People Must Live by Work: Direct Job Creation in America, from FDR to Reagan 9780812295313

Table of contents :
Contents
Abbreviations
Introduction. Prehistory of an Idea
Chapter 1. First Objective of Reform: Direct Job Creation in the Committee of Economic Security and the Designing of the New Deal
Chapter 2. People or Projects: The Works Progress Administration Versus the Public Works Administration Reconsidered as Economic Theory and Ideology
Chapter 3. “One Third of a Nation”: WPA Direct Job Creation Reconsidered as a Policy Success
Chapter 4. Right to Work? Rethinking the Promise of Full Employment in the 1945 Moment
Chapter 5. Jobs and Freedom: The Missing Front in the War on Poverty
Chapter 6. The 1978 Humphrey-Hawkins Act: The High-Water Mark for Direct Job Creation in “the New Deal That Never Happened”
Conclusion. Jobs and the Policy Imagination
Notes
Index
Acknowledgments

Citation preview

People Must Live by Work

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POLITICS AND CULTURE IN MODERN AMERICA Series Editors: Margot Canaday, Glenda Gilmore, Michael Kazin, Stephen Pitti, Thomas J. Sugrue Volumes in the series narrate and analyze political and social change in the broadest dimensions from 1865 to the present, including ideas about the ways people have sought and wielded power in the public sphere and the language and institutions of politics at all levels—local, national, and transnational. The series is motivated by a desire to reverse the fragmentation of modern U.S. history and to encourage synthetic perspectives on social movements and the state, on gender, race, and labor, and on intellectual history and popular culture.

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

Steven Attewell

universit y of pennsylvania press phil adelphia

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Copyright  2018 University of Pennsylvania Press All rights reserved. Except for brief quotations used for purposes of review or scholarly citation, none of this book may be reproduced in any form by any means without written permission from the publisher. Published by University of Pennsylvania Press Philadelphia, Pennsylvania 19104-4112 www.upenn.edu/pennpress Printed in the United States of America on acid-free paper 1 3 5 7 9 10 8 6 4 2 Library of Congress Cataloging-in-Publication Data ISBN 978-0-8122-5043-5

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Contents

List of Abbreviations

vii

Introduction. Prehistory of an Idea

1

Chapter 1. First Objective of Reform: Direct Job Creation in the Committee of Economic Security and the Designing of the New Deal

19

Chapter 2. People or Projects: The Works Progress Administration Versus the Public Works Administration Reconsidered as Economic Theory and Ideology

57

Chapter 3. “One Third of a Nation”: WPA Direct Job Creation Reconsidered as a Policy Success

90

Chapter 4. Right to Work? Rethinking the Promise of Full Employment in the 1945 Moment

129

Chapter 5. Jobs and Freedom: The Missing Front in the War on Poverty

172

Chapter 6. The 1978 Humphrey-Hawkins Act: The High-Water Mark for Direct Job Creation in “the New Deal That Never Happened”

210

Conclusion. Jobs and the Policy Imagination

261

Notes Index Acknowledgments

271 315 323

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Abbreviations

AAA ACA AFDC AFL-CIO APD ARRA CAP CCC CEA CES CETA CWA EITC ELR ERA FAP FEB FERA GMI HEW HHA NAIRU NEC NIT NRA NRPB NWRO NYA

Agricultural Adjustment Administration Advisory Committee on Allotments Aid to Families with Dependent Children American Federation of Labor and Congress of Industrial Organizations American political development American Recovery and Relief Act Community Action Program Civilian Conservation Corps Council of Economic Advisers Committee on Economic Security Comprehensive Employment and Training Act Civil Works Administration Earned Income Tax Credit employer of last resort Emergency Relief Appropriation Act Family Assistance Plan Full Employment Bill Federal Emergency Relief Administration guaranteed minimum income Department of Health, Education, and Welfare Humphrey-Hawkins Act non-accelerating-inflation rate of unemployment National Emergency Council Negative Income Tax National Recovery Administration National Resources Planning Board National Welfare Rights Organization National Youth Authority

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OEO OMB OPA PBJI PECE POUR PSE PWA TERA UI USES WPA

Abbrevations

Office of Economic Opportunity Office of Management and Budget Office of Price Administration Program for Better Jobs and Income President’s Committee for Employment President’s Organization on Unemployment Relief public service employment Public Works Administration Temporary Emergency Relief Administration Unemployment Insurance U.S. Employment Service Works Progress Administration

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Introduction

Prehistory of an Idea

People Must Live by Work discusses the history of an idea, one that seems completely alien to Americans today: that the government should fight unemployment (especially, but not only, in massive global depressions) by hiring the unemployed directly. The policymakers who invented and elaborated on this idea believed that the government had both a moral mandate and the practical capacity to obliterate unemployment altogether. It could deploy direct job creation measures to fine-tune the unemployment rate and eradicate mass joblessness, even in periods as calamitous as the Great Depression. The concept was not merely theoretical. For ten years (1933–1943), direct job creation was put into practice on a national scale by the federal government, which became the largest single employer in the country. After World War II (during which millions of Americans worked for the federal government either in uniform or in factories), a furious debate ensued over whether the right to a job should be enshrined in law and whether direct job creation should be used to give it life. Arguments persisted for thirty years, culminating in a clash over a 1978 bill meant to abolish unemployment forever. Thereafter, there was silence, and direct job creation fell out of the national policy conversation for a generation. Even today, despite one of the longest and slowest economic recoveries in history, calls for austerity and balanced budgets are voiced loudly while direct job creation has been pushed outside of the boundaries of acceptable policy discourse. Why was a manifestly successful concept shunted to the sidelines? That is the central question of People Must Live by Work. I seek to explain how and why direct job creation was created and put into practice; how it came within a hairbreadth of becoming a permanent feature of American social policy; how it survived as a contender in debates over economic policy; and why it has been largely forgotten or discounted today.

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To understand how and why direct job creation developed the way it did, I begin with its origins and the impulses and desires that gave rise to the demand for government-provided employment. One might imagine that the preconditions arose with the advent of industrialization, the universalization of a wage labor economy, and the dislocations that the business cycle introduced into economic life. However, demands for relief from unemployment appeared well before the Industrial Revolution—emerging with the enclosure movement, which took hold in sixteenth-century England, pushing millions off the land and into destitution. In 1536, Thomas Cromwell introduced a draft of a Poor Law into Parliament that would have provided for public works jobs for the unemployed, financed by an income tax on the wealthy.1 The bill was promptly shredded by Parliament. Instead, English Poor Law moved in the opposite direction, frowning on the very idea of relief for the able-bodied poor. Nevertheless, the idea persisted. In 1660, the Quaker “Appeal to the Parliament Concerning the Poor That There Be No Beggar in England” called for state-operated labor exchanges, and in 1696 John Bollers made one of the first proposals for the establishment of state-sponsored cooperative factories for unemployed workers as an alternative to traditional poor relief.2 In pre-Revolutionary eighteenth-century France, when most of the population were still peasant farmers, the emergence of mono-crop agriculture in the silk- and wine-growing regions of southern France made finding seasonal work a matter of survival for millions during the fallow period of the year. Crop failures frequently produced widespread unemployment; hence, people looked to the state to provide work. To fulfill its responsibilities, and avoid the social consequences that would follow from the mass migration of the unemployed poor, the ancien re´gime created a network of (underfunded and inadequate) charity workshops. As Alan Forrest and Lisa DiCaprio have shown, the French Revolution radicalized and expanded these traditions into a demand for the universal provision of work to the unemployed. National Workshops were established to arm and clothe the armies of the First Republic, confirming the government’s ability to address structural unemployment and imbuing social justice with patriotic implications. Working-class citizens grew to expect that the droit au travail was theirs, and they demanded that it be written into the constitution of the Second Republic. Despite the political controversy around it, the idea persisted as the cri du coeur of French socialism long after the 1848 Revolution.3

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Across the Atlantic, the concept that citizens had a right to a job followed from the growth of industrial labor in late nineteenth-century America, emerging in a very similar form to that in Europe (though about a generation later).4 The Panic of 1873, triggered by European financial failures and America’s contractionary monetary policy, saw a wave of bank failures, starting with Jay Cooke’s investment bank. Overbuilt and overleveraged, the railroad sector collapsed. Unemployment doubled.5 In response, a wave of demands for economic redistribution and democratic control of the economy swept the country: a self-appointed Committee of Safety assembled in New York City’s Tompkins Square Park, calling simultaneously for an end to charity and for the creation of a city Labor Relief Bureau that would provide work for the unemployed with $100,000 in city funds ($1.83 billion in 2011 dollars).6 During the Depression of 1893, Coxey’s Army, the first national protest march, saw six thousand men travel from Ohio to Washington, DC, to call on the national government to create public works jobs and to pay workers with inflationary paper money (fusing direct job creation with the ideology of the Greenback movement).7 Universal male suffrage, which emerged in the late nineteenth century, complicated these social tensions. Unemployed workers had become voters.8 This tension was especially strong in the United States, where the expansion of suffrage had begun earlier and gained greater traction. From the time of the early republic, fear of the capacity of the poor to overwhelm the political power of the landed drove the Founding Fathers to restrain the potential populist impulse of the majority. The American system of checks and balances, the development of cross-class political parties, and a laissezfaire ideology cast suspicion on the idea of public works.9 However, a competing version of republican ideology stressed the need to secure the independence of the “producing classes” by restoring a “rough equality of means” between citizens. According to this theory, a sovereign people should be masters of their own economic destiny. When millions of Americans lost control over this key aspect of life, many turned to the state to regain a semblance of autonomy. That government should provide work to the unemployed was merely one of the many proposals advanced toward this end. Railroad regulation or nationalization, the construction of public municipal utilities, and the establishment of an eight-hour day and a minimum wage were among the others. These proposals threatened the very basis of classical liberal economic orthodoxy, as identified by Karl Polanyi. The balanced budget was supposed

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to act as a bulwark against “class legislation,” the gold standard was supposed to restrain governments from violating taboos against inflation by pegging the monetary supply to a tradable commodity, and free trade (especially in currencies) would punish governments that debased their currency through capital flight and devastating deflation.10 As with the collapse of the National Workshops in the French Second Republic of 1848, these radical demands for public work were initially met with state violence—with the Tompkins Square Park “riot” broken up by mounted police. Coxey himself was arrested for walking on the grass of the National Mall and his “army” was quickly dispersed. However, state repression could not quell this agitation. It moved from public protests to the emergence of populist third parties and new bills in state legislatures. As Nancy Cohen notes in Reconstruction of American Liberalism, “as the new social movements of workers and farmers arose, protesting the economic developments of the era . . . liberals reacted . . . [and] invented a new liberalism that posited an active role for the state in society and economy, even as it justified constraints on democracy and the ascendancy of corporate capitalism.”11 While Gilded Age liberals worked to thwart populist efforts to regulate corporations, they also feared that the masses “would use the powers of the state to tax wealth out of existence and redistribute it to the poor and the worker.”12 Municipal reformers not only objected to outright political corruption, but also “complained that urban ‘bosses’ overtaxed property owners, in order to pay for the distributive programs that would keep the working-class voters loyal.”13 Thus, along with efforts to restrain the powers of the national government to enforce civil rights and of state governments to regulate the economy, liberals also worked to limit the fiscal powers of the state by returning to the gold standard, reducing the tariff, and “imposing numerous limitations on state legislatures . . . especially by curtailing the distributive functions of the legislatures . . . [and] den[ying] municipalities the power to incur debt.”14 This conservative attitude to redistributive spending automatically rendered any attempt by the government to hire the unemployed an impossible proposition because it required taxation to support. Accordingly, the Panic of 1873, two recessions in the 1880s, and the Panic of 1893 sowed distress throughout the land without much effort by the federal government to prevent unemployment. The arrival of the Progressive movement changed little. Progressives were more willing than Gilded Age liberals to challenge the prerogatives of corporations or embrace regulation, but they

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shared many of the same prejudices against activist fiscal policy. The new expert-driven model of government was supposed to ensure that governments would be efficient and frugal. Spending would not be dominated by working-class graft. Public works especially would be judged by the businesslike standards of “self-liquidation” (whether projects would generate enough revenue to repay costs), not by human need.15 The Great Depression of 1929–1933 (and the years of failed attempts to solve it using the tools of liberal political economy) shattered the edifice of orthodoxy. New economic theories and public policies emerged out of the wreckage, designed to remedy the economic collapse. Some nations took advantage of this opening and some did not. Great Britain, the birthplace of liberal economics, went off the gold standard under a Conservative government after an ostensibly socialist Labour government opted for the balanced budget over the needs of the unemployed. France clung to the gold standard, even after the election of a Popular Front government. The German Social Democratic Party dithered, rejecting the “WTB” Plan for mass public works put forward by three leading trade unionists (Wladimir Woytinsky, Fritz Tarnow, and Fritz Baade; hence the initials). However, the party was unsure whether to cheer the death of capitalism or answer the immediate needs of the working class. Unique among European center Left parties, the Swedish Social Democratic Party rose to power on the back of a call for government job programs.16 In the United States, despite calls from his own President’s Committee for Employment (PECE) and the President’s Organization on Unemployment Relief (POUR) in the early 1930s, Herbert Hoover absolutely refused to countenance federal public works or relief for the unemployed. He vetoed a series of relief and public works bills put forward by Senator Robert Wagner (D-NY).17 Even when Hoover was forced to sign into law the Reconstruction Finance Corporation, his insistence that public works be “self-liquidating” meant that only 9 percent out of an appropriation of $1 billion was actually spent during his presidency.18 Franklin Delano Roosevelt’s victory in 1932 created the perfect opening to break this stalemate: Roosevelt had pledged a “New Deal for the forgotten man,” and he had huge congressional majorities to lean on. In the midst of the economic calamity of the Depression, interest groups on the Left attempted to capitalize on this political moment. Economic planners sought to restructure the American economy. They sought to eliminate the forces of ruinous economic competition, rebalance economic sectors, or

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foster cooperation between business, labor, government, and consumers, all with the aid of technocratic expertise. Labor economists, especially the members of the Commons School at the University of Wisconsin, pushed to rationalize and humanize the labor market through the use of sanctions, standards, and incentives. Advocates for the abolition of child labor, the provision of public electric power, land conservation, and other causes readied their arguments. On the Left, production-for-use advocates showed a willingness to blur the lines between socialism and capitalism if that meant reducing unemployment and material destitution.19 Departures from orthodoxy were not unchallenged in the 1930s. Advocates for sound money and balanced budgets still held prominent positions in the executive branch, Congress, and the Democratic Party. Outside the Democratic Party, the true believers in Hoover’s associational approach (where trade associations and other groups of corporations would cooperate to set economic policy with the blessing of the government) struck the alarm over creeping socialism.20 Andrew Mellon proclaimed that deflation should continue so that prices would hit rock-bottom and then recover on their own. These convictions still commanded respect in the national press. Direct job creation policy emerged out of this chaotic mix, pioneered by a network of radical social workers and (mainly amateur) social scientists clustered in New York City social work circles. Franklin Roosevelt had been one of the few governors to throw himself into the breach of the Depression, founding New York’s Temporary Emergency Relief Administration (TERA). As governor, he tapped the New York social worker Harry Hopkins (then the head of the New York Tuberculosis and Health Association) to lead TERA. Hopkins brought in assistants from outside the field of economics to help organize the new agency. Under his direction, TERA became one of the first modern statewide relief agencies. It was a remarkable and novel effort but was ultimately only able to cover one in ten poor families in New York, because his budget was limited to $20 million while the need was far greater.21 Historians of the New Deal looking to understand Roosevelt’s economic policy often focus on the so-called brain trust, a small group of New York City–based economists. But they were not the architects of FDR’s job programs. Hopkins and his TERA colleagues had set the stage for the emergence of direct federal job creation. Following the 1932 election and the passage of the Emergency Relief Act of 1933, which created the Federal Emergency Relief Administration (FERA) and financed it with $500 million, Hopkins was brought on board

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to lead the new agency.22 In the FERA halls, the air was filled with unorthodox and dynamic ideas. His first day on the job and still without an office, Hopkins set up a desk in the hallway and, within two hours, wrote out $5 million in relief checks to a long line of governors, mayors, and social welfare officials. By the end of his second day of business, he had hired staff (many of whom were the same assistants who had helped him run TERA), sent out memoranda to forty-eight governors on how to set up state relief agencies, and dispatched emergency aid to seven states that were about to run out of money.23 Ultimately, FERA would help fifteen million families. However, as a new model for social welfare, FERA had serious limitations. The Emergency Relief Act mandated that federal funds be matched by state governments at a rate of three dollars of state money for every federal dollar—an ill-conceived attempt to increase state spending on relief. As those states with high concentrations of poverty tended to be among the poorest, the neediest areas were unable to afford the required spending.24 FERA relief came in the form of grant-in-aid—households received food and clothing donations, which kept families together and out of the workhouse, but that prevented them from spending money, which would have stimulated economic recovery. The local administration of relief left plenty of room for discrimination against blacks, other minorities, or members of the wrong political party. Worst of all, even with federal subsidies incentivizing states to improve their ridiculously low benefit levels, each family on relief only received a bare fifty cents per day, hardly enough to lift anyone out of poverty.25 Hopkins objected to every one of these policy provisions, but they were the law of the land. Most consequentially, FERA failed to provide a solution to the crippling psychological trauma of unemployment. “Relief was going out in great amounts,” Hopkins noted, “but men were going restless. . . . FERA field reporters sense the psychological impact of four years of depression . . . a dangerous feeling of hopelessness and dependence—a spreading of listlessness.”26 These social injuries were exacerbated by the dehumanizing rituals of applying for traditional relief. “It is a shameful business from beginning to end,” Hopkins lamented. “Here these citizens are. . . . [T]hey go to this relief office, timidly, ashamed, pride hurt, to go and ask a person they had never seen in their lives before [for help], and tell him the enormous secrets of their family life and economic conditions.”27 Hopkins directed his FERA staff to begin drawing up a new method for better meeting the needs of the unemployed masses, and the result was the

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first American experiment in direct job creation, one that would last for ten years, rebuild much of the country’s infrastructure, and employ more than ten million people.

Historical Perspectives Direct job creation occupies a strange position in historiography. In contrast to social insurance and welfare, direct job creation has not been seen by historians as a major part of twentieth-century reform efforts like the New Deal and the War on Poverty. Direct job creation has not been discussed in most assessments of recovery from the Great Depression, the economic boom of World War II, postwar prosperity from the 1940s through the 1960s, or the economic crisis of the 1970s. Instead, policy historians have tended to subsume direct job creation within larger categories—“employment policy,” “job policy,” “public works”—in a way that obscures the specific ideas that inspired and justified this dramatic market intervention. Because it languishes in relative obscurity, direct federal job creation is not easily distinguishable from similar policies. Indeed, during the period in question and in historical accounts, “relief works,” “work relief,” “public works,” “work programs,” “public employment,” and “public service employment” are often used interchangeably to describe direct job creation; but at the same time, not all job programs are the same thing. Subsidies to private employers and nonprofits helped to create jobs in the private sector; public works contracts to private contractors stimulated employment in the construction and materials industries; and subsidized jobs for specific groups of disadvantaged workers affected those workers specifically. In these schemes, the government provided funding to enable other economic actors to resolve gaping holes in the labor market. By contrast, direct job creation involves the government itself hiring, managing, and paying unemployed workers in order to directly lower the unemployment rate. Direct job creation, thus defined, perennially competed with other policy options. Traditional public works (which involve contracts to third parties), job training programs, Keynesian stimulus, and other forms of planning for full employment were the leading alternatives that posed a challenge to the proponents of direct job creation. People Must Live by Work explores the interactions between these policies and accounts for the

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successes as well as the ideological and pragmatic conflicts that attended the beginnings of direct job creation. Job Policy and the New Deal: Historical Debates Given the extraordinary scope and scale of job programs during the New Deal, most works on job policy focus on this period and roughly break down into several categories of historical studies. the american political development school and its critics

The first important body of literature is the institutionalist study of the New Deal, centered around but not exclusive to the American political development (APD) school of political scientists and policy historians. These scholars point to a variety of mechanisms to account for the evolution of Depression-era employment policy. They give considerable weight to path dependency: the notion that decisions taken earlier in time have ripple effects later on, closing off alternatives. Policy feedback also plays a role because, they argue, public policy generates its own politics, building coalitions to defend or attack programs. Institutional autonomy and design, the view that governments can act independently of politics to shape policy and to deploy veto points, are key to understanding policy development. How do these theoretical tenets of APD impact our understanding of direct job creation? In a pair of essays on the rise and fall of the Works Progress Administration (WPA), Edwin Amenta, Drew Halfmann, and their collaborators applied the APD model of veto points to explore how the New Deal’s job programs shaped, and were shaped by, emerging congressional coalitions. Machine politicians in the North were resistant to large-scale federal programs because they offered no scope for graft through the letting of contracts. Liberal and laborist congressmen, committed to a progressive ideological agenda, were more enthusiastic because the WPA held so much promise for their central political constituency: the economically threatened working class. Southern Congressmen eager for agricultural subsidies and other federal assistance accepted the New Deal’s job programs initially, but eventually turned against them when these programs threatened the monopoly of Southern whites over control of the Southern labor market.28 Amenta and Halfmann deploy the idea of policy feedback to explain the remarkable endurance of the WPA, the way that a program that distributed

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desperately needed jobs and public works managed to build a political coalition that kept the WPA lasting longer than other New Deal initiatives. Most important for my purposes, they argue that New Deal job programs created a “jobs and assistance state.” The architects and managers of the WPA and other employment programs believed that they were creating a permanent system that provided an alternative to standard social welfare policies. This stands in sharp contrast to earlier historians of the New Deal, like Arthur Schlesinger Jr. and William Leuchtenburg, who described the WPA as a temporary response to economic catastrophe. Other prominent APD scholars, especially Margaret Weir and Theda Skocpol, focus instead on institutional autonomy and structure.29 For them, the key story was how the limited and uneven establishment of economic policymaking institutions within the federal government shaped American job policy in a path-dependent process. Due to the weakness of these institutions (as opposed to the vagaries of congressional majorities, as Amenta and Halfmann would argue), job policy never quite made the jump from the New Deal into the postwar world. Taking a very different track from the APD school, Brian Balogh instead argues that state autonomy was very limited. Federal authority has historically been exercised through joint public/private ventures and collaboration with private professional associations, allowing the government to hide its hand in a country suspicious of public power.30 Balogh’s point is well taken with regards to the nineteenth-century state that he examined in A Government Out of Sight. Yet in his subsequent volume, The Associational State, Balogh overextends the point beyond what the historical record can bear. Critically, Balogh regards job programs almost entirely as a joint public/private enterprise dominated by the public works contracting process. This view overlooks the WPA’s innovative character, in that the program involved the federal government directly in hiring and managing workers, much to the consternation of the contractors’ associations.31 Likewise, in sharp contrast to the occasionally Whiggish implications of APD’s reliance on path dependence, Jefferson Cowie believes that the New Deal’s reforms were a temporary aberration in an otherwise dominant trend of conservativism. In The Great Exception, Cowie asserts that the political strength of individualism and antistatism conspired to render New Deal reforms the exception rather than the transformative rule. Americans were simply not inclined to accept as durable this level of government

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intrusion into the market. Rejecting an activist policy like direct job creation was made all the more likely by the division of potentially progressive voters by cultural conflicts over immigration, religion, and race. The historical record calls these pessimistic conclusions into question. Major reform movements—like post–Civil War Reconstruction or the Obama administration’s efforts on redistributive stimulus, health care, or financial reform—must all be defined out of the picture in order to cast direct job creation as an extraordinary exception rather than an example of an alternative perspective: reform and retreat.32 A case can be made that there are few “straight lines” in U.S. social policy. Instead, progressive causes advance new models that succeed for a time, get beaten back, and then reemerge again. The contested terrain is never settled. programmatic histories

Nancy Rose, Thomas Frank, and Bonnie Fox Schwartz created what are the most comprehensive of what could be called programmatic histories that focus on the careers of individual job programs, and all three examine job programs as emerging from the broader world of poor relief and welfare programs. Their histories closely resemble the original administrative narratives written by Donald Howard, Arthur MacMahon, and Josephine Brown (all of them veterans of the WPA) in the 1940s, who portrayed the WPA as an evolution in relief policies guided by a new generation of social workers. Finally, Chad Allen Goldberg and James J. Lorence have focused on job programs from a social history perspective, focusing especially on how radical activists among the unemployed people’s movement organized themselves within the New Deal job program workforce, contested their status as quasi-workers/quasi-dependents, and developed their own vision of a radical job program. Thus we can see some of the basic divisions in the literature focus on questions of categorization and approach. Amenta and Halfmann, basing their argument on congressional studies, would object to a description of job programs as part of a public works economic development program in the Jason Scott Smith or Robert D. Leighninger narrative, which flows out of the records of public works planners; again, Amenta and Halfmann believed that New Deal job programs constituted a separate drive for a “jobs and assistance state.” Schwartz and Rose and the administrative historians would point to social workers within the administration as the driving force behind job policy; social historians such as Goldberg and Lorence

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would argue instead for the agency of job recipients and their outside organizations. war on poverty

While much of the historical literature on job policy focuses on the New Deal (because it was the period in which the United States was most active in this area), there is also an important body of scholarship that focuses on job policy in the 1960s and 1970s. Here the role of job programs in the War on Poverty takes center stage. Margaret Weir’s Politics and Jobs focuses on how path-dependent decisions made during the 1940s entrenched the institutional power of fiscal Keynesianism, leading to job policy that was restricted to a palliative training model for targeted populations (as opposed to the larger and broaderbased programs of the New Deal) and that failed to navigate the choppy waters of racial politics in the 1960s and 1970s. By contrast, Judith Russell’s Economics, Race, and Bureaucracy gives us another take on the failure of job policy within the War on Poverty that focuses more on the internal dynamics of the Johnson administration and explains why the Labor Department lacked the bureaucratic capacity and political strength to claim a central role in the War on Poverty. Frank Stricker’s Why the War on Poverty Failed offers a third explanation, focusing on the importance of academic theories about the causes of poverty as the reason why Johnson’s social policies ultimately failed to grapple with major problems like unemployment, underemployment, and low wages. Guian McKee’s Liberalism and the Problem of Jobs provides an alternate, contrasting angle. He shows that, in big cities, declining industry led to a powerful call for job creation as the solution to deindustrialization at the local level. At the same time, progressive insistence on the desegregation of public works projects injected the civil rights community into the debate over the prospects for public-sector employment to address at least some part of the racial gap in employment—setting up conflict between construction unions and the civil rights movement. Standing back from the literature on job policy, one sees a divide between analyses that focus on New Deal job policy in the 1930s and 1940s and accounts that look at debates over job policy in the 1960s and 1970s. They are generally treated as period-bound policy debates rather than an overarching examination of how or whether government should play a role in creating or stabilizing employment. Only Weir’s work spans the two

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periods and studies how policy ideas were or were not transmitted between them, but Weir’s analysis remains at the level of institutional structure and economic theory, rather than examining the function of specific programs. As a result, less attention has been paid to how continuities in the debate over government “employment activism” emerged across these time periods. The historical record shows us that some policies emerged in the 1930s, only to be dumped for good thereafter, while others enjoyed stability and were incorporated into the fabric of government policy. For example, economic planning and price controls, which emerged in the Great Depression and were reinforced in World War II, were excluded from the realm of possibility thereafter. Policies like Social Security, agricultural supports, and rural electrification were integrated and remain with us today. Direct job creation occupies an odd position in the middle, as a perennial controversy rather than a policy either mainstreamed or permanently dumped. Periodization makes it harder to achieve a theoretical clarity that reaches across the time boundaries. Conceptual approaches taken by scholars working in one period have not been deployed in the other. Most of the works that look at the 1930s are either programmatic or institutionalist. Arguably, no historian has subjected New Deal job programs to the kind of analytical examination that Weir, Russell, McKee, and Stricker have provided for the intellectual place of job policy during the War on Poverty. At the same time, the major works on the 1960s and 1970s train their attention on both the intellectual debates that animated the inner circle in the War on Poverty as well as the perspectives that dominated broader political and academic communities. Programmatic studies familiar to students of the New Deal have not been undertaken for the later job programs. People Must Live by Work seeks to reconnect these two literatures by studying the pre- and postwar eras together. Focusing on the role of ideas in the 1930s enables us to appreciate how the policies created by the New Dealers managed to survive the transition to postwar America. In the hands of the youngest policymakers of the Great Depression, who hit their prime in the Kennedy years and engaged with the labor and civil rights movement, we can see a more continuous debate rather than distinctive periods that developed their own vocabularies and legislative agendas. However, People Must Live by Work also seeks to move the study of direct job creation in new directions. Contrary to the APD school, I argue that the ideas of New Deal administrators are just as important as the coalitions and institutions they created, and that direct job creation policy

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specifically has to be understood on its own merits, rather than being lumped into a general category of “job policy.” Unlike Smith and Leighninger, I find that New Deal job programs aimed at (and succeeded in) reducing unemployment rates in the short term, and they were more important in serving this purpose than they were in making a case for direct job creation as a long-term economic development strategy. Programmatic historians like Rose, Frank, and Schwartz fail to grasp the common threads that unite the various job creation programs of the New Deal. Finally, while the lived experiences of jobholders are important, the critical details that account for why direct job creation succeeded or failed took place behind closed doors among small groups of policymakers. A Historiographical Side Note: Why Public Works and Direct Job Creation Are Different The historical literature on public works, especially during the period of the New Deal, is unusually divided on several key questions: what were the ultimate purposes of federal public works? Relief from unemployment, economic development, or something else? Were public works and direct job creation part of the same political project, or are they distinct? When it comes to pre–New Deal public works, historiography exhibits greater consensus, especially when it comes to conceptualizing public works as a vehicle for answering questions about the development of the American state. For example, in his influential book Internal Improvement, John Larson focused on public works as a way to complicate our understanding of republicanism and federalism in the early republic. Larson’s work focuses on how struggles over national versus state activism and “different images of ideal future development” found expression in tactical uses of laissezfaire language, but that Federalists, Democratic-Republicans, Democrats, and Whigs all sought to use public works to push their preferred version of economic development when they were in charge of the federal government. As Larson puts it, “The positive use of government power for popular constructive purposes, such as public works of internal improvement, never was proscribed by American republicanism. . . . [O]ne of the virtues of republican government supposedly lay in its capacity to render safe and liberal the pursuit of human improvement by representative authorities.”33 Leighninger largely concurs with this narrative, arguing that there were broadly “three historical eras” of public works following the initial attempt

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by the revolutionary generation to “use . . . public works to strengthen the nation . . . aiding commerce and uniting the widely separated colonies” both physically and (through the effort to finance them through federal taxation or deficit spending) politically.34 Notably, there does not seem to be any disagreement that early public works were intended to spur economic development of the young republic or, later in the nineteenth century, “to solve social problems of cities” like public health, water and sanitation needs, education, and housing.35 This consensus runs aground where public works during the New Deal are concerned. Scholars ask whether they should be conceptualized as forms of work relief, with the attendant connotations of charity or poor support, or as a continuation of earlier traditions of national and local improvement through construction. Udo Sautter argues that public works in the 1930s served both purposes simultaneously: “It seems possible to differentiate between public works for relief purposes and work relief,” he wrote, since, “according to one definition, the former term would designate ‘needed public improvements,’ which may have been advanced [in time] to provide employment, but which must have been undertaken in the near future regardless. . . . [W]ork relief, by contrast, would consist of ‘operations definitively undertaken to provide employment.’ ”36 However, Sautter argues that this distinction was essentially artificial, because both programs involved hiring workers and producing certain categories of goods (buildings, roads, bridges and tunnels, and so forth), and both tended to concentrate on building projects as an object of federal spending. Smith offers an amendment to Sautter’s view, arguing that public works and “work relief” were identical, but neither aimed to provide employment. Smith departs from an earlier tradition of economic historians who “generally draw a distinction—unwarranted, in my view, between spending on ‘public works’ done by the PWA and ‘work relief’ performed by the PWA, neglecting the fact that both efforts produced substantial infrastructure throughout the nation.”37 Specifically, Smith “break[s] sharply from previous accounts that dismissed [these programs] simply as temporary efforts that failed to solve the crisis of the Great Depression,” including both consensus historians like Schlesinger and New Left historians like Howard Zinn, Barton Bernstein, and Ronald Radosh, seeing public works and relief programs instead as “important, wide-range investments in national infrastructure” that constituted a “public works revolution.”38 This revolution, in turn, “helped justify the new role of the state, legitimizing—intellectually

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and physically—what has come to be known as Keynesian management of the economy . . . and remade the built environment that managed the movement of people, goods,” and much more.39 Leighninger splits the difference, seeing New Deal public works as directed at both unemployment and economic development. In his narrative, “the argument that consumption can revive a sagging economy . . . got its first test during the New Deal by the Civil Works Administration (CWA). . . . [U]nderconsumption theory became a major defense in the continuation of the Works Progress Administration (WPA) and the Public Works Administration [PWA].”40 At the same time, he points to the federal government’s deep investment in economic development when it came to transportation, power generation and electrification, and other areas as proof that underconsumption theory was matched by the focus on economic development.41 Whether these historians see public works in the 1930s as aiming to reduce unemployment or further economic development, public works and direct job creation are seen as part of the same project.42 In my view, this is a mistake: public works and direct job creation were not the same. Treating them as equivalent makes it difficult to explain why the two programs came into conflict, or why conservatives sought to eliminate the last vestiges of direct job creation from the federal government but were perfectly comfortable with Dwight Eisenhower proposing the Interstate Highway System, one of the largest public works programs in history.43 Conflating public works and federal direct job creation also minimizes the disparate origins of the two programs and how the divergent intellectual and ideological outlooks that gave birth to them shaped how their proponents diagnosed the calamity of the Great Depression and remedies for the employment collapse that it precipitated. WPA staffers saw traditional public works as obsolete and myopically focused on fiscal probity over human need, and they saw themselves—proponents of direct job creation—as an enlightened vanguard that would end the Great Depression. PWA experts saw direct job creation as both a waste of public funds and a potential source of corruption that would rake leaves or dig holes and leave nothing of value in its wake.44 Finally, as I will show, these intellectual differences had real material consequences for how these projects operated. These programs determined whether skilled and relatively economically secure workers or unskilled workers off the relief lines would be hired; whether public funds would be

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spent to maximize the delivery of jobs to the unemployed to increase the return on taxpayers’ money; and ultimately how the federal government in general would fight the Great Depression.

Direct Job Creation and the Public’s Memory Policy historians have created a lively historiography on different periods of state activism, but they have been less successful in shaping the public’s historical memory, especially in the political news media. Over the past thirty years, conservative historians (mainly outside the academy) have put out book after book, a cottage industry in itself, proclaiming that the New Deal failed, that the War on Poverty was lost, that liberalism was responsible for stagflation in the 1970s. Their ultimate message is that the government cannot deal with unemployment (and that state action only makes things worse). Their arguments have been reflected and amplified by conservative talk radio, mainstream newspapers like the Wall Street Journal and the New York Post, and partisan instruments from the Washington Times to Fox News.45 These New Deal denialist histories include Amity Shlaes’s Forgotten Man; Burton W. Folsom’s New Deal or Raw Deal?; Jim Powell’s FDR’s Folly; Richard K. Vedder and Lowell Eugene Galloway’s Out of Work; and Gary Dean Best’s Pride, Prejudice, and Politics.46 The argument is standard throughout conservative historiography: the New Deal made things worse, by raising deficits and taxes; by instituting the central planning of manufacturing and agricultural goods; by “attacking business” with taxes, regulations, and rhetoric; by encouraging disruptive and radical labor unions; and by committing a panoply of other liberal sins against the free market. Following from Charles Murray’s arguments, they draw a straight line from the interventionist legislation of FDR to the sins of the War on Poverty, which they argue actually intensified poverty by encouraging “welfare dependency” and single motherhood. Likewise, 1970s stagflation is blamed on liberal social spending and greedy unions. Academic historians have been loath to engage with these narratives, believing that this lends credibility to politically motivated amateurs. This is a mistake. Without a public rebuttal, readers beyond the ivy walls have only heard from the conservatives. Pessimism about the capacity of government to fight unemployment has shaped American economic policy

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profoundly, especially following the 2010 midterm elections. Historians, especially policy historians, have a responsibility to correct the record, given their original mission “to inform policy makers through a historical approach to public policy.”47 Direct job creation, a public policy born to solve mass unemployment, has been erased from public memory and excluded from the realm of possible alternatives in the national political discourse. People Must Live by Work argues that direct job creation was abandoned for reasons entirely other than the efficacy of the policy, reasons grounded in political institutions and environments that are no longer relevant today. At a time when so many in politics or the media argue that “there is no alternative” to laissezfaire economic policy, or that attempts to fight recessions or alleviate unemployment make things worse, I believe the record shows that there is—and long has been—another and better way. In this way, this book is intended to be more than an academic project; it is a contribution to the restoration of a more accurate public memory. This book was inspired by my experience of reading Schlesinger’s description of the CWA in The Coming of the New Deal while I watched the Democratic primary debates in 2004. As each candidate talked about the need to “create jobs,” “build jobs,” and “grow jobs,” I read Schlesinger’s account of how the U.S. government had created more than four million jobs in fewer than three months, at a time when the most advanced administrative technologies available were the rotary phone and the carbon copy. As a budding policy wonk, I went onto the websites of the various candidates and was disappointed to discover that their plans amounted to little more than small pots of money for small business loans or tax credits to hire additional personnel. The difference in ambition between the past and the present fascinated me, and I began to wonder why no one was talking about the CWA and why students were not taught about it in school. My hope is that, with this book, we will begin to talk, to teach, to learn, and to remember.

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Chapter 1

First Objective of Reform Direct Job Creation in the Committee of Economic Security and the Designing of the New Deal

To take a seat in the telegraph office of the White House in mid-1934 was to occupy the front row in the central exchange of the American economy, a million messages of crisis vibrating up from across the nation. Good news and bad news chased each other across the wires: cotton up 4 cents, wheat up 42 cents, corn up 49 cents (a twofold increase over the previous year), and the national index of industrial production up 20 percent over the previous year; ten million workers still on the unemployment lines and eighteen million Americans on relief (up four million from the previous year, thanks to the Federal Emergency Relief Administration [FERA]).1 Scanning this information as it came in, Roosevelt administration officials tried to piece together the state of the union—there was a crisis, certainly, but were things getting better or worse? Was recovery on the way? How could one tell? While the data trickled in, the New Deal’s flagship programs—the National Recovery Administration (NRA), which was tasked with lifting industry out of crippling inactivity, and the Agricultural Adjustment Administration (AAA), which was charged with saving American farmers from accepting below-starvation prices—were drifting and falling to infighting, both reactive and slow. Congress, so acquiescent to the president’s agenda merely a year before, was beginning to push forward on its own in ways that conflicted with the White House’s preferences on an issue near and dear to the administration. Senator Robert Wagner (D-NY), who had so bedeviled the previous president with his ambitious relief bills, pushed forward with a bill to create

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a national Unemployment Insurance (UI) system. It was to be backed by payroll taxes that would cover all workers but which vested the entire management of the system by the states and allowed firms with private pension plans to opt out entirely.2 Congressman Ernest Lundeen (DFL-MN) proposed his own bill that went further than Wagner’s efforts, providing for universal and noncontributory insurance programs for unemployment, old age, and disability, all to be provided through general federal taxation.3 Pressed to do something to regain presidential leadership on the major issue of the day, Franklin Delano Roosevelt announced the formation of the Committee on Economic Security (CES) on June 29, 1934.4 Reporting directly to the president, the CES was to develop a comprehensive program to deal with the impact of the Depression. In the face of congressional pressure, and the growing popularity of Francis Townsend’s proposal for a guaranteed $200-a-month pension for each elderly citizen, the CES initially seemed like a presidential fig leaf.5 As much as it might have appeared that the New Deal itself was in crisis due to the travails of the NRA and AAA in the courts, the political situation rapidly shifted in the months following this announcement. Recovering from summertime doldrums, the public’s desire for more reform—not less—grew throughout the fall of 1934 and triumphed on Election Day. Turning out in record numbers, the voters broke with all historical precedent to back the party in power, delivering the Democrats fourteen more seats in the House of Representatives, and ten more seats in the Senate—a filibuster-proof two-thirds majority.6 Suddenly, what might have appeared as a stopgap, throwaway committee seemed instead to be an opportunity for new and sweeping legislation that might reinvigorate the entire New Deal. Roosevelt’s policy team responded to the midterm elections with a new sense of urgency. The FERA chief, Harry Hopkins, who earlier that year had seen the Roosevelt administration scuttle his Civil Works Administration (CWA) program, pondered the new political landscape. As was his habit, Hopkins leaned up against the rail at a Washington, DC, racetrack, watching the horses hurtle down the track, smoking up a storm with his closest assistants.7 “Boys,” Hopkins said, “this is our hour. We’ve got to get everything we want . . . now or never. Get your minds to work on developing a complete ticket to provide security for all the folks of this country, up and down and across the board.”8 Their answer was built on the model of

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the CWA, which only two years earlier had created 4.26 million government jobs for the unemployed within the space of three months. For Hopkins and his staff, following up with an even more ambitious program of direct government job creation was the best path to ending the Great Depression altogether. Hopkins and his team were not the only Roosevelt policy wonks looking over the political racetrack. Over in the Labor Department, Secretary Frances Perkins and her advisors, Professors Edwin Witte and Arthur Altmeyer of the University of Wisconsin, had also seen the potential in the congressional majorities for a new burst of reform. She was thinking through a plan for a state-level system of UI and Old Age Insurance, based on what Witte and Altmeyer developed during their time in Wisconsin two years earlier.9 Perkins had made FDR’s support for a social insurance system her price for joining his administration, and now that the pressure of the Wagner and Lundeen bills gave their plan a new urgency, Perkins, Witte, and Altmeyer believed that their approach could become the centerpiece of FDR’s counterproposal to Townsend (and Huey Long) on social security. These were but two of the policy beehives at work in Washington. There were many more. Children’s Bureau advocates drew up plans for a national mothers’ pension system. National Resources Planning Board officials in the Interior Department envisioned a twenty-year plan for public works. Public health advocates at the Julius Rosenwald Foundation drew up their own scheme for a national health insurance system.10 And during the day, all of these policymakers left their offices in their respective agencies, departments, and foundations to walk to the Washington, DC, headquarters of FERA (and also a temporary home of the CES) to fight for their vision of American social policy.11 They divided into two opposing camps: one relied on direct job creation; the other staked its vision on social insurance. A full analysis of the CES’s deliberations reveals the origins of direct job creation as the New Deal project closest to the heart of the state “theory” under development in 1934–1935.12 An eclectic group of expert administrators assembled the foundations of direct job creation both in competition with and cooperation with other New Deal projects within the CES, an effort that would later stand them in good stead when they would move to make direct job creation the dominant economic policy of the New Deal.

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Rethinking the Origins of Social Security The historiography of the Social Security program, and its origins within the CES, is voluminous. Historians have often looked to this foundational program as a vehicle for examining the New Deal itself and the development of the American welfare state more generally. However, most of this literature dwells on how the CES shaped our ideas about social insurance and welfare. Direct job creation has tended to be written out of this historical moment or seen as a separate development within the New Deal. As one of the earliest theoretical frameworks applied by historians to the study of the New Deal, Arthur Schlesinger Jr.’s model of the First and Second New Deals understandably influenced many later historical investigations of the Roosevelt administration. This is certainly true for the history of the CES. Social Security was Schlesinger’s u¨r-case study in the transition between a New Deal oriented around cooperation with capitalist interests, and a New Deal that moved to challenge them.13 For Schlesinger, Social Security showed FDR acting to create a new relationship between the national state and individual citizens, a new federal responsibility for social welfare, and a new attitude to laissez-faire capitalism that saw it as a fatally flawed system that must be replaced by a mixed economy guided by an activist government. Schlesinger argued that Social Security was a durable “reform” measure meant to shield Americans from any future recession and hence was a permanent contract between the working citizen and the state. Works Progress Administration (WPA) job programs were, on his account, a “relief” measure, a temporary effort meant to lessen the effects of the Great Depression rather than to become a permanent part of the New Deal order. Other periodization models have followed in the same vein: John Jeffries, Otis Graham, and Barry Karl built on Schlesinger’s model by hypothesizing a Third New Deal oriented around economic planning and the expansion of state capacity; they tended to place direct job creation efforts as part of both the Second and Third New Deals, while still seeing them as separate from the First, and as separate from efforts to construct and expand social insurance programs in the late 1930s.14 Alan Brinkley’s End of Reform reconceived the New Deal as either reconstructing or ameliorating capitalism and flipped the order of events, but he retained the two-period radical/reformist framework pioneered by Schlesinger. In Brinkley’s model, the WPA was part of the earlier radical phase that ended with the rise of the conservative

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alliance and the turn to a more moderate liberalism that no longer directly challenged the prerogatives of capitalism.15 Direct job creation does not fit particularly well with these periodization efforts. FERA work programs and the CWA chronologically fall within the First New Deal period but are virtually identical to the WPA of the Second New Deal, which calls into question the sharp discontinuities between periods described by Schlesinger, Graham, Karl, and Jeffries. Likewise, as we will see in Chapter 3, the WPA’s direct job creation efforts far outlasted the annus horribilis of 1937 that provides Brinkley with his demarcation point. Most important, in my view, is that these models portray different policy projects—especially social insurance and direct job creation—as having little to do with each other. I argue, by contrast, that they were intimately connected from the beginning. Following Schlesinger’s triumphal narrative of the expansion of the American welfare state, a new body of literature has challenged this optimism, pointing to ways in which the construction of social and economic citizenship within the CES had long-term consequences that entrenched and intensified pervasive gender and racial inequality. The economist T. H. Marshall’s definition of “social citizenship,” as “the right to a modicum of economic security and security . . . the right to share to the full in the social heritage and to live the life of a civilized being according to the standards prevailing in the society,” has been a tremendously useful model for American historians interested in political economy, poverty, and inequality.16 It is fundamental to both many discussions of American exceptionalism (since America’s journey through Marshall’s three stages of citizenship was quite different from Europe’s) and the distinctive features of the U.S. welfare state. However, Marshall’s concept has also been usefully challenged or extended by Alice Kessler-Harris, who coined the term “economic citizenship” as a fourth category or stage of citizenship. In her book In Pursuit of Equity, Kessler-Harris argued that the distinctiveness of America’s welfare state, and much of its gendered nature, stems from the fact that in America social rights have been made dependent on economic citizenship. Defined as “the independent status that provides the possibility of full participation in the polity” (and buttressed by access to superior forms of social insurance, mortgage and tax rates, and other benefits), Kessler-Harris argues that economic citizenship has been used as a barrier against women through their exclusion from the world of male work.17

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Even those who disagree with Kessler-Harris’s ultimate emphasis on opening up economic citizenship have found her “economic citizenship” term useful. Several feminist historians like Linda Gordon, Eileen Boris, and Dorothy Sue Cobble take exception to Kessler-Harris’s emphasis on expanding the right of women to work in professions that guarantee access to economic citizenship. They noted that this objective would do little for nonworking poor women and mothers. Moreover, working-class women, despite having long been engaged in the same kind of industrial employment as working-class men, were still not included within economic citizenship. Finally, economic citizenship still leaves the issue of the “double shift” and women’s unwaged labor in the home to deal with.18 Even as they argue instead for expanding universal human rights to health care, childcare, and social supports, Gordon and others accept Kessler-Harris’s terminology of economic citizenship as a useful foil for their preferred categories of social citizenship and universal human rights. Similarly, historians who focus on race, such as Suzanne Mettler and Ira Katznelson, have picked up the “economic citizenship” term and have studied how economic citizenship was made white-only by defining heavily black industries as outside the field of recognized “work.”19 The historiographical division over social and economic citizenship also plays into debates about the two-track nature of the American welfare state, because economic citizenship is roughly equivalent to access to the “first” track. Gordon, Mettler, Kessler-Harris, Robert Lieberman, Katznelson, and others have convincingly demonstrated that one of the major shortcomings of American social policy, especially policies enacted during the “big bang” creation of the CES, was the division of social welfare policy into social insurance programs and welfare programs. The systematic exclusion of agricultural and domestic workers from all of the major social insurance programs, from Old Age Insurance, to Old Age Assistance, and Aid to Families with Dependent Children, ensured that skilled workers who were predominantly white men gained disproportionate access to benefits that were national, categorical, and well funded through payroll taxes. By contrast, women, African Americans, and marginal workers were trapped in state and locally run programs. This left them vulnerable to discrimination at the hands of local officials. Benefits varied dramatically because they were shaped by state variation in the rules of eligibility and were subject to demeaning forms of social control through investigations, paupers’ oaths, and home visits. These programs were generally funded

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through grant-in-aid programs with limited federal matching, creating an incentive to keep benefit levels at a low level. Among scholars who have studied these programs, the major disagreements over the nature of the two-track welfare state revolve around which factors were responsible for the persistence of that two-track welfare state: did they include Dixiecrat insistence on maintaining the Southern labor market, traditional beliefs about the deserving versus undeserving poor, the impact of federalism, patronage systems, or a weak bureaucracy? Expanding the scope of welfare policies considered under the rubric of the two-track welfare state to include direct job creation complicates this framework. Edwin Amenta’s work on the relative benefits of social insurance payments and welfare payments during the 1930s, for example, argues that “most Roosevelt Administration policymakers did not see themselves as designing a two track welfare state; rather, the WPA was a means-tested program that gave relatively high benefits. Nor did American policymakers view economic security strictly as a matter of social insurance coverage; means-tested programs dominated social policy.”20 In a similar vein, Jason Scott Smith, in Building New Deal Liberalism, deliberately sets out to prove that “public works programs were the New Deal’s central enterprise” and that they played an enormous role in accelerating America’s economic development from the 1930s through the 1960s.21 In this view, the Roosevelt administration can be seen as pursuing something like a “jobs and assistance” state, in which the state would use public works programs to spur private-sector economic development, thus steering as many people as possible into the protections of the employmentbased welfare state. Similarly, Chad Allen Goldberg’s work on radical WPA unions suggests that WPA workers, while relief clients who theoretically should have been driven into the second tier of the welfare state, were able to use the concept of work to contest their status and demand the right to a job as an entitlement “earned” through their labor.22 Direct job creation appears to have existed halfway between the two tracks of welfare, with interesting consequences for considerations of social and economic citizenship. On the one hand, this type of program very much traded on the rhetoric of earned rights, based in gendered conceptions of work, deployed by advocates for social insurance, and meant to serve a clientele (predominantly white men, blue-collar workers, frequently older heads of households) normally protected by social insurance. Indeed, the fact that the Great Depression plunged many millions of these normally

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economically secure workers into the same straits normally occupied by the marginalized might explain why policymakers were willing to countenance such a radical expansion of national provision for the unemployed. On the other hand, direct job creation was not a contributory program as traditionally defined. Its relatively privileged recipients were still those whose paupers’ oaths had ejected them from the ranks of the “worthy” poor in the eyes of many in society. Moreover, the origins of this job program in poor relief drew a straight line between these work programs and the welfare track of American social policy. Restoring direct job creation to the history of the origin of Social Security and the CES thus offers a new perspective on questions of social and economic citizenship and the two tracks of the welfare state. To begin with, much of this literature has focused on the role of private-sector employment and specific forms of private-sector work as the restrictive and discriminatory dividing line between the worthy and unworthy poor. Yet direct job creation programs like the WPA traded on the idea of work as a badge of worthiness. The state distributed work to those without, bringing them into the circle of worthiness, instead of penalizing the unemployed. Unemployment was defined as a failure of the labor market rather than a sign of individual failure, absolving the unemployed of economic sin. Direct job creation turned work into a benefit that was open to anyone who applied for it. If this was not precisely identical to the idea of welfare as a right of social citizenship, it certainly was moving in that direction. Moreover, the actual functioning of such programs tended to undermine the racialized and gendered divisions of the two tracks of the welfare state: at any given time during its existence, four hundred thousand African Americans and another four hundred thousand women who would otherwise have been excluded from UI and Old Age Insurance gained eligibility through their WPA paychecks and the payroll contributions deducted from them.23 Direct job creation called upon work as a cultural, social, and political symbol, used to empower as well as to oppress. Social investigations of the kind studied by Mary Furner, Barry Supple, Alice O’Connor, and other students of social scientific knowledge and progressivism make this clear.24 They turned to research conducted in the 1930s by E. White Bakke, the eminent British social scientist and expert William Beveridge,25 the WPA’s Research Division, the U.S. Labor Department, as well as an array of public and private researchers to show that work had an important symbolic

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meaning for the poor and the working class. In industrial societies, work provided (and still provides) a huge source of social and psychological meaning. It defined the neighborhood one lived in; it circumscribed the friends and workmates who would occupy much of the day; it offered a sense of contributing to society, of being needed. Given the influence of immigration in industrial labor forces in the United States especially (but to a lesser extent in Europe as well), where a person worked could also be a signifier of nationality, language, and religion, and vice versa, as professions and sectors were ethnically divided. As a consequence, unemployed workers and their families, even those on public relief, believed in the idea that work entitled one to a superior set of earned rights and they wanted access to it. As one wife of a WPA worker put it, “We’re not on relief any more—my husband works for the government!”26 Early public opinion surveys, conducted by Witte and the nascent Gallup organization, of the unemployed and of relief clients discovered that the most downtrodden were much more adamant about finding a job than they were about welfare for all. While scholars favoring social citizenship or universal human rights (or a guaranteed minimum income) might argue that this reflects the hegemony of American individualism, there is no escaping the evidence of millions of unemployed workers themselves who proclaimed, “[W]e don’t want relief, give us work.” The sentiment reflects the conviction shared by many (including Marx) that the creative potential of employment is missing from social citizenship. As Beveridge argued in 1944, “A person who cannot sell his labour is in effect told that he is of no use . . . a personal catastrophe. The difference remains even if an adequate income is provided, by insurance or otherwise, during unemployment . . . the feeling of not being wanted demoralizes.”27 In the context of full employment and the right to a job, work requirements lose something of their punitive or exclusionary force. Instead they become a constitutive element in a horizontal social contract between the employed, who agree to pay the taxes required to employ the jobless, who in turn agree to produce public goods and services to enlarge the commonwealth and beautify the public square. On this reading, economic citizenship becomes less a characteristic of laissez-faire systems, and more a characteristic of solidaristic systems—hence the reason job policy is a vibrant characteristic of social democracies. Viewed through the lens of job policy, the distinction between social and economic citizenship breaks down. This in turn carries significant

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implications for the broader debate about American exceptionalism and the welfare state. Go/sta Esping-Anderson’s model of Anglo-American, Continental, and Social Democratic welfare state regimes relies on these distinctions.28 Yet if both the United States and Sweden were developing job policy simultaneously in the 1930s at a time when other nations within the Anglo sphere of influence (the United Kingdom, Australia and New Zealand, Canada, and so forth) and Continental nations such as France and Germany were not, we have a dilemma on our hands. How explanatory is the AngloAmerican model of welfare states? How exceptional and separate was the United States? The model does not hold. Likewise, if at times Britain, France, and Germany balked at mass direct job creation (even in the midst of an economic crisis like the Great Depression) then the United States’ frustrated attempts to institutionalize job policy mean that the American social policy is not as far as some would have it from European models.

Direct Job Creation and the Welfare State Social Security occupies a prominent place in policy history. Sociologists and political scientists have been interested in why the United States is a welfare laggard and why the country adopted certain structures of eligibility and their underlying “theories” of worthiness and not others. The American political development (APD) school has made particularly important theoretical contributions to our understanding of the ways institutional changes and structural features shape policy outcomes historically. In this model, initial policy decisions create a political dynamic that acts to reinforce them over time. This “policy feedback effect” entrenches one approach and excludes others, creating a “path dependency” in institutional development. Theda Skocpol, Margaret Weir, Ann Orloff, Jill Quadagno, Jacob Hacker, and others in this tradition point to Social Security as a classic case of path dependency. Once a policy so controversial that after enactment it was targeted for repeal by the opposition party, it became a third rail of American politics, so strong that it was easily able to weather antistatist periods in American politics. APD studies have tended to focus almost exclusively on social insurance and welfare programs. They tend to treat other policy initiatives considered by the CES as examples of policy options that were ruled out as a consequence of path dependency.

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Direct job creation throws a wrench into this model of the origins of Social Security. To begin with, path-dependent studies rarely involve what we might call “dual origins” of public policies. To the extent that direct job creation has been studied by the APD school, it has been through the work of Edwin Amenta, Drew Halfmann, and others, who portrayed this type of job program as part of a policy agenda that was separate from the Social Security Act: When people think of the origins of American social policy, they usually think of the 1935 Social Security Act. . . . [T]hese programs were somewhat marginal to New Deal social policy because they dealt with special categories of “unemployable” citizens. . . . Scholars miss the fact that most Roosevelt Administration policymakers did not see themselves as designing a two-track welfare state; rather, the WPA was a means-tested program that gave relatively high benefits. . . . These programs constituted an incipient “work and relief” state favoring the unemployed.29 I take issue with this perspective. As I will explain in greater detail, Social Security did in fact include “a commitment to work programs” as well as programs aimed at “unemployable” citizens. This raises the question of whether direct job creation was part of a “work and relief” state or rather a “work-insurance” state; the latter is what I believe the CES intended. Path dependency would seem to have limited utility as an overall approach to the development of the welfare state if we take the CES as the starting point. Social insurance and direct job creation shared very similar origins: they came out of the same committee, served much of the same clientele, used much of the same rhetoric of justification and similar economic theories, and yet, in the long run, met very different fates. This may well point to a more contested and contingent process by which different public policies win political support. Social insurance was, after all, not the most popular element of the Social Security Act—there was a long lag before benefits were paid out, payroll taxes were not popular (especially at the higher levels required for a prefunded Old Age Insurance program), and the program was challenged all the way up to the Supreme Court. And yet, unlike the WPA, which had a much stronger institutional base in many respects from an APD perspective, social insurance lasted much longer.

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Shaping Historical Memory One of the reasons why direct job creation has not generally been celebrated as an achievement of the CES is that a conscious attempt was made to write that type of program out of the historical record. The CES is seen today as the organ that created social insurance and social insurance alone. In 1936, Witte wrote an account of the development of the Social Security Act that was used for many years as the official in-house history of the Social Security Board.30 While the memoir’s purpose was to serve as an eyewitness account of the CES, the effect was to serve as an official narrative of what FDR and his staff intended the New Deal to be. Witte makes it clear that, from his perspective, the CES intended that social insurance would be the cornerstone of the New Deal. He was a partisan of this approach and did much to promote its importance for the long haul. From the beginning, he argued, the CES had hit on “unemployment insurance and old age security” as the “two major fields to which the staff would have to devote a great deal of attention.”31 “It was agreed that the committee would have to make careful actuarial studies” their first priority, given its foundational importance to Old Age Insurance.32 Witte went farther, claiming that direct job creation research was not a major undertaking of the CES. “No final report was ever made by [Emerson Ross] or his staff. . . . [T]he reports of Dr. Givens and his staff were able research reports, but did not figure very much in the final report of the CES.”33 Archival sources contradict this: Ross’s report was in fact presented to the committee; material from it was included in the first Executive Staff report and adapted in the final CES report. Witte had downplayed contributions of the pro–direct job creation members of the staff with whom he was not entirely in sympathy. The larger goal here was to argue that “the immediate relief problem came to be regarded as outside the committee’s jurisdiction,” that direct job creation was not a part of the committee’s deliberations, but social insurance was.34 Did all the committee members agree on this point? Did they see the remit of CES in the same way? In Development of the Social Security Act, Witte wrote that the committee had issued “a unanimous report,” that its members were “of one mind,” and that they “were able at all times to present a united front.”35 Those who disagreed are either subtracted from the story or described as foolish: “the advisory council . . . violated all requests of the committee,” he noted. The advisory council to the CES, a

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major institutional source of opposition to many of the characteristics of social insurance (it argued with the main committee over everything, from contribution levels and the exclusion of agricultural and domestic workers to firmwide versus industrywide pooling of financial reserves to pay benefits), was not included in Witte’s account of the committee’s deliberations. Witte wrote that “it remains doubtful whether it would not have been better to have no organization at this time.”36 Witte’s narrative relegated comprehensive alternative models for economic security to historical footnotes (in this case, exactly two).37 Fortunately, there are historical accounts that contradict Witte and they deserve pride of place in the historiography of the CES. Josephine Brown, a FERA alumna of the committee, chronicled the rise of direct job creation in her book, Public Relief. As Brown described it, far from the placid consensus between committee members that Witte had described, the adherents of a “democratic philosophy” of provision for the poor pushed hard for direct job creation, challenged the principles of UI as inadequate, and came within a hairbreadth of total success.38 Social insurance advocates such as Witte sought to tamp down the more universal aspects of the economic security system, while FERA officials fought to maintain them.39 In a larger sense, Brown argued, Witte’s social insurance advocates were not the true inheritors of the New Deal’s spirit. Similarly, in The WPA and Federal Relief Policy, Donald Howard, a researcher for the Russell Sage Foundation, emphasized the links between the WPA and the CES. In his opinion, the language of security—the idea that the employee-clients of the WPA should be sure that their jobs would be safe, the conviction that workers needed wages even when logistical issues or environmental considerations shut down projects, the requirement that monthly wages have a solid floor, all of these issues that the WPA would take as a common ideological foundation—was the handiwork of FERA staffers serving on the CES.40 In the course of developing plans for the committee, debates erupted within the WPA on whether the program should adopt prevailing wages or a security wage, whether it should accept any unemployed workers or demand a means test, and ultimately how far WPA wages should diverge from relief.41 Founded between the fall of the CWA and the rise of the WPA, the CES had “given a new lease of [sic] life” to the principle of federal provision for the unemployed. The CES’s arguments about the proper roles of federal and state action had the effect of more firmly establishing direct job creation as a federal responsibility, Howard noted.42

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The Structure of the CES When the CES first met in late June of 1934, it was a divided institution. Different groups of political actors assembled, each sensing limited space for policy action, each intent on winning that contest for their favorite vision of the new welfare state. The committee’s structure fostered the tension. While the Labor Department had the most representatives, Hopkins (as the administrative head of FERA) and Secretary of Agriculture Henry Wallace also claimed membership, as a testament to the dominance of the “liberal bloc” on antipoverty issues.43 Although these parties shared common goals in extending the reach of the state to combat economic insecurity, they had their own distinct ideas about how to do so. Above all, they wanted to commandeer the results for their own agency or department. As usual, the lion’s share of the committee’s work would be done by the Executive Staff, and hence Perkins’s choice of Witte to lead it was consequential. Witte, in turn, set about filling the slots with his colleagues from the University of Wisconsin and the Department of Labor—Joseph Harris, Thomas Elliot, and Wilbur J. Cohen, to name a few.44 These experts were mostly, although not entirely, students of John R. Commons, the American institutionalist economist. Prior experience in drafting the state of Wisconsin’s UI system just a few years earlier had led them to a common understanding that emphasized how UI, narrowly tailored to cover industrial workers, could counteract the natural cycle of unemployment in American industry by creating incentives for firms to regularize their employment. This perspective inclined Department of Labor staffers to emphasize UI over other forms of social insurance, contributory systems over noncontributory systems, and firm-level funds rather than industrywide funds.45 However, FERA was also well represented on the Executive Staff by six individuals (the second-largest contingent) in no small part due both to Hopkins’s position on the formal committee and to the fact that FERA had paid for and housed the CES.46 Other voices found no quarter. Social insurance promoters tied to the Ohio plan for UI (such as Abraham Epstein and Isaac Rubinow), advocates for national systems, and voices for public works were not included on the staff.47 Further complicating the debate was the Technical Board, a supposedly unbiased group of experts who would conduct research to inform the staff’s work. In practice, the board’s division into different topical working groups

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(on social insurance, direct job creation, relief, health insurance, and so forth) ensured instead that each camp on the Executive Staff could draw upon its own group of experts on the Technical Board to do the legwork on preferred policies. For example, the Department of Labor was represented by Altmeyer, Elliot (both University of Wisconsin economists, brought in by Witte), and Isador Lublin, all of whom would focus on UI research, while Aubrey Williams and Corrington Gill headed up the FERA contingent and conducted research on job programs.48 Although competition persisted throughout, conflicts intensified at specific and representative moments. Tension first surfaced in August 1934, when the CES set forth its initial plan for what topics it would research, what topics it would not, and who would be assigned to these studies. The second contentious period lasted from late September through early November of that year and book-ended the first round of presentations by the various research teams and Technical Board and Executive Staff preparation for their first report to the full committee. The CES’s final report to the president in January 1935 generated a third stage of conflict. Last, but not least, conflict occurred over the drafting of what would become the Social Security Act of 1935 and the Emergency Relief Appropriation Act of 1935, or what Roosevelt referred to as his “big bills.”49

Hopkins’s Team In selecting staff to back up his political arguments, Harry Hopkins drew on an eclectic group of experts and bureaucrats drawn from among the first and second tiers of FERA administrators. Jacob Baker, an industrial engineer who had worked for left-wing publishing firms on the West Coast before the Depression and an advocate of “cooperative enterprise,” wrote most of the policy proposals for direct job creation programs. Emerson Ross, a Dartmouth-educated statistician who had formerly worked for the Metropolitan Life Insurance Corporation, was both Hopkins’s chief numbers man and a key architect of direct job creation proposals. Corrington Gill, a University of Wisconsin–trained economist of the John R. Commons school who had been studying unemployment in New York State before being hired on by FERA, provided the economic theory and empirical analysis to undergird their arguments. A French-trained social worker and white racial liberal from Alabama, Aubrey Williams contributed his training

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in social work and his on-the-ground experience as the chief administrator of the Alabama Relief Administration.50 Aubrey Williams, Emerson Ross, and Josephine Brown had all entered into the relief business in the early days of the Great Depression; Brown was a social worker who had been hired as Hopkins’s assistant, and Ross was a staff statistician for FERA. These FERA staffers additionally leaned on Meredith Givens, another University of Wisconsin–trained scholar, and Eveline Burns, one of the few women economists working at Columbia University, for additional firepower. While Jacob Baker and Givens and Burns had no formal training in social work, they were passionate amateurs and picked up much of the social work culture from their peers. Harry Hopkins himself was a professional social worker trained at Grinnell College, and he acted as a synthesizer and popular advocate for the ideas developed by these specialists; he was assisted by Brown, who would later write a history of FERA and its successor agencies.51 As Brown described in Public Relief, many FERA staffers came out of the new generation of social workers (both professional and amateur) in the late 1920s who imbued their work with a new “democratic philosophy of relief” that emphasized the systemic nature of unemployment, the importance of treating individuals on relief with dignity and respect, and the obligations of all citizens to help people in need.52 This view, she argued, diverged sharply from earlier philosophies of social work that had emphasized personal responsibility and individual failings. The massive failure of private industry produced a concurrent need for public provision for the poor. Beyond this binding philosophy, three factors crafted a cohesive intellectual community out of these disparate individuals. First, they shared similar backgrounds. They were all well educated, either in the Ivy League, the Midwest, or Europe.53 Most had been trained in the social sciences or were amateur social scientists with backgrounds in engineering or statistics. Most important, they had all come of political age in the 1920s and were hence somewhat disinterested in Progressive Era debates about the state and economy. Second, they shared the common experience of administering poverty programs during the Great Depression. As both Brown and William Bremer point out, the 1930s had a transformative effect on those in the relief fight, overthrowing existing orthodoxies in economics and social work, leaving intellectuals scrambling for new explanations and prescriptions for ending the crisis.54 Simultaneously, the unprecedented scope of

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economic collapse and human suffering created a deep sense of urgency and impatience with inadequate local institutions and traditional methods of relief administration. Third, they shared a common institutional home—all of them had come to work for the federal government during the early days of the New Deal. Some of them had either worked in state relief agencies or had been hired by Hopkins to work in New York’s Temporary Emergency Relief Administration (TERA) prior to the New Deal. Most of them signed on to the federal government in the First Hundred Days through the FERA. These activist-intellectuals were charged with coordinating national relief policy across the country, and they had to come to grips with the inadequacies of local methods and the sheer scope of the poverty crisis. And, most important for our purposes, they were steeped in job creation experiments. Indeed, for five months immediately prior to the establishment of the CES, they had run the CWA, the first and most ambitious effort to put the unemployed back to work across the country. As social scientists and experts, these individuals were expected not only to produce plans for action, administer programs, and evaluate outcomes— the raw stuff of “policy learning”—but also to explain to the government and themselves what they were doing or propose how it would work or how it was working, and why it should be done. The CES relied on research programs, iterative proposals, and a final report to the president, all of which provided FERA staffers the means and the opportunity to convert their explanations into an economic theory of the Great Depression and the wisdom of government intervention, and into a series of formal policy proposals that translated ideas into agencies, budgets, and boots on the ground.

Direct Job Creation Emerges The idea of direct job creation as developed by FERA experts in 1934 was this: that in order to respond to a crippling unemployment rate of 20 percent, the federal government had to create jobs for the unemployed on a mass scale. This action would reduce unemployment rates by “force account” (i.e., by the government’s directly employing and managing formerly unemployed workers). Once the target for federal job creation was met, these workers would be assigned to various useful projects: “light”

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construction (chiefly of roads and public buildings), social services (especially in the realm of public health and education), arts projects, and social science surveys. FERA jobs were to include administrators for these programs as well. The notion that the government should provide jobs first and worry about what the jobs produced afterward was a major departure from traditional ideas about public works. A long-standing tradition in American political economy since the eighteenth century, public works were usually created by local governments in times of economic decline in the hopes of absorbing some of the excess unemployed.55 Direct job creation had a different intellectual root. It emerged not among public works experts, but rather from within the brain trust of poor-relief agencies and the social workers who staffed them. From the beginning, FERA administrators had experimented with providing relief in the form of wages for work instead of handing out food baskets or grocery orders (“in-kind relief”) to the destitute unemployed. In October 1933, FERA administrators had pushed their experiment further by establishing the CWA, which offered jobs to 4.26 million unemployed without requiring workers to take the humiliating step of registering as paupers under relief regulations.56 Thus, by the time FERA officials walked into the first meeting of the CES, they already had the kernel of a program as well as a year and a half of experience. The Economic Theory Behind the Policy Advocates of direct job creation saw their program as grounded in a particular school of economic thought. In an internal FERA memo titled “A National Program for Economic Security,” Jacob Baker, the FERA assistant administrator for policy and one of the chief intellectual architects of FERA’s direct job creation program, laid out the essentials of their approach. It began by analyzing the causes of the Great Depression. He argued that the economic collapse was ignited by mass unemployment and evaporating demand as opposed to various other theories that ranged from monetary deflation or economic imbalance between agriculture and manufacturing to tariffs restricting trade or a lack of “business confidence.” Baker’s report opened with a comprehensive survey of employment, unemployment, and relief statistics collected by FERA bureaucrats and then focused on the ten million unemployed as the chief economic problem. In Baker’s view, “There can never be recovery as long as there are economic

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strata without money to buy and security to spend. . . . [T]hey cannot contribute to recovery, their support constitutes a constant deflationary drain.”57 Baker justified his arguments by appealing to “the purchasing power theory of development and maintenance of prosperity” that was percolating within the New Deal.58 The economy had collapsed due to a lack of purchasing power. There would be no escape from the downdraft of the Depression until the government enabled the public to get back to its normal spending patterns. As he put the matter, “Government money shall be spent when private money stops.”59 This economic theory particularly emphasized that pump priming had to be directed toward specific programs rather than spread across the normal areas of government activity: increased spending would only work by redistributing wealth to “the lowest economic strata because it is there that occurs automatically the greatest number of respendings.”60 Direct job creation advocates argued that the New Deal had been overly cautious to date, not giving enough money to working-class consumers to produce a sizable-enough multiplier effect, and they called for a dramatic increase in effort; as Baker put it, “The flow should be free as long as the pressure of government spending is needed.”61 FERA officials focused on more than levels of aggregate spending. They emphasized the form as well as the quantity of spending. As Baker and his colleagues saw it, countercyclical spending would be wasted if it were to be spent solely on direct relief (which they understood would be the most efficient means of income transfer). These relief administrators believed that direct relief “destroys morale, it returns nothing to the community [and] contributes little to recovery except that it keeps people alive.”62 FERA officials did not dislike relief solely because of traditional American beliefs about dependency and charity, or because of liberal objections to the stingy, temporary, and degrading administration of local relief, but also because of its economic effects. With poor relief, “none of the money is paid back and not nearly enough is produced by its use.”63 Pump priming through direct relief produced little in the way of multiplier effects due to the low levels of consumption it generates (especially when it is “in kind” rather than “in cash”). Baker called outright for the abolition of direct relief as an integral part of any program for economic security, a call echoed by his peers in FERA. In its place, FERA officials argued that direct job creation would be the most effective means of stimulating countercyclical spending, and thus it

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would simultaneously provide for the poor and generate demand that would lead to greater economic security. By providing work at wages that ranged from 26 to 70 cents an hour, direct job creation would pull millions out of outright destitution, millions who would promptly add their new wages to existing consumer demand. The return on wages from taxes paid by newly employed workers would reduce the final cost of the program; most important, the publicly employed would, with their labor, “create new national wealth . . . more important than any saving.”64 The goods these workers would produce, from housing and public buildings to highways, streets, and road gradings, and infrastructure for utilities such as electricity, water, and sewage, would themselves stimulate production as well as consumption. FERA enthusiasts of direct job creation could be seen as protoKeynesians, plain and simple. However, their policy vision went beyond mere countercyclical spending to a broader restructuring of the American economy, in which direct job creation would play a central role. This vision emanated from work done collaboratively between this brain trust and a private firm of economic analysts from Manhattan’s Financial District.65 Lewis Baxter, the executive secretary of Economic Security Associates, devised a chart (see Figure 1) that displayed the American economy as a Mobius strip, with public and private economies as intertwined halves of a whole, linked by flows of taxation, interest, investment, and, above all, purchasing power.66 By adjusting a slide that denoted the size of the federal budget, the reader saw that increasing federal outlays on direct job creation reduced unemployment, increased production, and expanded purchasing power, thus repaying the cost of the program by increasing personal and corporate incomes and thus taxation, and increasing overall levels of economic production, as long as “universal useful employment based on assured jobs in public service” could be assured.67 Baxter’s model suggested a reconceptualization of the role of government in the American economy that went well beyond emergency measures during a catastrophic downturn: “Government activities constitute, in effect, an auxiliary industry,” he argued, “which might always utilize advantageously the entire labor surplus.”68 This auxiliary industry produced goods and services just as private-sector industries did, and it had its own rates of return on investment and labor. In this model, the old idea of government spending as a drain on private economic activity and hence a loss to the overall economy was turned on its head. Instead, unemployment would be abolished by government fiat. In one hypothetical recession, he

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Figure 1. Baxter’s vision of the American economy. From Lewis Baxter, “National Balance Sheet,” undated, Staff Subject Files Miscellaneous, Staff Subject Files, Records of the Committee on Economic Security, Group 69, National Archives II Building, College Park, MD.

speculated, “Decreased private activities have released 1,200,000 workers . . . but under this plan, expanding public activities would promptly take on 1,200,000 extra men.” Government-created jobs would maintain “the required equation between total workers and total available jobs. There would be no labor surplus to start the ‘vicious cycle’ of a depression.”69 Direct job creation would be the permanent solution to any cyclical economic crisis, periodically stepping in to counteract recessions and keep the economy growing at a stable rate. Baxter argued that direct job creation offered two further advantages over other antirecession strategies. First, it provided for the prospect of recovery through growth by putting potential labor to use. “The point to be emphasized here,” he wrote, “is that allowing an over-supply of human productive energy to go to waste in idleness, which might be utilized to create general benefits, deflates the entire price and investment structure.”70 By putting labor power to work, direct job creation would push the economy to its maximum

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level of production, reduce the downward push on wages caused by mass unemployment and decreasing demand, and restore an imbalance in the distribution of capital between consumers and investors by shifting tax revenue taken from the rich toward wages for the poor. In the memo “A National Program for Economic Security,” Baker concurred with Baxter’s emphasis on the effects of inequality on hypercapitalization, speculation, and underconsumption, theorizing that greater redistributive impact could be had by financing direct job creation through a tax on securities. “The more money that is hoarded or thrown into nonproductive uses, the greater become the number of such instruments of debts, and consequently the broader the base for such a tax,” he noted. “The imposition of such a tax . . . tends to force money into productive use,” complementing the government’s direct efforts.71 Second, direct job creation would decommodify work. By expanding government’s role into that of an employer and producer, direct job creation blurred the distinction between the private and public sectors. Public industry “differs from the others only with reference to the nature of its products and the methods of marketing them,” Baxter argued.72 This emphasis on the similarity of government and business implicitly argued for a gradualist strategy in which the basic economic structures would evolve without seeming to change. “Total income remains constant. The average personal income remains constant. The sole change is that the average producer is buying less individually and more cooperatively.”73 This perspective was not wholly embraced by everyone at FERA. Corrington Gill represented the more orthodox strain of economic theory. He approached direct job creation from much the same angle that John R. Commons would have: empirically, institutionally, and with a slightly conservative tinge to otherwise progressive aims. In his memo entitled “Basic Considerations Affecting a National Public Assistance Program,” Gill laid out his interpretation of the theory underlying direct job creation. In his view, persistent unemployment was driven by a mixture of frictional, structural, and cyclical factors. While frictional unemployment was “inevitable in a dynamic economy,” structural and cyclical factors were not. They reflected instead the force of technology and the shifting availability of natural resources, which could both be shaped by government intervention.74 “Since full employment is not in prospect in the predictable future,” Gill noted, “[people] other [than] marginal workers will be in need of public assistance.”75 The federal government would have to establish a

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permanent system of marginal direct job creation to ensure full employment, “play an increasing role in the field of public investment,” and avoid European-style dependence on nonwork-related welfare. Direct job creation, therefore, was an important element in the toolbox of New Deal liberalism, functioning in unison with a Keynesian “flexible public spending program [as] . . . a permanent aspect of public policy.” Along with wage and price controls it could avoid the kind of rigidity feared by Gardiner Means, a “price balance” policy between agriculture and industry along the lines envisioned by Rexford Tugwell, as well as “compulsory standards for wages and hours, guaranteed annual wage plans, and wide extension of unionization.”76 This intellectual work was a key part of coalition building; by explaining how direct job creation could complement other New Deal projects, Gill provided Williams and other FERA staffers with arguments they could use in conversation with the “spending faction,” key advisors to the NRA and AAA, and significant sections of the Labor Department. Gill worked hard to ensure that direct job creation projects would not undercut private manufacturing and displace workers from the labor market. He looked to the empirical data to argue that “inasmuch as these projects would not have been undertaken in the immediate future through the regular channels,” the decline in private spending meant that “displacement of the labor forces of private contractors is not involved.”77 From a more traditional economic theory perspective, Gill noted that conservative complaints were based on the “lump of work doctrine” rejected even by neoclassical economics. Finally, Gill pointed to direct job creation as an engine of economic growth. It was a “failure to utilize the productive services of idle men,” he argued. “[It] . . . has cost us at least 200 billion dollars in income which we might have produced but didn’t.”78 As much as his economic arguments sought to place direct job creation on a sound theoretical platform, Gill was actually one of the more conservative FERA thinkers. He maintained that the old “security wage” derived from poor relief should be maintained in any new program in order to reduce dependency and forestall the movement of private-sector employees to government employment. Wage differentials should not become incentives to seek public employment. Gill maintained that FERA’s program should concentrate on relief clients, thereby maintaining the means test and limitation of jobs to heads of households.79 What is more, in contrast to most of his compatriots, he did not believe in the absolute right to a job as he thought such a guarantee was beyond the fiscal means of the federal government.

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Nonetheless, even the most conservative of the FERA’s policy experts placed direct job creation at the heart of New Deal economic policy, a keystone of social Keynesianism. Gill argued that since “normal times have ceased to mean full employment . . . others besides marginal workers will be in need” of publicly provided work.80 If the economy continued to lag below full employment, he was prepared to abolish the means test that he had argued for elsewhere: “Mr. Hopkins has said that ‘we should reach a concept in America where the able-bodied unemployed are entitled to a job as a matter of right.’ . . . Abolition of the needs basis of hiring [and means testing], therefore, may be regarded as a desideratum which it has been impossible to achieve thus far because of . . . necessity.”81 The major dividing line over the means tests and the right to a job was, at least as Gill saw it, less an ideological issue than a practical matter. However, for people like Baker, the issue was very much an ideological dividing line. For Baker, fundamental social rights were at stake. The United States needed to promise a new social contract between worker-citizens and the state—one founded on a reciprocal exchange of work for wages. In a memo titled “A Program for Social and Economic Policy,” he wrote, “We, therefore, propose that the government assume the obligation of providing the opportunity for gainful work to all its citizens able and willing to work,” even as he proposed the elimination of federal direct relief.82 A common criticism of New Deal job programs now and in the past is that they failed to employ everyone who needed a job. This was not by design. Gill, Baker, and others envisioned a much more comprehensive program, embracing anywhere from 3.5 million workers (roughly 35 percent of the total unemployed) to eight million workers (roughly 80 percent of the same population).83 Their eyes were far bigger than the budgets that were available to them, but this was not for lack of imagination. Moreover, with the exception of Gill, who thought of direct job reaction as an emergency stopgap, the rest of the FERA brain trust was moving in a more fundamental direction: permanent direct job creation and eventually the fulfillment of a sacred principle that every American has the right to a job. Origins of an Ideology In the minds of FERA staffers, direct job creation was simultaneously an economic policy and an ideology. As administrators of programs that had to register millions of people on relief, collect data on the programs they

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were enrolled in, and find a way to provide sustenance for everyone, FERA officials focused primarily on the needs of poor people. They used experiential data, as sociologists might have used statistical or ethnographic data, to elaborate on an ideological conviction that they knew what the poor wanted. In memo after memo, supporters of direct job creation argued that “work is the form of assistance desired by the unemployed themselves. . . . [T]he unemployed themselves want assistance in the form of work. . . . [W]hat the workers really want is continued employment.”84 FERA officials pointed to their experience in the CWA, when seven million unemployed workers who had refused to take relief lined up to apply for government work in the winter of 1933, as proof of the overwhelming preference of unemployed people for work over relief.85 Ordinary people supported a conservative self-help doctrine that “employment is the best cure for employment” and “work is the best antidote for poverty,” converting these cultural precepts into a populist demand for affirmation of the popular will.86 Direct job creation advocates pointed to the psychological and social benefits to the unemployed individual to bolster their policy recommendations. Just as they believed that relief had destroyed morale and allowed skills of the trade and habits of self-reliance to wither away, FERA officials believed that direct job creation would restore morale and self-respect and also maintain skills. “Projects must be planned to use the skills of the workers in need . . . but also the rehabilitation and retraining of persons whose ordinary means of livelihood has permanently disappeared,” FERA officials argued.87 Psychological well-being was also necessary for real economic security: “the worker . . . should feel that, both in terms of security and maintenance of skill, he gets something besides the wages paid. . . . [E]ach worker should be sure of his job.”88 This emotional sense of economic security would help combat the universal fear of destitution and helplessness that characterized the early 1930s.89 At the same time, FERA staffers had not yet reached a consensus. Still in the process of formulating their own position, they were evolving from a poor-relief mentality to a destination not yet fully elaborated. Indeed, one of their first priorities at the outset of the CES was still welfare reform.90 “It is proposed to abolish direct relief for the unemployed,” argued one memo. “Give no relief for the able-bodied,” urged another.91 In its place, FERA administrators urged a direct job creation program as a better alternative. At the same time, Eveline Burns, an economist hired by FERA to conduct

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research on direct job creation, argued that, given public hesitancy regarding federal intrusion into the economy, the administrative difficulties of bringing enough projects online, and the need to preserve the dominance of the private sector in a capitalist society, “work must be regarded as a desirable form of relief which cannot, however, be extended to all the unemployed.”92 The same sentiment was shared by Ross and Givens in other reports.93 In contrast, other staffers (including Baker and Alan Johnstone) argued that “work relief” had to be as large as possible in order to have the necessary impact on purchasing power across the entire economy. Even FERA officials who believed that direct job creation could not cover all the unemployed emphasized that it had to be deployed as a countercyclical measure on a large scale. “As a permanent policy, the federal government, without guaranteeing employment, should continuously interest itself in maintaining a high level of employment,” argued direct job creation advocates on the CES’s Executive Staff.94 Over on the Technical Board, Williams and others further emphasized that “the first effort of government should be to . . . encourage maximum . . . employment.”95 Thus within the CES, FERA staffers were doing more than fighting over social insurance—they were developing an entirely new policy program, an economic theory to explain it, and an ideology to justify it. The process was not complete. FERA officials differed between themselves and were not always internally consistent on major issues such as whether jobs should be limited to heads of households, whether workers should be paid a prevailing wage, whether the means test should be abolished, and whether a right to a job should be created.96 In mid-1934, they were still negotiating with each other over how distinctive this new program would be from what came before. FERA officials would use the very mutability of these ideas when debating proponents of other programs. To promoters of social insurance, direct job creation advocates would argue that the UI program would not provide enough of a demand boost to restore the economy, a point familiar to their interlocutors who often relied on the same argument. In dealing with advocates for social assistance and mothers’ pensions, they would use the language of social work to argue that direct job creation offered more income and greater security than social assistance ever could, and that it provided the kind of psychological support that poor relief could not. Locked in battle with economic planners, the FERA administration claimed

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that their policies could help government planners manage long-term patterns of employment and demand. This rhetorical fluidity would be crucial in the next phase of the CES’s deliberations.97

Initial Conflicts The first skirmish with the CES revolved around the scope of its policy remit and the breadth of empirical knowledge it needed to gather. Social surveys would serve as the basis for the separate reports issued by the Executive Staff, the Technical Board, and their specialized subcommittees. In a series of memos titled “Basic Questions of Policy” and “Possible General Approaches,” Edwin Witte, the executive director, attempted to steer the direction of knowledge gathering toward social insurance. Witte set forth what he considered to be the key questions about the economic security program that would have to be researched first. Unsurprisingly, these questions focused exclusively on social insurance: should it be funded by payroll taxes or from general funds, should the system be federal or combine federal and state administration, and so forth.98 He hoped to dominate the discussion of options such that the deliberations would become a debate between his own Wisconsin plan and the Ohio plan. He went a step further by downplaying the role that alternative options could play in a system of economic security. Witte engaged in a preemptive defense by listing what he perceived to be direct job creation’s flaws. “Even if it [direct job creation] were attained,” he argued, “it would not eliminate the necessity for other methods of protection against the hazards of accident, sickness, old age, and death.”99 FERA staff would no doubt have agreed with this, except Witte did not extend the same standard to his own proposals for UI (which fewer than half of the workforce would be eligible for). Likewise, there was more than a little hypocrisy in Witte’s argument that workers’ compensation and health insurance were necessary, given that these were both rival projects that Witte viewed as inferior options to UI. Above all, he argued that even if direct job creation were part of the solution, it could never be the main chance. Why? Because, the executive director argued, it “would very likely prove quite costly,” and employers would oppose prevailing wages and the production of usable goods.100 The traces of Witte’s push to have social insurance dominate the thrust of research efforts are visible in the legwork of the CES. Of 116 reports written

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prior to the passage of the Social Security Act, 65, or slightly more than half, dealt with some form of social insurance, with 36 reports devoted to UI specifically.101 Against this current, direct job creation advocates pushed for a different research agenda. In a memo titled “Outline of Work,” Emerson Ross laid out a strategy that emphasized gathering statistics favorable to including direct job creation, including “estimates of unemployment and/or employment as far back as possible, present unemployment by industries . . . emergency government employment, PWA [Public Works Administration], CCC [Civilian Conservation Core], CWA, [FERA] Work Program.”102 By focusing attention on unemployment as the major crisis of the Great Depression, FERA officials believed that their research would point the committee toward the conclusion that more direct job creation was essential. Ross labored over preexisting data sets collected by FERA’s Research Division on relief applications and relief clients, as well as surveys of poverty and unemployment conducted by the CWA’s research projects to set up a comparison between relief and work as rival options.103 To underline the contrast between direct job creation and public works, Ross pushed for statistics on the “relative importance of government construction programs . . . in relation to total volume of construction,” contrasting the slow pace of PWA construction against the CWA’s sterling track record of a large “number of employed” compared to “wages earned [and] . . . costs of materials.”104 Finally, Ross argued that studies of “the present operations of each of the following agencies” would be necessary “to arrive at a judgment as to their relationships with the new program” of direct job creation. Ross believed that these studies would lend weight to his proposal to establish a permanent Public Welfare Department that would unify all aspects of direct job creation, including under one roof offshoot programs such as the CCC or placement bureaus such as the United States Employment Service.105 Naturally, these two research agendas collided. Ross wrote to Witte, arguing, “I think it would be useful to study the methods by which other countries have met the unemployment problem as a whole rather than simply by variations in unemployment insurance.”106 Ross thus positioned FERA on the side of all those policy advocates whom Witte was attempting to exclude from research funding and policy discussions, thus building valuable goodwill for FERA among the members of the Technical Board and

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advisory committees from organizations outside of the Labor Department —the raw material for future alliances.107 Ross increased the pressure by also insisting on more FERA research projects, arguing that “work programs should be incorporated in addition to social insurance measures” in CES research.108 “Equal time” demands won space for some fifteen reports on direct job creation.109 This was far and away the largest amount of research done by any noninsurance group. By contrast, Children’s Bureau advocates and health insurance advocates only managed to include three reports on their respective policies in the CES’s research program.110 Insofar as reports can be used as proxies for the overall flow of argument within the CES (as official minutes tended to report only final decisions, with little mention of deliberations), direct job creation advocates succeeded in maintaining a significant place in the conversation despite opposition. Witte’s hostility may well have been exacerbated by efforts of direct job creation advocates to borrow ideas and rhetoric from other groups on the committee. In a proposal titled “A Public Work Program as a Means of Economic Security,” submitted as part of the first round of reports, Ross presented a system of direct job creation that focused on UI’s shortcomings. “Any work program that may be devised must of necessity be more comprehensive than a program of unemployment insurance,” he recommended, at least in part because “the work program would provide for those not covered by the unemployment insurance plan” in light of its stringent eligibility standards.111 Ross joined this emphasis on universality (which appealed to advocates for more universal social insurance programs like the Ohio plan) with arguments that would appeal to the more conservative members of the committee: work projects like roads, schools, and bridges would ensure that the New Deal’s program for the unemployed would return some value to the taxpayer.112 Ross appealed to the members of the “spending caucus” by relying on purchasing power theory. Demand stimulation was important to their analysis of the Depression and he found a way to incorporate it into the direct job creation agenda. His comments about eligibility pressed on the biggest weakness of the UI approach: its failure to provide economic security to blacks, women, the long-term unemployed, and all other workers not covered due to industry or firm size. Job creation was open and hence it appealed to critics of the Wisconsin plan, to social workers, and to labor

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unionists.113 Most trenchant, Ross pointed to the resonance of jobs in shaping public opinion: UI offered a dole in a political culture dismissive of “handouts,” whereas direct job creation offered work, which would be viewed more favorably by citizens. Social science surveys and FERA interviews provided ample support for the notion that the poor themselves were mainstream believers in the value of work over relief. As part of this rhetorical shift, Ross also sought to distance direct job creation from poor relief by gradually changing terminology, from “relief” to “work relief” to “public employment program” to “work program.” Each step emphasized 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

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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

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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

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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 program as a major component of the economic security program. In these back-and-forth exchanges, FERA administrators and Labor Department advocates for social insurance had marshaled votes, appointments, experts, and ideas, to try to sway the CES in their preferred direction. And while the process did not end in a conclusive victory for either side, the fact that the CES had been pushed from its initial stance of studying social insurance programs alone, through a period of either-or conflicts between social insurance and direct job creation, to an ultimate compromise where the two networks fused points to a tactical draw and a strategic victory for job creation advocates. They had pushed their way into the process and retained a substantial foothold.

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Reporting to the President The CES made its final report to President Roosevelt in January 1935. It was the longest and most developed argument for a system of economic security produced by the committee. Both an internal memorandum and popular propaganda, it simultaneously proposed a program of action and sought to establish a consensus on Capitol Hill that these options were within the bounds of legitimate state activity. The recommendations went well beyond the limited scope of social insurance. In its public statements and publications, the CES embraced a hybrid mentality that saw overlapping spheres of protection as a pragmatic solution to insecurity that neither challenged outright the structure of American capitalism nor ruled out further challenges. Philosophically, the report blended approaches from multiple factions into a coherent New Deal perspective. Insecurity was seen to stem from multiple causes: the mass unemployment of ten million workers, the effects of bank failures and illness on workers’ savings, and basic volatility built into the very bones of an economy that evinced high average unemployment, frequent industrial accidents and disease, and a lack of support mechanisms for the elderly and the young.128 This comprehensive perspective left space for multiple programs to deal with the crisis, allowing rivals within the CES to accept the presence of their critics. It also had the advantage of pointing toward a common insecurity—a lack of a steady income— and a common cure: “The one almost all-embracing measure of security is an assured income. A program of economic security, as we [en]vision it, must have as its primary aim the assurance of an adequate income to each human being.”129 It was the very looseness of “income assurance” that made this system seem so “all-embracing.” Direct job creation partisans and social insurance advocates could agree on the importance of incomes without having to compromise on what form the income should come in. Moreover, the two different sides could agree on the importance of achieving security and recovery by swelling purchasing power even as they disagreed about how it was best stimulated. Compromise bred political advantage. The appearance of “a piecemeal approach” helped to blunt charges that the CES was an institution of radical partisans, rather than an objective agency. Committee members emphasized their pragmatic eclecticism as proof of their program’s place in the liberal mainstream: “the program for economic security

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we suggest follows no single pattern. It is broader than social insurance and does not attempt merely to copy European methods,” they argued. Even so, the political significance of direct job creation was not lost on anyone who read the report to the president. The committee made it clear that direct job creation singled out the CES program as distinctively American: “in placing primary emphasis on employment, rather than unemployment compensation, we differ fundamentally from those who see social insurance as . . . all-sufficient.”130 It was symbolically aligned with the tenets of American culture. President Roosevelt was not proposing a new dole in the form of UI; he was emphasizing self-reliance in the form of work. “Since most people must live by work,” the CES report noted, “the first objective of a program must be maximum employment,” which would be provided by a combination of social insurance and “stimulation of private employment” and “provision of public employment.”131 Ultimately, the CES portrayed “employment assurance” and “unemployment insurance” as complementary protections for the entire workforce, always with a pronounced emphasis on maintaining the quintessentially American work ethic. “Those workers who remained unemployed after benefit rights are exhausted . . . should be given . . . a work benefit” (emphasis mine). Likewise, “Workers who cannot be brought under employment compensation . . . will become eligible for public employment.”132 Direct job creation would forestall the possibility that a limited UI system would leave millions destitute or lead to an unlimited dole, as part of a “program for economic security . . . more comprehensive than unemployment compensation,” which would be “but a complementary part of an adequate program for protection against the hazards of unemployment.”133 Countercyclical planning was used repeatedly as the intellectual cement binding the two halves of the federal program together, with direct job creation playing a leading role. The authors of the final CES report argued, “Provision of public employment in combination with unemployment compensation will . . . promote private employment . . . [and] maintain purchasing power,” by pushing billions of federal dollars into the hands of working-class consumers, all according to an overarching process of “advance planning.”134 Economic planning would be driven by the “sound principle that public employment should be expanded when private slackens,” to counteract mass unemployment, to add “the social and economic values of completed projects” as “a considerable offset to . . . economic

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losses” incurred in the Hoover years, and to provide “an important stabilizing effect on private industry by increasing purchasing power.”135 UI reserves could be released in planned countercycles to achieve desired effects: “had $2,000,000,000 been available for distribution to the workers when depression set in in 1929 . . . it would have a most pronounced stabilizing effect at a crucial time.”136 Thus, just as the two programs worked to provide overlapping protections to the individual, they would also work to produce positive outcomes for the national economy. In both cases, the rhetoric of planning was used to give the two policies an aura of scientific exactness, of modern, forward thinking, designed by experts. Overall, it was a textbook approach for linking Roosevelt’s economic security program with the larger Progressive project of rationalization.137 In the final report then, FERA’s work program would serve as the linchpin of Social Security—bringing all workers under the umbrella of federal protection while maintaining American ideals of self-reliance. Politically, programmatically, and intellectually, direct job creation was at the very heart of a vision of the New Deal order that went far beyond the “idea of the state” that Brinkley describes. On January 4, 1935, President Roosevelt sent to Congress a plan for economic security that transcended a single act—indeed, in his message and public pronouncements, FDR described his two “big bills” (the Social Security Act of 1935 and the Emergency Relief Appropriation Act of 1935) as part of a single package. Introduced almost simultaneously on January 17 and 21, the two bills presented a complementary picture: direct job creation would receive $4.88 billion to put the unemployed to work; by taking many of the unemployed off relief rolls and onto payrolls, Social Security would face a lesser burden on its new funds and receive more contributions from payroll taxes, jump-starting the growth of federal reserve funds.138 Both bills passed Congress with overwhelming majority votes—although the appropriation act would pass three months earlier than Social Security—and would go into effect in the summer of 1935. The reason why the CES’s work resulted in two big bills instead of one is hard to divine, as there is little archival mention of the decision-making process. Moreover, given that the report prominently featured “employment assurance” among its recommendations, making it an important part of its public relations efforts, one might expect some measure to be part of the eventual Social Security Act. The report mentioned other programs—

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the coverage of agricultural and domestic workers under social insurance, the creation of a system of old-age annuities, and so on—that never made it into the Social Security Act, so we could just see job creation as one more idea that did not make the cut. However, when it comes to those issues, we have documentation about why they did not make it in: agricultural and domestic workers were left out of the eventual bill by Southern Democrats in Congress with the cooperation of Secretary of the Treasury Henry Morgenthau; old-age annuities frightened the life insurance companies, who successfully lobbied against their inclusion. Direct job creation was a policy that actually did get enacted at roughly the same time—so the question of why the legislative shift happened remains. The answer may well be that, just as when Hopkins went directly to FDR in October 1933 to get funding for the CWA when he felt that the PWA was taking too long to get “shovel ready,” Hopkins might have gone to FDR to argue for a separate Emergency Relief Act as a plan B in case the CES got bogged down (this time with Harold Ickes as an ally), and that the plan B was put into effect despite the committee wrapping up its work in a timely fashion.139 However, it is equally likely that the reason for the bills being split was an artifact of the congressional process: the powerful Senator Robert Wagner had introduced his Social Security bill as a social insurance and welfare measure so that it would run through his Committee on Banking and Finance, and he may not have wanted to complicate passage of the law by having it run through the Senate Appropriations Committee (as the Emergency Relief Appropriation Act of 1935 was). The latter committee was chaired by the more conservative Senator Carter Glass (D-VA). Politically Wagner may also have considered it easier to get Congress to focus on social insurance and welfare specifically rather than to try to get buy-in on the committee’s vision of comprehensive social protection.

Conclusion As fraught as its deliberations had been, and as complicated as the ultimate compromise between social insurance and direct job creation was, the CES proved to be the launching pad for job creation’s rapid growth in the New Deal. Within a month of signing the Social Security Act, 220,000 people were drawing paychecks from the WPA. By the time that the first fifty thousand lump-sum Old Age Insurance benefits were paid out in 1937,

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the WPA had already covered more than two million workers and their families.140 Direct job creation started out in 1933 as an experimental program, having to borrow personnel and budget from elsewhere. It was on the chopping block by early 1934 when the CWA was abruptly shut down, in no small part due to fears that the system was too radical a departure from traditional welfare practice. Now the policy had the explicit, lengthy endorsement of a presidential committee that represented virtually the whole of the Roosevelt administration. Its legislative authority and budget were enacted as one of the big bills backed by the president’s personal prestige, and job creation formed a major part of his campaign for 1936.141 Just as important for the future development of direct job creation, Jacob Baker, Emerson Ross, Corrington Gill, Aubrey Williams, Meredith Givens, Josephine Brown, Alan Johnstone, and the other Hopkins advisors had worked out a set of theories to justify a new policy model. They built goodwill and alliances for their efforts with many New Dealers whom advocates of a job program would need to appeal to when the WPA came into existence. At that point, everyone would be faced with a major conflict over which employment policy would be the dominant force within the New Deal.

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People or Projects The Works Progress Administration Versus the Public Works Administration Reconsidered as Economic Theory and Ideology

The Cabinet Room of the White House is dominated by a single long table, an oval of darkly gleaming wood. Containing stark white walls, heavy leather chairs, and rich carpeting, the room resembles nothing so much as a turn-of-the-century corporate boardroom, a place of probity and prudence (or of corruption and ruthlessness). But in 1935, the Cabinet Room was a different kind of place altogether—it was the meeting place of the National Emergency Council (NEC) and, more specifically, the NEC’s Advisory Committee on Allotments (ACA). President Franklin D. Roosevelt would sit at the head of the table in a specially designed chair, holding court among his advisors, gesturing with his cigarette holder, and forcing on them what were reportedly the world’s worst martinis. Around the table, those present included virtually every major figure of the New Deal: Secretary of the Interior Harold Ickes, a dour Chicagoan, always taking notes for his secret diary; Secretary of Agriculture Henry Wallace, a lanky Iowan from a long line of prairie populists; Secretary of Labor Frances Perkins, practical and determined to keep the discussion moving smoothly; the Works Progress Administration (WPA) administrator Harry Hopkins, a gaunt, fast-talking chainsmoker described by his peers as a cross between a priest and a bookie. Together, these New Dealers constituted an informal “spending” caucus within the Roosevelt administration. The spending caucus sat across the table from the director of the Bureau of the Budget, Lewis Douglas, the odd man out as one of the last goldstandard, balanced-budget Democrats left in the Roosevelt administration,

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and Secretary of the Treasury Henry Morgenthau, his genteel, aristocratic supporter on the side of financial responsibility, who together sought to hold the New Deal to fiscal limits. In addition to the movers and shakers of the New Deal, Roosevelt’s ACA also included a whole host of minor players: Frank Walker, the genial, peacemaking NEC executive director; the secretary of commerce; the attorney general; the chief of the Army Corps of Engineers; the heads of the Resettlement Administration, the Rural Electrification Administration, and the Forest Service; the vice chairman of the National Resources Planning Board (NRPB); as well as representatives of business, farmers, labor unions, and big-city mayors—of the latter, the most notable was the larger-thanlife New York City mayor, Fiorello LaGuardia.1 As far as such a thing existed, the NEC was the wheelhouse of the New Deal, and Roosevelt himself sat at the helm, attending almost every meeting, deftly controlling the course of national policy by leaning from one side to the other. Starting in the spring of 1935, the NEC would enter a new phase of activity. Before, the NEC had been an arena where New Deal policy had been hashed out, from the implications of National Recovery Administration (NRA) codes for consumers and the centralization of national economic power, to the impact of the Agricultural Adjustment Administration (AAA) crop-reduction policy on demand for farm labor, to the need for political unity within the New Deal.2 Now the NEC would have to decide how to parcel out the $4.88 billion of the Emergency Relief Appropriation (ERA) Act of 1935. It was a monumental task, because the ERA was two and a half times the size of the entire federal budget at that time, the single largest appropriation of public funds in American history to date, and the beginning of a long-term departure from historic trends of the size of American government. This sudden influx of funds into the coffers of the NEC provided a major opportunity for many different programs to expand. It sparked a serious bureaucratic conflict over which agencies would control the funds and which agencies would receive the funds. More important, it also generated conflict over how the New Deal would or should attempt to fight the Great Depression. Two major contenders emerged within the NEC. The WPA promoted the direct hiring of the unemployed by the federal government, which would add the purchasing power of new workers to the economy. On the other side, the Public Works Administration (PWA) urged instead a

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massive public works program directed through federal contractors to private construction firms, which would use the power of the multiplier effect to restore the critical construction industry, which in turn would increase demand for industrial products, such as steel, lumber, concrete, oil, coal, tools and machinery, and automobiles, and thereby indirectly stimulate demand throughout the entire economy.3 The ACA was the battleground where these two alternatives sought to dominate the policy landscape. Here, bureaucrats wielded regulations, definitions, and statutory authority like lances, always looking for advantage. But more important, ideas were pressed into service on behalf of each party. WPA experts marshaled the techniques of social investigation learned in progressive social work circles, adapted the latest economic theories, and completed the intellectual and ideological framework that supported direct job creation. Civil engineers on the PWA side drew on a long tradition of countercyclical theory, economic development theory, and economic planning theory to construct a long-term vision of an America transformed by public works, building a modern economy with networks of hydroelectric dams and interstate highways. The struggle between these two agencies over this massive appropriation illuminates the ways in which two schools of economic thought and political ideology competed for power and influence within the New Deal. Critical to the success or failure of either side was their explanation of how the Great Depression had happened in the first place, what was causing the continuing crisis, and what the most effective federal action would be to bring it to an end. The outcome—the victory of both the WPA and direct job creation—was a genuine turning point in the New Deal. It opened the way for more substantial fiscal intervention and a larger public presence in the private economy, a more profound connection between the New Deal and the “one-third of a nation” struggling with economic deprivation, and greater development of American job policy.

The Other ERA In the winter of 1935, the New Deal emerged from a period of uncertainty and drift caused by ongoing conflicts over the NRA’s industrial codes, the crop-reduction policies of the AAA, and the nature and extent of economic intervention needed to produce recovery. The 1934 midterm elections

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provided an opening for a new burst of activity: fourteen more seats in the House and ten more seats in the Senate gave the Democrats a filibusterproof two-thirds majority, with a much stronger progressive wing than had been the case during the Hundred Days. At the same time, the need for a new round of intervention was stark: ten million workers were on the unemployment lines, eighteen million Americans were on relief, and industrial production was stubbornly sluggish.4 Beginning with the dramatic paired introduction of the Social Security Act and the Emergency Relief Appropriation Act, accompanied by hard-hitting presidential messages that spoke of an intensified commitment to the poor and downtrodden, the Roosevelt administration began pushing forward with a new agenda. Historians refer to this period as the Second Hundred Days and the start of a Second New Deal.5 The Emergency Relief Appropriation Act was central to the moment. Introduced within a package with the Social Security Act, the ERA if anything drew more press attention with its recordsetting request for funds, hailed by President Roosevelt in his presidential message as “a permanent program . . . based on the principle . . . that the right to work is the birthright of every citizen” that would protect “the unemployed, the rural groups, and others not benefited by the social security act.”6 Debate over the bill was fierce, albeit one-sided—but, in the end, the size of the Democratic majority enabled an easy triumph: 317 to 70 in the House and 66 to 11 in the Senate.7 Indeed, as Edwin Amenta and Drew Halfmann have argued, the passage of this bill was part of a formative process of wielding the Democratic majority into a working coalition, as rural Southerners and Westerners traded their votes on the relief bill in return for favorable votes on agriculture bills from urban Democrats from the Northeast and Midwest.8 The ERA gave President Roosevelt an unusual amount of flexibility in deciding how to spend the $4.88 billion. The act appropriated the funds “in order to provide for relief, work relief, and to increase employment by providing for useful projects . . . to be used in the discretion and under the direction of the President” and authorized spending for highways, streets, rural rehabilitation and relief, conservation and irrigation, rural electrification, housing, the Civilian Conservation Corps (CCC), and a host of other purposes.9 The act granted Roosevelt wide latitude in prescribing rules for “the employment of labor . . . to persons receiving relief,” in regards to

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wages and hours, as well as in creating any new agency to oversee such work, authority that would later be used to establish the work program’s key features, from the NEC’s ACA to the WPA itself. Characteristically, Roosevelt established an institutional framework that divided authority among his subordinates, while giving himself maximum flexibility. The new Division of Applications of the NEC, headed up by Frank Walker, would receive the project applications, pouring in from all forty-eight states and thousands of municipalities, counties, and relief administrations, and pass them on according to their merits. The new WPA, led by Harry Hopkins, would analyze the applications for their capacity to increase employment and then provide a list of relief clients in the locality of each project. The PWA under Harold Ickes was supposed to be the main planning and building institution, undertaking the heavy lifting of the work program by carrying out the public works, using the manpower assigned to it by the WPA. Theoretically, this system should have worked smoothly. Local applications for projects would flow into the Division of Applications, which would sift out the good proposals from the bad. The WPA would certify that enough labor was available in the area to undertake the project, and the PWA would start building. However, two factors would destabilize this institutional setup and give direct job creation advocates a chance to dominate the agenda. First, there was a fundamental difference in philosophy between the hiring and building sides of the system. Ickes and his administrators in the PWA did not believe that relief workers (often unskilled or semiskilled workers who had been unemployed for several years) were qualified to efficiently carry out the complicated and demanding work of the kinds of “heavy” construction that would make for valuable, long-lasting, and, above all, “self-liquidating” public works that could repay the cost of construction through user fees (toll bridges and tunnels, for example). Ickes and his civil engineers preferred to work with experienced building contractors, including the future corporate leviathans of Bechtel and Halliburton, which had the skilled workforce, technical expertise, and machinery needed to construct complex structures such as Boulder Dam. For their part, Hopkins and his advisors in the WPA viewed traditional public works as too slow and cautious, ultimately unsuited to the task of reducing unemployment. After all, when major projects were steered to construction firms, the accompanying dollars went to men already employed, and construction firms were reluctant to do more than add on

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workers at the margins, let alone hire the millions of Americans in desperate need of work. Second, FDR made a number of structural decisions that created tension within the work program. The WPA, as the certifying authority for public works projects, was in a position to choke off the PWA by refusing to certify their projects on the grounds that they were not employing enough unemployed workers. Moreover, at Hopkins’s behest, Roosevelt had, through an executive order, granted the WPA the authority to “recommend and carry on small useful projects designed to assure a maximum of employment in all localities.”10 This provision of the executive order may have been intended to provide President Roosevelt the leeway to speed the work program up. After all, Secretary Ickes had been slow to launch the PWA in 1933–1934 while Hopkins had created the Civil Works Administration (CWA) in record time. In any case, the loophole gave Hopkins an opening to proceed with direct job creation, independent of the PWA’s authority. Finally, the NEC itself retained the ultimate authority to allocate funds to projects, leaving the WPA, PWA, and the Division of Applications without any clear hierarchy of authority among them. Accordingly, each party could advocate for itself on equal terms before the NEC. It is hard to tell from the historical record to what degree FDR was aware of the impact that these decisions would have. Certainly, the split into three agencies was consistent with Roosevelt’s tendency to make lieutenants compete with each other and rely on his decision making as a means of keeping a handle on the sprawling dimensions of the New Deal.11 Especially in regards to the “small useful projects” rule, it may have been the case that FDR knew what Hopkins would do with it, and that he accepted direct job creation as a “plan B” if Ickes took too long to roll out his public works. From the president’s draft press release on the work program, for example, we can see that “the Works Progress Administration . . . [is] responsible for the honest, efficient, speedy, and coordinated execution of the Work Relief Program as a whole . . . in providing employment [for] the maximum number of persons in the shortest time possible.”12 The ultimate structure of the work program, however untidy it might have been, provided a mechanism for the resolution of political conflict over ERA funds. Applicants before the ACA would face an adversarial setting in which to make a case for their share of the finite lump of ERA funding. The ACA itself would provide a majoritarian solution by voting

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requests for allotments up or down, and the work program’s separate parts would proceed independently. This institutional structure would also be a major spur to the creation of rival camps, as it encouraged both sides to repeatedly justify their own proposals, attempt to win over the people who would be casting votes on the future of their program, and thus gain control over New Deal employment policy. While the NEC’s structure did not please administrators of either the WPA or PWA, who had hoped for exclusive control of the federal program, it was nonetheless the result of years of advocacy on both their parts. Virtually from the moment that he had arrived in Washington as the new secretary of the interior, Harold Ickes had pushed for a “major program of public works,” calling for a $5 billion appropriation.13 Rebuffed by a stillhesitant FDR in the early days of the New Deal, Ickes had persevered, bringing together allies such as Frances Perkins, Rexford Tugwell, Donald Richberg, Raymond Moley, Senator Robert Wagner of New York, and even his erstwhile rival Harry Hopkins into a loose pro-spending caucus within the New Deal.14 These policymakers had collaborated on passing the $3 billion in public works attached to the National Industrial Recovery Act of 1933 that had funded the PWA and the CWA; they also allied against antispending advocates such as Lewis Douglas. In the Emergency Relief Appropriation Act of 1935, this coalition had achieved a real victory in expanding the fiscal footprint of the New Deal. The stakes for both public works and direct job creation were higher than ever before. Previously a sideshow to political struggles over the NRA and Social Security, the Emergency Relief Appropriation Act of 1935 pushed the issue of work relief and public works into the spotlight of national politics, with presidential messages placing FDR’s prestige behind the effort, and a massive source of funds independent of NRA or the Social Security Board. To win in the ACA would mean more than success for the WPA or the PWA as government departments; it would signal that the ideas behind these programs would become integral to the New Deal, and it would become the means by which the mass unemployment of the Great Depression would be defeated.

Two Visions of Relief and Recovery When the members of the WPA and the PWA sat down around the long, dark table of the Cabinet Room to fight for their proposals in the spring of

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1935, they brought with them more than bureaucratic imperatives and printed charts—they also carried their own intellectual heritage that explained, justified, and legitimated their policies. To understand the arguments made by both camps and the impact they had on the outcomes, one must first explore the intellectual background of these competing ideologies.

In One Corner: The Works Progress Administration The WPA’s Economic Theory As described in Chapter 1, the chief administrators of the WPA had begun to develop an economic theory during their time at the Federal Emergency Relief Administration (FERA) and the CWA. It stood on three legs. First, Jacob Baker’s purchasing power theory diagnosed the Great Depression as a crisis of mass unemployment caused by a collapse in consumer demand. He therefore recommended direct hiring of the unemployed as the most efficient means of both boosting consumer spending and reducing unemployment. Second, Corrington Gill’s institutional analysis of the labor market showed that the confluence of structural and cyclical unemployment would trap the country in permanent double-digit unemployment unless the government intervened, and he argued that direct job creation could accomplish recovery without destabilizing the private sector. Third, Lewis Baxter formalized their arguments into a model of the U.S. economy that had the public and private sectors as complementary halves that could produce full employment to absorb the whole of the labor-market surplus, and he argued that the business cycle could be corrected by public action. These precepts would shape the WPA’s thinking and action in 1935. First, it convinced Hopkins and his aides that the scale of response was critical to the success or failure of direct job creation. Second, it made the WPA’s experts skeptical about whether traditional public works were capable of generating sufficient employment to close the employment gap in full. For the WPA then, the competition over the ERA funding was about more than money. The WPA’s Ideology Job creation advocates had already begun developing an ideology in 1933– 1934, inspired by the new “democratic philosophy of relief.”

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It departed sharply from the old poorhouse ideology of the eighteenth and nineteenth centuries that had dominated American social welfare policy.15 Traditionally, the unemployed were seen as morally corrupt (thus requiring social control and reform) and responsible for their own sad plight. More important than this moral-flaw diagnosis, though, policymakers believed that work was inherently painful and undesirable. Fear and coercion had to be applied to drive the working class through the factory gates. FERA administrators rejected this view altogether. Their direct experience with the unemployed made it clear that the poor were perfectly ordinary workers who were cut off from employment by forces beyond their control, and that they wanted nothing more than to find work. Much like the radical social workers in the 1960s and 1970s who fought for welfare rights decades after the Depression, direct job creation advocates in the 1930s wanted to eliminate the invidious distinction between the “worthy” and “unworthy” poor. For them, work was the ideal vehicle for accomplishing this aim. In contrast to traditional paternalism, they came to view work as an expression of the creative spark and a critical component of self-worth in industrial society as opposed to a penalty imposed by capitalism. The provision of employment to the destitute unemployed was refigured from the terror of the Victorian workhouse to a liberating force that would restore morale, skills, and ultimately economic citizenship.16 Countless interviews with relief clients undertaken by FERA social workers and millions of CWA job application interviews both bolstered the findings of opinion surveys and made it clear that the unemployed overwhelmingly preferred work over relief. Moreover, work clearly had a psychological impact above and beyond the provision of income: unemployed workers hired onto job creation schemes developed a militant selfimage that associated work with heroic masculinity. CWA workers described themselves in their newspapers as an “army of the unemployed” who would “slay the dragon of the Great Depression through work,” and they lionized a New York City administrator who died at his desk as a modern Leonidas at Thermopylae who had been “KILLED IN ACTION.”17 These influences led the experts who had worked for FERA, CWA, and now the WPA to expand direct job creation’s ideological objectives to encompass the “right to the job.” During his time on the Committee on Economic Security (CES) in 1934, Jacob Baker had argued that economic security had to begin with “job assurance for all. . . . [T]his will provide security for those who are now working as well as those at present

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employed” in that job assurance would give current workers the knowledge that, should they lose their jobs in the future, the government would provide new ones for them.18 This certainty offered an entirely new relationship between the citizen and the state. “If a government job is certain for every employable person,” Baker argued, “he will have economic security through job assurance,” as opposed to economic security through social insurance.19 As he saw it, this required a major sea change in federal policy—the government must “make certain that every employable person at the bottom get a job. Employment should gradually ascend the scale of need as far as necessary at any moment,” over time becoming an expected right for workers displaced by economic downturns.20 At the time, this perspective was held by only a few, even within this circle of experts. However, in the critical period between the completion of the work of the CES and the passage of the ERA, this kind of thinking had begun to spread well beyond Baker. In 1935 memos to President Roosevelt, Hopkins and his aides called for a “fresh, vital . . . real employment program” to take the place of work relief.21 As part of a “Program for Social and Economic Security,” they “propose[d] as fundamental policies . . . that the government assume the obligation of providing the opportunity for gainful work for all its citizens able and willing to work” (a phrase that would reappear in 1945).22 After the passage of the ERA, they went even farther: the act, they argued, implied that the government had “assumed the responsibility for those thrown out of work by the depression.”23 In addition to their growing commitment to the right to a job, WPA advocates came to see a sharp division between their views and those of PWA partisans intent on building traditional public works projects. The competition between these two schools sharpened their differences. After all, if direct job creation was to be the “fresh, vital” alternative to the status quo, it would have to displace both the PWA and public works. Throughout 1935, therefore, the WPA studied its rival and developed arguments about both why direct job creation was superior and why the counterargument could undermine the WPA. Using the PWA’s own statistics against them, WPA analysts were convinced the PWA could not possibly achieve the goals of an expanded employment program, due to its insistence that local communities take out and then repay federal loans in order to keep the federal government’s balance sheet in balance. Local communities could not really afford to

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contribute more than 30 percent of the total costs of a job program, even with $10 million a month in additional federal support if communities borrowed money for self-liquidating projects.24 Moreover, the heavy construction favored by the PWA would dramatically increase nonlabor costs (land, materials, and machinery), which consumed 55 percent of the PWA’s budget. By contrast only 37 percent of PWA spending went to direct labor costs—so a PWA model would produce relatively few jobs per dollars spent. Using FERA and CWA statistics, Baker estimated that the new WPA could limit nonlabor costs to 30 percent of the total, while providing federal grants rather than loans.25 In this way, poor communities where the unemployed and the poor were concentrated could actually be assisted by the federal government. Crucially, nonlabor costs would be limited, allowing a focus on the job-creating potential of a given amount of federal spending rather than fiscal orthodoxy. This last point was the most ideologically salient—economic theory had primed WPA bureaucrats to think of larger payrolls as the straightest line to recovery; their growing commitment to the idea of a right to a job made every additional job that could be created out of the ERA’s appropriation both an economic and a moral advance. Direct labor and nonlabor costs allowed them to quantify the virtues of the two approaches. Every percentage of ERA funds that could be wrested from nonlabor to labor costs meant thousands and thousands of people saved from destitution. At the same time, the WPA’s experts were well aware that the great mass of the unemployed to whom they had provided relief through FERA and jobs via the CWA were overwhelmingly unskilled workers who had been out of the private labor market for several years. Private contractors who worked with the PWA preferred to use skilled workers, who knew how to use machinery to maximize productivity and minimize labor costs. If the PWA’s model were to succeed, the unskilled unemployed would have no place.26 In 1935, this was the ideology of the WPA, influenced by ideas about unemployment rates and consumer demand, rooted in an identification with the poor as frustrated workers and with work as a liberating force, and convinced that traditional public works would condemn millions to poverty. These policymakers cut across two tracks of social policy. The WPA primarily served a clientele that composed mostly white men, blue-collar workers but also professionals, and frequently older men who were heads of households. (Younger men were covered by the CCC, and school-aged men and women were covered by the National Youth Authority [NYA].)

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After the New Deal, these workers would be covered by social insurance, which was a source of privilege and a spur to postwar inequality, as Ira Katznelson shows in his book When Affirmative Action Was White. Moreover, WPA clients contributed their labor in the same way convention retirees were seen to have “earned” their Social Security benefits through contributions deducted from their wages. That parallel put the WPA in a different light from noncontributory welfare programs. Yet direct job creation was not wholly within the boundaries of social insurance, because it hired from among the ranks of those on relief. As much as they tried to also incorporate the unemployed not on relief, at the end of the day, the administrators of the CWA and WPA had to deal with the fact that there were twenty million Americans on relief, of whom 3.5 million were able-bodied unemployed workers that desperately needed jobs. As much as we would hope that the public would view them compassionately, more traditional attitudes that singled out those on relief as members of the “unworthy poor” (by making them take the pauper’s oath, for example) persisted.27 This attitude continued despite the fact that these workers were older white males, complicating the narrative of public assistance as an inherently female and nonwhite “track.” Thus, the WPA existed between social insurance and social welfare, neither one nor the other.

The WPA’s Plan of Action As a first step toward the right to a job, direct job creation advocates had developed a plan for action, using the CWA as a model. The WPA would employ the jobless, pulling as many as possible off the unemployment rolls.28 In 1934, these experts (then working for the FERA and the CWA) modeled a number of different scenarios in a series of studies, including “The Cost of an Expanded Public Employment Program,” “Summary of Relief Requirements,” “The Work Program,” “A Plan to Give Work to the AbleBodied,” “Comparing PWA to FERA,” “Transition from Work Relief to the Work Program,” “The Works Program,” “Two Pages on Politics,” “Memorandum to the President,” and “A Program for Social and Economic Security.” They ended with “A National Work Program.” Collectively, these reports represent a spectrum of proposals, of which the initial plan to extract 3.5 million workers from relief rolls was only the starting point.

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Following these proposals, Emerson Ross, Jacob Baker, Gill, and others in the WPA crafted a series of plans that sought to mimic the size of the CWA, providing three million jobs to relief workers and an additional 1.5 million jobs for the unregistered unemployed, on a long-term basis. Other proposals envisioned a graduating job program for six to eight million, where the majority would be ordinary, unemployed workers who had “graduated” from the ranks of relief recipients back into the status of “regular” workers. At the high end, WPA administrators proposed offering jobs to 60–80 percent of the unemployed, and they couched the plan as a first step toward realizing the right to a job.29 Their ambitions grew over time. In the early part of the year, they were thinking in modest terms. By October they were up to six million—covering a majority of the unemployed. Rather than their ultimate goal, 3.5 million jobs was the minimum number that the WPA advocates were willing to live with, corresponding to the entire “employable” population of the twenty million on relief.30 While the WPA leadership hoped to be universal and take every person in need of work, the somewhat limited financial scope of the ERA led them to restrict their program to those most in need of support: relief clients who had been unemployed the longest, and heads of households (to uphold gender norms and spread available support across as many households as possible). However, they continued to plan for the future and lobby for an expanded job program down the road that would more closely resemble a universal “right to a job.” Similarly, while WPA planners sought to establish wages well above the paltry limits of relief or work relief, they were trapped between their desire to hire as many people as possible and the limited amount of federal funds provided by the ERA. Wages would have to take a seat behind jobs as a priority. WPA administrators were willing to continue their policy of offering “security wages,” based on wage rates of relief programs. Some of them, like Gill, feared higher wages would disincentivize workers from accepting job offers from the private sector, if the latter offered wages lower than government scale—but most of them accepted the policy only as a matter of necessity and a way to maximize the number of jobs created. Even so, not a few WPA staffers welcomed more expansive “prevailing wages” when they thought it politically possible and also when they could win additional appropriations to pay for it. Baker and Ross especially were creative about finding projects that were low in materials and equipment costs but very labor-intensive. Baker

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pointed to the “improvement of public resources” and publicly owned utilities and also included “housing and building construction for low-income groups and impoverished communities” and “production and distribution of goods needed by the unemployed” as key fields of action.31 A common thread there was attending to the human needs of city dwellers: “low-cost housing for cities” was conceived of as part of a package with “schools, auditoriums, community houses,” or “fuel, clothing, bedding, shoes, household furnishing, and a variety of food products.”32 These goods transcended the boundaries between public and private, which under a new WPA would be provided by and for the poor, under public auspices. Each category of goods was defined in terms of the workers it could employ. Public parks and utilities were thought of as skilled and common labor projects; production for use required factory, textile, and clothing workers (and were more likely to include women). WPA analysts had a firm understanding of the difference between what they wanted to do and what public works traditionally did. In their minds at least, direct job creation and public works were two very different policies. As Baker explained in one of his policy memoranda, “The greatest difference between the programs . . . is in the fact that [direct job creation] is based on the maximum decentralization, a maximum use of force account, and an insistence that the one in need be the center of attention. This centering on individuals [sic] would be impossible if he were to be grouped in the usual [public works] contract methods.”33 His perspective conforms to the “jobs-first” thinking of the WPA by devoting the maximum percentage of funds to wages rather than machinery, materials, land, and profits (as was the case under traditional public works). Light construction projects were deemed preferable and given priority in the WPA because they provided for human needs, such as housing, education, and health care, rather than for the needs of industry. WPA advocates always viewed the projects themselves as more of a by-product of employment rather than the ultimate goal of their program. Production provided added legitimacy to direct job creation in the sense of “balancing” labor costs with production values and forestalling accusations of “boondoggling,” but the ultimate objective was putting people back to work. Job creation advocates did share certain ideas with their counterparts in the PWA. Both WPA and PWA staffers saw housing as a critical issue. Baker referred to housing as “a great present need of the country.” Paralleling the arguments of PWA advisors, Baker wrote that “this is particularly true of

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low-cost housing which has to be built under public ownership so that it can be financed so that it can be developed without the heavy cost of private financing.”34 Even the WPA, with its focus on job creation, could not ignore the importance and potential of the product it intended to create. Duration was also critical. The WPA’s administrators did not want their program to appear either “temporary” or “emergency.” Because their economic theory emphasized mass unemployment as a characteristic of “normal” economic life in a capitalist system and their ideology included work as a basic social right, WPA advisors like Gill argued that there was a need for a permanent job system. Just as social insurance advocates believed that a permanent Social Security Board would allow them to modernize their field, Gill called for a “permanent Federal Department of Welfare” to ensure “coordination of the functions of existing agencies on all three levels of government, increasing adequacy of benefits, and extension of public assistance.”35 A permanent department would have a “civil service staff” to ensure professional expertise, and “a change in the manner of making appropriations to permit great correlation between the extent of unemployment and the size of the program,” a policy that would permit both greater independence and permanent, countercyclical planning.36 The dream of a permanent status is visible in Gill’s proposal for the organizational setup of an independent WPA. He envisioned a Cabinet department, with a permanent bureaucratic structure. This “Federal Works Authority Board” would report directly to the president and link up with the NRPB to engage in economic planning that would coordinate a broad range of programs—conservation, rural electrification, drought and erosion programs, housing, poor relief, federal departments involved in construction, public work, and public works.37 It was a broad and ambitious agenda that would see the WPA become the center of virtually every plan or program that interacted with poor and working-class Americans. It would be married to major intellectual movements of national planning and administrative reorganization; it could become an NRA for the American worker. Even Baker, whose proposals often differed dramatically from Gill’s, shared this enthusiasm for a united and permanent system. In his 1934 proposal titled “A Program for Social and Economic Security,” Baker argued that “the Federal Emergency Relief Administration should be abolished and in its place there should be established a Department of Social and Economic Security.”38 This proposal especially stressed the virtue of permanence: “a work program of this sort should be promoted from a

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central place in Washington—a single cabinet department” that could provide “central controls, engineering, and financial standards.”39 When we consider the amount of time and energy devoted to proposals for permanent job programs and a Cabinet-level department devoted to work or social welfare, it becomes clear that the WPA leadership no longer thought of its remit as a temporary response to economic calamity. Instead, it was a durable institution because capitalism displayed periodic imperfections that resulted in debilitating unemployment.40 While the WPA’s continued existence ultimately depended on the $4.88 billion authorized by the ERA and subsequent legislation, Gill, Baker, and others continued in their efforts to win a permanent status and viewed the scramble for the lion’s share of the funds as merely the first step in achieving their ambitions. In multiple funding proposals put forward in 1935, the WPA’s advisors were unanimous that, in its first year, the WPA would require $1.8 billion to operate a job program for at least three million. Even to complete its first ten months would require $855 million. To expand the program to create 3.5 to 4 million jobs would require $3 billion a year.41 To get this money, given the limitations of the ERA’s appropriation, WPA planners needed to win the majority of unallocated funds and even get their hands on funds already allocated to the PWA and other programs that had not yet been spent. Since they had managed to grab $400 million of the PWA’s money to fund the CWA a year or two earlier, WPA experts turned their attention to the PWA as their rival in the work program. Thus, by the time that the WPA’s proposals were brought to the ACA, they contained an economic theory that explained the Great Depression and how it could be fought, a political ideology that explained why the government’s response to the Great Depression should be the provision of jobs, and a plan for action that sought to use force account (i.e., direct employment by the government), light construction, and rapid mobilization to realize theory and ideology. The fiscal demands of these plans would limit the scope for compromise and shift the outcome toward a zero-sum game.

In the Other Corner: The Public Works Administration In 1935, the PWA was in a strong political and intellectual position. To begin with, its advocates had more experience. They had lobbied longer and thought harder about the purposes of public works.42 In 1932, long

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before the advent of the New Deal, progressive senators such as Robert Wagner (D-NY) and Robert LaFollette (Progressive-WI) and congressmen like Sam Garner (D-TX) had pushed through a public works program over President Hoover’s opposition. They were seeking countercyclical reforms and had staked their public influence on battles over municipal socialism a generation earlier. Ickes aimed to burnish the public image of his agency by emphasizing probity and efficient use of public funds, which gave public works a certain amount of political cover against accusations of inefficiency and corruption.43 Moreover, after three years of operation, the PWA had built up a strong clientele of supporters—construction firms, contractors, and subcontractors’ lobbies. American Federation of Labor (AFL) craft unions in the building trades, as well as heavy-industry lobby groups, profited from the demand for steel and concrete and similar products; hence these groups saw the PWA as a life raft in a time of desperation. Public works was comfortable, familiar, operated through time-honored contracts that offered “cost plus” guaranteed profits, and allowed contractors to operate freely. A PWA chart regarding the “estimated total value of construction” showed that the volume of construction grew from $11.5 billion in 1925 to $12 billion in 1928, with private construction making up 78 percent of the industry and public construction a mere 23 percent. When the Great Depression hit, the volume of construction fell rapidly from $12 billion in 1929 to only $3 billion in 1933. The biggest toll was on the private side. Public construction held relatively steady. As a result, the ratio shifted dramatically, so that by 1932, the public/private ratio was exactly 50–50.44 (As the New Deal’s public works programs came online, this pattern would continue until after World War II, with public construction averaging 54 percent of all new construction from 1933 to 1945.45) As these figures make clear, the PWA had become the driving force in American construction, equal in size to all other firms put together, and in its impact it was much larger, given the critical importance of both its contracts to general contractors and subcontractors and its orders to materials firms. The PWA cannot be understood solely for its material benefits, however. Ickes, his subordinates, and especially the civil engineers who staffed the institution all traded on their own vision of political economy, their own ideology, and their own plan for action, rooted within the mainstream of New Deal policies. In every way, the PWA was an equal contender to the WPA.

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The PWA’s Economic Theory The vision of political economy that the PWA’s administrators shared was broadly in sync with a variety of economic theories shared by the New Deal Left. They embraced a relatively loose understanding of countercyclical action that in 1935 had yet to be transformed by the theories of John Maynard Keynes. They admired the Soviet Union’s Five-Year Plans that had achieved rapid industrialization and modernization. They were convinced that economic planning was the solution to the Great Depression.46 The common thread was an understanding of the Great Depression as a crisis primarily in production, and only secondarily in consumption.47 From the perspective of PWA administrators, industrial corporations had overproduced in the 1920s, especially in the realm of capital goods. Supplies used to construct new factories, railroads, and highways—all the goods needed for an expanding economy—were left on the sidelines without sufficient buyers. When demand for these goods failed to clear the market, a glut produced paralysis in the core sectors of the economy. Producers sat on overpriced stocks of material and then slashed production in response. The glut led them to stave off restarting production even when the economy started to improve. The economy was experiencing a “demand crisis” to which the only effective response was government purchasing to stimulate demand. Contracts for public works construction increased the demand for raw materials. In contrast to the proposals of the WPA, the PWA would create jobs indirectly, “bubbling up” from the foundations of the American economy. As Ickes wrote, “Who is to say which is the more important—the laborer who pours the cement at the dam, the one who digs the limestone in the quarry, or the one who hauls the finished product? . . . In all three cases they are usually workmen who, if not for the PWA program, would be unemployed. . . . PWA is giving employment all down the line and any distinction between direct and indirect labor is both misleading and unimportant.”48 In addition to this immediate, countercyclical recovery effect, the PWA experts hoped that public works would also advance a different kind of public intervention into the economy: long-term economic planning led by government agencies whose actions would produce new avenues for growth and smooth out the business cycle.49 In the minds of PWA experts, public works would be both economically progressive and fiscally prudent.

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The PWA’s “National Construction Plan” exemplifies the theory. It characterizes the Great Depression as primarily a failure in the construction market: “From 1925 through 1929 total dollar volume of annual construction was within the range of $[11 billion] to $[13 billion]. . . . It is estimated that private construction at the present time is at the rate of $[2.5 billion] to [3 billion] a year.”50 To reverse this trend, the PWA advocated boosting production, rather than enhancing consumer demand—“a government program of $[5 billion] a year would bring the total construction volume to the figure mentioned about as representing an adequate amount of construction to give a volume of employment equal to that prevailing from 1925–1929.”51 The emphasis here is on the material factors, the volume of construction, the works themselves, as the key factors driving the economy. Back to Work: The Story of the PWA, Ickes’s account of the program’s history and importance, focuses on the multiplier and transformative effects of new production relative to new consumption: “Wide highways offer possibilities of easier and more profitable trade for the farmers; higher standard of living for his family,” he noted. “Upon roads depend the prosperity of millions. . . . [A]t the present time the greatest potential source of national wealth lies undeveloped in our rivers. . . . [E]ach gallon of water falls is a possible source of electric current, which possess the god-like qualities of heat, power, and light.”52 Public institutions had the capacity to expand and improve the physical and moral environment of the United States. As Ickes put it, “Roads bring civilization.” FDR’s economic planners were all convinced that eliminating unemployment was critical. But the road to that end wound through different policies. The WPA sought to use direct job creation to lower joblessness, while the PWA thought the same thing could be done indirectly through the multiplier effect of public purchases. For the latter, public works would produce substantial numbers of government jobs (the PWA employed some 650,000 people in 1935, after all). But the real impact would come in “secondary effects” as moribund core industries fired up the plants to meet new orders and then brought back their old workers. This was the key argument of the “National Construction Program”: This volume of expenditure would provide direct employment for about 2 [million] men per month. The indirect employment in the production, transportation and merchandising of construction materials would be about equal to the direct employment. Total

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employment created, however, does not stop here. The expenditure of $5 [billion] a year becomes income to workers on construction sites and in construction material factories, to contractors, and to holders of shares in companies. The spending of this income in consumer goods will create employment for other laborers . . . referred to as secondary indirect employment.53 Ickes and the PWA’s administrators took the welfare of their workers seriously. Unionization on public works projects was acceptable if not encouraged; prevailing wages boosted their workers’ salaries and protected union-wage scales in the private sector. Ickes and the rest of the PWA enforced hiring and wage regulations that stood against racial discrimination on public works sites.54 Segregation in the construction industry often frustrated the ambitions of blacks, and few had developed the seniority in skilled jobs that was needed to gain a position on public works jobs. Nonetheless, those who had the qualifications were better protected than they had been in the past. Classifying the PWA’s economic theory is rather difficult. In part, the impulse toward providing housing, the belief in multiplier effects, and the drive for increased public spending would seem to place public works advocates in the same “purchasing power” school that Meg Jacobs has described and to which direct job creation advocates also belonged.55 However, in another light, the PWA resembled more closely the producerist theorists that Kathleen Donohue identified within the NRA, given their emphases on declining production as the root cause of economic collapse, reviving core industries as the key to recovery, and the privileging of production over consumption.56 However, I argue that the PWA’s approach was actually distinctive from institutions like the NRA who focused on the price side of production and argued that overproduction had been responsible for the collapse of profitability. Instead, the PWA focused on providing contracts and orders for machinery and materials that would bolster production and on creating infrastructure that would lower transportation and power costs (both of which were anathema to overproductionists). More than any other New Deal group, the PWA’s economic thinking in 1935 most resembles the “fiscal” or “commercial” Keynesianism associated with Walter Heller’s tenure of the Council of Economic Advisors in the 1960s, boosting economic growth through the multiplier effect, but focused heavily on corporate investment and profitability.

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The PWA’s Ideology Complementing and legitimizing this vision of public political economy was an ideology that saw government-driven economic development as the wave of the future. Many Progressives and liberals in America looked to the modernizing influence of technology as a way to escape the anarchy of capitalism.57 Public works were enormously influential in this vision—as Ickes and others noted, the capitalist economy had brought the fruits of modernity to the United States in an irregular fashion. The backwardness of rural America, with the South as the archetype of undeveloped America, was a key example of uneven development.58 Public works could rectify this omission and bring modern technology and modern values to undeveloped regions within the country. Public works could do much more as Ickes saw it. Redressing the balance between private goods and public goods was one of its virtues. In the “National Construction Program,” the PWA’s focus on production nonetheless revealed an ideological concern for the need for public goods. For example, the authors outright argued that “private enterprise cannot produce adequate housing for the low income family nor can it clear and rebuild slum areas without replacing low income tenants with a low moderate income group which on a large scale operation would disrupt the whole population of a city.”59 Therefore, the PWA should take up a permanent place in providing housing to the urban poor and working class, who were trapped in a market failure. In this fashion, a major segment of the real estate market would become properly socialized. Public works looked for market failures, proposed partial socialization as a remedy, and focused on human need by providing shelter, water, electricity, and health care, rather than (as direct job creation did) by providing jobs whose salaries could pay for these essentials. The Cooke Report, which generated a good deal of attention at the time of its publication, should be understood in this light. Morris L. Cooke, the report’s author, was a reform-minded PWA engineer, a Progressive who had made a reputation as a policy advisor to the U.S. Forest Service founder, Gifford Pinchot. Cooke was one of the New Deal’s leading lights on rural electrification and public power generation who later that year would be tapped to head up the Rural Electrification Administration.60 In his report, Cooke sought to virtually nationalize electrification and irrigation, highway construction, public utilities, and flood and

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coastal erosion control. He created a blueprint for economic transformation that envisioned the country divided by waterways, not states. He imagined this plan as part of a twenty-year effort to define national public works. Cooke took as his landscape America, the nation and the place, and sought to transform its natural resources through a process of slow and deliberate government intervention. He thought about projects first and people second. A conservative undercurrent was visible among advocates for public works. As scholars such as John Recchiuti have noted, Progressives were deeply ambivalent about public spending, placing a higher priority on maintaining corporatelike standards of efficiency and cost-effectiveness, ensuring that public funds were spent responsibly.61 This attitude contributed to a suspicion of high-spending public programs and haste in public action. Administrators should scrutinize proposals and contracts, and they must prioritize the lowest bids and sound project design over human need. Progressives placed a high value on self-liquidation, the idea that projects should pay back the costs of public works to the taxpayer through tolls, fees, and charges assessed on project users. As Ickes wrote in Back to Work, “The most important [issue] revived around our policy with respect to keeping the program as free as possible from graft, corruption, and skimpy work.”62 By insisting that projects would only be approved if they could generate income to pay back the public monies used to construct them, the PWA could ensure that projects were “useful.” The payback provisions exerted some fairly strict limitations on the PWA’s imagination. Staffers understood that they were running “a program of Federal public works of a self-liquidating nature” which would give the PWA over $1 billion in federal funds per year in urban and rural housing construction, an “express highway system,” substantial investment in railroad modernization, and an expanded rural electrification program. Selfliquidation was seen as so axiomatic that its downsides—the financial burden of communities having to pay back loans and the limitation of structures to be built to those that can generate fees—passed by without mention. Similarly, even in a document cowritten with WPA staffers, the insistence on self-liquidation remained: the program called for “work which will actually reemploy three to six million men [the priority of the WPA] and will produce useful things that in themselves will earn funds and result in increased revenues so that their cost can be repaid,” and that “the program of work should be undertaken in fields where . . . the returns will be

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such that the bonds outstanding against them will be repaid over a proper period of amortization.”63 Thus, the desire of the PWA to embrace countercyclical economics inherently clashed with the priority of due diligence, slowing down the response of government to a major economic crisis. The PWA’s Plan of Action Despite these tensions, public works advocates had agreed on a common course of action that was ready to go in 1935. The PWA drew up two public works plans: a five-year plan, which had $500 million in funding annually, and a twenty-year plan, which had $5 billion annually. These plans represented a major transformation in the contours of American government, the construction industry, and America’s physical infrastructure—embodied in the Cooke Report and the “National Construction Program.” The Cooke Report was animated by the idea that the Tennessee Valley Authority (TVA) model of publicly planned infrastructure development could be expanded nationally. The country would be divided into “principal drainage regions” delineated by common waterways, drainage systems, and climates. These sectors would be organized through TVA-like institutions that would independently coordinate hydro-electrification, highway construction, and public utilities. With a twenty-year funding structure, control over public works would be transferred from the politicians to the planners: “If the Congress can be persuaded to authorize a gross expenditure [for the twenty-year span] . . . the Administration will be free to plan the program of action as to gain the benefits of interrelated projects and of scheduled operations,” Cooke argued.64 America would be transformed by the power of planning and technology, modernized and made bountiful.65 The “National Construction Program” looked to massively expand public housing by 1,390,000 units in urban areas and 800,000 homesteads in rural areas; create a system of “express highways” that prefigured the 1950s Interstate System with funding for 9,600 miles; and provide massive grants to states and local governments for a variety of infrastructure projects. As we can see, the PWA’s plans did not lack for scope of vision. Ickes and his aides proposed a multibillion-dollar agenda, and they especially liked to think in the long term. Blurring the line between “temporary” and “permanent” programs, the PWA envisioned public works programs rolled out over multiple years, even decades, very much a long-term presence in

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American economic and political life. Just as important, the scope of the PWA’s vision created another source for conflict between itself and the WPA. Five billion dollars for the PWA’s five-year plans would eat up the whole of the 1935 ERA’s appropriations, just as would the WPA’s proposals for 3.5 million to 4 million public jobs. On an intellectual and ideological level, the PWA’s ideal work program differed from that of its rival in ways that would make job creation untenable if the premises and values of public works were to be adopted by the ACA.

Race to the Top Ideologically and intellectually divergent though they might have been, the administrators of the PWA and the WPA faced a common challenge in dealing with the ACA. In order to fund their projects, they would have to command a majority by both informing and persuading the committee members. This debate would take place on two levels. The first path to success would be involve behind-the-scenes bureaucratic infighting, full of legal definitions and loopholes, powers of project approval or disapproval, strategic press conferences, and, most of all, the marshaling of data by experts. The second path was a more public form of competition. The opposing sides issued policy proposals and press releases that sought to define, both inside and outside the administration, the long-term direction of the New Deal’s work program. The ultimate goal was to define the problem that the New Deal’s policies were to solve: was the Great Depression a problem of consumption or production? Sticky prices or mass unemployment? The cure had to fit the diagnosis. Whether direct job creation or public works would be seen as “the” solution to the problems facing the New Deal in the end depended upon the successful mobilization of ideas and knowledge, as experts bent to apply technique and theory to political argument, to craft technical data into public persuasion, and to transform abstract concepts into concrete programs. The WPA’s Pitch Hopkins and his chief executives approached the complexities of shaping the WPA by looking for bureaucratic loopholes as their source of leverage.

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Theirs was a textbook case of what American political development theorists would call institutional choke points. As we have seen, the WPA was allowed to independently initiate “small, useful projects,” each costing $25,000 or less.66 Recognizing an opening, the leadership launched its own job program at full force, subdividing larger projects into $25,000 chunks to fit under the limit. Constructing a school, for example, might be divided into a house-frame project, a foundationlaying project, an electricity project, and a plumbing project. A second, less devious loophole enabled the WPA to authorize or reject proposals brought to it by the PWA for manpower, if the WPA could show that the project would not or could not provide enough jobs for people on relief. As noted earlier, PWA project designers and managers preferred not to hire relief workers because they were perceived to be generally less skilled and experienced than their already-employed counterparts. Private contractors had a similar perspective because they already had a workforce of experienced construction workers. Thus, the WPA had lots of ammunition to justify the use of its veto power not just to slow down the PWA and to keep funding available for its own, relief-friendly projects, but also to highlight the issue of job creation before the ACA in ways most favorable to the cause of public employment. These strategies only went so far: they could get the WPA to the table with their own project proposals and money left in the bank to fund them, but they could not provide the funding themselves. In spite of what more purely institutionalist approaches might suggest, the most critical tool for this second stage was economic theory and ideology. The WPA aimed to convince this audience that its diagnosis was the correct one, that the Great Depression was a problem of jobs and purchasing power, that the private labor market could not produce enough of either to provide full employment, even in good times. The speed of job creation was the most critical factor in producing the kind of multiplier effects that would end the economic crisis. Progressive social science was one of the WPA’s most potent weapons. Gill, Baker, and others leaned on charts and statistics on unemployment to change the terms of debate over public projects. Two points typically came out in their analysis. First, they argued that the PWA’s process of sending out bids and scrutinizing was slowing down the pace of stimulus, by showing the initial six-month gap and persistent lag opening up between money

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allotted, contracts awarded, and the actual expenditure of funds. By appealing to FDR’s desire for speed, the WPA sought to turn the PWA’s virtuous probity into a vice and highlight Hopkins’s legendary efficiency in dispatching funds. Second, WPA administrators argued that the PWA’s method of relying on private contractors was drastically reducing the number of jobs per dollar the PWA could create. In 1933 and 1934, they showed that PWA construction spending grew from $80 million to $200 million a month but created only 60,000 jobs.67 One particularly trenchant WPA report to the ACA analyzed PWA flood-control projects on the Mississippi, Ohio, Sacramento, Missouri, and Columbia rivers, showing that $250 million in contracts was producing work for only 40,593 men.68 Armed with these data, Hopkins was able to turn the logic of productivity on its head—the PWA was being efficient in using machinery to produce the most amount of infrastructure with the least possible labor costs, but it was ensuring that the ERA would spend the most money in federal history with few jobs to show for it. By this measure, direct job creation (which substituted manpower for machinery wherever possible) was far more efficient for the purposes of the ERA, creating the greatest number of jobs possible out of a finite appropriation. Hopkins pressed the point, arguing that, as a result, the PWA’s model of “self-liquidating” public works could not possibly grapple with the national unemployment crisis. As Figure 2 shows, the $3 billion in funding from the National Industrial Recovery Act had achieved only modest goals at the hands of the PWA. At its peak in July 1934, only 650,000 had been put back to work through these means. With 7.5 million Americans unemployed, the PWA’s lengthy approval process would require nine years to get back to 1929 levels of unemployment. Direct job creation could produce more jobs at a cheaper price (drawing from FERA and CWA data as proof of concept)69 and thereby tackle the lion’s share of the unemployment problem much faster. The CWA experience—which created over four million jobs in just three months—stood as a case in point. By pitching its argument in these terms, the WPA appealed most directly to the “spending” caucus on the committee, which included figures like Secretary Perkins and Secretary Wallace, by shifting the terms of the debate to the needs of the unemployed. That was, after all, the most pressing concern of those on the Left in the Roosevelt administration. The WPA

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700,000 600,000

Employees

500,000 400,000 300,000 200,000 100,000

Oct-34

Sep-34

Aug-34

Jul-34

Jun-34

May-34

Apr-34

Mar-34

Feb-34

Jan-34

Dec-33

Nov-33

Oct-33

Sep-33

Aug-33

0

Figure 2. PWA-generated employment, 1933–1934. From “Chart of PWA Employment,” Folder “Legislation 1934–5,” Harry Hopkins Papers, box 79, Franklin Delano Roosevelt Presidential Library, Hyde Park, NY.

could get the job done. And this was becoming a pressing political concern, as Hopkins and his colleagues were quick to point out. It was an election year. Voters in 1936 needed to see that “happy days are here again.” Waiting for 1944 was not an option. The PWA’s Pitch The PWA took a different tack before the committee. On a bureaucratic level, Secretary Ickes preferred to use strict interpretations of statutes to enforce rules, close loopholes, and maintain “fairness,” while using personal communications to promote his program. Ickes was a true believer in Progressive Era principles of good government, as we can see from this letter to President Roosevelt, protesting what he considered to be foul play by the WPA: From the language quoted, it is evident that the Works Progress Administration can contribute up to 100% [of a project’s costs], whereas the Public Works Administration is limited to a 45% grant. This establishes a competition that is working to the disadvantage

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of the government. Municipalities that are able to finance projects . . . are not filing applications with the PWA. . . . [T]his is delaying the recovery program. . . . I am of the opinion that the demarcation between PWA and WPA should be clearly defined by you as the only one who can speak with authority.70 Ickes relied heavily on the original executive order and the concept of precedent in urging FDR to enforce regulations that would eliminate a WPA advantage and confirm the PWA’s authority. His ultimate aim was less to restore grant rules, but to justify why “PWA should continue to finance and supervise the construction of projects for public bodies such as . . . schools, streets, public buildings of all kinds, hospitals, social, charitable and penal institutions, sewers, waterways, and bridges, etc.” Redefining the federal work program in this fashion would have made the PWA the undisputed authority over the work program, cutting the WPA down to smallscale, minor efforts aimed at relief workers. Ickes presented the PWA as the defender of the virtues of traditional public works, and he raised the specter of waste, inefficiency, fraud, and political corruption should the WPA overtake them: “We have the personnel, we have the experience, and we have built up a reputation for integrity and efficiency that will stand the administration in good stead in the stormy political days that lie just ahead.” Concerned he might be overstepping his bounds, Ickes hastened to add, “I do not even intimate that Harry Hopkins cannot do the work as efficiently as PWA,” claiming instead that he worried about “confusion” should the WPA build up an equally efficient organization.71 Most importantly, Ickes argued for self-liquidation, claiming that “it was originally the intention to have practically all the four billion dollars expended on self-liquidating projects” and that even after the WPA’s creation, the PWA had “expected to be approximately half the total Works Relief Fund.” Unless FDR returned to the fold of orthodoxy, Ickes insisted, “there will be practically no money returned to the Treasury.” That would “sharply diminish” future spending. Should the WPA win this battle, “instead of having tangible outstanding and socially desirable projects . . . to show for the expenditure of this money,” Ickes protested, “there will be little of permanent value.”72 Ickes deployed the values and principles of traditional public works to define the grounds of evaluation, giving himself the inside track. The intent was opposite from that of Hopkins; the method was the same.

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Ickes was not above appealing to the press to hammer his points home right where the New Dealers lived. In a July 2 press conference, the secretary of the interior repeatedly touted a public “clarification of what Public Works projects are” in order to clear up “confusion in the minds of the people throughout the country as to what was PWA and what was WPA.” He ducked questions about whether his classification was prompted by the WPA’s cheaper programs.73 On August 30, Ickes complained to the press about 386 PWA projects held up due to “insufficient unemployed labor . . . man cost per year . . . [and] because 20–25% of labor would have to be employed directly at the site.”74 Three weeks later, Ickes cagily blamed Hopkins for two thousand rejected PWA applications and suggested that Hopkins was “sliding” his yardstick on requirements on “per man work on each job” in order to benefit his own project.75 Ickes’s goal was to define the federal work programs in such a way that the ACA would route the majority of funds his way. Hopkins was engaged in the same trench warfare. Either way, the victors intended to absorb the losing program. In “National Construction Program,” Ickes proposed to subsume all relief and recovery operations under the label of public works, just as Gill had proposed to subsume all construction under public employment.76 Direct job creation in the context of the “National Construction Program” would be redefined as a minor subsidiary of public works, intended to run some small projects that would provide employment to relief clients, while the bulk of ERA projects would be traditional public works, employing skilled workers.

Who Won the Argument? The WPA was the victor in this struggle. Its success is evident in a study of the Proceedings of the Advisory Committee on Allotments. Relatively early on, Hopkins presented a model WPA project in Kansas City that would employ 22,000 people at an average wage of $53 a month in a mix of “improvement projects . . . professional, educational, and clerical projects” (and that critically promised to employ 1,900 youth and 1,500 women). It attracted enthusiastic support from Secretary of Labor Perkins, who said, “This is a very brilliant and realistic scheme and I am very much impressed with it.” From there on out, following a promise from the WPA to use the Labor Department’s U.S. Employment Service to handle applications and

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placement of workers, Perkins and her compatriots voted in favor of WPA applications on a regular basis.77 Hopkins was successful at courting other members of the “spending caucus.” Mayor LaGuardia, who represented the vitally important Democratic constituency of big-city mayors, was particularly influential. Here, it was the PWA’s statutory restriction under the National Industrial Recovery Act of 1933 that was critical. PWA monies had to be distributed 70 percent as loans and only 30 percent as grants. That did not sit well with the mayor. “The 70/30 is not sufficient inducement for the cities to apply for loans,” LaGuardia declared. “These applications are not coming in, I’m sure the Administrator of the PWA will bear me out, everybody is holding back.”78 When General Wood of the PWA argued in favor of a compromise— namely that the PWA would lower its interest rates rather than increase its grants to 50 percent—LaGuardia pointed out that, “[even at] 3%, we have to borrow the whole amount.”79 Ever the politician, LaGuardia was also amenable to Hopkins’s larger argument about people versus projects. In discussing a $25 million PWA project to build a sewage-treatment plant on Wards Island and connecting tunnels to Manhattan and the Bronx, the mayor complained that “here we have a $25,000,000 project, employing 4,000 men [$6,000 per man, in comparison to the WPA’s $1,000], but most of this is pipe, concrete, brick—materials that are not manufactured in New York City.”80 Similarly, LaGuardia bemoaned that “we have a class of people in this country that just cannot understand anything spoke in human terms, but they will understand you when you speak to them in terms of tons of steel, thousands of brick, and so forth.”81 In gaining the support of the Labor Department and LaGuardia, Hopkins had attracted powerful allies. Ultimately, FDR himself carried the day. In the first session of the ACA, President Roosevelt defined the goal of the committee in a way that showed a firm understanding of the key differences between the two camps: “our objective is to give employment to that three and one-half millions of people. . . . Some experts say that we would employ indirectly two people by giving one man a job; others hold more than two; nobody seems to know . . . through the means of transportation, material, manufacturing of various sorts.”82 While remaining sympathetic to the PWA’s arguments about the multiplier effect of nonlabor costs, FDR nevertheless concluded that “our task in spending the four billions of dollars was to use as much of it

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as possible for the purpose of employing people now on the relief rolls . . . directly. That is our first task.”83 This decision gave an enormous advantage to the WPA: by placing the greater emphasis on direct versus indirect employment, the PWA’s advantage in stimulating manufacturing and other industries through materials purchases was turned into a weakness and the WPA’s greater manpower intensity shined. Prioritizing the needs of the unemployed on relief first and foremost meant that the PWA’s reliance on private contractors turned into a barrier to project approvals. Roosevelt made it abundantly clear that he prioritized employment, reducing the relief rolls and putting people to work “directly.” The WPA most closely approximated his philosophy. Not surprising, given this conviction, the president became increasingly impatient with Ickes. When LaGuardia’s $25 million sewage proposal came up for debate, FDR expressed astonishment over its heavy reliance on machinery and materials, noting that “if we were to proceed on the same basis for every city in the country, it would mean that we would expend practically the $4,000,000,000 and would only put 67,000 men to work.” When Ickes responded characteristically by noting that “but, of course, it is only through such projects such as this one that we could hope to have any money returned to the treasury,” the president was not impressed. The superior probity of loans over grants and self-liquidating projects did not move him, since he noted that many cities would be unable to fulfill the PWA’s requirements.84 The outcome of the debate was stark: within a few months, the WPA came to dominate the ACA (see Figure 3). By August 13, 1935, the WPA applied for 1,394 projects to the PWA’s 15, proposing to employ four times as many men with 60 percent more funds than its rival.85 While it did not win every application, the WPA snapped up $1.4 billion, or 28.6 percent, of the total 1935 relief act appropriation. This compared favorably to $500 million for the PWA, which comes out to 10 percent of the ERA and only 35 percent of the WPA’s haul. With ERA appropriations filling its coffers, the WPA grew rapidly in size in its first year, from a mere 500,000 employees to 2.7 million. During the same time period, the PWA held steady at 600,000 workers. Over the next two years especially, the WPA further extended its lead over the PWA, garnering four times the appropriations that the PWA was allotted. By 1938, the pattern was clear: direct job creation was the New Deal’s dominant employment policy.

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Figure 3. WPA’s capture of the funds provided by the Emergency Relief Appropriation Act (in billions). From Edwin Amenta, Drew Halfmann, et al., “Bring Back the WPA,” Studies in American Political Development 12 (Spring 1998); “Summary Charts and Statistics,” Container 628, Printed Materials, Harry Hopkins Papers, Franklin Delano Roosevelt Presidential Library, Hyde Park, NY; America Builds: The Record of PWA (Washington, DC: U.S. Printing Office, 1939), p. 272.

Conclusion On an intellectual level, the outcome of the 1935 struggle between the WPA and the PWA was profound: job creation had now survived two such clashes, and this time the victory was more substantial than a tactical draw. As a result, groups outside of its immediate circles (most notably the economic planners of the NRPB) looked to direct job creation as the most important policy method for achieving their goals. And the WPA had yet to face the political and intellectual conflict over spending versus austerity that would occur in 1937–1938; by the end of 1935 direct job creation was a commanding economic policy within the New Deal. On a policy level, direct job creation now had the budgetary room to run. WPA administrators would employ many millions of people and, as we will see in Chapter 3, would dramatically reduce unemployment rates. The agency garnered practical experience in operating a job program on a

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mass scale that influenced the macroeconomy. This triumph confirmed that its ideological framework was accepted and its moral goal—the right to a government-provided job—was now both desirable and achievable. Finally, on the political level, direct job creation had seized its moment of opportunity. In the 1936 election, Americans noted with approval that unemployment was now half what it was when FDR had made his pledge to rescue the “forgotten man.” Voters could see with their own eyes that almost four million of those rescued from the unemployment lines received WPA paychecks. FDR’s sweeping victory in the presidential election was also a victory for direct job creation, because voters turned out en masse to support the New Deal and punish those who opposed it. Their political voice enabled direct job creation to thrive well into the 1940s.86

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“One Third of a Nation” WPA Direct Job Creation Reconsidered as a Policy Success

In the early morning hours of August 10, 1935, more than 130,000 people made their way to work for the first time in years. Carrying lunch pails and newspapers, they walked through the front gates of thousands of job sites festooned with banners in bright, patriotic colors proclaiming “USA— WORK PROGRAM—WPA.” From the heights of Harlem, where men with picks and shovels began digging the seating holes for the northwest foot of the Triborough Bridge, to the shores of the Pacific Ocean, where workers broke ground on San Francisco’s historic Cow Palace, the army of the unemployed brought life to the blueprints of the Works Progress Administration (WPA). Within the first year of its existence, the WPA’s policy of direct job creation rapidly outstripped rival job programs like the Public Works Administration (PWA). From a base of 132,668 men in August 1935, the WPA’s workforce grew rapidly to three million workers by January 1936.1 Yet in our collective historical memory, we often divide the men from the projects, the workers from what they accomplished. Historians write paeans of praise for the soaring lines of concrete, steel, and stone, but often overlook how the WPA affected the American labor market and the larger economy. Beyond lists of projects, or the visual appeal of public art, the fundamental reality of the WPA as an economic policy is that it directly cut the nation’s unemployment rate in half in the space of three years.2 The greatest public works of the WPA were its workers. For decades, political historians of the New Deal, from the earliest generation of scholars like Arthur Schlesinger Jr. and William Leuchtenburg to more recent writers like Margaret Weir, Nancy Rose, Jason Scott Smith,

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and many others, have trumpeted how the 570,000 miles of rural roads, 67,000 miles of city streets, and 40,000 public buildings3 that the WPA built served as evidence for how the New Deal transformed the physical landscape. But the most monumental accomplishment of direct job creation is that it both gave hope to the suffering masses of the nation and simultaneously transformed the national labor market. However, in accepting the verdict of economists that the New Deal’s job creation programs failed to bring the country out of the Great Depression, historians have deemphasized the economic impact of these projects on national unemployment rates. Instead, they have tended to focus on other questions—what was the extent of the New Deal’s policy accomplishments and where were its limitations? How did those accomplishments match up with the ideas and imaginations of New Deal planners? What were the consequences of the New Deal’s surviving institutions, especially in the thirty years and more when the New Deal’s political coalition and regulatory apparatus remained dominant? What was the political culture and cultural politics of the New Deal era, and how did they shape (and were shaped by) the programs instituted by the Roosevelt administration?4 These analyses make assumptions about the New Deal’s economic impact without picking apart the underlying empirical data. They relied on the conclusions that were drawn in the 1940s by economists whose assumptions are worthy of reexamination. The raw data they drew on are rarely scrutinized. As we shall see, a reanalysis regarding what really ended the unemployment crisis of the Great Depression is needed, because the controversies of the day have been handed down for almost forty years. The New Deal is often described as having produced a partial, halting recovery. Historians hold the New Deal to a higher standard than we might apply to the Great Society programs of the 1960s, the recoveries during the Reagan or Clinton years, or indeed America’s recovery from the 2008 “Great Recession.” Why were New Deal job programs declared unsuccessful? I argue that historians have relied on a set of inaccurate statistics on unemployment rates in the 1930s that suggest the New Deal was less successful in fighting mass unemployment than it was. To compound the problem, these faulty statistics have been buttressed by a scholarly consensus among economists that New Deal fiscal policy was not responsible for recovery from the Great Depression. In this chapter, I challenge this perspective and reinterpret the record of New Deal job policy. My analysis has major implications for political

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historians and the traditional narrative of the New Deal. It places direct job creation as central to the record and to the New Deal’s success. Finally, I consider how the successes of direct job creation shaped the views of WPA administrators and the extent to which they came to see job programs as temporary or permanent.

The Debate Within Economics: The Data A key reason why political historians have decoupled the WPA’s track record on job creation from the broader narrative of the New Deal’s track record on economic recovery is that, for several decades, the only source of data they had on unemployment rates in the 1930s made it impossible for them to see the WPA’s impact. Modern unemployment statistics—based on surveys of households and employers (all usually conducted by phone)—did not exist in the 1930s. They are, instead, a creation of post–World War II improvements in statistical science. In order to get a better picture of employment in the Great Depression, economic historians have had to make a series of estimates based on the cruder surveys that were done at the time and then adjust them for comparability to postwar statistical methods. The earliest set of estimates we have was compiled in 1948 by the economist Stanley Lebergott, at the behest of the Bureau of Labor Statistics, based on limited, voluntary surveys of unemployed workers done at the time by the Labor Department, the Federal Emergency Relief Administration (FERA), the WPA, and the Census Bureau. In Figure 4, the Lebergott estimates are shown in a dashed line. These data show unemployment falling from 25 percent in 1933, when the Great Depression hit its hardest and the first New Deal job programs started, to 20.3 percent in 1935 when the WPA came on line. Unemployment fell, even more, to 14.3 percent in 1937, when the WPA reached its peak. The effects of the so-called Roosevelt Recession look quite dramatic indeed, as unemployment spikes up to 19.1 percent in 1938 and remains at double-digit levels until the beginning of World War II. However, Lebergott deliberately ignored the public-sector jobs created by the New Deal and instead counted the people who held them as still unemployed. He drew an analogy between WPA workers and Nazi concentration-camp inmates or Soviet gulag prisoners who also “worked”:

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These estimates for the years prior to 1940 are intended to measure the number of persons who are totally unemployed, having no work at all. For the 1930’s this concept, however, does include one large group of persons who had both work and income from work—those on emergency work. In the United States we are concerned with measuring lack of regular work and do not minimize the total by excluding persons with made work or emergency jobs. This contrasts sharply, for example, with the German practice during the 1930’s when persons in the labor force camps were classed as employed, and Soviet practice which includes employment in labor camps, if it includes it at all, as employment.5 As social science, this is problematic, because it blends together two categories of people who experienced the 1930s in radically different terms. It separates people who got paychecks from the private sector or “regular” public-sector workers from those whose pay packets owed their existence to New Deal programs, despite the fact that both groups went to work, got paid, spent their money on consumer goods, and generally felt themselves to be productive. Accordingly, this is a questionable distinction as a matter of economics. Arguably, it is even worse as policy analysis. With this omission, Lebergott ignored the primary method by which the Roosevelt administration attempted to reduce unemployment, making it much harder for scholars to gauge the true effectiveness of the New Deal’s economic policy.6 Between 1948 and 1978, these were the only unemployment statistics available for economic political historians and historical economists to work from, and so a generation of scholars based their work on Lebergott’s data, often unaware of the judgment he made about which jobs should (and should not) be counted. In 1976, the economist Michael Darby challenged Lebergott’s assumptions in an article titled “Three-and-a-Half Million U.S. Employees Have Been Mislaid.”7 Darby argued that, unlike prisoners, WPA workers freely applied for work, were paid regularly in cash, lived outside of their work environment, and could quit and be fired—making them essentially equivalent to private-sector workers. Thus they should have been counted as employed. The lower solid line in Figure 4 shows the revised unemployment numbers according to Darby. Adding WPA workers back into the ranks of the employed dramatically changes our image of the Great Depression and the New Deal: instead of unemployment remaining above 14

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Figure 4. Unemployment rates in Darby versus Lebergott, 1929–1941. From Michael R. Darby, “Three-and-a-Half Million U.S. Employees Have Been Mislaid: Or, an Explanation of Unemployment, 1934–1941,” Journal of Political Economy 84, no. 1 (February 1976): 1–16.

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percent during the 1930s, unemployment hit 9.2 percent in 1937, a 40 percent decline from its peak.8 Critically, this difference allows us to measure directly the impact of New Deal job programs on the national economy and assess the importance of them for the success of the New Deal. Without the WPA, unemployment in the 1930s would have remained above the double-digit mark used informally to separate depressions from recessions. Without the WPA, the Roosevelt Recession would have seen unemployment increase to 19.1 percent, rather than 12.5 percent (well below its 1933 peak). Most importantly, without the WPA, unemployment on the eve of World War II would have been an eye-popping 9.9 percent in 1941 rather than a historically normal level of 6 percent.9 The difference between Darby’s and Lebergott’s data raises significant questions for our perceptions of the New Deal and the Great Depression. Should an administration that chopped unemployment by 40 percent in its first term be considered a failure? If we (however informally) consider double-digit unemployment to be the difference between a recession and a depression, does that mean that the Depression ended in 1937 (or 1940– 1941)?10 If unemployment was only 6 percent in 1941, is it not more accurate to say that the New Deal, rather than the war, ended the Great Depression? Clearly the war boosted industrial production and reduced unemployment even farther, but it was not responsible for ending the greatest economic downturn in the country’s history. It took a reasonably good employment situation and made it even better.

The Debate Within Economics: The Cause and Cure of the Great Depression The WPA’s economic track record has been decoupled from the broader political historical narrative of the New Deal for another reason as well: a long-standing debate over what caused the Great Depression, what cured it, and whether Roosevelt’s policies—specifically New Deal fiscal policies— were a positive force. More or less since the Great Depression ended, economists have disagreed over whether the Great Depression was fundamentally a problem of demand that was cured by fiscal stimulation (the explanation preferred by John Maynard Keynes and his adherents), or whether it was the result of a

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credit crunch and was solved by monetary policy. Since the 1970s, the debate has tended to be resolved on the side of those who see fiscal policy as insignificant. Economists who relegate fiscal policy to the backwater differ over what led to recovery. Ben Bernanke focuses on the banking system. The Federal Reserve’s clampdown on the money supply caused American banks to cease operating as “credit intermediaries,” and this had a “financial accelerator” effect on the real economy, intensifying the downward spiral into a full-blown Depression.11 However, once the New Deal had rescued the financial industry through the bank holiday, the Emergency Banking Act, and Glass-Steagall, Bernanke argues, the Great Depression came to an end as a result of “self-correcting” tendencies within the national economy.12 Christina Romer takes issue with this “selfcorrecting” thesis, contending that the New Deal “conventional demand stimulus” did in fact lead to “rapid rates of growth of real output in the mid- and late 1930s,” but only “in the form of monetary policy” that expanded the currency at a rate of 10 percent yearly between 1933–1937 and even faster in the early 1940s.13 Barry Eichengreen, Brad DeLong, and Larry Summers offer yet another explanation: the gold standard. While still arguing that Keynesian economic management worked in World War II and thereafter, DeLong and Summers argue that “neither the Federal government’s fiscal deficit nor the surplus on trade account become an appreciable share of national product before Pearl Harbor.”14 Instead, DeLong and Summers argue that it was the shift off the gold standard (and the subsequent change in deflationary expectations) in 1933 that explains why the economy recovered under Roosevelt. Eichengreen gives this argument an international context in Golden Fetters: “The gold standard is the key to understanding the Depression,” he writes, because it “heighten[ed] the fragility of the international financial system . . . transmit[ed] the destabilizing impulse from the United States to the rest of the world . . . [and] prevent[ed] policymakers from averting the failure of banks and containing the spread of financial panic.”15 By abandoning the gold standard, Eichengreen argues, FDR was able to simultaneously inflate the currency, “provide liquidity to the banking system,” and begin deficit spending.16 Even among those who argue that fiscal policy (government spending) was the driving force in ending the Great Depression, the majority opinion is that fiscal policy only kicked in during World War II—rather than during

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the New Deal’s heyday. J. R. Vernon identified this position as the pre1970s consensus and went on to argue, contra Romer, that “fiscal policies were not the most important factor in the 1933 through 1940 phase of the recovery, but they became the most important factor after 1940, when the recovery was less than half-complete.” (On the other hand, Vernon did acknowledge that New Deal fiscal policy in 1934–1935 “accounted for 36.8 percent of the real GNP increase.”17) Robert Gordon and Robert Krenn concurred, adding that “the majority of the recovery up through 1940 can be explained by monetary policy innovations, while the larger part of the recovery that occurred after 1940 was almost completely due to fiscal policy innovations. Thus we find that while fiscal expansion was the single most important reason why the Great Depression ended, monetary policy also played a nontrivial role, explaining between one-quarter and one-third of the recovery as we define it.”18 Moreover, in their analysis Gordon and Krenn specifically tie their findings on the success of World War II preparedness spending to an assessment of the New Deal, whose “higher government spending on social programs,” they argued, “failed to bring about its promise of reigniting the economy.”19 Thus while economists disagree about what ended the Great Depression, there is a broad majority opinion that New Deal fiscal policy did not play a role in economic recovery.20 This weight of opinion owes much to the influence of Okun’s law, formulated by the economist Arthur Okun in 1962, which states that a stable relationship exists between gross domestic product (GDP) growth and unemployment, such that a percentage-point increase in unemployment will result in a two percentage-point decline in GDP. In reverse, this law holds that a two-point increase in GDP is required for a one-point decrease in unemployment, which means that the effectiveness of a Keynesian stimulus should be judged solely on the proportion of spending packages to the size of the economy.21 It is notable, therefore, that much of the historical economic literature on the 1930s both understands the Great Depression as a decline in GDP growth rates (while making nods to mass unemployment) and assesses policy in relation to Okun’s law. For example, Vernon analyzes the effectiveness of fiscal policy versus monetary policy by estimating “the deficiency of actual real GNP [gross national product] relative to potential real GNP” and finds that “54.7 percent of the increase in real GNP for 1941 was accounted for by the increase in federal purchases of goods and services.”22 Likewise, Gordon and Krenn base their analysis on a vector auto-regression

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model to recalculate multiplier effects on GDP from fiscal and monetary policies.23 In her analysis, Romer similarly measures the impact of fiscal policy in terms of deficits as a percentage of GDP.24 Her conclusions were stark: “simulations for fiscal policy suggest that changes in the government budget surplus played little role in generating the recovery. . . . [M]onetary policy was crucial to the recovery from the Great Depression and fiscal policy was of little importance.”25 Direct job creation presents certain difficulties for this kind of analysis, because in addition to the multiplier effect that comes with standard Keynesian spending programs, job creation also has a direct effect on the unemployment rate, which is not captured by the ratio of the size of government spending to GDP. This matters, a lot. Direct job creation was the main method by which the New Deal exercised fiscal policy between 1933 and 1939. Indeed, many of these scholars have not incorporated Darby’s revisions of unemployment data into their conclusions on the effectiveness of New Deal policy. Gordon and Krenn mention that “Darby . . . has criticized the official estimate of 9.9 percent for 1941 because it omits those employed by government relief programs (who in the current era would be treated as employed, not unemployed),” but they ultimately shrug, saying that “whether they are counted as unemployed or not, they were clearly available as part of the potential labor force and eagerly took higher-paying private-sector jobs as the expansion accelerated during 1940–41.”26 However, they do not integrate Darby’s data into their narrative of recovery, because they measured recovery in terms of GDP growth rather than unemployment rates. Likewise, Romer uses Lebergott’s numbers for unemployment at the same time that she cites Darby’s revisions and the fact that Robert Margo thinks that “at least some of Darby’s correction was warranted.” Her metric for recovery from the Great Depression is “rates of growth of real output,” and unemployment is only relevant to the extent that its trends are “roughly consistent with the behavior of real GNP.”27 Political historians have accepted the verdict of the majority, without looking into the details of the debate and the yardsticks by which each side was measuring the Great Depression. Thus, taking it largely on faith that New Deal fiscal policy did not work, they have focused their attention on other questions, to look at how the New Deal affected people’s lives and their beliefs. But if the consensus is not seeing the full picture in terms of New Deal job policy, then it is incumbent on us to reconsider the verdict on the Roosevelt administration.

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Political Historians and the Economics Debate Economists are not the only parties to ignore Darby’s work. Political historians have not thought about it much either. Even after Eric Rauchway’s interventions in the mid-2000s, most historians continue to rely on the Lebergott data, in ways that cause problems for our analysis of the period.28 Luminaries like Schlesinger and Leuchtenburg only had Lebergott’s estimates to work from. Yet because they were the first and most eminent historians to tackle the central questions of the New Deal, their conclusions have been influential for decades. Even as the next generation of political historians like Howard Zinn and Ronald Radosh, coming out of the New Left, took exception to the idea that “Dr. New Deal made a bold attempt to end widespread unemployment and place the nation on a course toward recovery” (instead arguing that the New Deal was a conservative attempt to save capitalism), they still cited Schlesinger and Leuchtenburg and, through them, Lebergott on unemployment statistics. Indeed, these earlier sources served to bolster their arguments (giving little incentive to challenge their elders on this point) that the overly cautious New Deal had “not accomplished these goals” and that the return to prosperity was due to World War II and the rise of the military-industrial complex.29 Long after political historians moved past these initial debates on whether the New Deal reformed or saved capitalism, they continued to use the same statistics. The hegemony of Lebergott’s work as a source can be seen in the ubiquity of his figures in recent history textbooks produced by leading political historians. Eric Foner’s Give Me Liberty! concludes that “the New Deal did not really solve the problem of unemployment,” and Pat Cohen and others argue in The American Promise that “the average unemployment rate for the 1930s remained high,” based on graphs of Lebergott’s unemployment data.30 This in turn has had a substantial impact on the public history of the New Deal, such that in current policy debates conservatives argue that “everyone agrees that the New Deal failed.”31 Lebergott’s data have also influenced specialists on the New Deal. Margaret Weir, both in Politics and Jobs and in “State Structure and the Possibilities of ‘Keynesian’ Responses to the Great Depression” (with Theda Skocpol), used Lebergott’s numbers, even though her focus was more on how “the decision to endorse spending as a recovery strategy in 1938 was a product of a[n intellectual] movement from within the administration.”32

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Despite this focus, Lebergott’s numbers led both Weir and Skocpol to overlook both how 1933–1937 was a period of development for job policy in the New Deal and how the impact of these programs’ unemployment rates contributed to intellectual development within the Roosevelt administration.33 In The End of Reform, Alan Brinkley argued that the New Deal collapsed in 1937, amid political setbacks on the Supreme Court and government reorganization, and especially the devastating impact of the Roosevelt Recession.34 In Brinkley’s narrative, the uptick in joblessness, when “four million more workers had swelled the already large unemployment rolls,” punctured FDR’s aura of popularity. Roosevelt’s political fortunes benefited immensely from an economic recovery that (in Brinkley’s words) was marked by “sluggish growth and high unemployment which had now continued for nearly a decade.”35 Here the Lebergott numbers lead to a false narrative—real GDP growth recovered incredibly quickly, by an average of 9.42 percent between 1934 and 1937; even taking into account the 1938 recession, the U.S. economy grew by an average of 7.3 percent in Roosevelt’s prewar term. That is not sluggish growth: compare that rate to an average real growth rate of 3.25 percent since World War II.36 While Brinkley’s main arguments in End of Reform dwell on ideology and periodization and do not particularly focus on the WPA or the New Deal’s track record on unemployment, Brinkley’s viewpoint that the administration had a relatively poor track record is consistent.37 For example, in a 2008 article for the New Republic entitled “No Deal,” Brinkley wrote, “Yet, despite these extraordinary achievements [the WPA and other job programs], Roosevelt’s initiatives did not, in the end, lift the country out of the Great Depression. At no time in the first eight years of the New Deal did unemployment drop below 15 percent. . . . And so this bold, active, and creative moment in our history proved to be a failure at its central task.”38 As we have seen, Brinkley’s 15 percent statistic (taken from Lebergott’s estimates) is accurate only if one excludes New Deal workers from the ranks of the employed.39 When they are counted among the employed, it becomes more questionable to claim that the New Deal failed “at its central task.” At the same time, the shift to Keynesian economics by the Roosevelt administration, which Brinkley studies, is much easier to understand if Keynesian economists could point to success in fighting unemployment both before and after 1938.

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Among the most recent entrants to these debates is Ira Katznelson. In Fear Itself he relies on Lebergott’s statistics frequently as support for his overall argument that the New Deal represented an attempt to preserve liberal democracy in an era when democratic nations were incapable of grappling with either the Great Depression or the threat of fascism. Pointing to the Roosevelt Recession as proof that fear persisted throughout the 1930s, Katznelson described it as a time when “unemployment nearly doubled” (as opposed to increasing by about a third) and “leaped to 19%” (rather than to 12.5 percent).40 If the Roosevelt Recession was less severe or long-lasting than the statistics Katznelson relies on, then the fears of a permanent Depression might have been less fervent and faith in democracy more resilient. Likewise, in discussing World War II, which he gives primary credit for ending “the dire years of economic suffering,” Katznelson argued that “unemployment disappeared from a rate of 14.6% in 1940 to just 1.2% in 1944” as opposed to unemployment dropping from a more manageable rate of 9.5 percent in 1940 to 6 percent in 1941, which would have made the war seem more modest in its effects and the New Deal deserving of more credit.41 While the difference between these two data sets suggests a need to revise some parts of the work of Weir, Brinkley, Katznelson, and others, while leaving their central contributions intact, it is more central in the case of other political historians. Nancy Rose, the author of Put to Work, a history of the Civil Works Administration (CWA), used Lebergott’s numbers to bolster her central argument that the New Deal failed to protect most unemployed workers; Darby’s data show a New Deal that was far more successful in lowering unemployment. Likewise, Jason Scott Smith’s argument in Building New Deal Liberalism—that New Deal job programs were “documented failures as unemployment relief programs” and were primarily successful in “laying the structural foundations for postwar economic development”—is internally contradictory because Smith uses Darby’s figures in his A Concise History of the New Deal, but he fails to adequately incorporate the data into his analysis of the employment effects of New Deal job programs.42

Reassessing New Deal Job Programs and the Implications for Historiography In light of the manifest problems of both Lebergott’s data and the consensus it generated about the New Deal’s weakness, can political historians

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continue to lean on the older data set and the conclusions they drew from it? At the end of the day, we have to ask whether we accept the notion that WPA workers drawing a modest but steady paycheck and living in their own homes should be regarded as no better off than the destitute or workcamp inmates. We have to decide whether to ignore the lived experiences of millions of American workers who were grateful to be back at work due to quibbles over wage rates and job-search behavior or to heed their words. I argue that the historical evidence of the sheer size and importance of New Deal job programs is simply too powerful to ignore. The revised data set strengthens existing arguments for the importance of the WPA for New Deal economic policy. In the past, scholars who sought to bring attention to the New Deal’s job programs had to rely on one of two arguments: some scholars, like Jason Scott Smith, Robert D. Leighninger, or Nick Taylor, emphasized the amount of public works created as a proxy for its impact on the economy. After all, if the WPA built 570,000 miles of rural roads, 67,000 miles of city streets, and 40,000 public buildings, all of this activity must have added to GDP growth—and the workers who built all of these historical monuments were clearly employed during the construction.43 However impressive these figures might be, it is extremely difficult to estimate the value added for a diverse group of projects (especially as many of these public works have lasted for more than eighty years), and, even if it is true, the point is hard to measure vis-a`-vis the exact impact on mass unemployment. Other scholars, like Patrick Renshaw, pointed to the parallels between national recovery and the WPA. During the Great Depression, Renshaw writes, “The federal government . . . was forced to act as compensating agent during economic downturn, spending public money to fill troughs in the trade cycle in order to stimulate revival, then cutting back in periods of boom. The depression of 1929–33 was thus followed by a recovery stimulated by federal government spending, which turned rapidly into a serious recession again when such spending was reduced.”44 Renshaw points to the close parallel tracking of national spending and national prosperity, more than absolute levels of government spending relative to GDP, as suggestive evidence of New Deal fiscal policy to national recovery. As we can see in Figures 5A and 5B, the same pattern links WPA employment levels to the overall unemployment rate: as the WPA dramatically expanded in 1935– 1936 to three million strong, unemployment rates dropped by almost a

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Number of WPA Workers

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Figure 5A. WPA workforce, 1935–1943. From George Field et al., Final Report of the WPA (Washington, DC: Government Printing Office, 1943), p. 28.

16.00%

Unemployment Rate

14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 1935

1936

1937

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Year

Figure 5B. Unemployment rate, 1935–1943. From George Field et al., Final Report of the WPA (Washington, DC: Government Printing Office, 1943), p. 28.

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third; when the WPA was cut by a million jobs in 1937, unemployment shot up by more than a third; when the WPA was dramatically increased to 3.5 million jobs in 1938, the unemployment rate slumped. However, as Bernanke and Romer have pointed out, there is a limit to how much you can prove with parallels. After all, fiscal and monetary policies paralleled each other during FDR’s presidency, with both simultaneously expanding between 1933 and 1937, and simultaneously declining in 1937 and then recovering in 1938 through to World War II. Parallels alone cannot tease out which was more important, and to what degree. It is also difficult to separate out the effect of the shift away from the gold standard (which DeLong, Summers, and Eichengreen champion) from the effects of fiscal policy. While there is a strong correlation between the date at which countries went off the gold standard (thus allowing for an expansion of monetary policy) and the date at which GDP growth rates began to recover, it is also the case that going off the gold standard freed up countries to expand fiscal policy (often in the case of increased military spending, as was the case in Japan and Germany). Darby’s numbers provide for a new angle into this complicated picture, by allowing us to see the direct impact of New Deal job programs on mass unemployment. As Figure 6 suggests, New Deal job programs (represented by the solid bars) created more new jobs year-on-year than the private sector (represented by the diagonally striped bars) for every year of FDR’s first term, with the exception of 1934 when the two were evenly matched. In the fight against mass unemployment, the New Deal’s job programs (rather than private-sector responses to monetary policy or even fiscal policy) were usually in the lead. Unless we assume that the billions of dollars spent on the WPA and other job programs had a multiplier effect of zero, some share of the credit for private-sector job creation in the 1930s must be counted as the fruits of New Deal direct job creation. Between 1935 and 1937, for example, an average of $4.2 billion a year (or 5 percent of GDP) was spent on direct job creation; Okun’s law would hold that 2.5 percentage points (or 48 percent) of the decrease in private-sector unemployment rates was due to this spending.45 Regardless, it is clear from Darby’s numbers and the WPA’s own records that the WPA and other New Deal programs went far beyond their historical reputation as palliative welfare measures to have a substantial impact on the national labor market. Figure 7 shows that these job programs grew

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Figure 6. Public-sector versus private-sector job creation, 1933–1938: new jobs per sector (in thousands). From Michael R. Darby, “Three-and-a-Half Million U.S. Employees Have Been Mislaid: Or, an Explanation of Unemployment, 1934–1941,” Journal of Political Economy 84, no. 1 (February 1976): 1–16; George Field et al., Final Report of the WPA (Washington, DC: Government Printing Office, 1943), p. 28.

rapidly as a percentage of the national workforce from 1.5 percent to 7 percent, remaining in that range from 1934 through 1940 before gradually declining. By way of comparison, New Deal job programs as a proportion of the national workforce were five to seven times larger than the current federal government workforce is in comparison to today’s workforce.46 Simply put, this workforce was just too big not to have a significant impact on the unemployment rate and the national economy’s growth rate. Moreover, just as a new interpretation of the statistical reality of the 1930s requires a reassessment of the WPA’s, and thus the New Deal’s, success in combating the Great Depression, these same sources suggest that we also need to rethink our historical narrative of economic recovery in relation to World War II. As discussed earlier, part of historical shorthand thinking has been that the war, not the New Deal, ended the Great Depression. However, if we turn again to Darby’s figures and the WPA’s records,

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10.00% 7.75%

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Figure 7. New Deal workers as a percentage of the workforce. Note that much of the decline from 1938 to 1941 is the result of substantial privatesector employment growth rather than a sharp decline in the overall New Deal workforce size.

a new picture emerges that blurs the boundaries between the New Deal and the war. While many of the New Deal’s programs were indeed short-circuited by the recession of 1938 and the rise of a Dixiecrat-Republican alliance in Congress, the WPA survived handily. As Figure 5A indicates, the WPA retained unusual strength long past its 1938 peak of 3.5 million workers, remaining close to the three-million mark through the first half of 1939, staying above the two-million mark through the middle of 1940, and still employing around a million workers as late as early 1942. As we see from Figure 7, during this period, the WPA remained a significant employer, covering 6.5 percent of the workforce in 1939, 5.6 percent in 1940, 4.2 percent in 1941, and hanging on to cover 1.5 percent of the workforce through 1942 and 1943. More significantly, the WPA remained important in relation to unemployment levels, employing 39.5 percent of the unemployed in 1941, 35 percent in 1942, and 12 percent in 1943. Without the New Deal’s job programs acting as a buffer during the transition from a peacetime to a wartime economy, unemployment would have been much higher and our memory of the golden years a little less shiny. The trajectory of the WPA, growing in size after the “conservative turn” of 1937–1938 and enduring until the middle of the war years, also contradicts Brinkley’s narrative in End of Reform. He describes a New Deal that

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was shattered in 1937 and legislatively finished by 1938. At the very least, the mounting evidence from both Meg Jacobs’s study of price controls and Jennifer Klein’s study of health care means that Brinkley’s theory of an early end to the New Deal simply does not hold.47 The trajectory of the WPA also calls into question whether political historians have placed too much weight on FDR’s rhetorical transition from “Dr. New Deal” to “Dr. Win the War,” and it provides additional evidence that there is more continuity between the late New Deal and World War II than past accounts have argued.48 Periodization obscures the ways in which the past survives, and this is no less true in the case of the New Deal and the war than of other periods. The GIs of the “Greatest Generation” slept in 3,000 barracks, ate in 1,720 mess halls, and recovered in 410 hospitals, all built with WPA labor; when U.S. Air Force planes took off from American shores, they did so by rolling down the runways of 375 military airports built or renovated by the WPA.49 As America went to war, it did so with the New Deal still hard at work. Moreover, political historians’ assessments of the New Deal’s track record on unemployment and economic growth raise questions of consistency in historical standards. If we are going to exclude people from the employment count because they worked for the public sector, as Lebergott did, then consistency would require us to exclude the average of 15 percent of the workforce that has worked for the public sector since World War II. This is an obvious absurdity—nurses and teachers are performing the same work when they work in the public sector as they do in the private, which is why they are counted as employed. The same logic holds for WPA workers, the majority of whom were engaged in light construction work no different than that performed by the private construction industry. Consistency also requires that we apply the same standards of analysis to the New Deal that we would to other periods of economic history. We must ask how FDR did in reducing unemployment when compared with the attempts of LBJ and JFK to produce economic recovery after the 1958 recession, or with Nixon’s and Carter’s attempts to wrestle with stagflation, Reagan’s attempt to recover from the 1981–1982 recession through military Keynesianism and supply-side tax cuts, and Bill Clinton’s use of Rubinomics to respond to the 1992 recession. The dramatic drop in unemployment under FDR (measured in Figure 8 during his first two terms for ease of comparison with later administrations) outpaces all succeeding attempts by presidential administrations to

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–54.60% FDR

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Figure 8. Presidential recoveries compared: drop in unemployment rate (measured from peak unemployment to trough. The source for unemployment rates, 1963–2000, is Bureau of Labor Statistics, http://data.bls.gov/ timeseries/LNS14000000; the source for unemployment rates, 1933–1941, is George Field et al., Final Report of the WPA (Washington, DC: Government Printing Office, 1943), pp. 1–16.

bring about economic recovery, including many that are remembered as successes.50 In historical accounts and popular memory, the rapid-fire growth and drop in unemployment (from 7 percent in 1961 to 3.4 percent in 1968) ascribed to the Kennedy/Johnson tax cut are seen as the zenith of the postwar boom. Likewise, Bill Clinton’s boom years saw unemployment shrink (from 7.3 percent in 1993 to 4 percent in 2000), even if much of that prosperity rested on top of an unstable bubble. The Reagan recovery (from 7.5 percent unemployment in 1981 to 5.3 percent in 1988, with a nasty spike in 1983) was and remains hotly debated for the unevenness of economic gains, but it still exerted enough power to keep the conservative movement going for thirty years. If these later recoveries are seen as successes, then FDR’s recovery should be considered the most spectacular in the twentieth century in terms of the rate of improvement. To fast-forward to the modern era, we could take the example of the Obama administration’s attempt to recover from the 2007–2008 recession. While politicians still debate whether and how much to credit Obama’s American Recovery and Relief Act (ARRA) for the gradual decline of unemployment rates from their peak of 10 percent in 2009 down to 7.8 percent by the time of the 2012 election, most experts conclude that the ARRA

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created or saved three to four million jobs.51 Had the ARRA achieved the same relative effect during Obama’s first term as the New Deal did in FDR’s first term, we would have been talking about a hypothetical unemployment rate of 4.4 percent in 2012 instead of the actual rate of 7.8 percent. In that scenario, even the most determined critic of the Obama administration would have had to concede that the ARRA had succeeded. At the end of the day, the Darby data are too consequential to our understanding of major turning points in the New Deal to be ignored. If unemployment was 10 percent rather than 17 percent in 1936, FDR’s massive margin of victory in his first reelection can be understood not only through his appeal to hope and the prospect of relief, but also as a response by voters to substantial economic improvement.52 Likewise, FDR’s ability to win a third term in 1940 might have less to do with fear of war and more to do with persistent popular support for New Deal economic policies if voters had seen the 1938 recession reversed, with unemployment once again below double digits.

The WPA in Its First Three Years So how did the WPA—and, by extension, New Deal direct job creation— manage this historical feat of fighting mass unemployment? In truth, it began as a hustle. As noted in Chapter 2, President Roosevelt included in an executive order, which implemented the Emergency Relief Appropriation Act of 1935, a provision allowing the WPA to “carry out small useful projects,” of $25,000 or less, “designed to assure a maximum of employment in all localities.”53 The WPA’s development should therefore be understood as a dialectical process—constantly competing and defining itself against opponents, rivals, and claimants from within and without the Roosevelt administration. WPA administrators were pushed to develop new justifications for their role, new economic theories to explain the impact of the WPA on the economy, new ideologies to legitimate this new organization to the federal government, a novel relationship between the public and private, and new alliances (to be won despite opposition) with other political and intellectual actors. Over the first three years of the WPA’s existence, this dialectic process was especially visible in a series of political conflicts. The size of the WPA’s

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workforce and appropriations, where New Dealers were intent on “mak[ing] every American citizen the subject of his country’s interest and concern,” clashed with increasingly conservative Congresses opposed to “creeping socialism.” Moreover, wage rates paid to WPA workers were contested. Labor confronted and collaborated with the WPA to increase wages to the union “prevailing wage.” WPA administrators split among themselves over how different this new system would be from the stingy and begrudging system of direct relief previously afforded the poor and how effective the program would be as a source of stimulation for consumer purchasing power. Lurking beneath all of these questions was the biggest symbolic one of all: would the WPA be popularly understood as work or relief? The WPA’s Size and Budget From the beginning, the size of the WPA workforce, and by extension the size of congressional appropriations needed to sustain it, made the WPA an instant source of controversy. Since the original, rather limited, purpose of the WPA was merely to refer jobless workers to the PWA for employment on privately contracted public works, the growing dimensions of the WPA sparked cries of opposition from a number of groups. Private contractors of the time, the direct corporate ancestors of Bechtel and KBR/Halliburton, opposed the growth of the WPA, whose workers were hired, paid, and managed directly by the federal government. The program represented a threat to the private sector’s control of the construction industry and labor market, and it had become a rival for federal dollars at a time when Congress was almost the sole client.54 In the eyes of private-sector opponents, Harry Hopkins was more than a rival for money; he was the “high prophet of no profits,” an advocate for production-for-use projects and an enemy of the capitalist system.55 The sheer size of the WPA’s appropriations placed it front and center in struggles over the fundamental role and size of the federal government. It catalyzed debates over the virtues of deficit spending versus balanced budgets, rousing the competing apostles of inflation versus the hard-money loyalists. As such, the WPA became the enemy of congressional conservatives, such as Congressman Martin Dies of the Dies Committee and Senator Henry Cabot Lodge of the Special Committee to Investigate Unemployment and Relief, who saw the program as the vanguard of creeping socialism and bloated tax-and-spend liberalism. Within the Roosevelt

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Figure 9. Federal spending: ERA appropriations and deficiency appropriations, 1935–1942 (in billions). From Edwin Amenta, Drew Halfmann, et al., “Bring Back the WPA,” Studies in American Political Development 12 (Spring 1998): 4–7.

administration, officials such as Treasury Secretary Henry Morgenthau and Bureau of the Budget Director Lewis Douglas, who maintained their allegiance to the “Gold Bug” policies of the Grover Cleveland–era Democratic Party, thought the program was a ruinous drag on the public treasury and a source of unthinkable deficits and debt. Despite this opposition, the WPA continued to expand. As we saw in Figures 5A, 6, and 7, its workforce, both in absolute numbers and as a proportion of the labor force, grew substantially from 1935 to 1937. Responding dramatically to the 1938 recession, it grew once again and indeed maintained its substantial numbers well into 1942. Figures 9 and 10 show that the Emergency Relief Act (ERA), passed yearly, directed billions of dollars into direct job creation, but also (as we saw in Chapter 2) the program won the internal conflict within the Roosevelt administration over which agency would receive ERA funds.56 Politics of Expansion However, it would be wrong to say that the WPA’s expansion was just a process of path dependency, even given the positive political feedback that the WPA’s local projects elicited.57 Rather, the WPA’s very existence was contingent on victory in yearly skirmishes for ERA funding, approved by Congress from 1935 to 1943.

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150% 84%

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Figure 10. WPA appropriations as a share of total ERA, FY 1936–FY 1943. From George Field et al., Final Report of the WPA (Washington, DC: Government Printing Office, 1943), p. 99.

The WPA approached the annual battle in a consciously political fashion: after the regular appropriation had passed, WPA administrators would return to ask for a “deficiency” (i.e., supplemental) appropriation just before election time (when congressmen would be most ambivalent about throwing thousands of constituents out of work) to win extra funding that would make up the difference in the WPA’s yearly budget. Figure 6 shows that ERA spending grew steadily, from $1.36 billion to $1.82 billion and then $2.2 billion, during the WPA’s first four years (with the exception of the 1937 balanced budget), although not without much struggle and reliance on deficiency appropriations to keep projects going through the lean months. Likewise, as we can see from Figure 10, the WPA’s share of ERA spending increased dramatically from less than one-third of all ERA appropriations in the first year to over half by 1938. Eventually, it took every dime set aside by Congress for the ERA. Even after the WPA peaked, it won average appropriations of $1.24 billion a year through all but the last year of its existence, and it stretched the money through local sponsors to keep the workforce numbers high. While at first glance this seems nothing more than the usual story of bureaucratic budget politics, these fights over the WPA played a constitutive role in the political evolution of the New Deal. In their articles “Bring Back the WPA,” “Wage Wars,” and “Who Voted with Hopkins,” Edwin Amenta and Drew Halfmann demonstrate that the WPA’s success at winning appropriations was part and parcel of the process of the New Deal coalition’s formation. They argue that the legislative success of the WPA was due to

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the formation of a “reform-oriented regime” in Congress that could push through policy in alliance with President Roosevelt. This coalition included “very probable pro-spenders” whose ranks grew from 19 senators and 28 representatives in 1931–1932 to 33 senators and 106 representatives in 1937–1938, and “probable pro-spenders,” who rose from 9 senators and 90 representatives to 24 senators and 142 representatives during the same period.58 From 1935 to 1938, especially, Hopkins and his advisors could count on between 234 and 248 representatives and 49–57 senators to vote through appropriations for the WPA, a bloc that could practically dictate policy as long as the Southern delegation chose not to filibuster.59 Who were these legislators? Those most likely to favor spending included “legislators from radical third parties, Democrats elected in democratized states with programmatic parties, and Democrats or Republicans affiliated with radical third parties.”60 They formed a coalition of socialist and communist-allied politicians, often from the Midwest or Northeast, Democratic Farm-Labor and nonpartisan politicians from the radical Farm Belt, veteran Progressives who had come into office, and New Deal Democrats. It would be reasonable to describe them as the congressional Popular Front. “Probable pro-spenders” were largely middle-of-the-road Democrats elected with the support of urban and rural machines and politicians. Their moderation rendered them electable on both the Democratic and Republican tickets. While these more moderate politicians were more interested in winning patronage than establishing uniform (i.e., “programmatic”) social programs, their self-interest was a reliable barometer of their voting patterns.61 These two groups fed off each other’s rise: as the New Deal coalition grew in size, thanks to the election of Left-leaning reformist Democrats and Northern and urban Democrats more broadly, the WPA’s political support grew with it. Likewise, as the WPA offered more jobs, public works, and consumer spending to millions of Americans, support for the WPA became valuable capital for politicians running for office. Because of these political ties, the WPA won successive budget victories from 1935 to 1939, as pro-spending Democrats pushed through budget increases and fended off cutbacks (with the exception of 1937) and increased wage rates from “security” to “prevailing” standards, while maintaining a substantial amount of Southern support from 1935 to 1937.62 Amenta and others argue that “most southern Democrats became opposed

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to the WPA after the Roosevelt administration took steps to make it permanent.” They defected gradually from the pro-WPA coalition from 1938 to 1941, which, combined with the decrease in the numbers of “very prospending” and “pro-spending” legislators after the 1938 midterm election, sapped the legislative constituency for the WPA. Yet for those crucial years of 1935–1938, Southern Democrats held to the New Deal coalition and provided just enough political support for the WPA to prosper.63 The political struggle over the WPA’s appropriations went beyond the congressional circles that Amenta and colleagues describe. With the support of right-wing newspaper editors, columnists, and reporters, conservative activists attacked the WPA’s expanding budgets as signs of inefficiency, corruption, federal tyranny, and the dreaded boondoggling.64 Headlines from the Chicago Tribune, for example, show the extent to which a common conservative narrative emerged: “Survey Shows WPA Rules Balk Useful Projects,” “Warns New Deal Can Never Live Down Its Waste,” “President Sees Boondoggling as Trade Spur,” “WPA’s Actors Give Santa a Great Big Hand: How to Pass Time While Waiting to Boondoggle,” “Study Assails Money Wasted in Boondoggling,” “WPA to Enlarge on Boondoggle Program.”65 As Rauchway has noted, these headlines showed a strong political bent, with the term “boondoggle” suddenly emerging in 1935 and spiking during the election of 1936 as the conservative press urged Congress to defund the WPA.66 In response, Hopkins and his colleagues put on a full-court press: Aubrey Williams and Jacob Baker reached out to labor unions who represented WPA workers. They sought support from the skilled workers represented by American Federation of Labor (AFL) building trades’ unions and the Congress of Industrial Organizations (CIO), which organized unskilled workers through the United Auto Workers’ project for unemployed workers, urging them to make WPA funding a key element in union endorsements. The unions were asked to get out the vote for pro-WPA incumbents, and they mobilized WPA workers and the unemployed who hoped to join their ranks to vote for the New Deal.67 The WPA launched a sophisticated public relations effort, beefing up its communications department to pump out pamphlets, newspaper articles, and even a live radio broadcast (with Harry Hopkins acting as DJ), all featuring happy WPA workers. A specialized “war room” was established to instantly refute newspaper and radio stories about WPA “boondoggles.” WPA leaders tracked public opinion meticulously with the help of the new

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Gallup polling company.68 Finally, careful efforts were made to ensure that WPA projects were spread across every county in the country (while still concentrating in high unemployment areas) in order to maximize the number of elected officials with incentives to defend the projects within their districts.69 The WPA’s leaders had to do battle within their own party, both with competitors for public works dollars and conservative Democrats like Lewis Douglas who disapproved of the very idea of public works. From 1935 to 1938, the WPA was largely successful in these internal contests, strengthened by the president’s political appeal and his recognition that local WPA projects were critical in maintaining his popularity. Wide Democratic margins in Congress and the political advantage conferred by the rollout of new jobs and public goods at a time of economic depression made all the difference.

A Turning Point: 1938 I have argued that the WPA and its antecedents worked assiduously to create political alliances among different pro-spending factions within the New Deal, progressive Democrats in Congress, and groups within the New Deal coalition like labor unions, African American voters in the North, and big-city mayors. What elevated these alliances beyond mere political convenience is the fact that they relied on intellectual theories, methods, and concepts that worked on the ground. As Figures 5 through 7 make clear, the WPA enjoyed an expanding workforce, steadily increasing congressional appropriations, and a growing share of ERA appropriations. There is nothing like success to cement a coalition and this one could bask in accomplishments that were critical to the nation. Hence it proved more resilient than, say, the producerists in the National Recovery Administration (NRA). The WPA “camp” was able to blow past opposition, even when it was backed by political force. In 1937–1938, when FDR, always open to persuasion by different advisors, famously took the advice of Secretary Morgenthau and submitted a federal budget designed to move toward balance by increasing taxes and slashing spending, the WPA was put on the defensive. As the largest of the New Deal spending programs, the WPA’s budget took the greatest hit, the WPA’s workforce shrank by over 50 percent, swelling the ranks of those who now found themselves unemployed at the hand

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of the Roosevelt Recession of 1938.70 Secretary Morgenthau and his allies are often overlooked by historians as important Democratic opponents of the New Deal compared to the Dixiecrat faction. However, within the lifetimes of the New Dealers, the Democratic Party was largely dominated by this conservative northeastern faction and their commitments to the gold standard, balanced budgets, and government economies (i.e., spending cuts). The administrations of Grover Cleveland in 1885–1889 and 1893– 1897 (as well as his unsuccessful nomination in 1888) and the nominations of Alton Parker in 1904 and James Cox in 1924 testify to the strength of so-called Gold Bug Democrats before the advent of the New Deal.71 In order to survive Morgenthau’s budget cutbacks, much as he had done while on the Committee on Economic Security (CES), Hopkins had to strike an alliance with the “spending faction” of the New Deal, which included Agriculture Secretary Henry Wallace, Labor Secretary Frances Perkins, Interior Secretary Harold Ickes (also a PWA administrator and Hopkins’s erstwhile rival for public works funds), as well as a number of leading New Deal economists, including Marriner Eccles and Lachlan Currie of the Federal Reserve and Leon Henderson of the NRA. This alliance was more than a temporary arrangement of bureaucratic convenience; their intellectual and ideological common ground would help build a vision of a “jobs and assistance state.” Two reports on the WPA written in 1938 by leading Keynesians Lachlan Currie and Leon Henderson display the essential theories of the “spending faction.” They were occasioned by the imperative to persuade President Roosevelt to reverse his decision (inspired by Morgenthau) to cut the budget. Instead, they urged a budget that increased spending without increasing taxes, creating a deliberate and self-consciously Keynesian deficit. In these memos, one can see the incorporation of the WPA’s ideas in the “Curried” Keynesianism that deeply influenced late New Deal liberalism.72 Simultaneously, in a series of WPA memos authored by Corrington Gill, Jacob Baker, Emerson Ross, Alan Johnstone, and Aubrey Williams, one can see the influence of Keynesian ideas about consumption, purchasing power, and the multiplier effect on the justifications for the WPA’s existence. Currie opened by laying out the dismaying statistics of the recent decline. He described the origins of the previous recovery, giving credit to “the Civil Works Administration . . . as an emergency device to provide employment and purchasing power” and arguing that the “largest single

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factor in the recovery movement was the excess of Federal activity-creating expenditures over activity-decreasing receipts,” a clearly Keynesian argument for deficit spending.73 As the narrative unfolded, Currie gave credit for the 1933–1937 recovery to the New Deal’s fiscal policy, and he placed the blame for the downturn on the fact that “it is in the net federal contribution to community expenditures that the greatest decrease took place.” Had the federal government avoided the spending cuts, the boom would have continued unbroken.74 Moving forward, Currie argued for a compensatory fiscal policy, with the WPA as the major spending program of the New Deal. Leon Henderson made the case in even stronger terms for a progressive agenda that combined Keynesian stimulus, an institutionalist focus on controlling prices, keen attention to purchasing power, and an expanded WPA.75 Blaming the 1938 recession on a net government withdrawal from the economy, which was caused by the attempt to balance the budget, Henderson called for an expansion of public spending, arguing that “purchasing power has got to come from private or public spending, and I cannot see where large increases in private spending are likely to be initiated.”76 Current levels of federal intervention were insufficient to deal with the recession, Henderson argued. Accordingly, he called for a “wide social program, which will require a $7 to $10 billion annual budget” in which “work projects of the WPA type . . . should be made an integral part of a permanent Federal social security program.”77 In rather dramatic fashion for an economist, Henderson urged Hopkins to “fight, fight, fight” for increased spending on a mass scale, rhetorically questioning “how can you prime a pump with an eye-dropper?”78 In this memo, Henderson embraced the WPA on both ideological and intellectual terms, arguing that the New Deal “is committed to a policy of not letting people starve, not only because of its resentment against Tory indifference but because it knows that the nation’s manpower must be kept in working order and that relief payments help to make up a deficit in buying strength.”79 He even described spending as the “democratic method” of dealing with the Great Depression while criticizing the “fascist method” of cartelizing to increase production. Intellectually, Henderson used the WPA to reconcile Keynesian proposals for spending (directed at the bottom of the income scale) with institutional arguments (that progressive spending would counteract the problem of “administered prices”). “Stimulating consumption” was reconceived as an antitrust strategy.

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The WPA’s administrators latched on to Currie’s and Henderson’s Keynesian ideas about purchasing power, the marginal propensity to consume, and multiplier effects in order to justify an expanded job program. In a 1938 memo titled “Suggested WPA Program to Expand Purchasing Power as Rapidly as Possible,” an unnamed WPA advisor (most likely Johnstone or Baker) linked the decrease in WPA appropriations to the larger picture of the federal budget, estimating that the “net stimulating effect of Federal expenditure in February 1938 had actually declined to a net negative $83 million, forcing an additional two million workers into unemployment.”80 In order to reverse the Roosevelt Recession, the author suggested that because “the WPA is the only source through which expenditure can be rapidly and surely expanded, this would mean increasing WPA monthly expenditures to a level of approximately $500 million a month.”81 Four million workers could thereby remain on the job, a deliberate Keynesian attempt to reduce unemployment and expand purchasing power. This new alliance between direct job creation advocates and Keynesian economists would engage in a “contest of strength” against those who believed in balanced budgets, both in front of FDR himself and then again before the Senate’s Byrnes Committee. All hands were on deck as the Roosevelt administration rallied behind the 1938 ERA, the centerpiece of the Keynesian budget.

Shifting the Discourse The Byrnes Committee on Relief was stacked deep with potential opponents. Even the generally pro-relief chair, Senator Byrnes, would vote against work relief in 1939. Republican Senator Henry Cabot Lodge Jr. of Massachusetts was the leading voice of congressional conservatives. The 1938 appropriations fight came at a time when the New Deal’s political influence was at its low point: the failed court-packing and executive reorganization efforts had catalyzed the Dixiecrat-Republican conservative bloc, the economy had suddenly slipped into recession, and the president had recently failed to purge New Deal opponents among the Southern Democrats in that year’s primaries. As such, WPA officials could no longer count on the automatic support of Democratic legislators, and they faced an empowered conservative bloc that saw the WPA as a prime target.

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Rather than retreat in the face of controversy, the WPA’s advocates counterattacked, arguing in both practical and imaginative terms for an expanded commitment to public employment. Baker proposed a “public work program for increasing employment,” which envisioned “employment for one member of every family totally unemployed,” adding an additional 800,000 to 900,000 jobs to the WPA’s then-current three million.82 The memo titled “Suggested WPA Program to Expand Purchasing Power as Rapidly as Possible” went beyond that number to call for four million workers at $500 million a month. Corrington Gill, normally one of the more conservative of the WPA’s advisors, advanced on a different front, calling for the establishment of a permanent “Department of Social Welfare,” to bring all social welfare activities (including Old Age Assistance, Aid to Dependent Children, the Food and Drug Administration, and the Women’s and Children’s Bureaus of the Labor Department) under one roof. He made it clear that work relief needed to become a permanent element in the federal government’s antipoverty toolbox.83 Johnstone, one of Baker’s advisors in the Social Research Division, proposed that the new work program should abolish any relief requirement and make “unemployment . . . the sole test of need,” and that the program had to base its wages on the new federal minimum wage, such that “the government will thus support the floor under wages and the ceiling over hours.”84 Taken together, these proposals constituted a vision of a New Deal state centered on jobs, just as Amenta and colleagues theorized in “Bring Back the WPA.” For Baker, Ross, Gill, and other WPA advisors, the WPA would be not only the major vehicle for fighting unemployment, but also an instrument to realize the rest of the New Deal’s agenda. The WPA’s “floor under wages and the ceiling over hours” would help the Labor Department enforce the Fair Labor Standards Act by acting as a yardstick against which private employers would be judged. By creating competition in the labor market, the WPA would help antitrust activists in the Department of Justice fight the administered prices of monopoly; for the Keynesians, the WPA would boost consumer demand through its massive payroll and bulk purchasing power in core materials industries.85 This syncretic impulse within the WPA should sound familiar as it predated the agency’s founding, when FERA had advocated a synthesis between direct job creation and social insurance during the creation of Social Security.86 This barrage of proposals, with more and more progressive expansions of the WPA, was to redefine the leftward edge of the political debate. The

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conservative minority report presented a perfect encapsulation of the rightward edge. Lodge and his colleagues on the committee argued that “the businessman, with all his faults, offers the best hope of new jobs,” and they charged that the executive discretion given to Hopkins was a “clear invitation by Congress to the executive to . . . [spend] relief money where it will help or hurt the friends or enemies of the party in power.”87 Lauding the private sector and fearing public power were common features of conservative rhetoric at the time, but the right wing of the committee went farther, advancing a novel argument against the very concept of public works. Lodge and his colleagues pitted the interests of the young and elderly (and thus deserving) poor against the interests of working-age WPA employees, arguing that society’s most vulnerable “are not served by schemes which take large sums of money . . . for projects from which they will never benefit.”88 In addition to obscuring the concept of the common or public good (let alone the idea that young people or old people might make use of the roads and buildings constructed by the WPA), Lodge and others recast the program as a lose-lose proposition. “If the Works Progress Administration builds a schoolhouse, or a swimming pool,” the cost of maintaining these new public works “means just that much less for the unfortunate people who look to that local government for direct relief.”89 In the name of equal treatment for all classes of the poor and revival from recession, the minority report called for “general tax reduction whenever possible,” the reduction of the “unnecessary and burdensome social security tax,” and splitting up the WPA to return public works to local control.90 The WPA’s advisors transformed their proposal to expand the work projects for a more moderate option (but not to jobs for four million). The prospect of a larger, permanent, and more ambitious WPA led the majority to vote for the middle ground: the WPA as it was. “The work-relief idea,” the majority wrote approvingly, “promoted the idea that the best relief to the unemployed was jobs, and that money spent in the form of wages for work . . . produced assets of permanent value to the community.”91 The Byrnes Committee argued against the minority’s critique, explaining that the “expenditure of these sums . . . has saved the lives and morale of millions of people in America” and that, far from being corrupt, “the projects have been conducted with great efficiency.”92 Thus, pressure from the Left maneuvered the committee into issuing a majority support that, while not embracing the wider goals of the WPA’s experts, still called for a significant expansion.

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The Keynesian 1938 federal budget and the 1938 ERA emerged as the outcome of this debate. Historians of the New Deal have rightly portrayed this as a victory for Keynesianism, in that the federal budget increased by $2 billion exclusively through borrowing. Yet it was also a victory for direct job creation—the WPA budget grew by $1.4 billion (70 percent of the total stimulus), leading to the peak of 3.5 million in the WPA’s workforce. Unemployment turned on a dime—within two years it fell back to the 9 percent mark hit in 1937. By 1941, before the U.S. entry in World War II, it was down to 6 percent. As I argued earlier, many scholars have attributed this turnaround to monetary policy, which shifted in parallel with New Deal fiscal policy (making it difficult indeed to isolate the effects of either policy). However, even if we assume that spending from 1938 onward had a multiplier effect of zero, the Darby figures allow us to state that (at a minimum) the WPA made up at least 51 percent of the total decline in unemployment between 1938 and 1941. The WPA fulfilled the role foreseen by Currie and Henderson as the programmatic vehicle for New Deal Keynesianism.93 Following the victory of the spending faction, the WPA’s advisors proposed greater and grander plans for the future, imagining a future permanent Department of Social Welfare with Cabinet status, pushing for higher wages and more ambitious projects that included more workers than ever before. As the WPA hurtled toward the end of the 1930s, its advisors began to speak increasingly of a right to a job. The WPA would endure through the middle of World War II, ensuring a smooth transition from a peacetime to wartime economy of full employment. Over at the National Resources Planning Board (NRPB), veterans of the WPA helped to draft Security, Work, and Relief, a call for the right to a job, backed by a federal guarantee of full employment and a cradle-to-grave welfare state, in which a public employment program would serve as the linchpin of a new American state.

Measuring Success As an organization, the WPA was self-reflective to a fault. Advisors like Williams, Gill, Baker, Ross, Josephine Brown, and Johnstone shared similar backgrounds in social science and social work, and they reached back to their roots in “scientific” social reform when they were tasked to head up

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the new administration. Hence, part of the WPA’s mission from the beginning would be to study itself, producing a steady stream of internal surveys from 1935 to 1943. In 1935, the WPA issued several important reports about its first year of operation, including “Report on Progress of the Works Program,” “Mission of the Works Progress Administration” (an independent analysis of the WPA’s administration, compiled by Colonel Harrington of the U.S. Engineering Corps), and “Genesis of Relief” (which summarized the intellectual development of the work program from 1933 to 1935). The first of these analyses collected statistics on employment, allotment of funds, and the status of existing relief programs. It revealed both a program growing in size to 2.35 million workers and an emerging division of labor between the WPA and the PWA over housing and roads. It gave these federal programs credit for the fact that “relief cases in 140 of the larger cities declined 3.3 percent,” a clear sign of early progress, but worried over the fact that average costs per person were exceeding original estimates.94 Responding to this concern, Harrington’s report on the organization of the WPA recommended an entirely new administrative structure to avoid “rigid procedure . . . that throttles the administrative machinery, and the confusion, inefficiency, and extravagance that results from lack of orderly methods.”95 He recommended the creation of modern bureaucratic divisions to oversee finance and reports, personnel, engineering, special projects, women’s projects, social research, and statistics, as well as a system of regional administrators to oversee WPA projects in different states. Harrington’s proposals were adopted swiftly. As a result, by December of that year, Gill and Ross could report to Hopkins that the program was ticking along nicely. In “An Analysis of Employment on WPA Projects in December 1935,” they reported that the WPA had managed to hit its first-year goals of 2.7 million workers employed at an average wage of $50 a month.96 From a purely administrative perspective, the program’s first year was seen as a solid success, though not without problems. However, these reports represent only a skeletal account of the WPA’s views of itself. Baker’s “Genesis of Relief” was the WPA’s autobiography, intended as a primer for the president on the historical development of direct job creation. Baker portrayed the New Deal’s foray into poor relief as a desperate attempt to meet the human needs of twenty million people.97 While defending FERA as having “reduced to a minimum the suffering of these destitute millions,” he nonetheless argued that the CWA had been the

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“greatest factor in reducing the relief rolls,” producing a new and superior model—direct job creation—for the alleviation of human misery. In Baker’s opinion, this new model was one of the relief program’s greatest accomplishments.98 In his discussion of the “relief problem” and “the work relief program,” Baker continued to distinguish the WPA from early relief programs, portraying work as the superior solution to the problem of the “industrial unemployed and their dependents.”99 Even so, Baker had even greater ambitions in mind. He compared the work relief program of the WPA unfavorably to a true work program: “While the merits of work relief, in contrast to direct relief, cannot be too strongly emphasized, we should not assume that the work relief program has, on the whole, duplicated private employment conditions for the unemployed. In its failure to provide full time work, assurance of security, and continuity of employment lies the reason why it can be considered only a stepping stone to the new Works Program in which these things are provided.”100 Baker aimed to describe an arc of progress from direct relief to work relief to a full-scale government work program. He defined a fully successful program as one that fits the “human values” of an ideal work program. Measuring success was part and parcel of the constitutive development of job creation policy. These reports set out a hierarchy of values: the cost to the public treasury was not important, but the morale and skills of the unemployed were; the problem of dependency was of secondary importance; the provision of work was primary. The leadership associated relief and work relief with the past, “loosely planned” and inefficient, while endowing the new work program with the positive attributes of modern science, armed with precise “information on occupational characteristics” that allowed “engineers, sociologists and planners” to devise modern job programs that made the most efficient use of human capital, fully justifying higher costs.101 If initial reports defined success, failure, and narratives of progress, the WPA’s final reports claimed success for this democratic experiment and urged that it guide policymakers and the public to accept direct job creation as a permanent part of public policy in the early 1940s. Here, the WPA’s Inventory and Final Report serve as useful comparisons. The former is a glossy pamphlet full of photographs and Art Deco–style charts aimed at burnishing the WPA’s image in the minds of the electorate, and the latter is a more staid, bureaucratic report aimed at laying out the Roosevelt administration’s case for a permanent work program.

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The Inventory used a combination of photography, easy-to-understand charts and graphs, and prose to persuade readers. Lavish photo spreads reinforced the text’s argument about the superior impact of work programs on unemployment. It defined the public sphere as a nation transformed: photos of roads and bridges emphasized the sweeping modernist lines of concrete and rebar; portraits of workers evoked Dorothea Lange’s themes of diverse humanity, the simple dignity of faces, and the aesthetics of harmonious group activity.102 The success of the WPA was rendered in physical, visual, and tactile form. The pamphlet’s categories—“Roads and Bridges,” “Parks and Playgrounds,” and “Public Buildings”—made an implicit argument that the success of the WPA should be understood as additions to the public square rather than as the triumph of a particular policy. However, one can still see a difference between the WPA’s perspective on the work program, and that of the PWA—here, the results were ultimately those of human labor. Ultimately, the report argues, the Inventory shows that “the Nation is learning to use to advantage the country’s emergency labor surplus.”103 The Final Report made many of the same points, and indeed much of the text seems to have been condensed from the longer internal document. However, the two documents were quite different, and the divergence is instructive for distinguishing between what was publicly palatable and what remained the policy knowledge of experts. The style of the Inventory, “an objective study of the facts as they have been found,” drew on traditions of social investigation and social science. The Final Report relied more on the Progressive academic style that the main author, George Field of the WPA’s Social Research Division, was trained in. Charts and graphs of economic data were made to do the same work as photos in framing a narrative. The Final Report made the intellectual framework of the late WPA— a hybrid of Keynesian economic theory, the “poverty knowledge” of 1930s social work, and internal intellectual developments of public employment—even clearer than the Inventory did. Where the Inventory merely hinted at the idea that the WPA should serve as a model for the future, Field and colleagues argued explicitly both that “the WPA was important as a social and economic stabilizer,” from an economist’s perspective, and that “WPA work projects marked an advance over traditional poor-law methods of providing relief,” from a social work point of view.104 The Final Report followed the same historical narrative as the early WPA reports, suggesting that earlier arguments had become widely accepted

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throughout the agency. Before FDR, relief was driven by “repressive theories.” The New Deal irrevocably broke with these theories by establishing FERA, which “held the line” while “it experimented with many types of programs.”105 The result of these experiments was the WPA, the embodiment of the conclusion that work relief is superior to relief. The theme of positivist progress extended throughout the Final Report, with “direct Federal administration” of programs seen as an organic part of the professionalization of relief, along with standardization of benefits and organization and the establishment of professional research divisions. Unusually, the Final Report did not shift attention from the program’s operation to its results. Instead, the WPA was presented from the viewpoint of its administrators, defined by the institutional mechanisms of budgets, hiring procedures, planning, and administration. Public works themselves were barely mentioned. Of course, it had a different audience and a particular purpose, that of “making the record of WPA experience available to Government officials and other interested individuals, and to presenting for future guidance the problems encountered during the existence of the program and the manner in which they were solved.”106 While on the surface, the Final Report was meant to be a farewell address from a program no longer needed, underneath the authors were providing their fellow bureaucrats with a how-to manual for future job creation programs. Where the Inventory emphasized the works and the workers, the Final Report emphasized the ideas underlying the WPA. The success of the program in the eyes of the WPA’s experts validated both a theory and the millions rescued from unemployment and their labor. Field’s introduction assumed that “acceptance by the Federal Government of a portion of the responsibility for assistance in the provision of work and wages in a time of mass unemployment” would become a permanent element of the American state. The economic data in the report were there to show how quickly the government was able to create millions of jobs, how long it could keep workers employed, and how such a program could be organized—proof of concept. The belief that policymakers would accept empirical evidence as proof of a successful policy experiment was not, however, driven by a blind faith in pragmatism. The Final Report did not openly discuss its own ideology. Nonetheless, one can see it in the condemnation of “repressive” poor relief, the firm belief that “the unemployed of the Nation wanted work and wages; they did not want to loaf in idleness on a dole,” and the unspoken implication that the dole and idleness are morally wrong while work is inherently

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ennobling. We see the same language in Roosevelt’s Four Freedoms. Field rested his positive assessment of the WPA’s success on the belief that “every employable American should be employed at prevailing wages in . . . private or public employment” as a human right.107 Ultimately, the creation of this body of knowledge and the ideology that legitimated it should also be included on the list of WPA successes.

Conclusion The leadership of the WPA packed up their boxes in 1943. They looked forward to an America transformed by the results of their successful experiment. The Roosevelt administration had proved that the old system of poor relief could be consigned to the dustbin of history and replaced by direct job creation and social insurance, and that federal job programs could pay a frugal but decent wage while producing public works of value at low cost. Most of all, the WPA had shown that federal action could modulate unemployment rates, with direct job creation at the leading edge of the New Deal’s attack on the Great Depression. As the WPA’s experts saw it, the future belonged to direct job creation: the federal government had assumed the responsibility for managing the economy at every level, and FDR’s Second Bill of Rights, announced in 1944, put the right to a job first and foremost among the new economic rights of all citizens of postwar America. The NRPB drew up proposals, inspired by work done by direct job creation advocates on the CES, that would install a new and permanent direct job creation program at the heart of U.S. economic policy. The success of the WPA in reducing unemployment between 1935 and 1937, the fact that it survived FDR’s disastrous turn toward austerity where other New Deal initiatives perished, and its second life from the Keynesian budget of 1938 through to 1943 all mean that it was distinctive among New Deal programs. Unlike the NRA, which suffered a fatal loss of faith within its own ranks even before it was terminated by the Supreme Court, the WPA was broadly popular. Like the Agricultural Adjustment Administration (AAA), the WPA survived a massive reversal of fortune; however, unlike the AAA, it was not made a permanent function of government. Unlike the 1938 Health Act or the 1937 government reorganization bill, which also were undone at the hands of an increasingly conservative

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Congress, the WPA had a nine-year track record in government before it was demobilized. These differences would have significant consequences for direct job creation’s future. Arguably, the high point for the WPA came in early 1939, when it received an impressive $1.47 billion appropriation and the Reorganization Act of 1939 had passed through Congress. That legislation empowered FDR to create the Federal Works Agency, an independent federal agency led by WPA veterans that consolidated all federal jobs and public works programs under its umbrella, including the WPA’s old rival, the PWA. Even so, the signs of political eclipse were there: later that same year, the WPA’s prevailing wage was cut back to the security wage, the WPA’s Theater Project was shut down, and the WPA was banned from initiating projects on its own unless it had local sponsors.108 The decline was remarkably gradual, however: in 1940, the WPA held its own, winning $1.3 billion from an increasingly conservative Congress, but the 1940 midterm elections devastated the ranks of liberal Democrats. Without them, the organization was vulnerable. Hence, in 1941, WPA appropriations dropped to $875 million, and further down to $280 million in 1942. In December 1942, FDR granted the WPA an “honorable discharge,” publicly marking the end of the program’s political existence, although several hundred thousand people would still work for the WPA through the first months of 1943. At the end of the day, the WPA’s demise was due to an ironic coincidence of its own success and the timing of American politics. It was not an accident that the Roosevelt administration created the WPA at a time when unemployment was still at 15 percent, that the WPA helped to push the 1938 Keynesian budget when unemployment spiked back to 12.5 percent, and that it was axed when unemployment hit a recorded nadir of 1.8 percent. Political support was nigh universal when the need for direct job creation was readily apparent to anyone who saw breadlines winding down the block. Even in 1945, the memory of the Hoover years was strong enough that the fear and determination never to see those conditions again pushed a Full Employment Bill onto the national agenda. Public support for direct job creation was quite strong throughout the New Deal, especially in comparison to relief. In 1935, 87 percent of the public supported work relief programs, rising to 90 percent through 1938 and 1939.109 Over time, however, the intensity and urgency for such a program faded. As the WPA succeeded in reducing unemployment both directly and indirectly, it was no longer seen as necessary. Despite having

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acted as both a foundation and catalyst for national recovery, the memory of the private sector’s need for government intervention was swiftly wiped out in favor of a narrative of corporate vigor and dynamism. The WPA’s base of political support eroded, as increasingly optimistic (and increasingly employed) working-class Americans lost interest in mobilizing against political attacks on job programs. Political science teaches us that a small but highly motivated and cohesive interest group triumphs over a larger but more diffuse and weakly motivated group. That is precisely what the WPA was left with: a large, but no longer active, support base, and a small but determined set of opponents. While the break with the Dixiecrat faction was probably inevitable, given FDR’s failed purge of the Southern Democratic Party in 1938, the failure of the government reorganization bill in 1937 might have been avoided if the turn to austerity had never happened. If the WPA had continued on its earlier trajectory of growth instead of undergoing a wrenching reversal and having to fight for its life, the reorganization bill might have been debated in a political environment of unemployment dropping from 9 percent to 6 percent, rather than rising back into the double digits, enhancing its chances of passage dramatically. Had that happened, a permanent Department of Social Welfare would have been born. But it was not to be. Still, there were signs of durability. Unlike other demobilized New Deal programs, enough people in the government were impressed by the WPA’s results that it was part of the postwar economic planning discussion. As we shall see in Chapter 4, the NRPB would conduct a major study on the “economic consequences of public works,” building on data collected by the WPA. This study by John Kenneth Galbraith and others heavily influenced the NRPB’s master plan for postwar reconstruction. Alongside proposals for universal health care and a cradle-to-grave welfare state was the firm conviction that direct job creation would be needed to enact FDR’s “right to a job” in daily life. Thus, despite its formal demobilization, direct job creation survived the transition from “Dr. New Deal” to “Dr. Win-the-War” and beyond, albeit by the skin of its teeth. When Congress convened to debate what postwar America would look like, direct job creation would be front and center.

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Right to Work? Rethinking the Promise of Full Employment in the 1945 Moment

More than anything else, 1945 was a year of plans. Across the political spectrum, economic planning had never seemed so hegemonic. Wartime experience with centrally directed economies joined state capacity with political desire. Blueprints for everything imaginable spilled forth from pens, typewriters, newspapers, and magazines. Designs for rebuilding Europe or constructing a million new homes a year, ambitions for universal social welfare states and systems of health care provision, provisions for reconverting factories from tanks and bombers to cars and commuter planes, and plans for reintegrating a generation of soldiers into civilian life were the stuff of deliberation and legislation. No topic loomed larger than full employment. It was the central concern throughout the Atlantic world, fueled by a constant, slow-burning uncertainty running just underneath the relief of wartime full employment and the triumphal victory over fascism. The end of the Great War had created two recessions for western economies as returning doughboys came home to unemployment lines swollen by discharged defense workers. Would the same fate await the GI? The New York Times worried about “a serious unemployment problem arising out of the fact that civilian goods manufacturing will not have risen rapidly enough” to compensate for the decline in military responding, which “inevitably would mean a period of recession.” The Times noted that sixty to eighty million tons of steel in military orders and mountains of grain had amounted to a surplus of $100 billion. Sixteen million soldiers and sailors were coming home. Eighteen million defense workers would

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no longer be needed in the factories, and journalists shuddered at Mayor LaGuardia’s predictions of a million unemployed pouring into New York City in search of relief.1 On the eve of victory, the American government had yet to unite around any single plan for full employment. For several years, a discordant chorus of voices had argued for competing alternatives. The federal government should act as the direct employer of last resort, or it could print money while business and labor planned prices and wages. Full consumption could be ensured through checks issued directly to the population, or the government could direct investment. Only one section of the chorus could be called Keynesian, and even among them, there was no agreement on whether aggregate demand should be supported by social spending or technocratic management of the “fisc and the Fed.” In our time, these voices would probably be drowned out by the full orchestra of the national bureaucracy and their K Street counterparts, but in 1945, Washington, DC, was a much smaller place, with fewer than fifty think tanks and barely four hundred lobbying groups (compared to 1,873 think tanks and 17,000 lobbying organizations today). Not only was there less competition for the government’s attention, but the government was much more porous. The executive office of the president was only a few years old; the growth in research, planning, and policy departments among the departments of the Cabinet, spurred by World War II, was still very much in its infancy. Congress still largely resembled the more informal structure of the nineteenth century, with no Congressional Budget Office and a tiny staff. Most importantly, the new president, Harry Truman, had yet to import any of his own advisors. A space was open for ambitious policy entrepreneurs to influence and potentially dominate the debate over full employment. It was this openness that drew so many planners into the debate over the Full Employment Bill (FEB) of 1945–1946. Indeed, the concept had become big business. Henry Wallace’s book, Sixty Million Jobs, was a smash New York Times bestseller and the subject of a nationwide book tour. Wallace would be the star witness for the FEB. To celebrate its one hundredth anniversary, Pabst Blue Ribbon, a beer manufacturer, decided that “making a real and significant contribution to the nation that made possible our growth from a tiny brewery on a hill” would best be accomplished by “stimulating individual American thinking on this vital problem of full employment.” The firm offered $50,000

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($600,000 in 2010 dollars) in prizes to the best essays on the topic.2 Along with ordinary citizens, some of the leading planners in America competed for the top prize, because the policy wonk who seized the public’s imagination might become the American version of William Beveridge.3 The stillliberal New Republic published a special issue collecting the proposals from some of the leading minds in the nation. Magazines like the Nation, Common Sense, and Public Affairs all published articles from full-employment planners opining on America’s options—each of them hoping to become the authority on the nation’s number-one issue. Conservatives (bolstered by the right-wing bent of American newspaper syndicates that had, it should be remembered, overwhelmingly and futilely backed FDR’s opponents) entered the debate as antagonists to full employment. The Hearst syndicate Chicago Tribune thundered repeatedly that “the true alternatives are not Rooseveltian fascism or depression . . . there is a far better way. It is individualism and free government.”4 Friedrich Hayek’s Road to Serfdom became a New York Times bestseller, and excerpts were republished in Reader’s Digest and Look Magazine, reaching millions of Americans. This public relations campaign had a significant impact on one element of public opinion: businessmen turned solidly against full employment, with 90.5 percent of businessmen surveyed in 1942 arguing that business should assume responsibility for jobs (as opposed to 7.5 percent in favor of the government taking charge). Sixty-six percent of businessmen surveyed in 1944 believed that government had no place in employment planning (despite the fact that only 15.7 percent of them believed business actually would step up).5 However, as Ruth Ellen Wasem points out in Tackling Unemployment, the conservatives’ PR campaign failed to penetrate beyond the ranks of the wealthy. While 65 percent of Americans were confident that they would have a job, 80 percent thought there would not be full employment after the war. Indeed, there was broad public support for government intervention. In 1943, 72.7 percent of Americans expressed a desire for the federal government to begin planning for full employment immediately; the same percentage believed that full employment would be possible if government intervened. By the summer of 1945, a full 76 percent of Americans believed that the government should take up the responsibility of finding jobs for “workers who lose their jobs and are unable to find work because there are not enough jobs,” with a full 42 percent believing that this would involve “the government . . . step[ping] in and provid[ing] work like the WPA

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[Works Progress Administration] and PWA [Public Works Administration].”6 In the public debate, most people were listening to the liberals. Even so, it was not entirely clear what full employment actually meant. Academic journals and pundits debated the concept, the best means for achieving it, and what all of this would mean for the nature of the postwar political economy. Over a thousand articles on the topic were published between 1940 and 1946. If the federal government assumed a direct responsibility for full employment, would this entail some form of central economic planning? The government directing the financial sector? Outright socialization of the economy? Or would the United States instead develop some form of corporatism, with the federal government acting as a broker state between business and labor? Alternatively, did the advances in statistics and econometrics suggest that full employment could be achieved by hands-off manipulation of a few key economic variables? Some worried the entire endeavor was the first step on the road to serfdom at the hands of the federal government. The debate spilled well beyond the circles of Keynesian economists as some historians have claimed. The year 1945 was very much a moment of transformation within economics; much was in flux and many voices were raised. As Theodore Rosenof has argued, it was an open question as to whether institutional economics (in the vein of Thorstein Veblen, John R. Commons, and Gardiner Means) or Keynesian economics would become hegemonic, or whether Keynesianism would replace neoclassical economics or be subsumed within it.7 To fiscal and social Keynesians and neoclassical economists, we must add institutionalist economists, heterodox economists who promoted the kind of pre-Keynesian consumptionist theories studied by Kathleen Donohue, and a coterie of pro–direct job creation New Dealers who had passed on their ideas following the demobilization of the WPA.8 Each of these camps intended to use the FEB to reorder the structure of the American economy. Understanding this debate through the lens of direct job creation offers a unique analysis of the participants and the political implications of their ideas. After all, only a decade prior, the New Deal’s chief tool for fighting the Great Depression had involved job creation on a mass scale through the WPA and its peers. The economic miracle of the war, which had seen unemployment plummet to a mere 1 percent and economic growth surge to a staggering 25 percent, required the government to employ twelve million men and women in the armed services and another two million in

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defense industries. To the veterans of the New Deal, this history served as powerful evidence for the efficacy of direct job creation in the same vein that $50 billion per year in government purchases during World War II was held up by Keynesians as proof of the efficacy of a government stimulus. On an intellectual level, the WPA’s model would have to be dealt with by planners—even if only to explain why their model would be superior. Indeed, to the extent that an official government plan for full employment had existed, it was the proposal from the National Resource Planning Board (NRPB) for postwar economic reconstruction. New proposals would be judged alongside the front-runner and would need to distinguish themselves in some fashion. How much would the postwar state and postwar liberalism resemble the New Deal? Would FDR’s vision of expanded social rights, achieved through public provision, persist? Would progressive Democrats carry forward the banner of New Deal liberalism or would they seek to chart a new course in the postwar world, adapting to a new political environment where the fear of communism grew on the horizon? Ultimately, these were questions of political economy. Either the dream of full employment would be fulfilled by the might of private enterprise, through cooperation between public and private, or through the democratic state itself.

The FEB Is Introduced Given the intellectual diversity within the executive branch, it is significant that the FEB emerged from Congress rather than either the Roosevelt or Truman administrations. Senator Robert Wagner’s Banking and Currency Committee proposed the bill, which was drafted principally by his chief legislative aide, Leon Keyserling, and cosponsored by Senator James Murray, his colleague on many pieces of legislation. This legislative DNA placed the FEB squarely within the late congressional New Deal, alongside the Wagner-Murray-Dingell Bill of 1943–1945 (which covered Unemployment Insurance [UI] and national health insurance) and the Wagner Housing Act of 1949 that pledged to build eight hundred thousand new public housing units. As such, it can be taken as a measure of the opinions of liberal Democrats, at least in Congress.

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In its initial version, the FEB introduced in 1944 consisted of four main components: • a “declaration of policy” that committed the federal government to achieving full employment and grounded its authority to do so in the constitutional duty to “promote the general welfare”; • a “national production and employment” budget, which would forecast the vital statistics of the private economy and propose a compensatory program of federal spending to close the gap between private economic activity and levels of economic activity needed to achieve full employment (which the president was required to submit to Congress annually); • a federal guarantee of the right to a job; • and a set of executive and legislative institutions to shape the program’s budget and guide it through Congress.9 This draft was a bare-bones affair. It courted two controversies: a vociferous public debate about how and whether the federal government should be responsible for full employment, and a much smaller and more exclusive debate about the specific policy mechanisms for doing so. It was an unusually freewheeling deliberation precisely because the FEB emerged out of Congress, as opposed to undergoing a drawn-out developmental process within the executive departments. Moreover, the Wagner Committee was a rather ad hoc affair, with none of the permanent staff and resources of the modern Banking Committee.10 The stars seemed to be aligned for passage into law. After all, the bill was introduced with the imprimatur of the dean of the congressional New Deal, and it sailed through the Senate with seemingly little opposition. Instead, 1945–1946 turned into the American center Left’s version of 1848, a “turning point at which history failed to turn.” The FEB died the death of a thousand cuts, watered down beyond recognition and eventually passed as a fig-leaf measure. Historians of the New Deal, of public and social policy, of intellectual and political history, have plunged into the archives to seek answers as to why the FEB of 1945 became the high-water mark that haunted the New Deal’s descendants for thirty years and beyond—and by and large they blame conservatives in the House.11 I argue for an alternative story, one that has not been told of the FEB and the New Deal. In my view, the 1945 FEB had already been sheared of

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its radical potential and political force before it was introduced in the Senate. The compromises that made it a bill in name only were already a done deal. The culprit was not, ultimately, to be found in the house of anticommunist conservativism. Conservatives inside and outside of Congress lacked the power to block the bill and could only hope to steer the debate.12 Rather, the culprit dwelled within the tent of New Deal liberalism as it existed in 1945. Conflict between fiscal and social Keynesians over the nature of reform in 1945 masked a process that had been ongoing since 1942, one that was virtually invisible to the public. Left-leaning advocates for the New Deal as embodied in institutions like the WPA were exiled from the new consensus. Defeat happened before the first vote was taken.

Rethinking the FEB That the FEB was ultimately killed by liberals has not been the dominant narrative within the literature. The historiography of the FEB of 1945 has tended to describe the bill’s outcome as the result of a struggle between two camps of economists: fiscal Keynesians versus social Keynesians.13 Initially popularized by Alan Brinkley in his essay “The New Deal and the Idea of the State,” the terms “fiscal” and “social” Keynesians were picked up by labor historians like Steven Fraser and Gary Gerstle, and structuralist political scientists like Margaret Weir and Theda Skocpol.14 Brinkley and others define fiscal Keynesianism as a school of thought closely associated with the Keynesian-neoclassical synthesis, with a belief that countercyclical adjustments of monetary and fiscal policies by the “Fed” and the “Fisc” were sufficient macroeconomic means for stimulating aggregate demand and thus aggregate growth rates. For Brinkley, social Keynesians were those who—emphasizing Keynes’s arguments about the need to nationalize investment—argued that adjusting tax and spending policies was not enough. Government intervention in the form of long-term economic planning and substantial investment in public goods and new industries would be necessary to prevent the return of the Great Depression. In The End of Reform, Brinkley relies on this distinction to explain waning liberal interest in economic planning, public works, and other policies that more directly challenged the capitalist monopoly on economic action in the later New Deal. Fiscal Keynesians won an intellectual

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battle within liberalism that began in the annus horribilis of 1937–1938. Especially in the context of a rightward shift in American politics, fiscal Keynesians were able to portray themselves as the moderate, uncontroversial, and relatively “apolitical” alternative. In the process, they managed to capture the Democratic Party elite (especially in the case of the Trumanand Kennedy-era Council of Economic Advisors).15 In her book Politics and Jobs, Weir places the defeat of social Keynesianism at the heart of the FEB’s failure. “The defeat of the Full Employment Bill in 1945 signaled the political failure of a ‘social Keynesianism,’ ” she notes, “that joined economic and social policy by institutionalizing government spending to ensure full employment.”16 In this narrative, employment policy in the 1930s developed as part of a policy network, where social Keynesians offered intellectual and policy rigor for government intervention on behalf of full employment to a coterie of sympathetic bureaucrats and politicians.17 The collapse of the FEB had a path-dependent effect because that network failed to gain the institutional footing it needed to survive. As a result, the state never generated the capacity to run a Swedishstyle employment system.18 This in turn explains why employment policy never gained a foothold in the War on Poverty and why the attempt to enact employment policy in the 1970s also failed. The usefulness of the fiscal/social distinction lies in the way it explains the fact that politicians and academics with substantially different economic theories and policies both claimed the mantle of Keynes. And, broadly speaking, there was truth to both sides. John Maynard Keynes’s body of writing was broad and eclectic, and Keynes himself famously shifted his opinions to fit changing evidence. At points in time, Keynes believed as a good liberal that the problems of capitalism could be solved without fundamentally moving from a system of markets and private property; at other times, he emphasized that capital markets were fundamentally irrational and that the government had to take over the investment function. Yet these terms—and the historical narrative that they helped to construct—are less clear-cut than they first appear. In Economics in the Long Run, Rosenof grounds the historical literature on Keynesianism by looking at the degree to which different schools of thought dominated government and academic circles at the time. He argues that institutionalist economics was actually more prominent than Keynesianism throughout much of the New Deal and the postwar period.19 Economists like Gardiner Means and Alvin Hansen sought to incorporate the other’s worldview into their own.

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They argued that the insufficient demand and suboptimal equilibrium that Keynes saw as driving the business cycle were just side effects of administered prices, and that the monopolistic stickiness of prices was secondary to the issue of aggregate demand. Drawing bright lines between competing schools is therefore overly simplistic. In the realm of politics, Rosenof argues that the Keynesian turn in the New Deal is overdetermined by historians, and that institutionalists continued to exert powerful influence within the government well into the Truman administration. Richard Parker’s biography of John Kenneth Galbraith and Robert Skidelsky’s biography of Keynes further complicate the situation.20 As Parker describes, an economist like Galbraith could easily synthesize internally multiple dueling economic theories. Galbraith was a devout convert to Keynesian principles after the publication of the General Theory. He agreed that demand was the key driver in the economy, and he endorsed the multiplier effect and the possibility of suboptimal equilibrium. At the same time, Galbraith’s work in The New Industrial State and American Capitalism show a strong and continued interest in institutionalist approaches in economics. His major theoretical contributions—the technostructure, countervailing forces, conventional wisdom, private planning, and the like—are much more in the institutionalist vein than Keynesian aggregatism. Looking at the historical literature on Galbraith himself shows how protean these labels can be when the same person can be variously described as a qualitative liberal who assumed that fiscal Keynesianism had created unending affluence, a social Keynesian who jousted against Hansen’s fiscal Keynesian orthodoxy throughout the 1950s and especially in the Kennedy administration, and an institutionalist.21 Skidelsky’s biography of Keynes points out that the master’s ideas were far more extensive than the Keynesianism that emerged out of World War II. In his eyes, Keynes was not an economist who also dabbled in moral philosophy but was primarily a moral philosopher and empirical observer who used economics as an analytic tool. Skidelsky points to Keynes’s suspicion of economic models and model-making and reliance on econometric techniques like regression analysis, and the critical importance of his ideas about uncertainty and psychology, as important differentiators that separate this towering intellect from the postwar mainstream of the discipline.22 I note especially Skidelsky’s point that Keynes’s theories were fundamentally incompatible with neoclassical microfoundations. Perfect rationality of economic actors did not align with his thinking, and therefore the “neoclassical synthesis” of

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John Hicks and Paul Samuelson, which sought to reintegrate Keynes’s arguments about deficient demand and suboptimal equilibriums by adding sticky wages to neoclassical assumptions, made a huge mistake. It was an error that had major consequences for how Keynesian theories would explain—and Keynesian policies react to—future events.23 Given that what constituted Keynesianism was still very much in flux in the 1940s, we have to be very careful about interpretations of the FEB that treat Keynesians as two relatively coherent groups within a settled intellectual school of thought, and a hegemonic one at that. Moreover, when we turn to Weir’s argument as it applies to the FEB (that the bill’s defeat was due to the failure of social Keynesians to develop a position within the federal government), we see that a focus on fiscal and social Keynesianism has certain drawbacks. First, Weir tends to treat all employment policies together as part of an undifferentiated category, without examining why particular strategies were favored at different times.24 In 1945, as in the New Deal, the means mattered. Employment policy focused on public works would have practical consequences in terms of both how fast a stimulus would circulate through the economy and what level of spending would be necessary to create desired levels of employment. The political consequences of different policies mattered as well. Public works benefited networks of contractors, local politicians, property developers, and lobbyists within the Democratic Party, and they did not challenge the status quo of midcentury American capitalism in which the government handled fiscal policy and the private sector monopolized the labor market and production. Employment policy based on direct job creation had different practical consequences, appealed to a different political constituency (poor and working-class voters, big-city mayors, Congress of Industrial Organizations [CIO] unions, and the left wing of the Democratic Party), and had different ideological implications vis-a`-vis the state and the market. Placing the two models together under the same Keynesian label as demand management or job training programs obscures how the FEB drew and redrew the boundaries of state activities in dealing with unemployment, and how ideology and ideas shaped this process.25 Second, Weir’s network argument does not fit very well with the narrative of the FEB. It is certainly true that the fights over reorganization were linked to full employment. However, looking backward to find pathdependent reasons why some groups succeeded in 1945 and others failed is difficult because virtually no faction had strong institutional grounding at

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the time that the FEB was being debated.26 The NRPB had been disestablished, a major ideological blow to social Keynesians, but there was not a large government bureaucracy in 1943–1945 where fiscal Keynesians held the upper hand either. Rather, the fact that the bill was shaped by a few policy entrepreneurs rather than by large institutions suggests that ideas had a larger role than institutional effects at this specific moment. One sign of the difficulties of this approach is that when trying to explain why liberals failed to save the bill, Weir abandons her earlier methodology of using network or institutional theories in favor of an explanation about the interests and strengths of business and labor lobbies.27 However, a network explanation does work if we consider more than just fiscal versus social Keynesians. In this instance, we see a fairly level institutional playing field in which variants of Keynesians, direct job creation advocates, and other economic theorists were all trying to win over congressional Democrats as key allies. One group out of many won the support of a small circle of elites and carried the day. Finally, one of the major uncertainties about the historiography of the 1940s—and it is a big bone of contention between those who argue for a long versus short New Deal—is how good the prospects for further reform were during and after World War II. Was Alan Brinkley right that the window had closed in 1937, or are Meg Jacobs and Jennifer Klein right that there was room to run in price controls and consumer rights or health and retirement benefits as late as 1947 (when the Office of Price Administration [OPA] was disbanded) or even 1950 (when the Treaty of Detroit cemented employer-based benefit systems)?28 The same is true for a job creation program. It is absolutely true that job policy had taken some significant knocks by 1945—the WPA had been given its “honorable discharge” in 1942; the NRPB, which had brought job policy firmly into the developing world of federal economic planning in its vision of a postwar job state, was shut down by congressional conservatives in 1943; and FDR had died in 1945. However, it should not be assumed that all was lost. While Weir is quite correct that the loss of the NRPB was a huge loss of the federal government’s capacity to create job policy, Jason Scott Smith is also right that the Federal Works Agency (which persisted until 1949) was an equally important source of capacity.29 Equally important, at a time when full employment was wildly popular both among the general public and in the Democratic Party, there was a simple, well-developed proposal for how to provide a direct job program.

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The Plans The sheer number of different plans for full employment offered in 1945 serves as evidence of the intellectual diversity of the debates. Far from a solely Keynesian affair, the debate featured strong arguments for direct job creation from the NRPB; from heterodox economists like Means and John H. G. Pierson; and from thinkers like Mordechai Ezekiel, who tried to synthesize heterodox and Keynesian economics. Of the full-employment planners, the most progressive were a group of Left liberals who took a more ambitious approach. They sought to transform the relationship between the state and the market into a genuine mixed economy. Inspired by the Left edge of the New Deal—the democratic planning of the Tennessee Valley Authority (TVA), the size and scope of the WPA’s workforce, the ordering vision of the National Recovery Administration (NRA) and the Agricultural Adjustment Administration (AAA)—these policy advocates deemed the NRPB their chief spokesman in the debate over full employment. Few institutions were as well placed to contribute as the NRPB. Charged since 1933 with providing long-term planning capacity for the Roosevelt administration, the board had a substantial first-mover advantage over other full-employment planners in that they had been at the task from the beginning of the war. In a 1941 memo, the NRPB outlined the result of conversations ongoing between them, WPA officials, and a number of industrial and labor leaders. That early, the NRPB had already called for a postwar bill of “human and economics rights,” which would include a “right to work” in “improving our public estate”—a significant difference from later interpretations of the right to work.30 Most important, the NRPB had access to a wealth of experience and data on direct job creation collected by the WPA. The WPA’s Final Report marshaled nine years’ worth of statistics behind a recommendation for the establishment of a permanent system of direct job creation, arguing both that “the WPA was important as a social and economic stabilizer” from an economist’s perspective and that “WPA work projects marked an advance over traditional poor-law methods of providing relief,” from a social work point of view.31 The author’s introduction proclaimed that “acceptance by the Federal Government of a portion of the responsibility for assistance in the provision of work and wages in a time of mass unemployment” would become a permanent element of the American state, on the belief that

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“every employable American should be employed at prevailing wages in . . . private or public employment” as a human right.32 The Final Report was published in 1943, but the information had been transmitted to the NRPB years earlier by WPA alumni, including Corrington Gill and Eveline Burns, a Columbia-trained economist who had worked for WPA’s predecessor (the Federal Emergency Relief Administration [FERA]) on the Committee on Economic Security before becoming the head of the NRPB’s Economic Security and Health Section. In 1940, Burns and Gill linked up with the NRPB’s staff economists, including Galbraith, to conduct a yearlong study called The Economic Effects of Public Works Spending, looking back at the record of the New Deal’s job program and what could be learned for the future. They noted that prior views of economic theory would be influential. “At the present time, it is possible to identify at least four different views of the relation of public works expenditure policy to the problem. . . . Each of these envisages a different role for public works construction expenditures in the corrective process.”33 Ultimately, Galbraith and the NRPB would split the difference between a Keynesian synthesis (which added Keynes’s ideas about insufficient demand to the neoclassical paradigm, while jettisoning his ideas that investment had to be nationalized) and Hansen’s stagnationist perspective (which predicted a decline in population growth and productivity, leading to longterm economic stagnation unless the federal government took over investment). Though the business cycle was determined by the rise and fall of aggregate demand, its floor and ceiling were determined by structural factors. As long as there was “at least the possibility of a continuing low level of private investment and a continuing high level of unemployment,” they argued, “the choice [is] not between employment in public construction employment and private . . . employment, but between public employment” and unemployment.34 A continuous program of public works had certain inherent advantages. Unlike private sector–driven investment and employment where the government had only the loosest of controls, at the point of full employment, public works would enable the government to carefully modulate levels of spending (by speeding up and slowing down projects) and thus avoid inflation. Given the uncertainty of private-sector fortunes after the war, public works could be done either as either a temporary or long-term program. Finally, federal intervention through public works would put the

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government’s power to borrow or print money in place as a backstop against an unforeseen failure in the private sector.35 A WPA-like system would make the most logical centerpiece of a public works campaign, Galbraith and others argued. Through an empirical study of PWA and WPA records, they showed that WPA programs had higher “employment efficiencies” (calculated at cost per man-hour of employment created) at 55 cents per hour compared to $1.12 for the PWA, even after adjusting for the difference in wages.36 By breaking down manpower-hours generated, the cost components of construction projects (labor, materials, land, tools, etc.), and other factors, they were able to point to the WPA’s higher volume of onsite employment. Its superior employment outcomes derived from its emphasis on light construction (i.e., roads, public buildings, and the like, which required less machine power than dams and bridges) and the attendant minimization of materials and other nonlabor costs. Stretching revenues across many small projects that could be done by large numbers of unskilled workers using simple tools also helped to explain the performance advantages of the WPA.37 “By means of extensive work relief construction,” Galbraith concluded, “the Federal government has been able to provide a volume of on-site employment sufficiently large enough to compensate for the decline” in the construction industry.38 Going forward, the margin between private labor demand and the total workforce “will have to be cared for by . . . Works Progress Administration, Civilian Conservation Corps [CCC], and other organizations which are better able to deal with the problem” as opposed to traditional public works.39 The recommendations that emerged from this analysis followed in the footsteps of the WPA’s own plans for full employment: a permanent works agency, freed from congressional constrictions through a proposed system of six-year appropriations that could be “advanced” forward or backward in time in response to the business cycle, and that would include “contingent” additional appropriations that could be activated by the agency without further congressional approval.40 Projects would be chosen on the basis of their “employment intensity” as opposed to any traditional “selfliquidation” principle or consideration of general utility. The NRPB’s 1940 program called for public works that looked as much as possible like the WPA and bore little resemblance to traditional public works. Galbraith’s proposals looked almost nothing like those that ended up in the FEB. They emphasized the activism and leadership of the executive

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branch, rather than relying on congressional approval—using mechanisms such as advance or contingent appropriations to remove legislative shackles as far as the Constitution would allow. This required shifting the emphasis of planning from the yearly federal budget process to a long-term, multiyear process centered in executive planning bureaus. Finally, they were much more forthright declaring the public sector, rather than the private sector, as the central locus of full-employment efforts. The NRPB had settled on the viability of the WPA model, and it chose to incorporate the WPA’s legacy of direct job creation into its fullemployment proposal. This intellectual heritage is visible in the NRPB’s formal policy proposals, leading up to the 1943 landmark report, Security, Work, and Relief. Building on Galbraith’s analysis, the board argued that even if countercyclical taxation and social welfare policies were enacted, the federal government would have to provide public works as a regular function of government. Even assuming a high rate of growth after the war, three to four million workers would remain unemployed due to the dislocating effects of reconversion and the structural imperfections of American capitalism.41 Thus, a WPA-like system of job creation would be needed even after the private sector recovered. The development of this school of thought over five years culminated in Security, Work, and Relief. Looking back at the New Deal, the NRPB argued that “of all the special measures . . . none was more significant than the provision of work by the government” in fighting the Great Depression, having covered 30–40 percent of the unemployed at any point in time.42 Building off this experience, Burns, Gill, and others argued that “when imagination is used a work program can be modified to fit the changing demands of growing employment,” adapting to times of economic growth as well as economic contraction. It could become a permanent part of the federal machinery.43 Full employment would be guaranteed through an expansion of social insurance, public assistance, and work programs as a third pillar of economic policy, the other two being Keynesian management and long-range economic development. Automatic stabilizers, a permanent agency, and direct provision of work were emphasized over yearly budgets and demand stimulation. The NRPB felt that the work program would be an essential element: “A high degree of interdependence characterizes our various proposals. Failure to implement some of our major recommendations, such as . . . the development of an adequate work program would render meaningless many of our

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other proposals.”44 If this program was not adopted, the NRPB predicted, wartime full employment would end and significant levels of joblessness would return.45 The government had to “provide work for adults who are willing and able to work, if [the] private sector is unable to do so.”46 The NRPB was uncompromising on this point. Federal government would provide work directly as a permanent function of the government, out of general taxation. This duty was to be maintained even if it took funds from the general treasury or posed competition with private industry in the production of goods.47 These measures were needed, the report maintained, because private industry persistently failed to provide genuine full employment even in boom times. Recognizing that the WPA had provided subpar wages, blurring the line between relief and work, the NRPB proposed to offer employment at prevailing wages, conditions, and hours, solely on the basis of need for work to anyone who either did not qualify for UI or who had exhausted his or her UI entitlement.48 Unlike many of the other proposals in Security, Work, and Relief, which revolved around a universal cradle-to-grave welfare state, direct job creation offered a number of possibilities for structural economic reform. The national state, acting as an employer of last resort (ELR), would act as a yardstick akin to the way a public utility sets standards against which private utilities are measured. As Richard T. Ely explained it, a process of this kind would provide a minimum level of competition in the market, one that would act on the entire labor market. Rather than placing employers in a position to purchase labor from a monopsony position, an ELR program would provide a basic floor on wages, hours, working conditions, and labor demand. It would also act as a “belt-and-braces” to Keynesian demand management, ensuring that no matter how private employers reacted to an increase in demand (either by increasing productivity or adding employment) employment and production would hit their desired targets. By shifting federal spending to the unemployed, the ELR would act as a spur to the wages of low-wage workers. By creating a new pool of public goods and services (since the poor and working class tend to rely more heavily on public goods), the ELR would be broadly redistributive. And in creating employment in the production of public goods and services, the ELR also offered the possibility of pursuing social and economic purposes simultaneously.

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On the issue of direct job creation, the NRPB thus offered the Left-most version of possible policies. However, the board’s proposals were not the writings of fringe political activists, but of a government agency established within the executive branch of a president with a putative congressional majority. Had the NRPB released Security, Work, and Relief to the Congress of 1936 or even 1938, or had the war not created a three-year gap between the report and the legislative process, it might have been the pivot point for the FEB. Even in its defunct state, the NRPB exerted significant influence on the debate over the FEB: Security, Work and Relief, The Economic Effects of Public Works Spending, and the two volumes of Structure of the American Economy were widely reviewed in economics journals at the time. More than a few of the advocates would include some aspects of the board’s proposals in their own full-employment plans, and even those who disagreed with the NRPB’s conclusions would nevertheless discuss its work in depth, if only to refute it.

The Heterodox In addition to the direct job creation proposals of the NRPB, there were also influential economic thinkers who existed outside the Keynesian mainstream of demand management and the Phillips curve. Gardiner Means, the institutionalist economist of the modern corporation, advanced a monetary solution to unemployment; Paul H. G. Pierson, by contrast, pushed a consumptionist alternative to both fiscal and monetary policies.49 The two men shared a similar background: both were trained at elite universities (Means was a Harvard man, Pierson a Yalie) and both had established positions in the federal bureaucracy (Means was an advisor to Secretary of Agriculture Wallace in 1933, was a member of the NRPB from 1935, and served in the Bureau of the Budget during the 1940s; Pierson was an expert in the Bureau of Labor Statistics in the Labor Department). Both belong within the historiography of the FEB because of their prominence at the time. Means was one of the original brain trusters, had worked widely across the Roosevelt administration (including the NRPB), and had published a number of articles on unemployment and full employment. Hansen would dedicate several chapters of his own book on full employment to countering Means’s criticism of his spending-based plan, while criticizing Means’s own monetary proposals. Although less well

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known at the time, Pierson was an incredibly prolific participant in the ongoing debate. He had published two books, dozens of popular articles, and five academic articles on full employment during this period and he had been part of the Wagner Committee that drafted the bill.50 The Modern Corporation, Means’s most important work, was notable for the way it turned the debate over the corporation directly to corporate pricing power. His theory of administered prices held that due to the consolidation of industry and the separation of ownership and management, two hundred corporations (which collectively owned 50 percent of production) now controlled prices rather than the free market, rendering neoclassical economics (which assumed that all economic actors were “price takers”) irrelevant. In the Great Depression these corporations “found it in their interest to hold prices essentially at near current levels and cut production and employment instead.”51 Where Keynes saw “animal spirits” and the marginal propensities to consume and invest as the ultimate cause of below-full-employment equilibrium, Means argued instead that corporate price maintenance prevented the return of real purchasing power and employment. The solution, then, was to establish public structural planning of the economy in consolidated sectors to manage prices and wages, and thus purchasing power and employment.52 While this body of theory was initially developed to deal with the mass unemployment of the Great Depression, Means turned his institutionalist perspective to the question of full employment in the postwar era.53 In a 1941 report, The Structure of the American Economy, commissioned by the NRPB, Means argued that structural factors (as opposed to deficient demand) were responsible for the failure of the capitalist system to produce full employment.54 Given this fundamental difference from Keynesian explanations, Means argued that the real intellectual division on full employment was between those who felt that public policy should change, and those who thought the American economic structure itself had to change.55 In his own proposals for full employment, Means stood at absolute right angles to Keynesian orthodoxy. He argued that deficit spending to pump up to full employment was a bad idea—rather, planning should aim to stimulate the economy such that the budget was in balance at full employment.56 Where Keynesians largely focused on aggregate spending, investment, and employment, Means argued that the effects of administered prices on wages and consumer prices (along with other restrictionist

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corporate policies) would disrupt external efforts to stimulate to full employment and he recommended, once again, planning.57 To prevent this undertow effect, and to prevent inflation at full employment, a board that had four members representing business, labor, consumers, and government would sanction binding agreements on wages, prices, and production in any sector where one company held 30 percent or more of the market or was valued at $200 million.58 In essence, Means was looking for a full-employment program that more resembled the European model in which labor and management agreed to stabilize wages and prices in exchange for full employment and labor peace, but one which would retain a Progressive emphasis on restraining corporate power. Monetary policy was another area of divergence. Due to a disagreement with Keynes on the nature of the effects of changes in the real money supply, Means became convinced that, “through the proper emphasis on monetary policy, we can avoid a policy of cumulative government deficits and yet maintain an economy of full employment.” In general, Means was of the view that “the contribution which monetary policy can make to a program of economic stability is very much greater than the Keynesian theory would indicate.”59 Pointing to the success of the New Deal in both increasing government spending and increasing the monetary base, Means argued that increasing the money supply could be done without increasing inflation or leveraging interest rates to prevent inflation.60 While Keynesians generally argued that monetary measures were “weak reeds,” Means believed that administered price models of the economy showed a strong direct effect of monetary expansion on spending. Accordingly, to achieve full employment, he called for a roughly even split between government spending and monetary expansion.61 John H. G. Pierson shared Means’ skepticism about Keynesianism, both in terms of its favored policy mechanisms and policy foundations, but for profoundly different reasons. He rejected Means’ emphasis on monetary policy. In Pierson’s plan, first published in the Antioch Review in 1942, “aggregate consumer demand . . . would be supported and controlled directly, by having government give and stand back of a guarantee of aggregate consumer spending.”62 Levels of spending sufficient to guarantee full employment would be achieved by rebating withheld income and payroll taxes and controlling the timing of the repayment of war bonds.63 All of this was relatively noncontroversial—similar elements existed in Hansen’s, Ezekiel’s, and Keyserling’s proposals. However, Pierson went

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beyond orthodoxy in calling for “national income security payments” of $100 per family or $50 per single person (a policy Hansen explicitly rejected as incompatible with American traditions), rebates on state sales taxes, food and clothing stamps for the poor, and ultimately a federal “reversible sales tax/bonus” to directly manipulate consumer behavior.64 Through these active measures, Pierson argued that “full employment without inflation” could be achieved and maintained on a month-to-month basis. At the same time, Pierson accepted the need for an expansion of public services “for health, education, slum clearance and lost cost development [of housing],” following Hansen’s schema of social Keynesian objectives, and was open to public works projects. Pierson proposed that the Federal Works Agency establish a shelf of public works projects, including light construction and social services that would pay prevailing wages, remarkably similar to that of the NRPB.65 Where Pierson drew the line between himself and the NRPB on one side and Hansen on the other was his ideological commitment to private markets. “Supplementary public works and services kept within practicable limits” were to be minimized on the grounds that “it is more logical to have the rest of our labor force producing for consumption than to be forced to make additional expenditures of public works and services to merely create jobs” (emphasis in the original).66 This insistence on the secondary nature of public investment and jobs was also a matter of concrete priorities. “Gap-filling,” as he described both job programs and social spending, “would here be the final line of defense against unemployment, not the front line.”67 In one estimate, a fullemployment potential of $250 billion with a $180 billion gap would be met by underwriting consumption at $180 billion and only increasing government spending by $3 billion if private investment slacked off.68 Pierson’s respect for the role of private industry and his limited embrace of either social Keynesianism or direct job creation went along with a more skeptical attitude toward Keynesian orthodoxy in general. Wary of fiscal Keynesians, he believed that “were we to try to sustain full employment through monetary-fiscal instruments alone, this attempt would fail” due to the restrictive efforts of monopolies.69 At the same time, Pierson disagreed with Hansen’s public investment approach, arguing that “such a policy [of using public investment to offset secular and cyclical deficits in private investment] ultimately risks against the canon of efficiency” and would “probably seriously discourage private enterprise.”70

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What we can learn from Means’s and Pierson’s participation in the debate over full employment is that the “struggle for the soul of economics” had not been won by the Keynesians in 1945–1946; rather, as Rosenof points out in his book, institutional and other non-Keynesian economists were a vibrant presence within the academy and in public debates over economic policy. They had worked out proposals for full employment that did not rely on demand management. Non-Keynesian economists were more open (although not universally) to direct job creation as a mechanism for achieving full employment. The NRPB was not a solitary force within the academic or political debate, but rather part of a large if intellectually diverse faction that was not content to stop at demand management.

Mordechai Ezekiel: A Halfway House If Means’s and Pierson’s works demonstrated the alternatives to the Keynesian mainstream in 1945, then Mordechai Ezekiel exemplifies the great diversity that existed within Keynesian economics in the 1940s. Ezekiel is one of the great unsung New Dealers. In many ways, he fits the classic profile of FDR’s policy intellectuals. Born and raised in Richmond, Virginia, by a middle-class Jewish family, Ezekiel was trained as an agricultural economist (like his peer John Kenneth Galbraith) at the Brookings Graduate School of Economics and Government. He came to the Roosevelt administration through the AAA (like Rexford Tugwell and Means, with whom he was often categorized as an institutionalist economist).71 Ezekiel became a chief advisor to Henry Wallace, the former vice president and secretary of commerce. Ezekiel’s plan—which took the $1,000 place in the Pabst Blue Ribbon competition—resembled a hybrid between Means, the NRPB, and the Keynesians Hansen and Keyserling. On the one hand, Ezekiel emphasized standard social Keynesian policies, such as countercyclical adjustment of income, payroll and other taxes, and the benefits they paid for, as well as the elimination of consumption taxes in favor of increased taxation on savings (both as a social justice issue and an inducement to spending).72 On the other hand, he included $10 billion per year for public works, and he advocated separating the federal budget’s General Fund from a New Capital Fund (which would not be reflected in the yearly federal budget balance, and therefore could be used as a long-term sinking fund rather

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than a balanced budget).73 In a memo titled “Possible Lines of Action,” Ezekiel went beyond even social Keynesianism to propose a public capital bank that would “provide capital and capital credit . . . [to] small concerns and other private businesses which today are unable to secure adequate capital,” as well as “provide capital at very low interest rates to projects of a semi-public or public character,” and “invest in the equities and securities of new industries and new concerns” (in other words, a national venture capital fund).74 These proposals went far beyond any other American proposal and resembled ideas advanced by Stafford Cripps, one of the leading figures of the Attlee Labour government in the United Kingdom.75 Ezekiel also argued, similar to Richard T. Ely, that publicly constructed war-industry factories should be retained for “public operation where yardstick competition with existing monopolistic concerns may be needed.” “Price controls, rationing, materials controls, credit controls, and export and import licensing” should be maintained until the ratio of supply to demand improved, and they should be reimposed if inflation resumed. A “national business-labor-agriculture planning advisory committee” would bargain out a price and wage accord that would trade productivity-based wage increases for low prices, a broad distribution of income with increases for low-wage sectors, lower profit margins but a higher volume of sales (and thus higher aggregate profits), and generous vacation benefits.76 These proposals went far beyond the Keynesian mainstream, showing the persistent influence of institutional economics. Ezekiel acknowledged the need for direct job creation. In his proposal, a five- to ten-year job program would be used to smooth the transition from a wartime to peacetime economy and would be reactivated in the event of a future recession.77 At $10 billion a year for jobs at prevailing wages, designed to absorb up to 5.6 million workers, this program would have dwarfed the WPA as the largest and most generous job creation program in American (and world) history. Ezekiel combined this proposal for short- and long-term job creation with a call for a permanent reserve of projects and a single agency in charge of the unemployed, so that the job program could be resumed in the future should mass unemployment threaten again.78 These proposals are virtually identical to those made by WPA administrators in 1935–1938 and by the NRPB in 1941–1943.79 Like the NRPB, Ezekiel’s intellectual confidence in direct job creation flowed from his positive evaluation of New Deal experience: “WPA, CCC, NYA [National Youth Authority] . . . constitute an effective and immediate

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increase in the purchasing power of those without adequate income,” and they “provide an exceedingly effective technique for expanding national production and income,” he argued in 1940.80 Ezekiel thus furnished an impeccably Keynesian rationale for a policy choice far more interventionist than most Keynesians, even social Keynesians, were willing to countenance. In his hands, the government—acting as a direct employer—became another species of “social” Keynesian stimulus. Ezekiel was not suggesting that such measures were required because of structural defects in the labor market (as the NRPB did). He did not follow Means’s call for monetarypolicy-driven full employment or challenge the theoretical basis of countercyclical spending. Yet neither did he assume that demand management would be a universal panacea (as did some Keynesians). Rather, he saw Keynesian policies as one item in a diverse and eclectic toolbox. It is this openness and fluidity in the midst of otherwise rigid intellectual division that make Ezekiel so significant. While Rosenof argues that there was a general failure of synthesis between Keynesianism and institutionalism in the 1940s, here we have an economist who was able to harmonize the insights of both schools into a hybrid economic program (that might well have been more resilient than mainstream Keynesian policy). At the same time, Ezekiel placed direct job creation at the very center of his plan for the reorganization of the American economy, which tells us a lot about the extent of intellectual fluidity and openness in 1945–1946. If direct job creation had been pushed out of the realm of polite opinion in 1942–1943 when the WPA and NRPB closed their doors, or if Keynesians had completely captured the federal government for the cause of “pure and simple” demand management, a figure like Ezekiel would have been pushed to the margins, rather than right in the center of the debate. What is curious in Ezekiel’s proposals is the limited impact they had on Wallace, whom he had advised for over a decade. Wallace’s role in the fullemployment debate was always that of a publicist as opposed to a theoretician, but his book, Sixty Million Jobs, was nonetheless a major bestseller and Wallace himself, as the champion of New Deal Left liberalism, became a star witness in hearings on the FEB.81

The Two Keynesians As a lens into the Keynesian perspective on full employment in this period, Hansen and Keyserling are everything one could hope for. Both were

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extremely active participants in the public debate: Hansen published ten articles on full employment in economics journals in the immediate years prior to the bill being debated; Keyserling was both the runner-up in the Pabst Blue Ribbon competition and a prolific popular writer.82 Together, these two figures provide a link between the intellectual debate and the process of legislation. Paul Samuelson and John Hicks might have been more important to the academic development of Keynesian economics, but it was Hansen who wrote the initial proposal for the FEB and who acted as one of the star witnesses in the Senate. Keyserling took that initial draft and, as Senator Wagner’s chief legislative aide and de facto head of the committee staff that drew up the FEB, turned it into law in Room 15A of the Senate Office Building.83 The son of a Danish immigrant family from South Dakota and also a University of Wisconsin–Madison trained economist, Alvin Hansen is perhaps best known as the man who “translated” Keynes into American— indeed, Hansen was called “the American Keynes”—and as a cocreator of the IS/LM economic model (this model, studying investment, liquidity preferences, and the monetary supply, was theorized by Hansen and John Hicks and reformulated Keynes’s General Theory within the framework of neoclassical economics). However, in the mid-1940s, Hansen’s Keynesianism was something quite different from the truncated Keynesianism of the neoclassical synthesis—and Hansen himself was very much the archetype of a social Keynesian. More than any other planner involved with the FEB, Keyserling was the archetypical American Keynesian. Born to a middle-class Jewish family in the South, Keyserling was a prodigy: he enrolled at Columbia University at sixteen, followed by Harvard Law and the Columbia Ph.D. program in economics (where he studied under Rexford Tugwell, but joined the AAA in lieu of completing his dissertation). Although Keyserling did a short stint in the Roosevelt administration, his major New Deal position was that of a chief legislative assistant to Senator Wagner, for whom he drafted most of the major legislation of the 1930s, including the National Industrial Recovery Act (NIRA), Social Security, and the Wagner Act.84 As head of the Committee of Economic Advisors (CEA) under President Truman, Keyserling would be one of the first Keynesian economists to try to direct the federal government toward full employment under the 1946 act, and he would insist to his dying day that it had been Keynesian policy, not the Korean War, that had prevented the return to the Great Depression.85

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Despite their similar backgrounds, the two men had quite different outlooks on economic policy. In Economic Policy and Full Employment, Hansen proclaimed confidently that aggregate demand (composed of consumer spending, savings-derived investment, and government spending) could be maintained at full-employment levels only if government could borrow from savings to make up for private shortcomings in investment.86 Simultaneously, he argued that “variation of the rate of interest is not a useful method of control,” and that controls on rent, credit, wages and prices, and inventory would complement compensatory fiscal policy—all of which would have shocked later Keynesian economists.87 Hansen was skeptical about the stability of private investment. The “utter undependability of private capital outlays,” he argued, flowed directly from the fact that “only in full-employment boom times has the amount of investment been adequate to provide full employment . . . [which] could not be maintained continuously without exceeding by far the requirements of growth and progress.”88 Private consumption was not reliable either; “private consumption has failed to keep pace . . . with increasing output” that had grown to 75 percent above 1929 levels.89 Hansen argued that full employment “could not be achieved without large public outlays” to absorb the increase in production. While increasing consumption to full-employment levels by “pay[ing] money out to consumers as a supplement to income earned” was “not within the range of practical politics,” Hansen did believe that by “carefully considered, selective ways of raising the level of consumption” (primarily health care, education, and housing, but encompassing family allowances, highways, parks, libraries, and other public services), the United States could “establish minimum consumption standards for all citizens . . . directed specifically at the points where the needs are greatest.” To this end, the “public sector can act as a balance wheel to the private sector.”90 Hansen believed that public investments had a special virtue. It was a point Galbraith would later echo in the boom years of the 1950s. “Education, health and nutrition, recreational facilities, and community cultural activities are essential parts of a broad national development program,” Hansen wrote. “Of what good are mere brick and mortar if we neglect to develop a healthy, trained, educated, and socially minded citizenry?”91 The social services were the areas in which the “United States, the richest country in the world, is incredibly deficient,” and these deficits “cannot be met

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except by a very large increase in the volume of outlays on publicimprovement and developmental projects.”92 Evangelical zeal for the public commons would strongly influence the shape of Hansen’s full-employment plan. It emphasized “a strong and flexible program of public improvement and development projects” and a “compensatory system of social security,” while still including countercyclical taxation policy.93 Nonetheless, Hansen’s commitment to public services did have its limits. “Full employment must be achieved, not by the simple process of setting people directly to work, but by the far more complex process of ensuring an adequate volume of aggregate demand.”94 Public services and investments were morally preferable means of financing the goal of full employment, but Hansen was unwilling to take the next logical step that public-sector employment could play a direct role in ending unemployment. For a time, this tension between a moral belief in the priority of America’s public wants over private demands and a technical conviction that only the aggregate mattered could be papered over. As we shall see later, when Hansen enlisted in the fight over the Full Employment Act, he would be made to choose. If Hansen’s proposal, with its emphasis on social objectives and an expansive public sphere, exemplified the spirit of social Keynesianism, Keyserling provided an excellent example of the moderate if not conservative outlook of fiscal Keynesians. It is by no means coincidental that Keyserling’s 1945 Pabst Blue Ribbon plan—which came in second in the competition, no doubt to Keyserling’s intense resentment—most resembles the eventual act. His participation on the Wagner Committee virtually ensured this would be the case. Keyserling envisioned an “American Economic Committee, with 3 members from the Senate and 3 members from the House . . . 3 members appointed by the President from his cabinet,” as well as six members appointed by the president from the ranks of “industry, agriculture and labor.”95 This fifteen-man committee (along with a small technical staff and executive director) resembled the tripartite vision of the NRA, since its structure created pressures for divergent economic and political groups to unite. They needed to swing behind a common “American Economic Goal” and develop an “American Economic Policy” to accomplish it. In Keyserling’s mind, the goal was nothing less than an “American” standard of living that enabled “all the people to enjoy material comfort, good education, jobs, and creative leisure.”96

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Keyserling’s proscriptions for a model policy largely emphasized private initiative. “We should not continue in peace-time the more drastic tools [price controls and other government directives] incompatible with the broad freedoms” that Americans desired, he wrote. “Full employment is predominantly a task for the system of American enterprise,” albeit a system that incorporated “democratic bargaining” that included not merely labor and management, but also “all groups” in society.97 Government should limit itself to providing incentives, “moving only when necessary from narrower to broader commitments,” such as research and development funding, guarantees and insurance for debt, public credit to new industries, and tax and regulatory integration.98 As far as aggregate demand management went, only “marginal public expenditure” would be needed.99 To the extent that the government was still responsible for providing work to the unemployed, “this residual responsibility” would be accomplished strictly through outsourcing to private contractors. The state would depend on their “effect upon stimulating private enterprise and in terms of the value of their end products.”100 A revived WPA along the lines that the NRPB or Ezekiel proposed was beyond the pale. Many full-employment planners genuflected in the direction of “free enterprise,” but Keyserling’s repeated insistence on the future dominance of the private sector went farther than most. In 1945, the conviction that appeals to the free market would gain political traction with an electorate that had trended more conservative, especially during the midterms of 1942, made sense. But for Keyserling, more than political instinct was at stake. He truly believed that the private sector could shoulder the majority of the burden of full employment. As we will see, Keyserling’s experience on the CEA between 1946 and 1953, and the return of recessions in 1953 and 1958, would change his mind later in life.101 While fully within the Keynesian mainstream, we can see here a clear difference between Keyserling’s fiscal Keynesian approach and Hansen’s social Keynesianism when it comes to the means that would be required to achieve full employment and the broader question of the roles of the public and private sectors in achieving it. However, this difference should not be overemphasized: for all that he is remembered as a social Keynesian, Hansen still considered the private sector to be the primary employer, and he included incentives and tax and regulatory integration within his policies.102 At the same time, Keyserling’s focus on collective bargaining between social groups—bringing unions and business to the table—went beyond a

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mere rhetorical strategy. Keyserling argued that incorporation of social groups as the main decision makers—recognizing unions, but also business—would allow the United States to “steer a safe course between this modern Scylla” of statism and “this modern Charybdis” of laissez-faire capitalism.103 Thus, “private first, public last” cannot simply be seen as a political calculation. It emerged out of an ideological foundation that rejected class conflict and anticorporate thinking, characteristic of the Left liberal wing of the Democratic Party, in favor of a mildly populist desire for national unity, as a way for liberalism to move forward in a posttotalitarian world.104 This drift would have significant consequences for the ultimate design of the 1946 Full Employment Act.

Where the Debaters Stood on Creating Jobs Where did direct job creation fit in all of this? One must distinguish between those for whom direct job creation was a primary intellectual commitment and those for whom a job program was simply a tool that could be useful in furthering the goals of another, preexisting policy project. For example, in looking at the WPA, we can see statements from Harry Hopkins and Aubrey Williams arguing for the necessity of work programs in the Temporary Emergency Relief Administration, the Federal Emergency Relief Administration, the Civil Works Administration, the WPA, and in the National Youth Administration, suggesting a long-term commitment to job creation as a primary objective. I would argue that we can see much of the same commitment in the NRPB’s Security, Work, and Relief, given the prominent role that the job program would play in its system of social protection. The influence of WPA alumni and the NRPB’s own studies of New Deal job programs make the lines of continuity clear. For Pierson and Ezekiel, I think we see a different purpose for direct job creation. In their schemes, it was a tool that could be used for another policy project. Pierson’s unique contribution to full-employment planning in 1945 was in his strong emphasis on direct control over consumer spending, especially his proposal for a reversible sales tax. Direct job creation was to be used as a “belt-and-braces” policy in the event that increases in consumer spending failed to bring about the desired increases in overall employment. Similarly, Ezekiel’s plan for full employment revolved around the combination of social Keynesian demand management and more structuralist efforts to restrain

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administrative prices through the establishment of yardstick public utilities. For him, creating jobs was a method of targeting federal spending directly at unemployment (as opposed to spending on other important social priorities like health, education, and housing). And critically a job creation program was not a major element of either Hansen’s or Keyserling’s proposals.

The Evolution of the 1945–1946 Full Employment Bill The 1945 legislation evolved through various drafts and bore the mark of various schools of thought as those thinkers attempted to influence Wagner’s committee. The senator often staked out a position to the left of the New Deal on issues like Social Security and the Wagner Act. Accordingly, it is surprising that his committee draft was one of the most conservative plans for full employment.105 The initial draft (which began as S.380) envisioned only a commitment to spending levels equal to creating a number of employment opportunities (i.e., job vacancies) that should produce 3 percent or less unemployment. For a country that had experienced less than 1.5 percent unemployment during the war years, this was a good deal shy of what many had in mind when using the phrase “full employment.” “Continuing full employment,” therefore, did not “refer to a situation in which everyone willing to and able to work has a job. It merely means that the opportunities to work must exist,” the Wagner Committee argued.106 Little attention was paid to the kind of detailed analysis of regional labor markets conducted by the NRPB. Would there be a “clean” matchup between employment opportunities and applicants based on either skills or geography? Such a plan would ensure that employment opportunities would be filled, but it was not specified in the legislation. Neither was there discussion of how corporate power might dilute the economic effects of increased spending (as Means would have liked). By shifting the terms of debate from levels of employment to levels of employment opportunity, the bill’s scope was becoming more restrictive and, as we shall see later, less appealing to the ordinary voter. Its emphasis on narrow fiscal Keynesianism became even more pronounced as the FEB moved from its initial draft to the version introduced on the floor of the Senate. In the early drafts of S.380, the bill had listed

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key policies to be deployed by the federal government: “taxation, public works and conservation, small business, natural resources, veteran’s benefits and preferences, agriculture, wages and hours, foreign trade, monopoly, social security and investment.”107 If not the full gamut of the social Keynesian agenda, we see in this draft a fairly broad selection of Hansenite proposals. However, the final committee draft removed them on the grounds that “a comprehensive program . . . in all the various fields with which the Government concerns itself” would have to be proposed by the executive, making their inclusion in the text of congressional legislation both lengthy and redundant. Indeed, “several alternative programs could be pursued” under the bill.108 In other words, the Wagner Committee excised social Keynesianism from the bill out of a sense of confidence that the administrative machinery it led to would be amenable to the development of a social Keynesian agenda later. Critically, the Wagner Committee began by including the WPA/NRPB direct job creation model only to explicitly rule it out in subsequent drafts. In one of the earliest versions, developed in 1944, the bill’s declaration of policy was open to the possibility of direct job creation. It would be the policy of Congress that “to the extent that such expansion remains insufficient to achieve full employment, [it shall be the policy of Congress] directly to create . . . the necessary additional job opportunities.”109 Over time, though, the committee turned against direct job creation. In a 1945 memo titled “Area for Amendments,” the staff inquired whether it “should . . . be spelled out that the Bill does not authorize the guarantee of individual jobs to individual workers.”110 Eventually, the decision was made to include such a statement, with a “Suggested Revision” that “the construction of public works by the Federal government shall provide for the performance of the necessary construction work by private concerns under contract.”111 A key element of the New Deal’s legacy, one that would give the government direct control over how many people were hired per dollar spent, was eliminated. Only the traditional private-contract model of public works would be allowed. By the time that the FEB was ready in late 1945, the decision was final. In the Wagner Committee’s Majority Report, the authors made this quite clear: “the full employment bill . . . provides not for the direct creation of work by the government . . . but merely for ‘such volume of Federal investment . . . as may be needed.’ This policy is essential if we are to avoid the large-scale government expenditures that will be inevitable” if a WPA

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model were to be adopted.112 The government would avoid not just largescale direct job programs, but direct job creation programs of any kind: “Attention is called to the fact that subsection (d) is to avoid another WPA. In addition to orientating the Government’s program toward preventing a situation such as gave birth to the WPA during the 1930’s, it provides that Federal construction be performed under contract, except in special circumstances and under laws relating to labor standards.”113 Reestablishing traditional forms of public works, via contracts let out to private firms, coupled with the ban on New Deal job programs revealed an important and hidden conservative angle even to social Keynesianism. If the aggregate level of spending is all that matters, the means can be ignored. Political expediency triumphs, even though the means shift the relation of power between the state and market in important ways. Henceforth, liberal economic policy would no longer involve the state as a major employer competing with private industry in the labor market or genuinely acting as an ELR. The most concrete link between an abstract right to a job and the individual voter had been broken.114 Drawing this line in the sand at the same time that the Majority Report’s authors sought to “prevent a situation” like the 1930s speaks to one particular rationale for why New Deal liberals would reject their own legacy. Just as the Labour government elected in the United Kingdom proved to be fatally torn between faith in nationalization and belief in central planning, in 1945–1946 the liberal wing of the Democratic Party had divided dreams.115 Some members of the liberal wing believed in the direct provision of health care, housing, education, and, ultimately, employment, and, in general, an economic “mix” of public and private sectors that leaned more toward the public. Others were convinced that technocratic economic planning provided a rational and consensual alternative to partisan conflicts over state expansion. The executive branch would lead the way and promote social science rather than ideology. Liberals split unevenly, with the advocates of planning retaining the commanding heights of power in the U.S. Senate. Unfortunately for the liberal advocates of the FEB, this decision to strip the bill down to its least controversial components had unintended consequences. As they promoted the FEB, congressional liberals actively distanced themselves from the WPA by taking the same rhetorical positions that conservatives had pioneered in the 1930s, thus opening the door to conservative counterattacks against economic planning in general.116 The

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Wagner Committee’s analysis, tellingly titled “Assuring Full Employment in a Free, Competitive Economy,” gave intellectual ground to conservatives starting with the indispensability of “free enterprise”: “Full employment and free enterprise are twin objectives. . . . [W]e cannot have full employment . . . without the expansion of private enterprise and the investment of private capital.”117 Abandoning earlier New Deal challenges to “big business” or “monopoly,” the committee presented itself as a chief defender of American capitalism. “Full employment without free enterprise . . . would be contrary to the traditions and desires of the American people,” they wrote. In this fashion, liberals accepted a rhetorical frame that labeled the private sector as free, and conversely the public as unfree: the right to a job was presented as “the supremacy of the individual, as opposed to the state.”118 Keynesian liberals no doubt hoped that this rhetorical move would “disinfect” the FEB, removing any grounds for charges of leftist interventionism. Ironically, it actually opened up a new conservative avenue of attack. Charges that the FEB would lead to increased taxation and spending (because the bill was now entirely focused on maintaining aggregate spending levels) united traditional small-government conservatives like Robert Taft with a new generation of anticommunist conservatives. They had been shoved into the limelight in the House following the 1942 and 1944 elections and now had a role to play in safeguarding American democracy. Though their reasons differed, conservatives united in criticizing the FEB as a harbinger of permanent deficits, high taxes, and big government. These qualities were, in their view, far too Soviet (despite having very little to do with actual Soviet command-and-control economics). Congressional conservatives pursued a variety of rhetorical strategies. Republican senators sitting on the Wagner Committee adopted a strident attitude and flatly challenged the basic premises of Keynesianism rather than the goal of full employment. Giving everyone a job was a universally beloved goal. Keynesianism was a foreign economic theory only vaguely understood by the public and, hence, a much easier target. “The Undersigned concur fully in the stated goals of the so-called full-employment bill,” conservative members wrote. “Our only objection is to the policy of unlimited government spending.”119 The report that this quote was from, also called the “Minority Report,” flatly denied that it was possible “to make an accurate estimate 18 months ahead,” that a specific full-employment GDP level could be estimated, or

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that one could “judge in dollars or jobs the effect of any general measure.”120 Senator Taft and his colleagues asserted that “the so-called compensatory spending theory, advanced by Lord Keynes” was simply a cover for unlimited government spending. Taft worried out loud that the federal government would end up directly employing the unemployed at a cost of $20 billion a year. He ignored protestations from Wagner and his colleagues that they had ruled this out by explicitly excluding direct job creation.121 The “Minority Report” closed by arguing that “government can guarantee full employment if it is prepared to set up a totalitarian government. Hitler did it. Stalin did it.” Also an “increase in debt might shake the confidence of the business world so much that it would destroy more jobs than it created.”122 It was a theme sounded again several decades later as debates on full employment emerged in the 1970s. Conservatives authored a number of amendments that highlighted the bill’s statism or split liberals by forcing them to vote against concrete work programs (thus opening them up to the accusation that the FEB would not itself provide jobs, and was relying instead on an untested economic theory). In the House, Congressman William Whittington introduced a replacement amendment that “unqualifyingly rejects this theory [Keynesianism],” argued that deficit spending would “destroy the system . . . of free competitive enterprise,” and took aim at the remaining spirit of social liberalism by claiming that “the right to work is not synonymous with the right of freedom.”123 Senator Bourke Hickenlooper’s amendment would have added a clause to the effect that “the Federal Government should not pursue a policy of engaging in commercial activities in competition with free, competitive private industry.”124 Senators Robert A. Taft and George Radcliffe offered an amendment that would have added “a comprehensive program of public works and other expenditures,” while Congressman Everett Dirksen sought to include “the use of Federal works programs not as relief but to stabilize and expand the construction industry.”125 These amendments, although easily defeated, forced liberals to step forward in ways that left them open to being critiqued as quasi-communists or to vote against concrete job proposals on narrow technocratic grounds, rendering the bill as an empty pledge. In 1945–1946, these conservatives did not have the power to block the FEB outright. New Dealers still held a majority in the Senate, ironically because only one-third of the Senate had been elected in 1944. Enough of a notional Democratic majority remained in the House to prevent the bill

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from being killed outright (although they would lose control of the House in the midterm elections of 1946). Out beyond the Beltway, public support for full employment was high enough that voting down the FEB would have brooked retaliation at the polls.126 What conservatives could do was to steer the debate into the waters of statism and economic liberty, inducing liberals to emasculate their own legislation. As liberals squirmed to moderate the bill while under rhetorical assault, the right to a job was whittled away. In its own convoluted way, the Wagner Committee tried to clarify its stance: “the right to a job does not mean guaranteed jobs. . . . [I]t is not the aim of the bill to provide specific bills for specific individuals.”127 What, then, was the meaning of this right? The Wagner Committee closed off the liberal project of using the courts to expand economic rights, stating that “the statutory enunciation of the right to employment opportunities does not imply resort to the courts.”128 This is the more surprising development, considering the critical ideological importance of this provision for liberals within and beyond Congress. The right to a job contained within the legislation maintained political continuity between postwar liberalism and the New Deal with FDR’s wartime Four Freedoms speech, in which “freedom from want” was added to the classical liberal freedoms. His famous Second Bill of Rights portrayed social and economic rights as a continuation of the work of the Founding Fathers. It was also the most popular provision of the bill, directly answering the fears and hopes of a generation transfixed by the memory of mass unemployment. The right to a job would, like Social Security, create a direct link between the promises of the national state and the individual voter-as-worker. Redefining full employment through the technical lens of spending levels precluded any legislative way of creating that direct link—lest the charge of statism or excessive spending be renewed. An irreducible choice between economics and the liberal political project of economic rights was created, and congressional liberals chose the former. The shift from the right to a job to a more general guarantee of a favorable economic climate turned out to be the antithesis of a winning political strategy. In 1944, Harry Hopkins had commissioned Princeton University’s Office of Public Opinion Research to do three separate public opinion surveys on postwar employment issues. The data showed strong support for job creation: when asked whether they favored that “the government guarantee a real job on useful Government work to anybody unemployed after

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the war until they can find a job in private industry,” 73 percent of respondents agreed. Asked if they would be willing to pay higher taxes to finance those jobs, 67 percent were ready to take that step. Even when confronted with attacks that the NRPB plan was too akin to communism or that WPA jobs went against American traditions of self-reliance, about 60 percent of the American people still approved.129 Public attachment to economic planning itself was much weaker. Only 58 percent of Americans expressed confidence that joint planning (far closer to tripartite bargaining than Keynesian forecasting) could work to reduce unemployment. Americans were badly split along partisan and class lines about who should lead planning efforts. Only 39 percent of Democrats and 19 percent of Republicans agreed that planning should be governmentled (as it would be in the Keynesian model), and a majority of Republicans and wealthier Americans called instead for business-led planning.130 The general public was moving in the other direction. Poll respondents were skeptical of a strategy that relied on the private sector to produce full employment. Sixty-six percent of Americans believed that “the Government will have to work out many projects to keep people employed” (as opposed to only 27 percent who believed that industry could absorb the majority of the workforce on its own) and only 50 percent believed that there would be jobs for everyone after the war.131 Liberals thus opened themselves up on two fronts. They started their fight in a defensive crouch on the home ground of conservative thought. They faced the unenviable task of pushing a major policy change up the Hill that no longer actually provided the guarantees for individuals that the public endorsed. The FEB was moving away from its origins in the realm of economic rights. Skeptical voters were being asked to put their trust in economic models with no guarantee of tangible assistance. The result was that a valuable political weapon, the overwhelming majority sentiment for a job guarantee, was thrown away at the moment it was most needed. There was dissent in this process, but it emerged among outsiders to the Wagner Committee. In 1946, Representative Joe Patton offered an amendment mandating that “to the extent that private enterprises are unable to achieve full employment, the Government . . . must employ direct means . . . to achieve full employment.” It automatically appropriated the funds necessary for “undertaking suitable work programs to provide supplemental employment opportunities for men and women who are unemployed.”132 In the same vein, Louis Bean of the Bureau of the Budget

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proposed a “Revision of S.380” that would have reintroduced “a long-range planned program for public works” into the bill.133 Sadly, these efforts were disparate, uncoordinated, and far too late— neither made it into the bill. Now that the FEB was introduced, it had to be supported or opposed. A process of political narrowing was taking place in which all good liberals were supposed to come to the aid of planning, and public works amendments were defined as conservative attacks against aggregate demand management. The rejection of the WPA, by then something of an American tradition, made the form of full-employment policy an outlier. In the 1940s, most countries incorporated long-standing policy frameworks already familiar to their national audiences in their plans for full employment. The United Kingdom’s program drew heavily on the Labour Party’s faith in economic planning, nationalization, and state direction of industry and the New Liberal thought of Keynes and Beveridge. Canada, Australia, and New Zealand moved in directions that revealed the strong influence of the British model. The French would emphasize dirigisme and the Germans, tripartite negotiations; the Scandinavian model famously emphasized labor-market policies.134 The United States, a pioneer of direct job creation when it put millions of people to work during the depths of the Great Depression, turned away from its own recent history. Historians have tended to focus on the role of the House in eviscerating the FEB, pointing to the historic blunder of assigning the bill not to the House Committee on Banking and Currency (chaired by New Dealer Congressman Brent Spence) but to the House Committee on Expenditure in the Executive Department (chaired by arch-Dixiecrat Congressman Carter Manasco). The Manasco Committee packed its witness list with advocates from the chambers of commerce who fell in line with Senate conservatives in attacking Keynesianism. Opponents argued that the bill required “immediate action to fill some unknown gap between this obviously unreliable forecast of spending and employment and a vaguely defined condition of full employment.”135 The Senate version of the FEB was voted down 17 to 3. A weak substitute passed narrowly that specifically removed the right to a job and provisions for automatic countercyclical spending in the budget.136 While liberals would carry on the fight on the floor of the House, and then again in conference with the Senate, the House ultimately succeeded in clipping the ambitions of the original bill.

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However, differences between the Senate and House bills were less substantial than they appear at first glance: the House removed the right to a job and replaced it with a mere “policy” to “foster and promote” jobs for all. While this seems like a significant change, the Senate had already changed section 2b from establishing that “all Americans able to work and seeking to work have the right to . . . employment,” to establishing that those self-same Americans “are entitled to an opportunity” for work.137 The House downgraded the federal government’s responsibility for full employment to a mere “policy” hedged about with qualifications that the policy would “use all practicable means consistent with its needs and obligations and other essential considerations of national policy.” This was more than a little ironic since the Senate had already shrunk the federal government’s “ultimate responsibility . . . to assure continuing full employment” down to a “responsibility . . . to foster free competitive enterprise.”138 At every point, House conservatives simply built on top of the Senate’s own retreat.

Why Direct Job Creation Was Rejected Explaining why direct job creation was jettisoned from the Employment Act of 1946 is harder than describing the steps that led in that direction. Congressional liberals did not discuss their internal deliberations; indeed, the very process of internal negotiation was carried out among a very small number of policy intellectuals attached to the Wagner Committee, with none of the kind of general debate among stakeholders that we associate with major policy measures like the Affordable Care Act of 2010. The Wagner Committee left no minutes of meetings or other records of its deliberations. Moreover, there was great pressure on liberals inside and outside of Congress to defend the FEB as it existed by presenting a common front against conservative attack (a not-unfamiliar process to current progressive activists) and avoiding internal debate.139 In order to understand why the FEB excluded the job creation model, we have to examine the private debates of a group of policy intellectuals and entrepreneurs who had gathered around Keyserling, then a close advisor to Senator Wagner and a peer of Keynesian intellectuals who had coalesced in various places in the executive branch. This group, which called itself simply the White Paper Committee, included some of the real luminaries of American economic policymaking: Keyserling himself, who had been the

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most significant legislative draftsman of the New Deal; Marriner Eccles, chairman of the Federal Reserve and a key player in the “Keynesian turn” in 1938; Gerhard Colm, a Weimar Republic Social Democratic economist who had fled from the Nazis and been hired by Harry Hopkins to develop the first national income estimates; and Alvin Hansen, the “American Beveridge.” The White Paper Committee would (through Keyserling, who was part of the official bill-writing team within the Wagner Committee staff) exert a subtle influence on the drafting process and attempt to guide the public debate.140 Their internal memoranda are very revealing, of both their influence and their thinking. The initial draft of the committee’s full-employment plan—written by Hansen—was broadly social Keynesian in emphasis: it stressed that countercyclical spending would be run through social services, and it discussed how the environment for full-employment levels of investment could be stimulated through regional resource development (with a slight hint of TVA-style interventions), urban redevelopment, a broad highway and airport modernization program (prefiguring the Eisenhower-era infrastructure act), and the expansion of government investment in scientific research.141 Eccles and Colm concurred with Hansen’s proposal, calling for “a comprehensive program for the development” of national infrastructure as well as “a national minimum” of “social security, health, education, and . . . labor standards.”142 Colm even proposed the addition of a National Investment Bank in the same vein as Ezekiel.143 The full 1944 draft proposal for full employment, which the White Paper Committee announced through the Bureau of the Budget and the Federal Reserve, called for a fullemployment program whose pillars of “Encouragement of Business and Agriculture,” “Long-Range Development and Improvement,” and “Guarantees of National Minimum” rested on Hansenite foundations.144 However, as previously discussed, Keyserling (the link between the White Paper Committee and the Wagner Committee) filtered these proposals through in such a way that the social elements did not make it into the final bill. This, the committee approved. Deliberations within the White Paper Committee add to our understanding, especially since we have nothing equivalent for the Wagner Committee. Two motives surface from the White Paper group for excising direct job creation. The first was political: they were afraid of arousing the thennascent alliance between ideologically antistatist Republicans and tactically

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antistatist Dixiecrats. This was no idle possibility as it had transpired following the release of Security, Work, and Relief by the NRPB just a few years prior. At an August 11, 1944, meeting of the White Paper Committee where Colm, Walter Salant, two other representatives of the OPA, and two representatives of the Federal Reserve were present, a consensus emerged that “it would be unwise to put much emphasis on Government spending as such,” arguing that “in the public mind [it] also means spending on projects which are not absolutely urgent (boondoggling).”145 Opinion polls of the time tell us that this was not actually the case, but it was certainly a critique bandied about by the opposition and printed in the press. In contrast to the NRPB approach, Colm argued that “the emphasis for the first postwar period should be on business expansion . . . the second phase on the expansion of consumption.”146 While social Keynesian projects in “public health, housing, education, etc.,” would be considered “on their own merits,” they would not be the center of “deficit spending.”147 A full two years before the FEB became the Employment Act, some of the biggest players within the Roosevelt administration were scared enough of antigovernment sentiment (or sufficiently committed to fiscal Keynesianism instead) that they decided to jettison both the NRPB and social Keynesian models.148 Abandoning job creation was a useful scapegoat against such a firestorm, and the move to privatize public works was a potential shield against red-baiting. Eliminating direct job creation was also a concession that Keynesians on the White Paper Committee did not see as a great sacrifice. In internal documents, Hansen argued that the key to full employment was “the maintenance of an adequate flow of total expenditures”; the federal government would “create conditions under which free enterprise can reach its maximum possible development, and . . . supplement its activities” where necessary, but no more.149 While Hansen would have preferred these supplemental expenditures be social in nature, they did not have to be for the theory to work. Even in his more social Keynesian mode, Hansen was agnostic about how the delivery of those services could be accomplished—public vendors or private vendors resulted in the same boost to aggregate spending.150 Accordingly, sacrificing direct job creation was (in their eyes) painless—the government would still ensure full employment, it would still be the driver of economic planning; the conservatives would be offered the outward display of victory, only to have the Keynesian technocrats snatch the substance out from under them.

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This confidence in ultimate victory flowed from a deep faith in planning methods. World War II not only had demonstrated that truly full employment was possible (not merely below 3 percent but below 1 percent unemployment and virtually full use of production capacity), but also had seen a statistical revolution that had greatly increased the tools available to planners.151 National income accounting had allowed for the creation of GDP figures that could reliably underpin growth planning; modern unemployment measures were now available from new, scientific surveys.152 Statistical agencies had been expanded and the field of public opinion research had come into existence. In such an environment, Keynesian intellectuals and the politicians they advised made a fateful decision to focus on the budget and the joint committee as the key to full employment. They did so, confident that they were pursuing a course of eventual victory. Thus, the stage for the disintegration of the FEB had already been set before the bill was introduced—the experts drafting the legislation had already decided to jettison the NRPB’s model. Virtually any hint of social Keynesianism was eliminated long before the bill passed out of the Wagner Committee and onto the floor of the Senate, where it passed by an overwhelming 71 to 10. Seventy-one senators believed that they had voted on a substantive Full Employment Bill, but they had not.

Conclusion The decidedly mixed outcome of the struggle over the FEB had major consequences for the postwar development of a job creation policy. In failing to cross over from the New Deal to postwar American economic and social policy, the right to a job backed by government programs was not enshrined at the heart of the American social contract. This stood in marked contrast to the guarantees of Social Security. Nonetheless, contrary to what one might expect from the theories of path dependency followed by Edwin Amenta, Weir, and others, direct job creation continued as part of the policy debate for decades afterward, even though it was deinstitutionalized for eighteen years. This points to the more significant influence of the second outcome of the FEB: the creation of a popular expectation that the government was now responsible both for the management of the economy and for the well-being of at least the industrial core of the working class. Although

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there were institutional imperatives for Keynesian targets for employment and growth or Keynesian policies for achieving them, there was even so a sense of expectation. What, exactly, the government was responsible for was hazy. But even the haze exerted an influence, albeit an uneven one. The Truman administration, staffed by remaining New Dealers (and maturing young New Dealers) and especially now by Keynesian economists, aimed at Keynesian budgets. Social Keynesianism in the form of Truman’s Fair Deal (which failed to pass Congress) and military Keynesianism in the wake of NSC-68 (which sailed through Congress) were in full bloom. The result was that unemployment was kept below 4 percent between 1945 and 1948, and it reached the consensus full-employment level of 3 percent by 1952. Despite a rather nasty recession in 1949, GDP grew by an average of 4.8 percent a year during Truman’s full term. It should be noted that, in this chapter, the role of conservatives in abandoning the New Deal approach to full employment has been relatively muted. In no small part, this is because the voice of conservativism in American politics was still muted in 1945. In “The Problem of American Conservatism,” Alan Brinkley noted that before 1945, American conservatives did not “often constitute an effective political force. . . . [N]ot until the postwar era did large numbers of conservatives manage to articulate a serious and important critique of liberal culture.”153 The reason for this assessment becomes clear when we look at recent historiography on the conservative movement. As Kim Phillips-Fein describes in Invisible Hands, the conservative movement was still reeling from its historic defeat in the 1936 election, and the dominant mood in American business circles (the financial lifeblood and organizational force on the right, according to Phillips-Fein) was for cooperation with the federal government rather than resistance.154 Those conservative groups that remained unrelentingly hostile to the New Deal were still organizationally weak in 1945: In the decade [between 1937 and 1947], this developing movement culture manifested itself in a variety of institutional forms. . . . [M]any of these attempts were to varying degrees uncertain, lurching, and transient, and until the establishment of the Mont Pe`lerin society none of the institutions managed to fulfill their original mandates or to become established on a permanent basis. . . . [T]he eventual successes of the neoliberal movement have made it

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challenging for contemporary readers to recognize the sense of uncertainty that impelled its early years. Between the two world wars it remained very much in abeyance.155 It would take both an intensification of underlying trends and escalating political events from 1946 to 1950—George Kennan’s Long Telegram, the codification of the Truman Doctrine and U.S. support for anticommunist regimes in Greece and Turkey; the first loyalty investigations within the federal government; the Berlin Airlift, the communist victory in China in 1949 and its domestic fallout as resurgent Republicans in Congress demanded to know “who lost China”; the issuance of NSC-68 as the guiding doctrine of U.S. foreign policy; and the beginnings of the Korean War—to unite the conservative movement behind the cause of anticommunism. As Phillips-Fein puts it, “The free market movement that had started in the 1930s grew and gained momentum against the backdrop of McCarthyism and the broader climate of anti-Communist politics.”156 This foreign policy crusade would turn inward to the domestic front, where the strike wave of 1945–1946, the failure of the CIO’s Operation Dixie, and the elimination of the OPA were all swallowed up by the overarching public issue of “communism” versus “freedom.”157 In this atmosphere, conservatives were able to discredit as “communistic” the kind of detailed, statist, interventionist economic planning that direct job creation was suited to, and thus gradually push direct job creation itself outside of the bounds of normal public policy—as signified by Herbert Hoover’s transformation of the Federal Works Agency into the General Services Administration in 1949.158 At the same time, the influence of conservatives in the 1950s should not be exaggerated: even under a Republican president like Eisenhower, large-scale federal public works were acceptable once couched in the language of the Cold War, and full employment would remain a goal of national policy throughout the Cold War era. Moreover, as we have seen in this chapter, the Republican Party of 1945, far from embracing the ideas of Friedrich Hayek and Milton Friedman, was in favor of economic planning and full employment—although it certainly echoed American business groups that economic planning should be public-private and preferably business-led. Even when the Republican Party recaptured the White House, President Eisenhower essentially accepted the permanence of much of the New Deal state (especially Social Security).

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So what then did the outcome of the FEB mean for liberals? Despite the victory of Keynesians in 1945 over their rivals within the center Left, their economic policy lacked the tools needed to circumvent or end the business cycle and keep unemployment below the 3 percent line drawn by William Beveridge. Without a liberal Democrat in the White House, the political consensus needed to maintain full-employment policies was simply not strong enough, even though the public was in favor of government intervention toward this aim. Yet direct job creation was far from finished. Spikes in unemployment during recessions in 1949, 1953, 1958, and 1960; persistently higher unemployment in the United States than in Western Europe; and the emergence of new social problems created demands for new policy tools. Because Keynesians were never so hegemonic in government that they could exclude all alternatives from the councils of government, direct job creation could wiggle in through the cracks. However, unlike the 1930s, when direct job creation advocates and Keynesians had worked together as part of the same policy network, they would now be rivals. During the New Deal, the federal government lacked the fiscal presence necessary for Keynesian policies to be enacted without an alliance with direct job creation advocates. In the postwar world, the much larger national state (with its military contracts, broad-based income tax, and public works initiatives like the Federal Housing Act of 1949 and the National Defense Highway Act of 1956) offered plenty of scope for action without such compromises. New calls for direct job creation would now be seen as disruptive to the status quo. The waning of the New Deal and the transition to postwar liberalism brought about an equally significant shift. The rhetoric of the New Deal, grounded in collective economic and social rights and envisioning the national state as the engine of economic regeneration, provided a welcoming environment for direct job creation. Postwar liberalism, while not abandoning progressive politics, adapted to the new climate of anticommunism by embracing the rhetoric of individual rather than collective rights and economic opportunity and growth over redistribution. While the state remained a major agent of change, postwar liberals were far more ambivalent about expanding its “intrusion” in the market. None of this meant that direct job creation would cease as a public policy project, but it did mean that after the Full Employment Act of 1946, it would now be swimming against the political currents.

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Jobs and Freedom The Missing Front in the War on Poverty

Martin Luther King Jr.’s “I Have a Dream” speech so dominates the public historical memory of the 1963 March on Washington that we often only think of the vast sea of protestors who swarmed to the Mall to hear it as nothing more than an audience. But when we focus down into the crowd the signs that the marchers carried come into view. “JOBS FOR ALL” was plastered across those placards as often as “EQUAL RIGHTS NOW.”1 Indeed, the official title of the gathering was “the March for Jobs and Freedom”—jobs first, freedom second. And King was as adamant a crusader for economic justice as he was for civil rights; indeed, he saw the two issues as integral to one another. Within a year, an activist president, Lyndon B. Johnson, advised by Keynesian economists, called for the virtual abolition of poverty. A massive and historically liberal congressional majority was eager to pass whatever bill Johnson sent to them. In the process, for the first time in a generation, direct job creation thus reentered the policy debate. Between 1945 and 1963, direct job creation policy had spent eighteen years in the wilderness. The Truman administration embraced fiscal Keynesianism (between 1945 and 1949) and military Keynesianism (between 1949 and 1952). Eisenhower followed with a policy program based on orthodox Republican economics, focusing on monetary stability and keeping inflation low (an average of 1.4 percent). Direct job creation seemed a thing of the past. Why then did a job program emerge once again at the heart of debates over the War on Poverty? On a political level, the 1958 midterm elections returned a historic number of liberals to Congress, no doubt because the recession in that year

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sent unemployment skyward, hitting 6.8 percent. The election of JFK in 1960—a liberal running on a platform of “getting the country moving again”—and the 1964 elections, which sent a working liberal majority to Congress for the first time since the New Deal, opened up opportunities for policy projects that had been sidelined for years.2 Full employment by demand management, medical care for the poor and the elderly, federal support for education, and perhaps even civil rights were now on the agenda. In an administration where increased federal intervention in the economy was now standard, direct job creation no longer appeared as radical as it had during its eighteen-year banishment. A gradual weakening of anticommunist witch hunts after Joseph McCarthy’s censure in 1954 helped to resurrect the prospects for direct job creation as well. Landon Storrs has argued persuasively that repeated House Un-American Activities Committee investigations of New Dealers like Leon and Mary Keyserling had a chilling effect on their policy positions. Selfcensorship was often seen as the only way to scotch rumors that they might be “reds.”3 However, the New Dealers who worked in direct job creation were less affected by these scares. To begin with, the Works Progress Administration (WPA) had been demobilized in 1943. It was not around to be investigated after the war. Hence by the 1960s, vague memories of red-baiting investigations of the WPA during the late 1930s were hazy at best. And some of the key figures who led the WPA were no longer in play. Harry Hopkins died in 1946, and to the extent that right-wing anticommunists tried to paint him as a “red,” they generally focused on his work as a wartime envoy to the USSR. Corrington Gill died the same year. Jacob Baker and Emerson Ross retired quietly. Aubrey Williams’s political career had been sidelined in 1943 when he was denied the nomination to head up the Rural Electrification Association. This passing of the old guard had two important consequences: on the one hand, it meant that the leaders of the WPA were not on hand to face the same treatment that Dean Acheson, Leland Olds, and Rexford Tugwell faced after the war. Direct job creation separated from the personalities who had developed it. When job creation was reintroduced as a policy option in the 1960s, it was not in the context of renewed loyalty investigations. On the other hand, because these leaders were no longer on the scene, there was also no transmission of experience and knowledge to the next

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generation. Those who would argue for direct job creation in the 1960s would have to rediscover the policy for themselves, and the ideas that undergirded it would be redefined in the context of the 1960s. At the same time, the institutional capacity built up so painstakingly in the 1930s would have to be re-created from scratch at a time when advocates of direct job creation in the Labor Department were competing with the Council of Economic Advisors (CEA) and the Office of Economic Opportunity (OEO), which both had more influence over the initial planning phases of the War on Poverty. The recessions of 1953 and 1958 played an important role in the resurgence of job creation because they forcefully shoved the problem of unemployment back onto the national radar. Democrats were returned to power by an electorate worried about joblessness and needed to show that they had reacted to their concerns. But recessions in swift sequence also created a fear among mainstream Keynesian economists and the Democratic Party that the postwar boom was no longer as self-sustaining as it might have once appeared and that more state activism was needed to keep it going. Senator John F. Kennedy’s economic platform in 1960 was primarily aimed at boosting economic growth rates in competition with the USSR, but it did include both a call for public works and a campaign pledge to bring the unemployment rate below 5 percent.4 Even so, the national expectation for government involvement in solving unemployment had changed considerably since 1945. During the Truman administration, William Beveridge’s standard of unemployment below 3 percent was considered full employment; the Eisenhower administration had run an average unemployment rate of 4.8 percent; and Kennedy was aiming to bring the unemployment rate down from a high of 7.7 percent in January 1960 down to a modest target of 5 percent.5 Support for the government to act as the employer of last resort gradually declined from 68 percent in 1948 to 59 percent in 1960.6 By the time that the Johnson-era policy wonks sat down to work, job creation advocates in the federal government were, once again, in the mix. The Labor Department was a particularly important “nest” of job program advocates. Nonetheless, the War on Poverty declined to open a job front in 1964. To understand why, we have to look at the task forces and examine how the CEA, OEO, and the Labor Department mobilized to dominate the War on Poverty. We also have to go beyond initial divisions in 1964 to examine

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how the splits within shifted over time as policy learning and network building took place, because the War on Poverty did move toward a jobpolicy approach between 1963 and 1968. And by that time, it was too late. Initial decision about how to prosecute their “war” set limits on what could emerge in the way of a job program. A temporal mismatch between the War on Poverty’s understanding job policy and the window of political opportunity that LBJ’s political capital had created meant that direct job creation would again miss a rare opportunity to establish itself permanently in American economic policy.

The Place of Jobs in the War on Poverty The historiography of the War on Poverty is quite comprehensive when it comes to the ideas circulating within the Kennedy and Johnson administrations, especially the competing voices within its task forces. In America’s Struggle Against Poverty, James Patterson emphasizes the divisions between structuralist and culture of poverty theories within the War on Poverty, noting how the CEA chairman Walter Heller’s design mixed a Harringtonesque culture-of-poverty perspective with opportunity-theory ideas about cultural deprivation to propose a remedial strategy without Harrington’s emphasis on jobs.7 While the OEO might have pushed back against Heller’s proposals, given its use of structuralist and disempowerment theories, it ultimately chose a human capital approach that easily merged with Heller’s, as opposed to an economic-transfers approach.8 In her book Poverty Knowledge, Alice O’Connor traces the roots of the War on Poverty back to academic debates of the 1950s and early 1960s. She shows convincingly how culture-of-poverty theories were profoundly shaped by the emergence of postwar affluence and the behavioral revolution in social science. O’Connor dwells on the reconceptualization of the family during the Cold War as the source of psychological stability (requiring properly patriarchal role models), and she lays out the prevailing international focus on internal barriers to development.9 These influences on culture of poverty would drive even those (like Michael Harrington) who otherwise understood many of the structural economic causes of poverty to zero in on individual, psychological dynamics (especially located in a fear of the “matriarchal” family of color) that fostered poverty rather than digging into a trenchant critique of capitalism.10

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Community action theories grew out of Chicago School efforts to enhance the “competence” of neighborhoods to better organize themselves, to eliminate barriers to opportunity, or to modernize social services. Still, the underpinning of community action meant that, ultimately, its advocates often ignored the problems of race (outside of a narrow focus on assimilation), directed most of their energy at political infighting against politicians and entrenched bureaucracies, and ignored the pressing need for redistribution.11 When the newly launched War on Poverty brought these academic disputes into the realm of politics and policy, the CEA looked to define poverty as a problem that could be solved through its preferred solution of Keynesian demand management. By boosting growth and driving toward full employment, combined with targeting particular social problems, the underbelly of capitalism could be raised up. Human capital theory was embraced by the CEA, and it had much in common in its reliance on individual shortcomings with the ideas of the culture of poverty. Hence the CEA adopted much of the theory’s interpretation of the problem. The approach allowed the CEA to participate in the War on Poverty while simultaneously defending its Keynesian agenda against structuralist critics like John Kenneth Galbraith and Gunnar Myrdal and the A. P. Randolph wing of the civil rights movement.12 Even community action could be added to the mix without threatening the Keynesian agenda as a way to target youth with remedial human capital programs and deliver quick results.13 The historiography of the War on Poverty focuses largely on the CEA, the OEO, and the Department of Health, Education, and Welfare (HEW) as the major players in Washington, DC. It dwells especially on how these agencies came to focus on education, training and health programs, the community action programs (CAPs), and increased social welfare spending as models for dealing with poverty. To the extent that jobs enter the narrative, the literature tends to focus on those standing on the sidelines when the loudest voices inside the War on Poverty were preoccupied with arguments over the culture of poverty versus disempowerment versus structuralist debate. Kevin Boyle points to Left elements in the labor movement, especially within the United Auto Workers (UAW), who preserved the New Deal’s vision of state activism against unemployment. Walter Reuther and his aides in the UAW pushed job policy repeatedly in reaction to the rise of

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automation and structural unemployment in the automobile industry. Their emphasis was less on direct job creation than on tripartite economic planning as a necessary precondition, as “jobs programs . . . would be nothing more than ‘stop gap measures’ unless they were placed within a program of ‘publicly planned economic abundance.’ ”14 Boyle especially credits the UAW for continually pushing the civil rights movement and the War on Poverty to focus on economic structures of inequality.15 Thomas F. Jackson explores a parallel development within the civil rights movement, showing how Martin Luther King Jr., Bayard Rustin, Tom Kahn, A. Phillip Randolph, and others had preserved the same social democratic tradition and had come to many of the same conclusions independently.16 In The Problem of Jobs, Guian McKee in turn points to a tradition of local liberalism in Philadelphia that had never lost sight of the economic planning embodied in the National Resources Planning Board (NRPB). He notes that this tradition could have solved the combined problems of declining industrial bases in the cities and racial inequalities in the labor market.17 By contrast, Patterson, Irving Bernstein, and O’Connor concentrate on external intellectual forces that were arguing for a jobs approach to the War on Poverty. Patterson emphasizes the role of a structuralist theory of poverty that formed around Gunnar Myrdal, Kenneth Boulding, and Leon Keyserling, who argued that unemployment and low growth were responsible for half of poverty. This group clashed sharply and repeatedly with culture-of-poverty theorists.18 Bernstein focuses squarely on Harrington as the advocate for jobs in the War on Poverty task forces.19 O’Connor points out, however, that there were significant trends within structuralist thought that limited how useful structuralism could be in arguing for a jobs approach. To begin with, many structuralists argued that poverty either was now a problem of islands and pockets immune to growth (but at the same time, no longer seen as caused by unemployment and low wages) or was a more general phenomenon driven by unemployment and low wages but curable through growth.20 More consequentially, while structuralists argued that economic structures caused poverty, some nonetheless slid into a focus on the demographic characteristics of the poor, muddying their analysis. In the case of Harrington and Daniel Patrick Moynihan, O’Connor points out that they had two different kinds of analyses: one that centered on labor-market failures, lack of labor organizing in lowwage industries, and the limitations of the welfare state, and another that hewed to “vicious cycles of deprivation and psychological isolation” that

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had created a “culture of poverty.” “By couching the analysis so exclusively in terms of behavior and psychology,” O’Connor writes, Harrington and Moynihan “undercut [their] own radical potential and deflected attention away from any critique of capitalism” or from an economic, job-focused approach to fighting poverty.21 Moreover, insofar as jobs policy enters the “inside” story, there is a lack of consensus about the role that jobs policy played in debates among poverty planners in 1963–1964. For Bernstein, the key problem was that jobs policy would require redistribution and that LBJ’s insistence that the War on Poverty would be funded solely from the surplus of prosperity foreclosed a jobs-first model.22 Patterson puts more weight on the bureaucratic clashes between the Labor Department, HEW, and the OEO as responsible for creating a conflicted program that had little room for more aggressive measures.23 We see the same pattern in the writings of those few scholars who do train a lens on jobs policy in the War on Poverty. In Politics and Jobs, Margaret Weir combines an American political development focus on institutional capacity and path-dependent processes with a keen attention to how these forces interacted with the politics of race. She argues that the Labor Department was beset by fragile institutional capacity in terms of both planning and carrying out job creation programs, and also in creating the economic analyses needed to justify them. That weakness was, in turn, caused by earlier failures to institutionalize jobs policy within the federal government. Overall, this analysis gives the conflict between Labor and the CEA an inevitable quality.24 As a result, the War on Poverty would proceed on a “remedial” basis focused on human capital rather than on a structural focus on labor-market policy. Weir links this institutional story to the changing political dynamics of race, arguing that “the initial design of the poverty program—stressing enhancement of individual capacities . . . collided with the movement for African-American political empowerment in ways that hindered further development of labor market policy.”25 The War on Poverty was shaped by a conception of the problem as a lack of income that implicitly framed poverty as predominantly white. This was reinforced by Bobby Kennedy’s sojourns to rural Kentucky where poor whites in threadbare clothing were photographed on the front porches of broken-down homes. However, as Weir explains, “it was in practice directed . . . particularly on the black urban poor . . . [and] became identified as a ‘black’ program.”26

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I share Weir’s belief that timing was crucial here. The identification of the War on Poverty with the black community occurred in the late 1960s: “black political incorporation no longer evoked images of passive resistance to southern racists; instead it called up troubling memories of urban riots.”27 As Weir sees it, by the time that the Johnson administration had come around to the idea that the War on Poverty had to shift to an “employment approach,” such policies were seen by white voters as “riot insurance” payoffs, dooming their chances in Congress.28 Judith Russell argues that Weir’s approach fails to “distinguish between the intentions and goals of policy makers and policy outcomes but also to separate these dimensions from perceptions of policy outcomes.” Whatever the intentions, Russell points to the “stark incapacity of the Labor Department to administer the kinds of large-scale jobs programs it was proposing,” and “the lack of consensus among experts as to the technical causes of unemployment and how unemployment was related to poverty.”29 Once again, the picture is of an alternative raised by Labor Secretary Willard Wirtz that was conclusively shut down in 1963. Frank Stricker argues that “Johnson and antipoverty planners censored alternative approaches” to fighting poverty and therefore “the programs that were publicized as the War on Poverty . . . excluded direct job creation.”30 In his telling, the administration supported CAPs because they were “a good alternative for planners who did not want comprehensive jobs programs” and allowed policymakers to “avoid terms like ‘inequality’ and ‘redistribution of income.’ ”31 While he documents a later shift in thinking, Stricker argues that in the end “antipoverty liberals missed a chance to focus on programs that could assist all Americans.”32 Overall, less attention has been paid to how job policy developed after 1964. Brian Steensland and O’Connor document the OEO’s shift to a quantitative view of poverty, but it focused on income policy, not on jobs policy.33 Between 1964 and 1968, both the Labor Department and the OEO reconceptualized jobs policy; Labor especially increased its institutional capacity by running the Neighborhood Youth Corps and other employment programs. The two agencies learned to work together after 1965 and to present a united front on this new approach to poverty. Hence, timing was important because, had this process been completed before and not after the 1966 midterm elections, the history of the War on Poverty might have turned out very differently.34

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Antipoverty Strategies in the 1964 Task Forces The CEA and OEO—Human Capital In the early days of the Johnson administration, most participants in the War on Poverty began with a theory of poverty that precluded the idea that direct job creation would be useful. The CEA and the leadership of the OEO were particularly convinced.35 As Walter Heller’s initial “Confidential Memo on Poverty” argued, the CEA saw “limited earning potential” as the result chiefly of “inadequate education and training.”36 Poverty and unemployment did not bedevil most labor-market participants. Those who suffered from these ills fell into a category of Americans whose shortcomings could be remedied by education, retraining, and literacy programs.37 Income transfers would be aimed at those over sixty-five. Everyone else would be treated to a program that would increase human capital. The CEA expanded on this argument in the President’s Economic Report in 1964: “the chief reason for low pay is low productivity.” The higher incidence of poverty among those with a high school education or less was evidence for the wisdom of this perspective. Beyond this, the CEA bought into the “cycles of poverty” theory, noting that “poverty breeds poverty” through “high risks of illness, limitations on mobility, limited access to education . . . and lack of motivation, hope, and incentive” passed on from parents to children.38 At the same time, Heller’s position within the task-force debates somewhat belies his reputation as a rather conservative fiscal Keynesian. Heller was not simply a Panglossian advocate of economic growth. In a memo to LBJ titled “What Price Great Society,” he argued that “the idea that the poor and the Negro automatically get the benefits of a highly prosperous economy by way of a ‘trickle down’ of jobs and income is true only to a limited extent.”39 Indeed, Heller’s “Confidential Memo on Poverty” was remarkably pessimistic about a growth strategy: “we cannot . . . rely on future growth alone to do the job,” in part that “it may be that the remaining poverty will be much more resistant to simple economic growth,” because an economic boom triggered by tax cuts would siphon off the more readily employable.40 Heller’s initial plan for a Keynesian tax cut in 1963 was quite different from the regressive reduction in top income rates and corporate taxes that supply-siders have repeatedly referenced for the last fifty years. Instead,

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Heller sought to boost consumer demand (as opposed to investment) through a progressive tax cut aimed at the lowest income-tax brackets.41 Indeed, had the 1963 tax cut passed in its initial form, as much as $10.6 billion might have been transferred to the working poor and near-poor, affecting a population that was largely neglected by poverty warriors in the early 1960s. It was, in a sense, an early forerunner to the Earned Income Tax Credit. In the historiography of the War on Poverty, much emphasis has been placed on how the OEO would later split from the CEA’s “human capital” model of poverty reduction. The disempowerment hypothesis of Leonard Cottrell, Nelson Foote, Lloyd Ohlin, and Richard Cloward (that poverty was caused by the political disenfranchisement of the poor, which meant systemic neglect by local governments) pointed to the value of CAPs, which would mobilize the poor to demand better access to political power and the social services, infrastructure, and public-sector jobs that would come with political power.42 The OEO took on David Hackett’s “guerrilla” approach, seeing state and local welfare bureaucracies, the social work establishment, and HEW as agencies designed more to control the poor than to end poverty, which in turn meant that the OEO was quite cool to HEW’s proposals to expand welfare programs. Even if the CEA had adopted the argument that “inadequate education and training” were responsible for poverty in a time of plenty, the OEO was among the fiercest champions of that position. For all that, the CAPs were innovative as delivery systems. CAP programs—focusing on remedial and enriched education, nutrition, health and childcare, and various types of training—were meant to build up the children (who were deficient in human and cultural capital) so that they could “escape” the cycle of poverty. Despite the Job Corps’ resemblance to a New Deal direct job creation program like the Civilian Conservation Corps (CCC), in its 1960s guise the program provided education and job training to poor teenagers, constructing a ladder out of poverty and into the national economy. Thus, to a large extent, the CEA and OEO shared a common understanding of a smoothly functioning economy that would respond to the Keynesian stimulus embedded in the 1964 tax cut, and once antidiscrimination and human capital programs had done their work, the poor would have a home. At the same time, the “disempowerment” thesis behind the CAPs did not seem as radical or disruptive in the planning stages as it would later on. As we can see from Heller’s “What Price Great Society” and

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“Confidential—Attack on Poverty,” Heller was quick to pick up on the CAPs as a perfect demonstration project for the War on Poverty.43 From his perspective, the CAPs were cheap and thus could be pursued as a model for antipoverty policy without violating LBJ’s pledge of a $100 billion cap on the federal budget. Community action would later challenge many elements of the consensus within the Democratic coalition, but in the beginning it did not challenge the precepts of fiscal Keynesianism. The Labor Department and Direct Job Creation Heller (and, more loosely, Sargent Shriver and the future OEO as well) had some differences with Wirtz. Heller held that the productivity of the poor had to be increased as a necessary precondition for raising wages and employment rates. The Labor Department saw it differently. Because “private enterprise cannot afford to provide unnecessary jobs . . . it may be both socially and economically useful to provide unskilled work for unskilled workers” to complement an overhaul of payroll taxes, “accelerate[d] public works in cities with high unemployment,” expanded publicsector employment, and an increased minimum wage.44 Experts in the Labor Department responded to Heller’s proposal for an attack on poverty, upping the rhetorical ante with a call for an “unconditional war on poverty.” The memo encapsulated Labor’s alternate theory: “except for the very old and the young, the essential characteristic of the poor is unemployment or underemployment.” Pointing to the fact that 60 percent of those unemployed longer than five weeks were heads of households, and 63 percent of them had wages that placed them below the poverty line, Wirtz argued that “nothing will . . . have more impact within the ranks of the poor than for the President’s program to put people to work.”45 Health and welfare policies are fine for “caring for the wounded. . . . [I]t doesn’t count in winning the war.” Tax cuts would help, but “there is . . . the necessity for special programs designed to create useful jobs” for the unemployed.46 In this, Wirtz and the Labor Department dissented from the CEA/OEO orthodoxy—but only to a degree. In the same “Unconditional War on Poverty” memo in which the Labor Department argued in favor of a jobs-first strategy, the authors agreed that “the cycle of poverty and ignorance has got to be broken” with “a vast increase in the education of young America,” and so they strongly favored job training that, they argued, could also be

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considered employment.47 The actual jobs programs proposed were rather minor. The authors suggested reforming the U.S. Employment Service (USES) to develop more placements for low-skilled workers, a voluntary work-sharing program, and so forth, with the most concrete proposal being government guarantees of investments from union pension funds in poverty areas. Wirtz’s private response to Heller’s initial, confidential memorandum on a potential war on poverty proposed a similar approach. Along with proposals to “give jobs by a process which eliminates slums and degradation,” Wirtz recommended “programs to enable people, and especially young people, to break out of the poverty cycle and improve their own employability”—exactly mirroring Heller’s own stance. More important, in terms of scale, Wirtz called for only “a billion dollars a year” to be spent on these varied job programs (which would have covered only two hundred thousand jobs).48 Heller disagreed with Wirtz and the Labor Department on a theoretical basis, but he was enough of a diplomat to adapt to the situation. In Heller’s early memoranda, we can see that many of Wirtz’s 1963 proposals were in fact incorporated into the War on Poverty by 1964. Heller’s “Widening Participation in Prosperity” memo, a more public recapitulation of his initial confidential draft, included Labor Department proposals for expanding Unemployment Insurance (UI), “comprehensive manpower policy,” relocation assistance, reforming the USES as well as “work relief for the unemployable”—as long as everything stayed within budget.49 Thus, when Heller quietly left out of his plan “a combination of accelerated public works with education and training and with jobs for hard-core unemployed in poor neighborhoods” (the essential core of Labor’s antipoverty program), Labor accepted the half-loaf and resolved instead to see whether it could shoehorn some version of its jobs agenda “in the proposed community programs.”50 In 1963–1964, the Labor Department had broken with the fiscal Keynesian orthodoxy that a rising tide would lift all boats. But it mostly dissented in theory; it was not a strong advocate for direct job creation. The department had many irons in the fire: a minimum-wage increase, income-tax credits for the working poor, and wage subsidies for employers to hire the unemployed among them. These proposals represented equally important options for dealing with poverty among those who worked and those who were unemployed. Labor’s preexisting commitment to manpower-training

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programs—inherited from the Area Redevelopment Act and Manpower Training and Development Act—was perfectly compatible with the War on Poverty’s consensus that the problems of the poor were best dealt with by making the poor more employable. While Labor had argued the theoretical point that direct job creation was needed in order to deal with flaws in the labor market, it had yet to understand the scope of activity that would be needed to make effective real difference. At a time when experts estimated four million unemployed (of whom perhaps 2.5 million were unemployed poor heads of households); an additional 3.4 million underemployed, poor families; and 2.8 million full-time, working-poor families, Wirtz and his departmental colleagues called for creating a few hundred thousand jobs at most. Their plans would have covered 3.4 percent of the total “employable” poor.51 Outside Voices If the voices for direct job creation were somewhat fainthearted within the War on Poverty task forces, there was a much louder chorus outside the Kennedy and Johnson administrations who did call for direct job creation. The labor movement and the civil rights movement, the two most important constituencies on the left of the Democratic Party, were foursquare behind a jobs-first strategy for fighting poverty. Behind the scenes of the March on Washington, there were divisions (however quickly hushed up). Activists debated the merits of gradual progress versus instant action, the pluses and minuses of the 1963 Civil Rights Bill, and the question of nonviolence versus self-protection. Still, the Left wing of the civil rights movement did not oppose the economic policies preferred by the rest of the movement. John Lewis and James Farmer, whose speeches at the March registered (or would have registered) radical dissent with the Civil Rights Bill and the movement’s strategy of supporting legislative compromises, did not mention jobs in their addresses.52 Indeed, if one looks outside of the March on Washington, the same pattern emerges: McKee’s Problem of Jobs shows that, however divided they were on issues of race, white liberals in the Community Renewal Program and the Economic Development Committee, as well as Leon Sullivan and the Opportunities Industrialization Centers, were all keenly attuned to the importance of government intervention in the local labor market.53 As Robert O. Self points out, the Maoist-inflected neocolonialist analysis of the

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Black Panthers of Oakland, California, did not prevent Black Power advocates from calling for “full employment for our people” in the Panthers’ Ten-Point Platform for the Oakland City Council. Indeed, they demanded a “massive make-work” program for the poor of Oakland along with black control over work programs, “central labor committees” that would work as hiring halls for the poor to connect them to employers who benefited from federal programs, and job guarantees.54 As a result, for a period, social democrats like Bayard Rustin and A. Phillip Randolph could basically write the economic platform of the civil rights movement. They were adamant that $10 billion per year for a “massive federal Public Works Program to provide jobs for all the unemployed” would be necessary to accomplish the March’s demands.55 Additional academic ammunition for their goals came from Leon Keyserling, whom Randolph and Rustin had enlisted to provide an academic argument for the Freedom Budget they had hoped to make the focus of the March. By this point, though, Leon had gone through significant changes in his life. Since the Full Employment Act of 1946, he had been out of government for a decade, having left the CEA in January 1953. He would always insist that the Truman administration had faithfully followed the principles of the Full Employment Bill, even going to the extent of claiming that it had done so exclusive of the military Keynesianism of the Korean War. But the 1953 and 1958 recessions had a profound effect on Keyserling’s thinking.56 Blaming these two recessions on the failures of the Eisenhower administration to keep to the Keynesian faith, Keyserling came to believe that the economic profession itself had gone into decline, indifferent to unnecessarily high unemployment levels.57 Keyserling was left out of the Kennedy administration, no doubt due to his close links to Hubert Humphrey, who had challenged Kennedy for the Democratic nomination in 1960. He was excluded from the Johnson administration, thanks to his criticism of what he viewed as an insufficiently aggressive attack on unemployment and poverty.58 Consequently, Keyserling could not serve as a conduit for ideas and expertise linking the Truman and the Kennedy and Johnson administrations. Instead, his voice was reasserted in the civil rights movement. With Keyserling’s assistance, the Freedom Budget of 1965, which A. Phillip Randolph, Bayard Rustin, and Martin Luther King would build off the momentum of the “people’s budget” of the 1963 March on Washington, sought to operationalize the demands of the civil rights movement in ways

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that could be mapped onto the federal budget. At the same time, the Freedom Budget reflected Keyserling’s unique perspective on achieving social progress: The “Freedom Budget” differs from previous worthy efforts to set forth similar goals because it fuses general aspirations with quantitative content, and imposes time schedules. It deals not only with where we must go, but also with how fast and in what proportions. It measures costs against resources, and thus determines feasible priorities. It is not only a call to action, but also a schedule for action. The “Freedom Budget,” however, is not self-executing. It defines programs around which can be rallied all those individuals and groups who favor these programs and their objectives. But even with this convergence of forces, these individuals and groups will need to assume the political task of impressing upon their Government the obligation to undertake promptly the needed legislative and Executive programs. As is stressed throughout, improved operations under the Employment Act of 1946, commencing at once, must be the first focal point of the implementation process. The “Freedom Budget” is thus an imperative call to national action—now.59 The emphasis on the Full Employment Act that he had largely authored, the belief in quantitative measures of social justice and timetables to bind future governments to that goal—this is vintage Keyserling. However, in the Freedom Budget’s call for an attack on “all of the major causes of poverty,” not just “unemployment and underemployment,” but also “substandard pay; inadequate social insurance and welfare payments to those who cannot or should not be employed; bad housing; deficiencies in health services, education, and training,” we glimpse a change in Keyserling’s thinking. He was taking up the social Keynesian position of Alvin Hansen. On the critical issue of jobs policy, Keyserling argued that excessive unemployment was masked by the overall prosperity of the postwar era. The U6 rate, which includes discouraged, underemployed, and marginally attached workers, was 8.5 percent in 1964 at a time when official unemployment was only 5 percent. Refusing to separate poverty from macroeconomic concerns, Keyserling argued that 40 percent of poverty was directly caused by unemployment and could only be cured by job creation.60 His view

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was that “training was not enough” to overcome persistent shortfalls in the macroeconomy. Advances in automation were critical; social expenditures mattered more than tax cuts; and the federal government needed to take dramatic fiscal action. This language makes clear the vast intellectual distance between inside and outside actors in the War on Poverty. Keyserling’s was a form of dissent that the Johnson administration was both conscious of and felt compelled to answer. While arguing that Keyserling “exaggerates the amount of slack in our economy, and cares little about price stability relative to the goal of full employment,” a priority for the CEA, the CEA nevertheless had to concede that “there is a certain amount of truth on his side.”61 Reuther pushed the same social democratic line from the labor side. Pointing to the “dimensions of the technological revolution confronting us,” Reuther pushed hard for the inclusion of jobs within the War on Poverty, arguing that “nothing less than a total effort to get America back to work will provide the leverage needed to deal effectively with . . . poverty.”62 (He saw a jobs program as an essential part of a total package that included other liberal goals such as universal healthcare, civil rights, and housing policy.) The UAW’s 1964 convention put a more emphatic point on Reuther’s statement, demanding that an “all-out war on poverty” required “achievement of the national goal of a job at decent pay . . . for all Americans who are able to work” through “a vast increase in federal outlays for job-creating public works” as well as macroeconomic policies.63 If Reuther’s position was unsurprising to those who had followed his career since the 1930s, the fact that George Meany and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), who had balked at endorsing the March on Washington, endorsed Reuther’s position on direct job creation was surprising. Indeed, Reuther’s commitment deepened over time as opposed to being abandoned when no longer tactically necessary. In a 1964 statement, the AFL-CIO placed unemployment, underemployment, and policy responses to these factors at the center of whether the War on Poverty would be “a token effort or an all-out war.”64 Pointing to the same long-run trend of “rising unemployment and underemployment” identified by Keyserling and other liberals, the statement called for $2 billion a year in public works and a further $2 billion a year in school construction, hospital construction, and housing to create (a rough estimate of eight hundred thousand to nine hundred thousand) jobs for unskilled workers.65

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Thus, direct job creation had broad support from the two constituencies who were most important to the Great Society: advocates who had manpower, other resources to mobilize, and significant interests in the outcome. The administration was desperate for their cooperation. And yet these voices were not invited into the debates of the War on Poverty task forces. If the views of Rustin, Randolph, or Reuther were represented within the task-force meetings, it would have been through the work of Harrington and Moynihan. Harrington had been invited by Shriver to participate in the task force, largely because he found him to be an “interesting person” whose book on poverty had brought the problem of poverty to the attention of the nation; Moynihan was the Assistant Secretary of Labor for Policy and Research.66 Together they made the most noise for direct job creation within the task forces. From Harrington’s perspective, the government was dealing with fifty million poor and near-poor who had been left out of the New Deal’s orbit due to their low wages, chronic unemployment, or race. They were threatened not by family pathology but by a general shift to an economy that required greater skill. Their needs eclipsed economic growth fueled by tax cuts and they would require more than remedial training to move out of poverty. In this, he differed from the perspectives of Heller or Shriver.67 Yet Harrington was entirely within the Kennedy/Johnson consensus when he argued that “the new poor cannot be helped just by jobs.”68 His alternative proposals for the War on Poverty were marked by a similarly ambivalent attitude. On the one hand, Harrington’s call to combine a commitment to social housing with the mass employment of the poor—to “hire the poor to tear poverty down”—went much further than Wirtz’s more limited proposals for jobs programs. Likewise, his social Keynesian argument that “national economic planning is required for a full scale war against poverty” was significantly to the left of the technocratic “mixed economy” vision of Heller and the CEA. On the other hand, Harrington’s proposal that the War on Poverty be funded at $856 million in 1965, and combine housing, education, health care, and federal incentives to hire the poor (as opposed to directly employing them) did not really go that much further in scale or scope than Heller’s own proposals.69 Even if spent entirely on direct job creation, $856 million would have employed perhaps 180,000 (or 0.5 percent) of the poor.70 To a degree, Moynihan went a different route. He proposed expanding the U.S. Postal Service by fifty thousand jobs to provide a public-sector

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route to middle-class jobs for the poor.71 In general, though, Moynihan acted more to advocate for Harrington’s proposals, lobbying Shriver for his support for their public works proposals, and to “represent Labor’s interests in jockeying for position in the task force.”72 He was something of a loose cannon as advocates go, alienating Wirtz to the point of temporarily banning him from the task-force meetings for undercutting Labor’s negotiating position on control over the Job Corps.73 Ultimately, Moynihan’s most significant contribution to the debate over the War on Poverty would come two years later in his report “The Negro Family.” This infamous article showed an inconsistent, almost schizophrenic interest on unemployment. Moynihan points out that “impact of unemployment on the Negro family, and particularly on the Negro male[,] is the least understood phenomenon” of poverty. He pointed to E. Wight Bakke’s studies of New Deal jobs programs, pointing out that “the critical element of adjustment was not welfare payments but work” and that “work relief is the only type of assistance which can restore the strained bonds of family relationship.”74 Yet this argument comes only after an extended discussion on divorce rates, out-of-wedlock birth rates, single motherhood, and “welfare dependency” and was then followed by another eighteen pages on “the tangle of pathology.” If there was an argument here that poverty should be tackled via job creation and increases in the minimum wage, it was almost completely obscured. Most frustratingly, Moynihan refused to put any recommendations for an antipoverty program of any kind into the report, arguing that “the problem is so inter-related . . . that any list of program proposals would necessarily be incomplete, and would distract attention from the main point . . . [which is] where we should break into this cycle and how.” He reminded the audience that these “are the most difficult domestic questions facing the United States.”75 At the same time, Moynihan’s intellectual schema made it hard to adapt into policy: if families avoid work because they have developed a psychological dependence on welfare, then whether the labor market tightens by itself or government provides for employment directly does not matter very much. If “educational achievement, which depends in large part on family stability, which reflects employment,” is the pathway, then we should not be surprised at his tendency to throw his hands up over where in this cycle intervention should come.76 Thus in both Harrington and Moynihan we see these repeated inconsistencies—demanding “massive public works” but then providing

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modest gradualist job proposals; seeing unemployment as the cause of poverty and the result of poverty. Their proposals did not match their underlying theory of poverty. As O’Connor points out at length, their shared focus on deviancy and pathology, initially used to dramatize the poverty problem, backfired and then fueled an individualist approach to antipoverty programs and a growing popular backlash against the poor.77 Neither Harrington nor Moynihan was ever particularly clear whether family dysfunction and pathology were a consequence of or the cause of poverty and unemployment. In some places, they argued that jobs could eliminate pathological family structures by restoring the earning power and marriageability of poor (black) men; in other places, they argued that poverty was “more a moral and cultural crisis than a material one. Indeed it is frequently the former that produces the latter.”78 Because of this lack of clarity, O’Connor notes, people eventually used the diagnosis offered by Harrington and Moynihan as fuel for arguments against their policy prescription, that “broken homes, illegitimacy, and female-oriented homes” rather than unemployment were the causes of “the big-city Negro’s plight.” On this basis, job creation efforts of the kind recommended by the Kerner Commission would not help.79 In 1963, it meant that Heller could borrow their analyses as arguments for his “growth plus” policies without adopting their conclusions about the need for job programs.80 Thus, as much as they called for direct job creation within the War on Poverty, Harrington and Moynihan added no political force to their cause within the task forces. Pathology ultimately led to a politics of moral control rather than economic intervention. As O’Connor notes, because of the mismatch between theory and policy, Harrington and Moynihan did not form a strong connection to Secretary Wirtz and the rest of the Labor Department, where the theory of poverty was much closer to that of the structuralists.81 At the same time, the culture-of-poverty perspective held little to no appeal to Left laborites in the UAW who had pointed to automation and structural unemployment for more than twenty years, or to social democrats in the civil rights movement like King and Rustin who shared the same view. Structuralist economic theories abiding within these groups led to a more convincing rationale for the proposals advanced by Moynihan and Harrington. At the very least, they would have provided Wirtz and the Labor Department a roadmap back to the fully worked-out model of direct job creation created by the WPA and the NRPB in the 1930s and 1940s. Moreover, a closer

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working relationship between the Labor Department and King and Reuther could have set Wirtz up for greater political influence within the War on Poverty task forces. But this was not to be. In the 1930s, direct job creation activists in the Roosevelt administration built political links to CIO unions and big-city mayors to give their arguments additional political heft. In the 1960s, very few links were built below the presidential level between federal administrators and external political groups. Reuther and King focused their attention either on molding public opinion or in dealing with President Johnson directly.82 LBJ himself was canny enough to give both men some of what they wanted (the Civil Rights Act and Voting Rights Act for King; Model Cities especially for Reuther), without committing totally to their agenda. For his part, Harrington seems to have understood the importance of building strong alliances with the civil rights movement, labor, and the New Left (and even then he was not always successful in his efforts). Moynihan’s competitive and defensive reaction to criticisms of his report made him persona non grata on the Left, and Wirtz displayed little of Hopkins’s facility at corralling allies.

LBJ’s Views on Direct Job Creation Up until now, I have largely avoided the topic of presidential personalities, partially because FDR was usually a strong advocate for direct job creation (but also favored a somewhat passive-aggressive, hands-off management style), and partially because the Full Employment Bill of the 1940s was a creature of Congress that Harry Truman had little to do with. However, when we come to the place of direct job creation in the War on Poverty, the president does move to center stage. On paper, LBJ was almost the ideal pro–job creation Democrat: he had won his spurs in national politics as a New Deal Democratic congressman from West Texas; he had worked for the National Youth Authority (NYA) run by Aubrey Williams, which made him a junior colleague of sorts to Emerson Ross, Jacob Baker, Alan Johnstone, Meredith Givens, Corrington Gill, and the rest of Harry Hopkins’s staff. His commitment to the War on Poverty was both personal and quite genuine. However, as McKee has so helpfully illustrated in “The Government Is with Us,” LBJ manifested a profoundly contradictory view of the War on

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Poverty and the role of job policy within it. At times, he was so wildly in favor of work programs that he believed he had in fact created an NYAstyle job program and seemed mystified when the CAPs diverged from that vision: I thought we were just going to have [another] NYA. As I understood it—do you know what I think about the poverty program, what I thought we were going to do. . . . I thought we were going to have CCC camps. . . . And I thought we were going to have community action [programs] where a city or county or a school district or some governmental agency could sponsor a project . . . and we’d pay the labor and a very limited amount of materials on it but make them put up most of the materials and a good deal of supervision and so forth just like we used to have.83 Yet LBJ had, in fact, explicitly rejected Wirtz’s proposals for a job program in favor of Heller’s Keynesian tax cut and the human capital approaches of the early War on Poverty.84 How should this contradiction be understood? First, there was his prior commitment to the Kennedy tax cut, which had required both a huge investment of political capital in pushing a nakedly Keynesian program through a suspicious Congress. Trying to push for a WPA-style job program after passing the tax cut would have called into question the efficacy of the tax cut, and similarly the tax cut would have been used to argue that there was no need for a job program. But more than the force of prior commitments was at stake. I would argue there was an ideological affinity between LBJ and the tax cut. A rather young man during the New Deal, who had come into power during its decline in the late 1940s and the 1950s, LBJ was keenly aware of the political price that the New Deal had paid for its Left-leaning ambitions. As scholars of both Keynesianism and American liberalism have noted, Heller’s tax cuts not only were less threatening than massive new federal spending, but also offered the optimistic possibility of a “rising tide lifting all boats.” This gave the politically appealing impression that the War on Poverty could be waged painlessly, skimming the cream off the top of economic growth rather than trying to dramatically redistribute income and wealth. Second, in order to get the Kennedy tax cut through Congress, LBJ had made a personal promise to the powerful chairman of the House Ways and Means Committee, Wilbur Mills, to keep the federal budget below $100

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billion a year. Wirtz’s proposals for a five-cent tax on cigarettes to fund his direct job creation program would have violated Johnson’s promise. As the “Administrative History of the Office of Economic Opportunity” put it, “The President would have none of it. . . . [H]e explained [that Wilbur Mills] was against earmarking. Besides, 1964 was the year for cutting, not increasing taxes.”85 Locked in on both budget and revenue, the War on Poverty had to be limited to fit inside modest budget requests. In this sense, LBJ had little choice but to hope that the strategy of a Keynesian tax cut to stimulate the broader economy, coupled with affordable training and education to reposition the poor in a prosperous labor market, would work. Third, LBJ must have genuinely believed that economic growth created by the tax cuts would allow the War on Poverty to grow over time—a war that could indeed have included a large-scale jobs program, such as the one that Johnson began to consider more in earnest after the riots of 1965. Unfortunately, Johnson had oversold his antipoverty program as a total War on Poverty, as opposed to the smaller-scale demonstration project it really was. Asking for budgetary increases raised the specter of whether his crusade was failing: “Whatever figure I give in the budget I will fight for it as I did last year, but I cannot keep [Shriver] from being the victim of Bobby [Kennedy]. . . . I think that’s hurting poverty more than anything in the world, is that these Commies are parading, and these kids, long hairs . . . [are] saying, you know, that they want poverty instead of Vietnam, and the Nigras, and I think that’s what the people regard as the Great Society. . . . [I]n my judgement, the bigger request I make for poverty, the more danger it is [in of] being killed.”86 At the same time, as many scholars of the War on Poverty have pointed out, Johnson’s decision to escalate the Vietnam War meant that public resources were being drained at the very same time that the War on Poverty was trying to expand. Even if Johnson had wanted a job-based approach to follow the initial wave of “demonstrations,” even if he had wanted to shift to a policy of “riot insurance,” he could not have done it. He had spent the political capital necessary to pay for his insurance premiums elsewhere.

After the Task Forces In retrospectives on the War on Poverty, one of the chief complaints against the OEO director, Sargent Shriver, was that he oversold his initiatives in

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Table 1. War on Poverty Spending by Activity, FY 1965 (in millions of dollars) Activity Youth and Training Health and Education Community Action Work Programs Total

Appropriations

Percentage of Total

$302 $170 $340 $150 $962

31.4% 17.7% 35.3% 15.6% 100%

Sources: Walter Heller to Theodore Sorensen, Folder “War on Poverty (1963),” box 92, Department of Labor—Wirtz Papers, National Archives II, Washington, DC; “Budget Summary War on Poverty Fiscal Year 1965,” Folder “WE9 Poverty Program (Great Society, 6/11/1964–7/20/1964),” box 25, WHCF Subject File, Lyndon Baines Johnson Library and Museum, Austin, TX.

the press, leading to inflated hopes and exaggerated disappointment.87 This charge is unfair in its selectivity—the rhetoric of war was omnipresent in the War on Poverty. Both the Labor Department and the labor movement called for “unconditional” and “total” wars. LBJ and Shriver echoed their rhetoric. Heller’s labels shifted from “widening participation in prosperity” to an “attack on poverty.” Even the pacifist Bayard Rustin bowed to the Cold War milieu by comparing his Freedom Budget to the Marshall Plan. Curiously, militaristic rhetoric and New Frontier–style calls for “bold” and “comprehensive” action coexisted with a private understanding that the actual War on Poverty would be a limited experiment, at least in the beginning. The first year of the War on Poverty carried a price tag of $962 million, roughly the level advocated by Heller, Wirtz, and Shriver, but only $400 million of it was new spending. Labor’s share of the War on Poverty was second only to the OEO, but actual work programs (which tended to be on-the-job training or temporary summer jobs as opposed to WPA-style employment programs) received relatively little in the initial rollout. It was a far cry from what the Labor Department wanted and well shy of what the Nelson Bill of 1964 would have provided. That legislation called for $1 billion a year for 750,000 CCC-style jobs in conservation for the unskilled and long-term unemployed. The Bureau of the Budget dismissed the bill as competing with “the substantial effort being conducted in connection with the war on poverty, we do not believe that a general program of the kind Senator Nelson is proposing is desirable.”88

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However, the overall budgetary caution—less than half a billion in new spending in the face of a “poverty gap” of $10 billion—was the more significant factor. Even if the Labor Department had succeeded in persuading the task force that direct job creation should be the sole approach of the War on Poverty, the initial $962 million would only have provided enough financing for 192,000 jobs. That was barely enough to cover 7.5 percent of the unemployed (let alone the underemployed) poor. As the War on Poverty switched into gear in 1964–1968, a two-fold exercise in policy learning would take place. In one, the idea of job creation (and the economic theory behind it) spread beyond the Labor Department. The other engaged the Labor Department and the OEO in reckoning with the real size of the poverty problem in America and the resources that would be needed to eliminate it.

Policy Relearning on Direct Job Creation Although the War on Poverty had little space for direct job creation at the outset, this changed in short order. Beginning in 1964, both the Labor Department and the OEO engaged in a process of policy learning that would culminate in a new consensus—that substantial redistribution (with direct job creation in a central role) would be necessary to end poverty in America. For those in the Labor Department who had started out as believers in direct job creation (however halfhearted), this learning process was as much about realizing the scope of unemployment and underemployment in the cities, and the scale of direct job creation needed to meet it. Only a year into the War on Poverty, the Watts riots in Los Angeles catalyzed new directions. The Kerner Commission’s report figures prominently in the historiography of the 1960s, but it is arguably not the most important signpost for this evolution. California’s governor, Edmund “Pat” Brown, also commissioned two studies on the necessity of “federally financed socially useful jobs”—studies he forwarded to the Labor Department in hopes of enlisting their support. In these reports, the authors argued that $2.5–$7.5 billion a year would be needed (compared to $962 million for the entire War on Poverty for that year) to employ one to two million of the unemployed (roughly 25–50 percent of the unemployed, or 40–80 percent of the unemployed poor). Brown concluded by saying, “I am convinced that the only

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solution lies . . . in directly creating jobs . . . if we are to avoid incidents that occurred in Watts.”89 Labor responded cautiously to Brown’s agenda. In 1965, the Labor Department suggested hiring the unemployed to rehabilitate urban housing along the lines suggested by Brown’s studies, but it recommended including 500,000 instead (12.5 percent of the unemployed, or 20 percent of the unemployed poor).90 The department also studied sources of “labor intensive low-productivity jobs” that could absorb large numbers of the unemployed poor while spending as little as possible on nonlabor costs—a structure very reminiscent of the WPA.91 By early 1966, the Labor Department was expanding its influence, especially through the Task Force on Adult Work and Training Programs. It not only proposed an immediate expansion of existing work and training programs to cover 375,000 people, but also complained that “the Budget for 1967 does not provide funds for new legislative programs to implement fully the Task Force’s recommendations.”92 The major turning point for the department came later in 1966, when a Labor Department study found that, in addition to a 10 percent urban unemployment rate (at a time when the national unemployment rate fell below 4 percent), slums had an average “subemployment” rate of 30 percent (with some areas experiencing 50 percent underemployment rates). Moreover, 20 percent of full-time U.S. workers (nearly half of poor heads of households) earned under $2,880 a year, the poverty line for an individual.93 Although the Labor Department still made the argument that increased skills training could deal with this problem, this evidence followed so closely a structuralist argument about the labor market that it began to shift thinking within the department. Testifying on behalf of the public-private Concentrated Employment Program that year, Wirtz argued that “significant personal factors . . . [such as] limited skill and education, transportation difficulties, harassment by creditors, police records . . . entered into the unemployment and subemployment problems,” but this claim was much more qualified and limited than previous human capital arguments. Moreover, it was counterbalanced by structural arguments drawn from the Area Redevelopment Act that “concentrating public and private resources . . . in selected, economically distressed areas . . . would result in substantial job opportunities.”94 Over the next year, Labor’s fence-straddling posture between theories about human capital and theories about labor market structure (to say

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nothing of the new political incentive to “firefight” against summer riots) accelerated the creation of hybrid employment/training programs. The Neighborhood Youth Corps and the Concentrated Employment Program that emerged resembled public-employment programs much more than the OEO-operated Job Corps. Still, the overall sizes of these programs were still modest in comparison to the population in need—by 1967, the Labor Department funded two hundred thousand workers/trainees, only 6.6 percent of the unemployed.95 It planned to expand to five hundred thousand (roughly half the level recommended by Governor Brown) in the following year, but had yet to break through that ceiling. At the same time, however, these limited programs helped to build up the institutional capacity for job creation that, as Weir and Russell argue, was missing in 1963. Unable or unwilling to expand its jobs programs any further, the Labor Department nevertheless continued to look for avenues to boost employment of the poor that did not involve further expenditures. From within the Urban Employment Task Force, the department called for using “government contracts to . . . reach, motivate, train, and place the hard core unemployed population.” For extra measure, it also added in rebuilding the UI system to emulate the Scandinavian and West German active labor policies that incentivized reskilling, work sharing, and hiring of the unemployed, in addition to other labor-market policies, such as providing wage subsidies to employers who hired “hard-core” unemployed workers.96 Despite its lingering budgetary caution, the Labor Department was clearly moving in the direction of job creation policy as a preferred strategy in the War on Poverty. What the department needed in order to break through any self-imposed barriers was an ally. In some ways, the OEO made the more remarkable transition. Beginning from a position that saw remedial healthcare, education, training, and political empowerment as superior methods of combating poverty, the new agency began to shift on the jobs question as early as 1964. Given its strategic position (and a previous role as a competitor to the Labor Department), the OEO would have significant influence in the War on Poverty task forces and would steer the Johnson administration toward a jobs program between 1964 and 1968. The OEO’s evolution was prompted by the sudden difficulties that the agency’s human capital and empowerment agenda faced when it was first implemented in 1964. To begin with, there were political conflicts over control of CAPs. Beyond that, Shriver and his aides soon realized that

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investments in education, healthcare, and other “human capital” programs were not going to show their worth in time, because most of those programs were targeted toward poor children who would not complete their educations or enter the workforce for years, if not decades.97 Moreover, problems in the Job Corps provided a rough illustration as to how difficult it would be to run a training program that would show results. In the first year, more than one-third of Job Corps participants dropped out, and the OEO barely reached 10 percent of its goal of enrolling one hundred thousand young people.98 Many of the program’s graduates were unable to find work, and it was unclear whether the Job Corps was reducing the net number of unemployed. One study argued that the “effect [of Job Corps] has probably been, at least partly, to put newly trained workers into jobs previously filled by other workers, who were simply displaced.”99 Faced with this rather public reality, the OEO made a dramatic volte-face. In 1965, Shriver pressed LBJ for an ambitious expansion of his agency’s mission. His twelve-point proposal asked for a mandate to coordinate all poverty-related programs and an Economic Opportunity Council (EOC) to be established as a parallel to the National Security Council. The EOC would be led by a director whose domestic authority would parallel the international portfolio of the national security advisor. It would coordinate a “national poverty budget” that would focus the government’s varied programs on closing the “poverty gap.”100 Shriver’s subsequent memo pressed the case for the bureaucratic expansion of the OEO’s remit, grounded in a belief in the virtue of competition between the OEO as the voice of the “silent poor” and the older, stodgy Cabinet departments. Even the Labor Department was defined as a potential rival to the OEO. Shriver’s memo called for a substantive policy shift in the War on Poverty. He urged Johnson to “make whatever fiscal expenditure is necessary,” in contrast to the rather limited budget of the OEO, to abolish poverty. That expansion would fuse “social works” (what would later be called public service employment) and public works in order to “massively employ the poor.”101 In this we can see something of a shift from the OEO’s initial “human investment” approach—but only a partial one. Investments in the physical infrastructure of poor areas were to be delayed, while public-sector and nonprofit service-sector employment was expanded. CAPs notably would remain “in the vanguard of our attack on poverty.”102

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Shriver suggested that the OEO had reached Labor’s 1963–1964 position on direct job creation from a pragmatic perspective rather than from a fully developed theory on unemployment. His call for fiscal expenditure diplomatically refrained from any concrete figure that might put the OEO in conflict with the Bureau of the Budget or the CEA. This lack of specifics was remedied later in 1965, when the OEO commissioned a pair of studies from Greenleigh Associates, a New York–based, Left-leaning think tank specializing in welfare issues. In its first report, titled “A Public Employment Program for the Unemployed Poor,” Arthur Greenleigh and others argued that the ranks of the unemployed and underemployed were larger than the task forces had initially assumed: “there are approximately 3.5 million unemployed and underemployed Americans who live in poverty but are capable of entering productive employment if the job opportunities and supporting services are made available.”103 Drawing on an economic model that described the American economy shifting to a dual labor market, in which low-skilled or obsoletely skilled workers were less in demand, Greenleigh and colleagues followed a Galbraithian argument that “there needs to be a planned allocation of resources” toward “making jobs available for the unemployed poor” in “education, health, social welfare, recreation, public works, and [public safety].”104 This recommendation was supported by two economic theories. First, a labor-productivity explanation, similar to arguments advanced by the NRPB and the WPA a generation earlier, pointed out that “the unemployed are consuming goods and services. If they were productively employed, the GNP would be increased. If the increase equaled the cost of providing these goods and services, there would be an aggregate gain to the total economy.”105 Second, a structural argument that saw the growth of state and local services (and the service economy in general) as the key dynamic in the 1960s labor market had argued in favor of the government leaning in to the growth of the public sector as a means of fighting poverty. Greenleigh called for a jobs policy strategy based on subsidizing jobs in the public and nonprofit sectors, ramping up from an initial 470,000 in the first year (or 11.75 percent of the unemployed) to 4.3 million, a level that would lead to full employment (and full coverage of the 3.5 million unemployed and underemployed poor) by 1970. Naturally, the proposal retained certain OEO characteristics. The OEO was “the most logical [agency] to

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plan the overall program . . . devise the operating guidelines, and . . . [maintain] program control and accountability,” as opposed to either Labor or HEW. Moreover, the public employment program would involve “a maximum amount of involvement of the local community agencies and groups,” maintaining the spirit of the CAPs.106 It was a controversial strategy within the OEO. Structural unemployment theory, which posited that “there are not enough vacancies to take care of all the unskilled but able-to-work poor,” was the basis for arguing that it was wise to “support the concept of a limited number of Public Employment Programs.”107 Yet the OEO feared that direct job creation (as opposed to private-sector employment) would result in the creation of a “job receptacle” for the poor “without the poor being in any way prepared to move out,” in the same way that Aid to Families with Dependent Children isolated the poor from the social insurance system, or public housing prevented people from receiving the middle-class benefits offered by the Federal Housing Administration, Fannie Mae and Freddie Mac, and the mortgage tax deduction.108 Similarly, the Office of Research, Plans, Programs and Evaluation (RPP&E) argued that a structural theory of unemployment “does not fit the economic situation in 1966 and will probably not fit the economic conditions of the country” pointing to unemployment below 4 percent.109 This ambivalence was reflected in the OEO’s formalized proposals that followed at the end of 1965. In the “OEO Executive Summary on Employment of the Poor,” the agency proposed establishing a direct job creation program within the CAPs by expanding the number of paraprofessional jobs offered to poverty-area residents. Paralleling the proposals of the Labor Department, the OEO recommended a job program below the levels suggested by Greenleigh and others—rising to 500,000 in five years from just 46,000 in 1965 (mostly in Head Start). The following year, the OEO continued this momentum toward direct job creation, although not in a linear fashion. In a 1966 memo, Shriver called for a variety of programs in “health care, education, school construction, housing, etc.,” which would come together within a tripartite antipoverty program of jobs, social programs, and income transfers.110 The OEO continued to straddle two poverty theories—on the one hand, noting that economic growth was not enough to eliminate poverty (as millions had entered the ranks of the poor during the postwar boom), and, on the other hand, arguing flatly against redistribution in favor of self-help through

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employment in a booming economy. Despite this theoretical uncertainty, the agency had clearly committed to more radical concrete proposals. In terms of goals, Shriver’s tripartite plan was ambitious by modern standards, targeting 14 percent poverty in 1970, 10 percent in 1975, and only 4 percent by 1990. While the OEO director still gave lip service to the value of social programs, the bulk of poverty reduction would be achieved by a substantial permanent employment program funded by $5 billion a year (at least a million jobs, or 50 percent of the unemployed poor) and a further $5 billion a year in Negative Income Tax—erasing the “poverty gap,” half through jobs and half through transfers.111 I will dig into the politics of the Negative Income Tax in Chapter 6, but it is important to note here that the OEO did not make this shift on jobs without doubts. Was the benefit of increased earnings through public employment programs greater or less than the cost of direct income transfers? Following economics orthodoxy, Kenneth Brown argued that if the marginal productivity of a worker was $1 an hour and the public employment program’s wages were $1.60 an hour, and the private wage that the worker would have earned if employed was $1.20 an hour, then the costs of a public employment program were higher than you would have with a simple transfer like a guaranteed minimum income. But “if the worker would have been unemployed in the private sector, then . . . public employment is the less costly program.”112 Would the target be a low-wage worker or an unemployed one? There, economics did not have an answer. Despite these misgivings, the OEO did not retreat on direct job creation. Instead, its memos kept advocating for exactly this approach. When levels of inflation convinced the CEA to recommend a $10–15 billion tax increase (or 1–2 percent of GDP) in 1967 to restrain demand, Shriver pushed back against the CEA to argue that the tax increase should not foreclose the possibility of direct job creation. A public employment service program, created through $1–1.5 billion in funding, could counteract the job losses among the poor that the economic slowdown was projected to cause.113 If the OEO was going to push through its agenda, especially in the more politically fluid environment of the War on Poverty task forces, this sharpelbowed agency would need allies. The candidate with which it could have a common cause was the Labor Department, formerly a lonely voice in favor of direct job creation. Labor needed the political backing of other groups to push its ideas more aggressively. In order to make this alliance work, the OEO accepted cutbacks in its own job training programs after

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the Watts disturbance prompted a move toward “riot insurance,” which shifted funding toward work and training programs run by Labor and away from health and education programs.114

Labor and the OEO in Action As the Labor Department and the OEO grew closer in thinking and began to coordinate politically, job creation became increasingly influential within the War on Poverty task forces in the later Johnson administration, especially after 1965. A 1965 task-force report on the L.A. riots (the internal companion to the Kerner Commission) noted that unemployment in Watts was highly concentrated, reaching 33 percent in some areas, and that “many [residents] believe jobs would solve most problems. . . . [T]he expansion of job opportunities for men with limited skills was advanced as the single most vital quest of the Negro community.”115 Despite the call for an “all-out effort” to meet the “needs of the poor,” the task force still felt that self-help was the ne plus ultra of federal outreach to the ghetto.116 The constraints on the War on Poverty and the efforts of the OEO and Labor to overcome them were made especially clear by the simultaneous argument that the “most important task is to put people to work,” and a much more modest agenda of “greater participation by industry and business in on-the-job training . . . greater efforts by business, labor . . . and others to ease and expedite bringing jobs and the unemployed together,” and similar smallbore projects.117 Later the same year, the Interagency Task Force on Adult Work Programs took a bolder step toward direct job creation. Surveying similar data as the L.A. task force, Elmer Staats of the Bureau of the Budget, Wilbur Cohen of HEW, Leo Wets from Labor, and Joseph Kershaw and Lisle Carter from the OEO recommended an expansion of work-training spaces to five hundred thousand (the level already argued for by the Labor Department), combined with a public employment service providing 1 million to 1.5 million jobs.118 Twice the size of any program supported by either Labor or the OEO, this initiative would have represented a significant increase in coverage of War on Poverty programs. Indeed, it would have reached 30–44 percent of the unemployed (and 40–75 percent of the unemployed poor), comparable in scale to the WPA. The OEO was not only fully in support of

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this proposal but actually became more aggressive than the Labor Department in some respects, as Labor’s initial proposal had been for six hundred thousand jobs and the OEO’s was a more ambitious 1 million to 1.5 million. The Task Force on Urban Employment Opportunities, which reported in 1967, shows further enthusiasm for direct job creation, thanks to the work of Labor and the OEO. As its position papers pointed out, the structure of the American labor market was isolating the ghetto from prosperity: 80 percent of new jobs in the boom year of 1966 went to whites (mostly teens and women), while nonwhite men received only 3 percent. The report combined the War on Poverty’s human capital approach (pointing to barriers of discrimination and the cultural and educational deprivation that barred the poor from skilled employment), with a new structural emphasis (championed by liberal senators on the Clark Committee) that pointed to the movement of industry out of the cities and into the suburbs as a primary cause of the ten million unemployed, underemployed, and working poor.119 In order to come to grips with this problem, this task force recommended a yearly program costing between $3.6 billion and $4 billion to fund comprehensive training and placement (providing healthcare and social services in order to ensure higher graduation rates). “Any eligible individual” could participate, establishing something of a right to job training. Importantly, the task force moved beyond the human capital paradigm, recognizing that “there is certain to be individuals who have completed a course of training but for whom no jobs are immediately available.”120 For the unemployed, the government’s “pledge to serve all must continue to hold for these groups as well. . . . [T]he system must provide . . . public employment jobs . . . and/or income maintenance.”121 The report’s authors envisioned the system starting at two million (67 percent of the unemployed and 80 percent of the unemployed poor) and expanding there to cover the entirety of the unemployed. When one compares the 1967 task forces to their counterparts in 1963, it seems clear that a great deal of intellectual momentum had gathered behind direct job creation in just five years. Flatly rejected as a strategy for fighting poverty at the beginning of the Johnson administration, a jobs program had become the policy of choice for dealing with a growing crisis in the cities. Major interventions into the structure of the economy, rather than just redistributing the fruits of private prosperity, were now deemed

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reasonable. And that was formally described in exactly those terms; witness the example of the Task Force on Urban Employment Opportunities report, which noted that “this system is designed to make good on the general pledge in the Employment Act of 1946.”122 Unfortunately, this intellectual momentum did not automatically translate into legislation. Opposition from the CEA, which had not budged from its 1963 vision of antipoverty policy, combined with hesitancy on the part of the president, meant that the window of opportunity for legislation regarding job creation slammed shut.

Too Late LBJ’s War on Poverty never reached the dimensions of financial and programmatic commitment called for by its own reports. As we have already shown, Labor’s work and training programs reached a ceiling at 200,000 places in 1968. President Johnson only asked for an increase to 230,000, and, even then, the funding was siphoned from other worthy areas of the War on Poverty.123 Despite setting a goal of 500,000 to be employed within a subsidized private-sector program called Job Opportunities in the Private Sector (JOBS), only 189,000 were employed by 1968. Administrative incompetence was not to blame; a conscious decision to aim low on job creation was. In a January 1967 memo from the Bureau of the Budget, Charles Schultze, its director, proposed “the objective of reaching 100,000 individuals in the next year and a half,” meaning only “2,600 to 4,000 jobs per city” as the most that should be budgeted for direct job creation.124 Even after massive urban riots shook the nation out of its complacency and made abundantly clear that the cities were powder kegs of frustration, caution won out. Even in LBJ’s 1968 campaign manifestos, when election-year incentives to create jobs peaked, Labor was unable to break through the president’s budgetary caution. After his election, the president’s staff mobilized for only a modest package of $2.1 billion for work-training programs that would have covered 1.3 million trainees, with an expansion of the JOBS program to the 500,000 already envisioned by the Labor Department.125 Even at this date, LBJ would not go beyond job training. The OEO fared little better than its allies in the Labor Department. Despite an initial plan to spend $1–2 billion a year and the agency’s own proposals for $10 billion

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12

Funding in Billions $

10

War on Poverty Appropriations

8 OEO Requests

6 4

Poverty Gap 2 0 FY 1965

FY 1966

FY 1967

FY 1968

Figure 11. War on poverty: plans versus reality. From Administrative History of OEO, box 1, Administrative History—OEO, vol. I, LBJ Library.

a year to close the poverty gap (i.e., how much money would be required to move all households in poverty above the poverty line), the OEO’s growth was stymied.126 The Johnson administration’s failure to embrace the conclusion of its own task forces points to the limits of bureaucratic autonomy during the War on Poverty. On the inside, Labor and the OEO made significant inroads into the intellectual universe of the federal government, but they were not able to move from reports and proposals to budget lines and programs in action. By contrast, the CEA and the “core economic departments” (the Bureau of the Budget, the Department of Commerce, and the Treasury Department) had much more sway over economic policy than their counterparts during the New Deal or even during the Truman administration did, and they used their influence to pump the brakes on the War on Poverty. The CEA’s reversal on the War on Poverty is quite striking: in 1963– 1964, Heller and the CEA were an influential force in bringing the War on Poverty together. After 1966, they erected a roadblock to further growth in its budget. In 1964, a $2 billion–strong War on Poverty coincided with the stimulatory tax cut, offering a useful support to the CEA’s Keynesian policy. By 1966, inflation had taken off. Voluntary agreements and presidential jawboning could not slow it down, and the administration watched in horror as inflation doubled to 3 percent. The cost of living then became a

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crucial political issue, especially for Republicans running in the midterm elections. As a consequence, the CEA’s attention shifted to the defense of Keynesian policy itself and the need for a tax surcharge to restrain demand. The political calculus was upended. Any expansion of the War on Poverty now threatened to accelerate demand. It would also disrupt the fragile political compromise with moderate and conservative Democrats like Wilbur Mills whom the CEA needed to pass the surcharge. In this way, the OEO and Labor’s movement toward direct job creation now became a threat to the foothold that Keynesianism had won in 1964, and their first loyalty was to Keynesian economics. Accordingly, the CEA evaluated the plans of the OEO and Labor, slapping each with the scarlet letter of “inflationary.”127 And, ultimately, LBJ would side with the CEA. Nonetheless, momentum behind direct job creation continued to grow outside of the Johnson administration. Following the Nelson Bill in 1964, Senators Joseph Clark and Robert Kennedy sponsored the Emergency Employment Act as an amendment to the OEO’s budget, which provided $2.5 billion for direct job creation in 1967.128 The Labor Department and the OEO leaned on this legislation to circumvent the president’s limits on direct job creation; Wirtz and Shriver both privately endorsed the Emergency Employment Act, but, ultimately, their influence could not outweigh that of the CEA. Believing that the Clark Amendment would jeopardize moderate support for the entire OEO budget (and in part because of his hatred for Senator Kennedy), the president mobilized the entire executive in opposition to the Emergency Employment Act. Joining the president’s aide, Joe Califano, was Shriver. Despite a dozen task-force reports and as many OEO proposals, and despite his own personal endorsement, Shriver folded under pressure and chose loyalty to the president. Califano and Shriver lobbied the Senate Health, Education, Labor, and Pensions Committee to remove the Clark Amendment behind the senator’s back. Despite the president’s opposition, Congress began to submit more and more bills calling for direct job creation. Following the demise of the Clark Bill, Congressman Barratt O’Hara and twenty-five cosponsors in the House introduced the Guaranteed Employment Act, a far more ambitious effort. The O’Hara Bill not only provided for $4 billion in grants to federal, state, and local government agencies and nonprofits to create jobs for the unemployed, but, for the first time, also authorized establishing a permanent

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Office of Guaranteed Employment in the Labor Department. It was to ensure that workers hired under the act would be paid the prevailing wage, work an eight-hour day, receive fringe benefits and pay into the Social Security system, and it would guarantee that agencies entered into “consultation” with public-sector unions.129 Taken together, the Nelson, Clark, and O’Hara bills suggest that Democrats in Congress were becoming more comfortable with the idea of direct job creation, even though conservative victories in the 1966 midterms supposedly foreclosed any opportunity to expand the Great Society. Moreover, these bills expressed a pressure building within the Democratic Party more broadly to do something about unemployment—pressure that resulted in the 1968 Democratic Party Platform. The same Platform Committee in Chicago that had split bitterly over Vietnam was united in declaring that “for those who can work but cannot find jobs, we pledge to expand public job and job-training programs . . . to provide meaningful employment by state and local government and nonprofit institutions.” Moreover, it moved beyond this gradualist position to promise that “for those who cannot obtain other employment, the federal government will be the employer of last resort, either through federal assistance to state and local projects or through federally sponsored projects.”130 At least on paper, the Democratic Party was now committed to direct job creation, a fact that would be very significant in the 1970s. Johnson’s War on Poverty (and the Democratic Party more broadly) started out bedeviled by a divided position vis-a`-vis direct job creation. Through policy learning and network building it emerged with a consensus in favor of it—albeit too late for the changing political environment. On the Left, the trajectory was exactly the opposite. The relative unity of the 1963 March for Jobs and Freedom and the Freedom Budget could not hold. One letter to Rustin from then–graduate student Robert Paehlke shows how Vietnam became a red line for the New Left that took precedence over full employment. “Of course I support [the Freedom Budget],” he wrote, but “a meaningful Freedom would be impossible without some change in our present foreign policy stance.”131 The Reverend James P. Breeden was quite blunt, charging that the “principle underlying the Freedom Budget is basically one of philanthropy . . . without trying to get to the root causes,” and arguing that the entire project was an attempt to “get the liberal coalition off the hook,” attack radicals, and “bring radical leadership . . . off the streets” while escalating the war in Vietnam.132

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On the other side of the center Left, liberal or social democratic figures like Rustin and Keyserling were divided by the dilemma that the war brought—especially as Hubert Humphrey began to run for president. Keyserling retreated into a defense of the administration’s war policy and a denunciation of the Columbia University student occupation. Rustin tried unsuccessfully to combine pacifism by seeking a compromise with more mainstream Democrats working on the Defense budget to get their support for the Freedom Budget.133 King broke with LBJ even as he turned more to the left on economic issues, which to an extent limited the influence of this move within the Democratic Party. The perfect storm that had existed in 1963–1964, when an alliance between the Left and the Johnson administration on direct job creation might have been possible, had passed.

Conclusion As a policy “opening,” the War on Poverty was an exception to the other moments when direct job creation was actively considered. In 1945, fear of mass unemployment created by the Great Depression was so vivid that full employment ascended to the political agenda when unemployment was only 1.8 percent. As we will see in the next chapter, the economic chaos of the 1970s created a whole new set of economic fears that brought direct job creation back into policy discourse. The War on Poverty took place at a time of moderate unemployment in decline, a time of plenty and optimism. In this environment, direct job creation managed to return to the national political debate and indeed became more frequently discussed and considered between 1965 and 1968 than it had been at the launch of the War on Poverty. At the same time, LBJ came just close enough to putting true mass direct job creation into effect to leave a noticeable trail in the policy debates that followed. First, the investment into training and job programs and the Johnson administration’s proclivity for independent, farranging task forces led to a restoration of institutional capacity and economic theory behind jobs programs in the Labor Department. Without this planning and staffing progress, arguably the Comprehensive Employment and Training Act and the two direct job creation drives of the Carter years would not have happened.

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Second, direct job creation captured real political momentum. An absent presence for eighteen years and an afterthought in 1963, by 1968 it had progressed from small-scale programs in action like the Neighborhood Youth Corps in 1965–1966 to proposals for large-scale programs and a federal right to work only a year later in task-force reports supporting congressional legislation. Notwithstanding this momentum, certain forces circumscribed the possibilities for direct job creation during the War on Poverty. The eighteenyear lag had prevented any direct handover of the expertise, methods, and theories of the New Deal job creation experts. Reinvention of the wheel turned out to be problematic. The failure to create a coalition out of the Labor Department; outside voices like Harrington, Moynihan, and the UAW; and the Randolph-Rustin-King nexus within the civil rights movement enabled the far more entrenched network of fiscal Keynesians in the CEA to prevail. Direct job creation fell just short of fruition. By the time that direct job creation advocates had re-created institutional capacity and a sufficiently robust coalition within the executive, the political window created by the 1958 and 1964 elections had closed. Thus, during the War on Poverty, liberals placed their bets on Keynesian tax cuts and an open opportunity to solve the growing social crises in America. And, for a while, prosperity was enough to paper over the cracks. And then the good times ended.

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The 1978 Humphrey-Hawkins Act The High-Water Mark for Direct Job Creation in “the New Deal That Never Happened”

At first blush, direct job creation should have become the law of the land in the 1970s. After thirty years in the wilderness, job creation returned again in 1973 in the form of the Comprehensive Employment and Training Act (CETA), which would employ hundreds of thousands of workers per year until 1981. It was a major part of President Jimmy Carter’s signature antipoverty effort, the Program for Better Jobs and Income (PBJI), suggesting a level of presidential commitment that had not been seen arguably since the New Deal. Most important of all, the Humphrey-Hawkins Act (HHA; its official name is the Full Employment and Balanced Growth Act of 1978) would attempt to establish as law the right to a job, pushing far beyond the ambitions of the Full Employment Bill of 1945 and serving to amend the Full Employment Act of 1946. These policy efforts were not isolated, quixotic affairs. In 1976, the Democratic Party took the unusual step of endorsing a particular bill as part of its presidential platform. Majority Leader Tip O’Neill called the HHA “the centerpiece of our party’s 1976 platform.”1 For Democrats in that election year, this legislation was a public statement of the party’s allegiance to America’s working class during a protracted recession. It stood in sharp contrast to the failed austerity measures of President Ford (who had threatened to veto the bill). The promise to the electorate was clear: return the Democratic Party to power, and we will pass a full-employment bill. The American people responded by electing a Democratic Senate with a filibuster-proof majority of sixty-one, a Democratic House with a majority of seventy-four, and (however narrowly) a Democratic president committed to supporting the HHA. The sponsors of the 1976 bill reintroduced

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their legislation at the very beginning of 1977 with the firm expectation that it would sail into law. Instead, citizens waited—for eighteen months. Instead of getting to work on the bill, Congress first endured the spectacle of an administration fighting itself (and then fighting Congress) over a presidential initiative (the PBJI) that directly competed with the HHA. When this debacle was over, congressional leaders found themselves negotiating with an unexpectedly hostile president who no longer supported the bill he had endorsed on the campaign trail. By the time that the negotiations had finished and the resulting bill passed through Congress, the HHA was a rerun of the Employment Act of 1946: a fig leaf no longer capable of genuinely providing work to the unemployed. And as Senator Hubert Humphrey and Congressman Augustus Hawkins would discover, the bill was a paper shield that President Carter was determined to shred by flatly refusing to enforce it, even as he nominated a chairman of the Federal Reserve who would plunge the country into the worst recession since the Great Depression (at that time) and hold it there until 1982. How both the HHA and job creation policy along with it came to their demise is a mystery. Why, with a large Democratic majority and a Democrat in the White House, was a bill with broad Democratic support killed in all but name? Why, in an era when high unemployment threatened so many American workers, did direct job creation policy become politically untouchable? Why did the HHA become the high-water mark of progressive economic policy and signal the emergence of a vigorous center Right economic consensus that would extend across both political parties? The guilty party is an economic theory and political ideology rather than broad shifts in public support. Between 1976 and 1980, policy networks within liberalism that were crucial to the success of the HHA simply broke down. Within the Carter administration, the Labor Department’s support for direct job creation as a key part of the PBJI ran into headlong opposition from a coalition of departments led by the Council of Economic Advisors (CEA), the Office of Management and Budget (OMB), and the Treasury Department—and, ultimately, from Paul Volcker, the chairman of the Federal Reserve. The Department of Health, Education and Welfare (HEW), which would have been a useful ally in this fight, did not behave like one in the same way that the Office of Economic Opportunity (OEO) had stepped up

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in the mid- to late 1960s. Rather, HEW quarreled bitterly with Labor over whether guaranteed minimum incomes (GMIs) or direct job creation would dominate PBJI, and it provided only tepid support against the economic departments. When this conflict reopened over the HHA, with Labor supporting the bill and the core economic departments in opposition, HEW was silent. Labor was ultimately defeated by its rivals, which explains why the administration turned against the HHA in 1978.2 Both within the administration and in congressional hearing rooms, the Keynesian school of economics disintegrated into warring camps that privileged fighting either unemployment or inflation. In their intellectual panic and despair over the emergence of stagflation and the breakdown of the Phillips curve, the latter Keynesians found themselves on the same side as the new right-wing economists. They were beginning to accept some of the ideas of the monetarists and the supply-siders, including the natural rate of unemployment that governments could not improve on without kicking off inflation. Thus, unlike in the 1930s, when Keynesians and direct job creation advocates fused in a single coalition, or the 1940s, when Keynesians had at least supported the idea of full employment and the instrument of direct job creation, the prestige of Keynesian economics was used to delegitimize the goals and methods of the HHA. This deprived direct job creation advocates of key intellectual support. The Humphrey-Hawkins Act was a high-water mark that peaked just shy of victory, ultimately due largely to divisions and weaknesses within liberalism.

Rethinking the Fight Against Unemployment in the 1970s To understand why the fatal intertwining of the HHA and the PBJI is crucial to direct job creation’s demise, we have to look at how current historiography views these two pieces of legislation. Gary Fink and Hugh Davis Graham’s The Carter Presidency marked a transformation in our historical understanding of the Carter administration. This edited volume moved away from a revisionist literature by Erwin Hargrove, Charles Jones, and John Dumbrell that sought to rehabilitate Carter’s personal image3 and instead explored how the Carter administration profoundly disrupted the New Deal coalition by spurning the base of

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the Democratic Party in favor of balanced budgets and the project of fighting inflation.4 In his chapter, “Jimmy Carter and Welfare Reform,” James T. Patterson argued that Carter was caught between diametrically opposed conservative and liberal critiques of welfare. The president exacerbated the failure of the PBJI by “demanding major reform” without understanding that “this would cost a good deal of money” and by insisting on “comprehensive” fixes at a time when gradualism might have fared better in Congress. Most of all, Carter doomed the program by allowing a proposal to go forward that “seemed to threaten a range of historical powerful ideas about the central value to the Good Society of work,” despite his own misgivings.5 Patterson frames PBJI’s work provisions as designed to deal with welfare-reform concerns about work effort and proposals for work requirements, and guaranteed income policies as the heart of a radical proposal. This gives rather short shrift to the development of direct job creation and the right to a job as an alternative means of providing for guaranteed income. In Patterson’s view, work therefore appears to be a punitive corrective for the nonworking welfare recipient rather than a valuable and noble goal with its own historical trajectory on the left of the Democratic Party. Since the publication of The Carter Presidency, interest has been renewed in what Jefferson Cowie terms “the New Deal that never happened.” In Stayin’ Alive, Cowie argues that the HHA was desperately needed by the labor movement, because it would “mitigate the divisiveness of inter-racial competition for jobs in the midst of record unemployment” that “was threatening the economic foundations of postwar liberalism.”6 Unfortunately, President Carter “reduced the bill from substance to symbol,” viewing “the Humphrey-Hawkins bill [as] both unnecessary and undesirable.”7 From Cowie’s perspective, this was part of a broader turn by Carter against the interests of labor and the left of the Democratic Party, visible as well in his effort to torpedo labor-law reform.8 Judith Stein’s Pivotal Decade amplifies this argument about a broad turn against the Left, extending the analysis to industrial, trade, and monetary policy. She points out that Carter was a true believer in “economic globalism” and “thought that every effort must be made to increase steel imports to keep prices down.”9 “The policy of welcoming imports and ignoring job loss was at the heart of the problem the Carter administration had with the labor movement,” given that it happened at the same time that Carter gave up on progressive tax reform in favor of supply-side tax cuts on capital

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gains. Carter, Stein argues, landed on the side of Wall Street rather than workers.10 The historical literature that followed has focused on the key areas of direct job creation and guaranteed incomes—through the lens of welfare policy and welfare reform. In “The False Dawn of Poor Law Reform,” Alice O’Connor cites Carter’s PBJI within a context of “deeper social, economic, and demographic transformations that were operating to change both the ‘face’ and the political meaning of welfare in the 1970s.”11 An obsessive focus on largely invented welfare “crises” and a persistent fear of black matriarchy coincided with a new interest by policymakers in the working poor. O’Connor argues that “in the narrower confines of the case against welfare . . . inevitably it pitted the ‘deserving’ against the ‘undeserving’ poor.”12 Supplemental Security Income (SSI), the Earned Income Tax Credit (EITC), and the CETA frustrated Carter’s attempt at welfare reform by providing jobs and income to the “deserving” and thus demonizing the remaining poor.13 At the end of the day, Carter’s “internally-conflicted domestic agenda . . . [was] continually confounded by his insistence on a stance of fiscal conservatism and his desire to divest himself of associations with ‘big government’ liberalism.”14 Jeff Bloodworth also focuses on the PBJI, but more specifically on the ways in which “the legislation . . . revealed the different impulses, New Deal versus Entitlement liberalism, tearing liberalism and the liberal consensus apart,” and he argues that “the split in welfare policy between Entitlement and New Deal liberals undermined Carter’s welfare reform plan.”15 Focusing more on these different strands of liberal ideology than on O’Connor’s poverty knowledge approach, Bloodworth argues that the attempt to fuse guaranteed incomes and job guarantees in a climate of “rising hostility toward welfare” created an insoluble tension within PBJI that was primarily responsible for its failure: “PBJI was neither entirely a creature of the New Deal nor Entitlement liberalism; rather, it was the mongrel child of both, which angered many and pleased none.”16 Bloodworth’s categorization is problematic in many ways. After all, “entitlement” liberals shared similar political backgrounds with “New Deal” liberals (Willard Wirtz and Joe Califano were both members of the Johnson administration, but they came to different conclusions about guaranteed incomes). Moreover, Bloodworth’s categorization does not explain forces within the Carter administration who opposed both incomes and jobs. By placing so much emphasis on “entitlements,” Bloodworth overlooks

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divisions among New Deal liberals over unemployment and inflation and how these divisions influenced the success or failure of job programs. At the same time, there is something to Bloodworth’s idea of a tension between income strategies and job strategies and how these strategies either flowed with or against the current of public opinion.17 Margaret Weir’s work does not dwell on the PBJI, focusing instead on the HHA. She suggests full-employment legislation could only have succeeded if “the institutional framework and the organization of interests” around direct job creation had been “substantially reoriented to support policies that expanded the government role.” She sees that there was no pathway to such a reorientation within either Congress or the Carter administration.18 Specifically, for Weir, the demise of the HHA stemmed from a failure of true coalition building between labor liberals and African American labor, and that especially showed shallow and weak support for the bill because of a hostility to price and wage controls. Tripartite wage and price-cooperation efforts stumbled, which kneecapped the bill’s antiinflation provisions.19 The weakness of this alliance was further exacerbated by the inability of experts to form a coherent school of thought or policy network that could justify and explain this kind of intervention. Beyond that, Carter’s own ambivalence about the role of government created an opening for pro-market forces within and without his government.20 I largely agree with Weir’s analysis of the HHA—especially on the critical role that the delay and the 1976 hearings had on the eventual outcome— but it misses a few important points that have a bearing on the history of direct job creation. The absence of the PBJI from Weir’s narrative means that the Carter administration (as opposed to Carter himself) falls out of the direct job creation story except in regards to its efforts to create tripartite cooperation on inflation. This excises the critical influence that the Labor Department and the core economic departments had on the administration’s reaction to the proposed HHA. It also elides the role that the Carter administration played in shaping the bill via direct negotiations with its legislative sponsors. Weir’s focus on the dominance of neoclassical economics in the academy as the reason why a network in support of the bill never came together, while highly useful, also loses sight of the divisions among Keynesian partisans that arose in the 1970s. These internal conflicts rendered the emergence of such a network impossible. The collapse of the Phillips curve (which posited a stable relationship between inflation and unemployment)

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and the way in which its demise split Keynesianism in half is crucial to understanding why Johnson administration veterans like Charles Schultze lost faith in the legitimacy of government action to fight unemployment. Ultimately, the historiography of the Carter administration, both in its “broad turn” and its more specific focus on jobs and incomes, zeros in on individual policy proposals rather than a comparison of all job efforts undertaken during the Carter years. Cowie and Weir both analyze the HHA but not the PBJI; O’Connor and Bloodworth focus on the PBJI but not the HHA (and in both cases they tend to focus on the income side of the equation rather than on the job side). To truly understand the fate of the HHA, we have to analyze the two pieces of legislation together. Their interaction meant that failures in one shaped the thinking and the behavior of the same actors with respect to the other. Folding a blended analysis together with direct job creation—which was its own policy project distinct from welfare reform—is important. Highlighting the impact of divisions within Keynesianism, we begin to see how Humphrey-Hawkins and direct job creation were defeated for a generation by the combined effects of two historic clashes: one between unemployment and inflation and the other between jobs policy and guaranteed incomes.

How We Got to the Humphrey-Hawkins Act The trajectory of the HHA is best understood by examining how the political winds shifted so that direct job creation moved from an abstract idea in 1945–1946 to a program that employed hundreds of thousands of workers by the mid-1970s. The notion that government could actually enforce a right to a job was taken seriously in a way that it had not been in nearly thirty years. Yet unlike the 1930s when there was a consensus that work for the unemployed was the issue of the day, the 1970s presented a very different policy environment. By then, direct job creation had to contend with powerful alternatives that argued that employment could be bypassed and that the poor and unemployed could be assisted instead with guaranteed incomes. The 1973 Recession and the CETA From 1968 through 1973, a rising tide of support for direct job creation in Congress led to the creation of the CETA. The fact that direct job creation returned at all is evidence for the strength of the idea. After all, Nixon was

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absolutely ideologically opposed to a job creation program. For him, job creation was a New Deal–style interference with the free market. The president bitterly opposed the establishment of an employer of last resort (ELR) for mothers in his Family Assistance Plan (FAP), even though it mean the loss of support both from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and from Senators Herman Talmadge and Russell Long. Lacking such a program intensified the internal problems of work requirements and work incentives within FAP.21 Even so, when Congress pushed for employment programs in the wake of the recession of 1969–1970, Nixon resisted them.22 But as unemployment rose from near-record lows of 3.4 percent to 5.9 percent in 1969–1970, Congress stirred. It challenged the president on this issue, forcing Nixon to accept a modest public employment program of some 128,000 in 1971.23 In 1973 unemployment peaked at 9 percent, swelling the ranks of the unemployed beyond “pockets” concentrated in communities of color to include the otherwise-secure blue-collar, white working class. Direct job creation programs suddenly became more appealing to Congress both as a vehicle for economic recovery and as a way to unify black and white workers in a majority coalition in search of economic protection. No further objection could be made, and Nixon unhappily signed the 1973 CETA into law. CETA was the first true direct job creation program seen in thirty years, but in its design one can glimpse a total failure to learn from both the strengths and weaknesses of New Deal programs.24 Indeed, Clifford Johnson would describe the program as “marked by shifting and multiple objectives, frequent policy revisions and changes in funding levels, and repeated charges of mismanagement and abuse.”25 Where the Works Progress Administration (WPA) covered between 25 percent and 45 percent of the unemployed and thus had a substantial impact on the macroeconomy, CETA was launched at a level of some 50,000 public service employment (PSE) jobs during a recession that would leave 7.5 million people without work.26 Expanded to 750,000 jobs following the persistence of the recession and the 1976 CETA amendments, the program was never authorized to do more than cover “20% of unemployment above 4%, or 25% of unemployment above 7%,” and never budgeted to cover more than 10 percent of the unemployed even as late as 1978.27 Fundamentally, CETA was never allowed to gain the advantages of scale necessary to really reduce the unemployment rate.

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CETA’s wage cap ultimately drew pay down to the level of $5 an hour, thus limiting the kinds of jobs that could be offered. Its 1976 amendments set aside a disproportionate number of the job openings to those from lowincome neighborhoods (92 percent), to those on welfare (31 percent), or to racial minorities (48 percent).28 Thus, just as the WPA had failed to distinguish itself completely from relief by focusing its employment on those already on the relief rolls and paying them a “security wage,” CETA’s combination of low wages and targeted employment helped to define the program as a welfare program, with all of the negative consequences in public support this implied.29 Thus, for many, CETA was not a job program; it was a rescue program for racial minorities. CETA ignored the model of direct federal administration characteristic of the New Deal job programs, leaving the programs in the hands of state and local governments struggling to contend with deep fiscal crises. The strategy avoided political tensions between the federal government and state governments of the kind that cropped up during the WPA’s tenure, but it created new problems. States and cities hit hard by the 1973–1975 recession faced huge temptations to balance their budgets by replacing higher-paid public workers with cheaper CETA hires, reducing the net effect of unemployment. High rates of substitution were in fact common. In his book Creating Jobs, George E. Johnson estimated a 60 percent substitution rate although the strength of this effect varied according to which econometric models were used.30 Empirical studies found an 18 percent substitution rate, but also found that 31 percent of new hires were used to preserve existing jobs that would otherwise have been cut, which also weakened net job creation.31 Public employee unions that had been supportive of direct job creation throughout the 1960s and 1970s now saw CETA as an attack on their wage rates and the availability of employment more generally. CETA was seen as a program to undercut public-sector workers rather than an attempt to preserve jobs or add new jobs. And yet the level of controversy over CETA should not be overemphasized. For all the attention paid to its shortcomings, as with the WPA, local projects were overwhelmingly popular.32 Likewise, while some public-sector unions were unhappy with CETA’s institutional design, labor as a whole still desperately needed a federally operated jobs program to fight the recession. The downturn was biting deeply into America’s industrial base, setting

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off strident conflicts between white and black workers over the shrinking supply of jobs available in the 1970s.33 And for the Labor Department, CETA changed everything. By 1976, direct job creation no longer was an idea favored by one secretary of labor; instead it became the largest single activity undertaken by the department and took the lion’s share of its budget. Rather than trying to put together a direct job creation program from scratch, as had happened in the 1960s, the Labor Department had years of experience and enormous amounts of institutional capacity that it could use when it came to PBJI and the HHA.

The Rise of the GMI At the same time that the Labor Department was developing the institutional capacity to direct job creation to address the economic crisis, other groups in the federal government were developing a potentially competing policy: guaranteed minimum incomes (GMIs). Advocates of this policy thrust faced an uphill slog since the 1960s. Despite LBJ’s total opposition to “the dole,” the idea of a Negative Income Tax (NIT), or GMI, became increasingly appealing to the OEO after 1964 as the difficulty of reducing poverty through human capital or political development methods became apparent. Their poverty theory shifted to emphasize the “poverty gap,” as memos argued that poverty could be straightforwardly tackled by transferring income to fill the difference between current wages and the poverty line.34 For the OEO, transfers seemed an interesting alternative to their contemporary proposals for direct job creation. “For unemployed but employable poor people, jobs with a sufficiently high wages rate would solve their income problem,” but while “wage rates would almost certainly be in excess of the workers’ marginal products,” their output would still offset the overall cost of the program, which would mean that “programs of this type would be relatively efficient,” but, given the scale of any such program, “not cheap.”35 At the same time, the NIT was seen as “the most efficient method available,” which could guarantee a decline in poverty by closing the income gap via brute force. The NIT did raise problems of “the additional real costs of adverse incentive effects,” although the OEO argued that “these costs . . . would be less per dollar paid out than those of the current welfare system,” given the removal of work penalties for existing welfare recipients.36

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These ideas were not going to be turned into legislation during Johnson’s administration, but the OEO succeeded in gaining traction in the Heineman Commission on “Income Maintenance Programs,” which met from 1964 to 1966 (and then again in 1968). This group proposed that “for the aged, disabled, single moms, cash is necessary,” especially for the 7.5 million elderly poor and 21.7 million poor children, as well as the chronically unemployed and low-wage workers.37 Thus, by 1969, the federal government had signed on to a GMI in theory. Moreover, HEW, which initially had preferred to support improvements in Aid to Families with Dependent Children (AFDC), had come around on guaranteed incomes and supported the OEO in these task forces. GMIs took a giant leap toward practice when Richard Nixon came out with a proposal for the FAP in 1969. Relying on work done by the OEO and HEW in the Kennedy and Johnson administrations, this proposal would have established a GMI for working families with an increase in welfare benefits for families that satisfied a new work requirement.38 Given Nixon’s antipathy to the OEO, HEW took up the torch for GMIs, successfully shepherding the FAP through the executive branch despite a good deal of opposition from conservative figures in a Republican administration. Despite hesitancy on the part of the president or his staffers to fully embrace Daniel Patrick Moynihan’s theory of “red Toryism,”39 the FAP came within an inch of success. It passed the House 243–155 before being attacked by conservative Democrats from the right and the National Welfare Rights Organization (NWRO) and its Left liberal allies in the Senate, where it rolled over and died. Was there an inherent conflict between direct job creation and GMIs? Theoretically, advocates of poverty reduction could support both policies. As we saw in Chapter 5, the OEO was able to support both an NIT and a jobs program simultaneously. Ralph Abernathy, Martin Luther King Jr.’s successor as head of the Southern Christian Leadership Conference and the Poor People’s Campaign, was in favor of both jobs and income.40 The NWRO’s founding resolution called for “decent jobs with adequate pay for those who can work, and adequate income for those who cannot.” Carter’s PBJI would attempt to combine the two within the same program.41 Yet there were centrifugal forces that drove the two policies (and the groups who supported them) apart. The different agencies that would have had jurisdiction showed little inclination to combine the two policies, especially after the OEO was dismantled by Nixon in 1973. Wirtz of the Labor

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Department vocally opposed GMIs in 1964, an attitude that grew stronger within the Labor Department as it developed institutional commitments to direct job creation policy in the CETA era.42 “Having lost the battle for a job-creation strategy during the War on Poverty,” Carter administration “Labor analysts were determined not to cave in to the straight income approach favored by the analysts at HEW.”43 For their part, many advocates for GMIs within the federal government were “critics of the jobs approach,” who “insisted that many poor people were unable to work . . . [and] regarded a jobs strategy as but a part of a much better plan of income maintenance.”44 In 1969, the Heineman Commission on “Income Maintenance Programs,” which included both HEW and OEO members at a time when OEO was undertaking a series of GMI experiments, argued that “employment approaches alone cannot provide a satisfactory sole basis for an economic security system and are not fundamental alternatives to income supplement proposals.”45 Thus, by the time that PBJI and the HHA came around, HEW was further committed to GMIs and was skeptical about job guarantees.46 In no small part, Nixon’s policies exacerbated these trends right before the PBJI and the HHA came into view. As we have already seen, Nixon and his staff bitterly opposed jobs programs and were insistent that they not be a part of the FAP. That led the Labor Department to see the FAP as a competitor to its proposals for job programs in the wake of the 1969–1970 recession. At the same time, Nixon’s 1972 volte-face on guaranteed incomes, where he viciously race-baited George McGovern’s modest “demogrant” proposal, further classified GMIs as welfare programs for black people.47 It did not help that there was no sign of a coalition between their respective constituencies outside of government. As Brian Steensland tells it, “Labor leaders were not receptive to [GMI] proposals because they feared GMI programs would institutionalize low wage levels and undermine their collective bargaining power,” and they “did not favor any kind of program that removed the link between benefits and labor market participation.”48 While the NWRO formally supported jobs for all, its political efforts were largely focused on expanding welfare into a GMI program: “[Richard] Cloward and [Frances Fox] Piven, for instance, stated directly that their longterm aim was a guaranteed annual income policy.”49 Likewise, elements within the NWRO and its allies embraced “the Goal of Full Unemployment,” believing that the advance of automation combined with a GMI

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would liberate the working class from capitalist discipline.50 As Guida West, a veteran of the NWRO, argued, the NWRO’s focus on GMIs was driven by a split between the white organizers who believed that jobs were for men and welfare for women, while the NWRO’s rank-and-file were interested in job training, jobs at good wages, and child care, rather than income policies.51 These impulses made it difficult if not impossible for the two policies to coexist easily. Convictions about whether the job market or the welfare state was responsible for poverty were too divergent. Deciding whether providing work to the unemployed was a way to liberate people from poverty or was a form of workfare proved too divisive. Ultimately the two camps could not resolve whether social and economic rights were reciprocal and solidaristic or universal and unqualified. Consequences for Direct Job Creation By the time the HHA emerged onto the scene, therefore, the political environment for direct job creation had changed dramatically. The recession of 1973–1975 had returned unemployment to the national agenda with an intensity that had not existed during the thirty years of postwar prosperity. Direct job creation was much better poised to take advantage of this policy opening than it had in the past. Unlike in the 1930s and 1940s, the Labor Department now had extensive interests in promoting and expanding direct job creation programs, and unlike in the 1960s, it also had the institutional capacity to back up its commitments. Even so, the emergence of GMI policy complicated the environment within the executive branch. During the 1960s, the Labor Department cooperated with the OEO on direct job creation while agreeing to disagree on guaranteed minimum incomes. By the mid-1970s, the OEO had been effectively dismantled. HEW took its place and it had no such tradition of support for jobs programs. Consequently, two of the more social justice– oriented departments were set up to clash and compete rather than cooperate over direct job creation proposals.

Emergence of the HHA At the same time that CETA and guaranteed incomes were changing the internal politics of the executive, direct job creation advocates in Congress

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looked to create a permanent, mass job program in response to the persistence of high unemployment during the 1973 recession. Congressman Hawkins, one of the great unheralded leaders of the civil rights movement, led the charge. A New Deal Democrat who had served in the California legislature for twenty-eight years before his election to Congress in 1963, Hawkins authored Title VII (prohibiting discrimination in employment), helped to establish the Equal Employment Opportunity Commission (EEOC) of the Civil Rights Act of 1964, and was one of the original founders of the Congressional Black Caucus. The HHA began in 1974 as Hawkins’s Equal Opportunity and Full Employment Act. His 1974–1975 draft of this bill was in many ways the most progressive and the most ambitiously statist version. He made the federal government the guarantor of jobs rather than limit its role to economic planning.52 The program’s administrative machinery borrowed directly from the Swedish labor market system: local planning councils would establish local reservoirs of job projects.53 A new Job Guarantee Office within a nationalized U.S. Employment Service (USES) would bear the responsibility for finding a job for “any American, able and willing to work,” who applied for assistance. If private employment was not available, the Job Guarantee Office would give the unemployed individual a job with a newly established Standby Job Corps, which would carry out public service work on the projects proposed by local planning councils.54 To assist the new system in its development, a National Institute for Full Employment would be established within the Labor Department to research economic policy tools for managing a full-employment economy. Most controversially, the bill aimed to eliminate involuntary unemployment entirely by establishing a concrete right to a job, which would be enforceable through the courts.55 Hawkins’s bill quickly attracted the attention of Senator (and former presidential candidate) Humphrey and his legislative amanuensis, Leon Keyserling, who worked as an advisor and speechwriter for Humphrey as early as 1948. For Keyserling, Humphrey was the man “most suited to be president in the country,”56 in no small measure because of their common commitment to “jobs for all.” After their failure in the 1968 election, Humphrey and Keyserling had returned to the Senate with a bill that would amend the original 1946 Employment Act by requiring the president to transmit a “National Purposes Budget” to Congress that included goals for

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3 percent unemployment and “specific goals for the virtual liquidation of poverty within the United States within a decade.”57 Having seen successive Republican administrations weaken the federal government’s commitment to full employment in favor of tight money policies in the 1950s and 1970s, Keyserling had abandoned his 1940s commitment to executive branch leadership. Though he had originally favored flexibility for planning in the CEA, now Keyserling looked to bind the government’s hands by requiring that presidential plans include specific policy goals (for example, the end of poverty), include specific numerical targets for unemployment (rather than general goals for “maximum” employment), and explicitly prohibit specific policy tools (for example, monetary policy–induced recessions to fight inflation). Unsurprisingly, Keyserling immediately saw promise in the 1974–1975 Hawkins bill. Its numerical targets for unemployment and mandatory presidential budgeting and planning were, as Keyserling himself argued, “the heart of it, despite the provision for Federally financed supplemental employment programs.”58 At the same time, Keyserling urged Hawkins to tone down aspects of the bill he disliked. He pushed for the removal of “the provision for court review” of the right to a job, argued that “local planning councils . . . duplicate much of the work of the U.S. Full Employment Service,” and finally offered a draft of the bill in which he “eliminated the standby job corps which is another duplication.”59 Keyserling urged Hawkins to recognize that “the bill is a comprehensive planning vehicle, and that is what we imperatively need”—as opposed to a direct job creation bill.60 Most important, Keyserling insisted that full employment be defined at 3 percent unemployment or less. He was sure this was the only realistic hope for progressives. Even that goal would require “an average annual U.S. real economic growth rate of 9.5 percent within this three year period,” the most that could be hoped for even at full employment.61 In the 1976 bill, the hand of Leon Keyserling is clear, especially in the section on the CEA. The legislation now included a presidential “full employment and production program” and “labor report” borrowed from the Humphrey Bill. Hawkins agreed to structural streamlining: the Research Institute was absorbed into an expanded CEA, the local planning councils were folded into the USES, and the Standby Job Corps was no longer the sole vehicle for job creation. The 1976 draft also saw the right to a job enforced through appeal to “administrative arbitrators” rather than the

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courts. A somewhat utopian effort to end unemployment altogether was moderated into the numerical definition of full employment as 3 percent.62 Yet he was not completely successful in transforming the bill into an echo of his efforts in 1945–1946.63 In return for toning down the unemployment goals and weakening the enforcement of the right to a job, Hawkins required Senators Humphrey and Keyserling to accept “the bedrock responsibility of the Federal government to finance directly supplemental public service jobs for all” who could not find private employment. Hawkins would not continue to work on the bill without this concession.64 The bill retained the basic structure of local planning, federal management and oversight, and a backup direct employment agency, and it emphasized direct federal responsibility as opposed to indirect planning through fiscal, regulatory, and monetary policy, which set it apart from the strategy pursued by congressional liberals in 1945–1946. Keyserling provided invaluable intellectual assistance as Hawkins’s most prominent defender against the charge that the bill would be inflationary. He argued against the Phillips curve and proposed an “inflationary stagnation” theory that blamed higher costs on unused production capacity of raw materials and parts. Unemployment and inflation were in fierce competition for attention, making Democrats feel especially vulnerable to crosscurrents of public opinion. Keyserling’s theories provided cover for Humphrey, Hawkins, and other liberal supporters of the bill who wanted to soothe their colleagues’ fears of inflation. Keyserling’s combative personality made him an ideal political attack dog against critics of the HHA who adhered to more orthodox economic philosophy. Responding to a Congressional Budget Office report on Humphrey-Hawkins, Keyserling let loose a barrage of invective, claiming that “the report . . . is really a violent attack on reducing unemployment. . . . [T]he report is dishonest . . . dogmatically made . . . nothing but a scare statement . . . a downright silly argument.”65 Beyond straightforward ridicule, Keyserling used his inflationary stagnation theory as a rhetorical bludgeon within memos circulated throughout Congress. “There is complete neglect of . . . [the fact] that inflation has advanced most rapidly when idle workers and plant were very high. . . . [T]he report offers absolutely no examination of how the economy has behaved in the past,” he argued. Keyserling insisted repeatedly that “national policy has the capability to reach almost any rational employment . . . target that it sets out deliberately to reach.”66 Already predisposed to

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arguments against prioritizing inflation over unemployment, Hawkins took up Keyserling’s theories and his rhetoric in his public statements.67 In a contest between the wealthy and the workers, both men were clear about their priorities. With this partnership now well established, Humphrey and Hawkins sought to roll the endorsement of Democratic leaders into congressional passage of their bill in 1976.

Keynesianism Confronts Itself Congressional hearings in 1976 were the next step toward passage. It was here that the intellectual division within the Democratic Party emerged. Political factions that had divided bitterly in the 1960s—George Meany and the AFL-CIO, Leonard Woodcock and the United Auto Workers, the Americans for Democratic Action (ADA) and New Leftists, Coretta Scott King and civil rights groups arm in arm with feminist groups—were united on this bill.68 The major divisions were rather between different Democratic-identified economists, especially within Keynesian circles. Witnesses called to testify before the committee divided into three large camps: Keynesians who supported the bill, Keynesians who opposed it, and the neoclassical insurgents who opposed the bill for entirely different reasons. For Keynesians on both sides, the central issue in the debate over the HHA was whether the full-employment levels proposed (3 percent) and the Standby Jobs Corps created to bring them into effect if the private sector failed were inflationary. Ultimately they had to battle out whether full employment should be prioritized over controlling inflation. And the central conceptual lens through which these questions would be evaluated was the Phillips curve. The Phillips curve was first popularized in a 1958 paper by a New Zealand economist, William Phillips, and then replicated by the fiscal Keynesians Paul Samuelson and Robert Solow. As Richard Parker describes it, “Using data on British economic performance dating back to the 1860s, Phillips had observed an inverse, stable relationship between rates of change in money wages and those in unemployment: rising inflation lowered unemployment and vice versa, with surprising predictability.”69 The Phillips curve had an enormous effect on fiscal Keynesians, giving them one of the

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most important “tools that would let them steer the economy.”70 On a policy level, the Phillips curve allowed policymakers to choose any combination of unemployment and inflation that they wanted, “depending on whether full employment or disciplining inflation was more important” at any given time.71 On an intellectual level, the Phillips curve “patched into IS-LM Keynesianism to relieve that model’s lack of a theory of inflation.”72 For fiscal Keynesians, this was crucial: the IS/LM relationship between investment, liquidity preferences, and the monetary supply reformulated Keynes’s General Theory within the framework of neoclassical economics. It gave fiscal Keynesians a theoretical model for how to achieve full employment. Still, inflation remained a worry. Moreover, this was a “patch” that seemed to offer empirical validation for IS/LM: after all, as interest rates dropped along with unemployment (as IS/LM predicted), inflation increased according to the Phillips curve. As unemployment increased, inflation would fall as interest rates rose (again, as they had predicted). Conservative economists like Milton Friedman began their campaign against Keynesian economics with an attack on the Phillips curve.73 In his famous 1968 address to the American Economics Association, Friedman “introduced an expectations function into the Phillips Curve, so that the inflation rate would now depend on both unemployment and past inflation expectations.” Friedman showed that in his model, “the expected rate of inflation predicts the actual rate of inflation only when unemployment is held at . . . the natural rate.” As a result, “efforts to reduce unemployment below its natural rate equilibrium would appear successful in the short run, but would soon generate accelerating inflation.”74 Friedman’s theory of inflationary expectations, if true, would gut the Phillips curve and totally discredit Keynesian economic policy. Even worse, because Friedman had built his theory on the Phillips curve, “mainstream American Keynesians . . . could not object to Friedman’s specification that inflation was a function of unemployment and other factors. Being neoclassical synthesists, they could also hardly deny a role for expectations, nor that expectations must be satisfied in the long run, nor the policy relevance of the long run.”75 All that the Keynesians could do was to fall back on the empirical reality of the Phillips curve as evidence that their preferred economic policies worked in practice if not in theory. Starting in 1974–1975 when inflation spiked to 11 percent despite unemployment hitting 8 percent, the Phillips curve crashed and burned. Economic

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facts on the ground did incalculable damage to fiscal Keynesianism. That which their models had declared impossible had happened. As James K. Galbraith put it, “The Keynesians were in crisis by the time Volcker came in. They had failed to prevent rising inflation in the 1960s, and their concept of a stable trade-off between inflation and unemployment . . . collapsed in the 1970s.”76 One Carter administration official in the OMB would later put the dilemma into both numerical and ideological terms, lamenting “how easy it was to be a liberal back when there was 4.9 percent unemployment and 2 percent inflation. . . . [Y]ou could spend a point or two on inflation to get unemployment down. Now you just do not have the margin. You simply cannot sustain as high a level of employment without subjecting the economy to real shocks and dangers.”77 Keynesians simply lost confidence in their own nostrums and were hypersensitive to inflation—an ironic reversal from their overconfidence during the debates over the Full Employment Bill of 1945. After all, if there was no constant relationship, any fiscal policy change might bring on inflation without warning. Fiscal Keynesians had no way to think about inflation without the Phillips curve. The fall of this pivotal concept reopened old conflicts from the 1940s between the disciples of the IS/LM theory and the unreconstructed social Keynesians who had never bought into the Phillips curve or the neoclassical synthesis. These progressives were convinced that income policies and other statist interventions would allow for full employment without inflation.78 To the disciples of the IS/LM theory, the dream of full employment was threatened by radicals on both the Right and the Left at the time of Keynesianism’s greatest crisis; to the unreconstructed social Keynesians, fiscal Keynesians seemed like Pharisees who had betrayed the cause of full employment to carry water for financial interests terrified of inflation, and who needed to be driven from the temple of the true faith. The HHA moved these conflicts from the safe bosom of academic conferences into the harsh light of the national press. Keynesian economists publicly divided over the bill, with some arguing that the combination of economic planning and direct job creation could provide full employment without inflation and others arguing that any attempt to use the government to achieve 3 percent unemployment would bring about ruinous inflation. At the end of the day, instead of contributing to unity within the Democratic establishment, Keynesian economics cast the HHA into a controversial and potentially dangerous light.

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The Defenders of the HHA The undisputed star of the 1976 hearings and chief witness for the defense was Leon Keyserling. As a drafter of the 1946 Full Employment Act and the first chairman of the CEA, Keyserling presented himself first and foremost as the spokesman of a golden age that should be emulated in troubled times: “During World War II . . . we forged a comprehensive and consistent policy and program, with almost miraculous results. . . . [W]hat we experienced during [World War II] offered many useful planning lessons.”79 At the same time, Keyserling excoriated the fiscal and monetary consensus he saw emerging after the Truman administration, charging that “in the more recent years, under both Democratic and Republic[an] Administrations, programs and policies have been insufficiently coordinated, excessively improvised, not developed in a sufficiently long-term perspective and, above all, insufficiently comprehensive.”80 As a result, both Democratic and Republican administrations had passively adopted higher and higher levels of unemployment that would still be considered “full” employment. The HHA would commit the executive branch to a hard target of unemployment below 3 percent. While still presenting himself as a Keynesian, Keyserling implicitly argued that there were two Keynesian traditions: a robust social Keynesianism of the 1930s and 1940s, and a heretical devolution that had turned away from the millennial promise of full employment. He knew which side he was on. A career’s worth of hopes, frustrations, and research poured out in impassioned pleas for economic planning. Government interventionism was a credible, critical alternative to persistent high unemployment. Most heartfelt of all was Keyserling’s regret that “we have never developed the mechanisms for a consistent and comprehensive program. . . . [T]he core feature of S. 50 is that it provides . . . for remedying this defect.” It was the promised land of the New Deal, which would “yield the more genuine type of economy by doing first what needs to be done most, by discerning better what the real problems are, [and] by addressing ourselves more accurately to the real needs of the economy.”81 Keyserling’s break with orthodox Keynesianism surfaces throughout his Humphrey-Hawkins testimony. Repeatedly, he hammered away at the Phillips curve: “Nor has there been, during recent years and now, any conventional ‘trade-off’ between unemployment and between unemployment and inflation,” he argued. If there was a serpent in the garden responsible for

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the fall of Keynesianism from grace, it was the Phillips curve. It had tricked the priesthood of economists into believing that artificially induced unemployment was a necessary cure for inflation. No, said Keyserling. The imagined empirical trade-off between unemployment and inflation was a mirage. This was obvious to anyone looking at the empirical record in the mid- to late 1950s when unemployment averaged 6.4 percent, rather than the early 1950s when joblessness averaged half that.82 Rather, he argued that unemployment could itself be inflationary by causing shortages and raising per-unit costs. Full employment could lower inflation by increasing supply and thus lowering prices.83 Keyserling argued that “the empirical evidence strongly supports the conclusion that a faster rate of real economic growth, conducive to a rapid reduction of unemployment is conducive to less inflation,” pointing to his experiences in 1947–1953 and 1958–1966 as evidence.84 In other ways, Keyserling’s conversion from orthodox Keynesianism was limited. The more ambitious social rights of Hawkins’s 1974–1975 draft were not part of his vision of the final HHA. In a replay of his position in the debates over the 1945 Full Employment Bill, Keyserling claimed that “this bill does not guarantee the right to work to anybody. It does not vest that right in anybody. It does not give the right of anybody to go into court.”85 Direct job creation would play a limited role in the new system. In his vision, PSE would be limited to between 1 million and 1.5 million jobs, while the majority of the effort to establish full employment would be accomplished through “national priority jobs” created in the private sector or state and local government through government spending on “housing, mass transportation, environmental improvement, resource development, health, education, [and so forth].”86 Still, Keyserling had taken at least a step beyond his 1945 position in a number of areas. Disillusioned by a gradual government acceptance of ever higher average rates of unemployment, his attachment to lower unemployment rates as an end in themselves became something of a moral calling. Keyserling’s position was uncompromising: “The concern has been expressed in some quarters that the proposed legislation would be inflationary. This concern is without merit, quite apart from the supreme moral point that the unemployed and their families . . . should not be asked to bear . . . the burden of protecting the employed and the affluent from inflation.”87

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Finally, Keyserling had signed on to something he had actively fought in 1945—direct job creation—even if in a limited fashion. “S.50, while contemplating primary reliance on fiscal and monetary policies, for the first time requires adequate use of specified micro-economic policies and programs . . . and, as a last resort, use of the Employment Service and a Full Employment Office.”88 This office would prepare a reserve PSE program of more than 1.5 million jobs, should traditional efforts fail; the government would finally put itself on the hook for its own pledges of full employment. How to explain this shift? Keyserling had spent thirteen years working with A. P. Randolph, Bayard Rustin, and the other supporters of the Freedom Budget. During this time Keyserling was out of public office and thus less driven by his need to appear moderate in the wake of McCarthyist loyalty investigations. His growing frustration with economic planners who had accepted higher levels of unemployment, coupled with the immediate political necessity of maintaining the support of Congressman Hawkins and the Congressional Black Caucus, motivated his change of heart. It could perhaps be argued that Keyserling, as something of an amateur economist who never really had a base within the academy, was an outlier; thus his critique of the Phillips curve should be discounted. However, his views on unemployment, inflation, and direct job creation were shared by a group of unorthodox economists who similarly had never bought into the Phillips curve. James K. Galbraith describes these economists as “Old Keynesians”—including in this group himself, his father (John Kenneth Galbraith), Leon Keyserling, Robert Eisner at Northwestern, and Nicholas Kaldor at Cambridge (whose collaboration with Gunnar Myrdal suggests a connection to the Stockholm school). They were complemented by a group of post-Keynesians,89 including such luminaries as Michal Kalecki, William Vickrey, and Hyman Minsky. Overwhelmingly, the Old Keynesians and post-Keynesians stood outside the mainstream of the neoclassical Keynesian synthesis. As James K. Galbraith put it, “We never accepted either the Phillips Curve or the NAIRU [a non-accelerating inflation rate of unemployment]. Instead, we believed that full employment was not inherently inflationary.” Like Keyserling, they believed that monopolistic behavior by large corporations with high fixed costs could cause prices to rise during a recession, whereas full employment could control price growth due to “ample competition in product markets, high rates of technical change, and declining costs, as businesses seek ways to save on scarce and expensive labor.”90 At the same

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time, many of these economists—Vickrey and Minsky most notably— believed quite strongly that the federal government needed to act as an ELR through direct job creation. Existing in close intellectual proximity to the Old Keynesians and postKeynesians were a rather heterodox group of empiricists, labor economists, and urban economists who joined the debate over direct job creation through a series of edited volumes, such as the Political Economy of Public Service Employment (1972), Creating Jobs—a Brookings Institute Study (1978), and Perspectives on Public Job Creation (1977). This group included economists like Harold Sheppard of the Upjohn Institute, Barry Bluestone of Northeastern University (in close collaboration with Bennett Harrison at the Massachusetts Institute of Technology [MIT]), Thomas Dernburg at American University, Thomas Barocci at MIT, and Edward Gramlich at the University of Michigan. Also part of this group was Ray Marshall, then an economist at the University of Texas at Austin, who would in just a few years become Jimmy Carter’s secretary of labor and one of the leading liberal figures in the administration on a number of issues, from the minimum wage to regulation to job policy. These heterodox economists sided with the Old Keynesians and postKeynesians, drawing on empirical studies that revealed the gap between the neoclassical model of a freely adjusting labor market and reality, pointing to structural constraints, quasi-monopoly power over wages in many industries, a rapid entry of young people and women into secondary labor markets, and other factors that were undermining standard macroeconomic policy, thus explaining the stagnation side of stagflation.91 Critically, these heterodox economists were skeptical about the existence of the Phillips curve and tended to argue that new economic policies could neutralize inflationary tendencies in the economy. Hence in 1976 Leon Keyserling was not alone in his economic views. He had a following in a particular section of the economics discipline that was responding to the crisis in Keynesianism. They took it upon themselves to develop both theoretical and empirical frameworks that offered alternative explanations of and prescriptions for dealing with unemployment and inflation. A policy network was there for the taking. There was little evidence of it in the congressional hearings. John Kenneth Galbraith appears prominently, but among the others, only Bluestone and Harrison appear on the witness lists and then only in earlier hearings. The only major recurring economist appearing was Keyserling, who seems

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to have taken on the burden of providing the theoretical defense of the act. This lends further credence to Weir’s thesis that an economic theory network failed to coalesce around the HHA. Why? These dissenters from Keynesianism failed to unite around a single alternative economic model even though they shared similar criticisms of the dominant school of thought.92 Beyond Keyserling, there was no consensus in the pro–HumphreyHawkins group. While agreeing that PSE created more jobs at a lower cost than the tax cuts of fiscal Keynesians, Alice Rivlin of the Congressional Budget Office did not agree with Keyserling’s perspective on inflation. She pointed to “unevenness of unemployment,” especially among young people, women, and black workers, which made “it much more difficult to get the aggregate unemployment down without creating inflation.”93 This led her to argue that an unemployment rate of 3.5 percent would lead to 7 percent inflation unless stronger anti-inflation measures were added to the bill. Overall, Rivlin showed greater caution about the unemploymentinflation relationship. “I think we, as economists, have to plead ignorance about how far the unemployment rate can be pushed down without escalating inflation,” Rivlin argued, mirroring the feelings of Keynesians who were unmoored by the collapse of the Phillips curve.94 John Kenneth Galbraith took a similar stance. Like Keyserling and unlike Rivlin, he took issue with the inflation trade-off theory, pointing to his experience at the Office of Price Administration during World War II (when the United States was at 1 percent unemployment but maintained price controls to restrain inflation). That experience, he explained, was proof that “whether the 3 percent unemployment goal” would “be disastrously inflationary . . . depends entirely on the companion action to prevent inflation.”95 At the same time, Galbraith rejected Keyserling’s “shortfall” theory of inflation, arguing that “there is no substance to the wishful thought . . . that the higher output that goes with full employment will lower unit costs or otherwise stabilize prices. In step with the higher output goes higher income to buy. . . . [A]s capacity is approached, the ability of corporations to raise prices increases.”96 Instead, Galbraith called for tripartite wage controls and Means-style price controls on highly concentrated industries, showing the influence of his institutionalist leanings and his experience as a wartime price controller. By contrast, more conservative Keynesians like Charles Schultze had a very consistent message—low unemployment was inherently inflationary,

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and fighting inflation came first. Schultze—Lyndon Johnson’s director of the Bureau of the Budget and a Keynesian economist trained at Georgetown and the University of Maryland—testified against Humphrey-Hawkins. Whereas Keyserling and his allies had come to be skeptical of the efficiency of orthodox fiscal and monetary policies, Schultze was a true believer. He argued that “the traditional weapons for stimulating economic activity— easy money, tax cuts, and government spending[—] . . . are perfectly capable of generating an increased demand for public and private goods. . . . [W]e do not need to have the government hire people directly.” However, he was also convinced that the Phillips curve kicked in at very high levels of unemployment, such that “every time we push the rate of unemployment towards acceptably low levels . . . we set off a new inflation.”97 Less than 5.5 percent unemployment would lead to accelerating inflation, he warned. Schultze saved most of his ire for an ELR policy through PSE. In his view, “the chief obstacle to overcoming [high and persistent unemployment] . . . is inflation. . . . [T]he combination of the ‘employer-of-lastresort’ provisions in this bill and the wage standards that go with it threaten to make the inflation problem worse.” The Humphrey-Hawkins provision that Standby Job Corps jobs should pay the prevailing wage (in jobs that normally paid a prevailing wage, such as in construction) was “bound to be highly inflationary. . . . [W]age scales in private industry will be quickly driven up to the higher level,” and prices would follow.98 This logic is a bit hard to understand—as other economists in these hearings noted. An ELR was logically less inflationary than the traditional stimulus favored by Schultze because the ELR added to production as well as consumption— but we can see in Schultze’s testimony a split between Keynesian economists and labor over the prevailing wage and a fear that full employment would actually be achieved rather than approximated. In many ways, the Keynesian split played out like a family feud. Keyserling and Schultze had been colleagues at the CEA during the Truman administration, and Keyserling viewed Schultze’s opposition as both a personal betrayal and an abandonment of the true Keynesian faith, writing to Hawkins that “Charlie Schultze . . . did not ‘shoot us down’ ”; he “stabbed us in the back.”99 He was even blunter in his direct communication with Schultze. “I have always . . . respected your energy and abilities,” Keyserling claimed. But “positions on your part are simply not in accord with empirical evidence. . . . I would have thought that simple morality and equity . . .

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would have persuaded you from accepting the viewpoint that unemployment should be inflicted deliberately upon millions of workers and their families.”100 Marshall counterattacked exactly on the point of PSE—a preview of his later conflicts with Schultze on economic policy. Schultze’s interpretation “places excessive reliance on traditional monetary-fiscal policies, even though he admits they alone cannot produce full employment,” Marshall argued. “He obviously thinks inflation is a much more important problem and . . . is not willing to take the measures needed to achieve full employment.” “Public employment—including public service employment,” Marshall argued, had been a demonstrated success overseas, and it was six times cheaper than traditional monetary and fiscal policies, making it less inflationary than the alternatives.101 If the disagreement between Keyserling and colleagues and Schultze had the flavor of a family feud, the appearance of Arthur Laffer, Alan Greenspan, and the Chamber of Commerce portended a very different conflict. Indeed, Schultze may well have been taken aback by the way that conservative economists dropped his name in their testimony, using him to legitimize ideas still seen as fringe. “I would concur with Mr. Schultze’s comments on the price effects of the bill,” Laffer stated repeatedly. Laffer’s opposition to the HHA stemmed not from his faith in the Phillips curve but from a conviction that government is inherently a tax on work.102 Using the same kind of sweeping overgeneralization that would lead to embarrassing failure when Ronald Reagan’s tax cuts failed to pay for themselves as he had predicted, Laffer proclaimed that PSE would increase unemployment. It would cause taxation to rise. Taxpayers would rationally respond to this threat by reducing spending to a level that would more than cancel out the effects of a PSE program.103 To the extent that Laffer agreed with Schultze, he did so only to promote his belief that cutting taxes would be a universal panacea, unleashing private-sector vigor.104 On inflation, he was noticeably mum. Greenspan’s attack on the principles of the HHA was equally aggressive. Taking a page from Laffer, Greenspan appropriated Schultze to push a radically different conclusion. PSE would backfire, not because of the impact of the prevailing wage and lower unemployment on the Phillips curve, but because nonmarket jobs are inherently unproductive. A right to a job would impede the unemployed from conducting job searches in the inherently superior private job market and shift labor from productive low-wage

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industries to the public sector. Similarly, “the very existence of the program would increase the number of people looking for work. . . . [W]orkers earning wages below the level specified in PSE jobs . . . would have an incentive to leave their job,” resulting in two million additionally unemployed for each percentage of the population covered by public service jobs.105 Greenspan went further, attacking the entire Keynesian project of setting economic goals as counterproductive. While Schultze wanted a more flexible set of goals, Greenspan argued that goal setting conflicted with the NAIRU. “If we focus our efforts on achievement of a number we are apt to initiate policies which would be counterproductive to what we really mean by full employment,” he argued. “As we approach it we find we’re running into inflationary imbalances and other difficulties which eventually increase unemployment.”106 In other words, full employment, as Keynesians understood it, was simply impossible. These well-spoken scholars were the polite, academic version of the more vitriolic conservative hatred for the bill. Reagan, then the former governor of California and a 1976 candidate for the Republican presidential nomination, thundered against the bill in a series of radio addresses. The “Humphrey-Hawkins bill . . . is as persuasive and grandiloquent as the label on a bottle of patent medicine,” he broadcast. Reagan told his audience that the bill will “actually decrease employment” as workers left their privatesector jobs in favor of “make work” jobs in the public sector. Most ominously, Reagan equated Humphrey-Hawkins to “a pattern once used in Italy by a fellow named Mussolini and then it was called Fascism. The annual plan would involve government allocating resources including labor . . . which also means government would begin telling free Americans where they would work and what kind of work they’d do. Maybe it is a full employment program—but so was slavery.”107 At the same time, the story of conservatism in the failure of jobs policy is a complicated one, for a number of reasons. First, conservatism was undergoing a shift of its own in the 1970s as anticommunism faded in the face of a Republican-led policy of de´tente and the rise of new political issues and new political groups that emphasized instead the politics of welfare reform, the “family values” politics of cultural conservatism, or the politics of white backlash.108 Second, partisanship played a role. In the 1970s, movement conservatism found much more fertile organizing ground within the Republican

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Party rather than within the Democratic Party, and the HumphreyHawkins Bill (like the 1945 Full Employment Bill before it) was debated in the context in which Democrats held veto-proof majorities in both houses of Congress. Thus, the conservative movement did not have the votes to reject Humphrey-Hawkins outright and would have to rely on more subtle mechanisms, chiefly in influencing the ideas of those within the Carter administration. Third, that process of intellectual influence took place in a quite disparate fashion. Business lobbies, which were quite influential in knocking down tax reform and labor-law reform during the Carter administration, were still in the process of a gradual expansion and were not active on every issue as they would be in later years.109 While the Carter administration wanted to maintain good relations with the business lobbies, Stu Eizenstat (Carter’s campaign manager and political advisor) and his colleagues understood that reelection would still require keeping labor, liberals, and African American voters on their side, so there was a limit to how far cooperation could go.110 Similarly, while it is highly significant that there were advocates for supply-side economics within the federal government in the late 1970s, these were advocates from within the Democratic Party—Laffer was not brought into the Carter administration.111 Rather than a case of the conservative movement winning congressional votes or infiltrating a Democratic administration, then, what we are primarily discussing is a loss of faith within liberal circles, as Keynesian economists lost confidence in their nostrums in the face of conservative counterarguments, and Democratic policymakers reacted to the loss of confidence by instinctively shifting to the middle.112 However, as Kimberly Phillips-Fein put it, this was not yet a situation in which conservatives had gained intellectual hegemony (as they arguably would achieve in the early 1990s) within the Democratic Party. Rather, while “Jimmy Carter . . . like other centrists in the party wanted to recast the Democrat’s message to draw in white middle-class suburbanites,” it was also true that “liberal factions in the party still had enough strength and confidence to push their agenda forwards, especially in the years after Watergate, when the Democrats held a solid majority in both houses of Congress.”113 Did intellectual splits prevent the Humphrey-Hawkins Bill from passing in 1976?114 It is hard to say. What is clear is that Keynesians were badly divided in the face of an aggressive phalanx of neoclassical economists, and their disagreements rendered a consensus impossible. Even pro-HHA

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Keynesians could not agree on inflation; more centrist and conservative Keynesians were increasingly torn between their fears of inflation and the support for wage restraint and their desire for deregulation and cheaper imports and their allies in the labor movement.115 At a time when the claims of Keynesians to scientific rigor and academic competency were under the gun from Friedman and his allies, larger ideals of a dynamic activist government in a mixed economy fell by the wayside. In microcosm, this was a textbook case of a center Left intellectual crisis. Progressives who fought tooth and nail against conservative Republicans in the 1960s surrendered in disarray before the fight even began. Not a few Keynesians were choosing academic respectability over full employment. Despite these rifts, Humphrey and Hawkins felt surprisingly encouraged. While the bill had not passed Congress, it had moved out of the House HELP Committee for the first time, and had picked up one hundred sponsors in the House and another seven in the Senate, Ford’s veto threat notwithstanding. More importantly, the Full Employment and Balanced Growth Bill was catching fire in the broader Democratic Party, thanks to internal reforms enacted in the wake of the 1968 debacle. McGovern’s reforms to nomination caucuses and primaries may be better known, but the invention of midterm national conventions gave party activists a new influence on public policy discourse. The 1974 convention, dominated by the party’s Left, pushed Democrats to recommit themselves to universal health insurance, the abolition of poverty, and the right to a job.116 Support only grew once the upcoming presidential election intensified partisan efforts to highlight high unemployment under President Ford. Though greatly divided on social politics and still licking its wounds from internal clashes over Vietnam, the Democratic Party was in certain respects at the peak of its progressive inclinations when it came to economic policy in 1976. United by eight years of Republican rule and the desire to regain the White House during a period of high unemployment, the Democratic platform of that year was resolutely interventionist: “During the past 25 years, the American economy has suffered five major recessions, all under Republican administrations. . . . We have met the goals of full employment with stable prices in the past and can do it again. The Democratic Party is committed to the right of all adult Americans willing, able and seeking work to have opportunities for useful jobs at living wages.”117 As platforms went, this language was not far from Democratic Party commitments to the legacy of Franklin D. Roosevelt’s Second Bill of Rights

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within presidential platforms from Truman to Humphrey. What made 1976 different was a further guarantee: that “to make that commitment meaningful, we pledge ourselves to the support of legislation that will make every responsible effort to reduce adult unemployment to 3 per cent within 4 years.”118 The HHA was no longer just a joint project of congressional liberals and the Congressional Black Caucus; it was the centerpiece of the Democratic Party’s economic agenda.

Carter’s Views on Economic Policy This is where the individual ideas and ideology of the president become most significant. Carter came onto the political scene in 1976 as a darkhorse candidate who promised to be a different kind of Democrat. As Eizenstat described it, “He was clearly the most conservative of the Democratic candidates in the 1976 campaign. He was the only one talking about balanced budgets and less bureaucracy and less red tape and themes that one associates perhaps with Republicans.”119 Crucially, Carter had come into politics from outside the assembly line of politicians and experts who had taken part in the New Deal, the New Frontier, or the Great Society. In many ways, this made Carter unsuited to the task of guiding the country through the aftermath of the 1973–1975 recession or dealing with the complex economic crisis of the late 1970s. As Cowie notes, Carter was elected because voters “hoped he would be the guy who could tame the Wallace supporters, entice the black voters, and still offer something for the industrial workers, all while using his Georgian charms to turn the South back around.”120 In other words, what the American electorate wanted in 1976 was a fiscal liberal and a social moderate. What it got instead was a social liberal and a fiscal conservative. Critically for the purposes of this book, Carter’s position as an outsider to American liberalism meant that he was also an outsider to liberal economic and social policy: “It was anathema to them to be talking about balancing the budget,” Carter wrote. “That wasn’t something that a Democratic president was supposed to do. . . . [A]ll they knew was stimulus and Great Society programs, new social opportunities.”121 Thus, when advocates for direct job creation attempted the difficult feat of getting a permanent statute through Congress, they had to grapple with a president who was lukewarm, at best, to their project.

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To the extent that Carter had any personal convictions on these issues, it was the attitude of a fiscally conservative technocrat who was willing to undertake humanitarian reform as long as it did not cost any money. As we will see, this would have significant implications for both the PBJI and the HHA. But if Carter was a technocrat, he was one who had little confidence in the power of government or economic planning. The bedrock beliefs that had inspired Keynesian economists during the debates over the Full Employment Bill or the War on Poverty were not in his wheelhouse. Carter was more pessimistic, believing that confronting complex problems required a huge investment of expertise—hence his foresighted efforts in trying to grapple with the energy crisis. He was, however, never hopeful about the prospects for more than a partial victory. And this was the man who would have a huge amount of leverage—what American political development scholars call a “veto point”—over the success or failure of proposals for ambitious national economic planning and extensive new fiscal commitments to establish the right to a job in fact as well as in law. Arguably, Carter could be seen as something of a New Deal Democrat, if we think of him as part of the pro-development wing of the New Deal, centered in the American South, which was friendlier to associational, public-private approaches to economic policy than the Left labor wing of the New Deal coalition.122 That being said, that developmental/associational wing opposed major efforts of the labor Left to transform the New Deal by increasing wage rates or organizing Southern workers into unions (which would threaten the South’s strategy of attracting new industries with low wages, low taxes, fewer regulations, and a more biddable labor market).123 Moreover, one can see quite simply how one could politically evolve from a business-friendly pro-development politics to a “growthmanship” politics to being influenced by newly aggressive business lobbies into opposition to “antibusiness” liberal activism.

Carter Confronts Direct Job Creation One might have expected the president nominated by the same convention that placed the Humphrey-Hawkins Bill at the heart of the Democratic Party platform to move quickly to push it through Congress. Once in office, however, the Carter administration embarked on a completely separate effort to grapple with direct job creation and welfare, the Program for

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Better Jobs and Income, or PBJI. That move would have profound consequences for the HHA and job creation programs. On the face of it, PBJI presented a promising solution to the persistent conflict over welfare reform and unemployment. At a time when high inflation and unemployment blurred the lines between the unemployed and the working poor, the Democratic Party was mired in a persistent conflict over welfare policy. PBJI would give work to the unemployed poor and both work and child care to those with young children, both acceding to and outflanking traditional views about the necessity of work, “worthiness,” and motherhood. An expanded EITC meant to lift the working poor out of poverty and above welfare requirements. The poor with children younger than twelve would, for the first time, be guaranteed a national, unified, minimum cash benefit above the poverty line, as part of a bid to win support from the NWRO and its congressional allies.124 That this compromise not only failed, but failed conspicuously, requires explanation beyond a mere counting of votes. Rather, we have to understand it as a consequence of intellectual paralysis within the administration that mirrored divisions within the larger Democratic Party. The morass began with structural decisions taken early on in the Carter administration. Reacting to Nixon’s paranoia-driven centralization of power in the West Wing at the expense of the Cabinet departments, Carter sought to promote a decentralized government through the establishment of policy working groups within federal departments. They were to formulate policy consensus on a particular issue under the direction of a “lead” Cabinet secretary designated by the president. This rather laissez-faire approach gave enormous leeway for agencies to push their department culture rather than adhere to a presidential agenda, but it also had the disorganizing consequence of incentivizing every department to advocate for its own priorities and to block competing alternatives. Joseph Califano, LBJ’s former fix-it man and Carter’s incoming secretary of HEW, sought and won leadership of the Social Policy Group (SPG) by persuading Carter that he could win passage of PBJI within the first year of his term.125 From the outset, Califano attempted to dominate the SPG and steer the discussion in the direction of a GMI. Announcing the formation of the SPG, Secretary Califano described the group’s mission as “a comprehensive study of welfare reform led by the Department of Health, Education, and Welfare,” and he sought to define the problem as one of reforming “the array of income security programs that fall under the rubric

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of welfare,” in order to “devise an income security program that reflects the compassion and decency of the American people.”126 HEW’s method was a federal GMI that would put a $4,700 floor (roughly 95–100 percent of the poverty line, depending on family size) under American households. HEW viewed direct job creation as a competitor to its favored policy of a GMI. As one Labor Department memo put it, “Both [Joe] Califano and [Jim] Corman see the jobs component as an impediment to swift action on the welfare bill. . . . For them, the best of all worlds is to be able to refer to the promise of a jobs program . . . [but] move the cash assistance along without it.”127 At most, Califano called for “redirect[ing] CETA public service employment and training . . . to the poorest people who can work,” with no additional funding.128 Assistant Secretary of Labor for Policy, Evaluation, and Research Arnold Packer saw HEW’s objections as more than a question of money—“the crucial judgment is whether the Administration can assure employment . . . to every employable family head by 1980,” in itself a modest goal well below that of full employment. “The HEW position is that we cannot,” he explained. “Therefore we should guarantee cash income unrelated to work.”129 HEW’s commitment to expanding cash assistance over other methods of fighting poverty was remarkably strong, even after the failure of the FAP. During the negotiations over the PBJI, HEW proposed a 50 percent clawback on Food Stamps benefits for CETA and other directly employed workers, with the money to be redirected into AFDC, and it “proposed eliminating the EITC entirely” in favor of spending the money on expanding its “cash assistance program.”130 These sweeping proposals went beyond mere bureaucratic power plays. In some instances, HEW was proposing to scale back its own programs to make direct job creation less appealing while bolstering cash assistance. Civil servants within HEW had been advocating for a GMI since the War on Poverty task forces, and they had developed an intellectual and perhaps ideological conviction that income guarantees were the best and only way to end poverty. However, the decentralized structure of Carter’s policy groups, which lacked a clear chain of command and could be bypassed by dissenters, along with the hostility of the “core” economic departments (the CEA, the OMB, the Treasury Department, and the Commerce Department) to the overall project of expanding welfare, required that HEW find allies. To do so, it had to make some kind of accommodation with the Labor Department. The other departments were simply too hostile.

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Labor entered into the SPG with two main initiatives in the area of poverty reduction: the EITC and direct job creation. The EITC was a recent innovation that nonetheless was similar enough to the Labor Department’s traditional interest in Unemployment Insurance (UI) that it could be quickly adopted as a core policy. Like UI, the EITC covered the already employed and was beneficial to the same kind of low-wage hourly workers that the Labor Department already dealt with on matters of wages, hours, occupational safety, and the like. Their research had already shown that some 4.6 million low-wage workers lived in poverty, and another 3.8 million workers lived under 150 percent of the poverty line. Expanding the EITC would not only reduce the population in poverty up to 18 percent, but also close a major entry point into poverty.131 The EITC had the additional benefit of being compatible with a direct job creation strategy, in that it reinforced rather than counteracted incentives to work, as opposed to the HEW proposal, which set an NIT benefit at $4,700 versus the minimum wage of $5,200 a year.132 Finally, it did not hurt that the EITC was a bipartisan policy, which stood the best chance of gaining Republican votes. However, tax relief for low-wage workers was a secondary concern for Labor, when compared to direct job creation. After the creation of CETA in 1973, which the Labor Department administered, the largest single activity of the department was managing public employment and training programs. Moreover, it had a long legacy of supporting direct job creation efforts, dating back to the War on Poverty, whereas the EITC was relatively new. Seeing the administration’s initial stimulus as “only sufficient to offset the fiscal drag produced by [higher taxes and inflation],” Packer portrayed PSE as a unique vessel that would “neutralize the pro-cyclical behavior of State and local governments . . . [and] pick up additional unemployed resulting from inadequate private sector demand.”133 These factors inclined the Labor Department to propose expanding direct job creation as the centerpiece of its broad program for reducing unemployment and poverty. The “triple track” proposal, as Department of Labor experts called it, would “provide income support in a direct, equitable, and efficient manner to individuals and families who are not expected to work outside of their homes . . . with a national minimum benefit standard designed to provide a decent standard of living.” For the working poor, the Labor Department’s newest constituency, “expansion of the Earned Income Tax Credit” would ensure “that working persons who

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require additional income to meet basic needs are not . . . forced to enter the welfare system.” Finally, “a unified and restructured manpower system” would “provide an integrated system of training, job placement services, and public service employment opportunities to those who can, want to and should be expected to work outside their homes.”134 Marshall went behind Califano’s back and around the SPG, appealing directly to Carter. He framed the “key tactical decision [as] the Earned Income Tax Credit vs. the Negative Income Tax,” arguing that the EITC could serve as a foot in the door for expanding income guarantees while providing jobs, whereas the NIT would prevent a jobs strategy from working.135 Armed with the president’s agreement that the NIT was not workable, the Labor Department countered by skirting around HEW staffers who were firmly attached to the NIT. Califano was persuaded to “leave the Earned Income Tax Credit where it is or potentially expanding it [as an alternative to the NIT], consolidating the welfare programs, and creating a big jobs program.”136 Thanks in part to Labor’s preemptive offer of a minimum benefit for welfare recipients, HEW and Labor came to a fragile compromise. In return for this compromise on a “big jobs program,” Marshall agreed to back Califano’s proposal to “substitute [a] Federal cash assistance program for the current AFDC and food stamp programs,” and to establish a floor under the poverty line with “federal benefits . . . set at 75 percent of the poverty line.” The states were to make up the remaining 25 percent.137 By combining a “10 percent EITC . . . extending all the way out to . . . $9,000 for a family of four,” with an expanded federal job program paying “25 percent more than the minimum wage,” the PBJI would ensure that “a four-person family with one full-time worker in a regular job paying the minimum wage would be brought up to the poverty line.”138 Thus, both working families and welfare families would escape poverty, and there would still be a distinction between work and welfare. Despite earlier disagreements over the ideal nature of a job and income system, both departments had always agreed that a genuine effort to tackle poverty through welfare reform should be made. Both insisted on increased funds to close the poverty gap. Powerful voices in the main economic departments of the Carter administration, including the CEA, the Treasury Department, the OMB, and the Commerce Department were having none of it. They outright opposed any additional spending. In their eyes, the administration’s initial stimulus bill had been more than enough—“the

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unemployment news in April is good,” the new CEA chair, Charles Schultze, wrote. “Indeed it is in some ways almost too good. . . . [W]e have to turn our attention increasingly to getting better control of inflation.”139 Any further action on either GMI or a jobs program would tilt the balance of the economy toward inflation, so both had to stop. In this conflict, the best weapons that the two sides could call on were the political promises made by Carter himself. During the campaign, Carter had promised to reform the welfare system (and had endorsed the HHA), but he had also promised to keep the deficit below $30 billion.140 The economic departments succeeded in portraying any additional funding for either incomes or jobs as a breach of the second promise, and Carter was especially susceptible to arguments that stressed fiscal discipline. A month after the PBJI was proposed, Carter told Califano, “I want you to take all the money that is now being spent on welfare programs and redesign the whole system using the same amount of money.” When Califano replied that more money would still be required even in a total redesign, the president exploded, saying, “Are you telling me there is no way to improve the present welfare system except by spending billions of dollars? In that case, to hell with it! We’re wasting our time.”141 It was a smashing victory for the core economic departments. In the end, the compromise pleased no one. HEW and Labor lamented alongside congressional liberals. The bill now provided for only 1.4 million jobs (only 750,000 of which were new) at the minimum wage. Welfare payments were capped well below the poverty line—which meant little fiscal relief for states in the Northeast and Midwest who provided abovepoverty benefits out of their own coffers. Now-Senator Moynihan flatly told Carter administration officials who lobbied for his support that Carter’s insistence at keeping the cost of the package down had cost them his vote. “I would like you to go back to the Director of Management and Budget when you next see him. He has sent you up here to make bricks without straw and it is not easy to do.”142 The economic departments and conservatives in Congress were annoyed that even this limited version would still cost $17.4 billion more than current welfare spending.143 As Senator Carl Curtis complained, “Working men and women across America want fewer people on welfare, not millions more.”144 The PBJI is emblematic of much of Carter’s presidency. In attempting to straddle the difference between liberalism and conservativism—in this case, a bill that promised to end poverty and unemployment while cutting

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welfare spending and not spending any new money—he ended up pleasing neither. Carter fell between two stools. His attempt to run a decentralized, expert-run government dominated by Cabinet working groups had meant that powerful congressional figures, whose support was needed to pass the bill, had no commitment to the bill politically and nurtured resentment toward the president for ignoring them. Al Ullman, the chairman of the House Ways and Means Committee; Russell Long, the chair of the Senate Finance Committee who had a mercurial position that led him to both champion workfare and the EITC; and Moynihan, who considered himself the congressional expert on welfare and expected to be consulted, turned their back on Carter. When they found the bill not to their liking, the chairmen promptly killed it without so much as a vote.145 The sad outcome of the PBJI had three major implications for the HHA and direct job creation. First, it aggravated internal tensions within the Carter administration because HEW was excluded from a new program that focused entirely on direct job creation and the core economic departments felt that a carefully worked-out compromise had been violated. The Carter administration would thus be badly divided over the direct job creation provisions of the HHA. Second, Congress felt it had been disrespected by the administration. Direct job creation had been publicly tied to welfare at the least opportune time—when public hostility was at its peak and Congress was in no mood to deal with welfare. Third, and most important, it created a crucial time lag. PBJI was introduced in February 1977 almost simultaneously with the 1977 Equal Opportunity and Full Employment Act (when unemployment rates remained high at 7.6 percent). For the next ten months, the administration tried to present the bill as an alternative to the HHA.146 As a result, negotiations over the bill did not begin until June 1977 and then only fitfully—ensuring that the bill would go through Congress not in the calm waters of a presidential honeymoon, but in the choppier seas of a midterm election year, which saw unemployment drop to 6 percent, weakening its political saliency. Indeed, this often seemed to be a major problem for job creation advocates. Unlike other social and economic crises, unemployment fluctuates frequently. At times of crisis, whether during the Great Depression or the 1973–1975 recession, the saliency and urgency of direct job creation rises, and programs can then pass through Congress. But as Margaret Weir and Theda Skocpol remind us, long-term planning means preparing for the next crisis during periods of low unemployment, when the public’s

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memory of economic calamity and human need has faded (not an easy maneuver).

The Carter Administration Divides over Humphrey-Hawkins When the Carter administration finally began negotiating with the sponsors of the HHA, the executive was already painfully divided over direct job creation in ways that would powerfully shape its reaction to the bill. To Marshall and the Labor Department, who had seen their painful compromise sunk by Congress, Humphrey-Hawkins appeared not just as a life raft but as a veritable luxury yacht. Here was a bill that not only promised to expand direct job creation (their largest activity as a department), and put the USES back under the Labor Department (a bureaucratic priority of the department since the 1930s), but it also sided with them on internal disagreements over economic theory and policy. These dilemmas, which had appeared during debates over PBJI, involved the perennial problem of inflation versus numerical goals for unemployment. In debates over PBJI, Labor had taken a radically different perspective on inflation than other Carter administration agencies, following Marshall’s lead from the 1976 committee hearings. Feeling that “the Department’s goals of full employment and free collective bargaining are threatened by inflation and the policy reactions to it,” Packer had argued that Marshall should oppose “restrictive fiscal and monetary policy.” Instead, he suggested that Labor pursue a more unorthodox policy of industrial committees where workers and employers would negotiate wage restraint, coupled with a “switch toward the income tax and away from sales taxes, employer payroll taxes,” and so on. This would reduce prices and employer costs directly.147 Similarly, Labor Department experts believed that unemployment below 3 percent could be achieved without increasing inflation.148 This belief was grounded in their experience that PSE could reduce unemployment without the inflationary effects of expansionary fiscal and monetary policies or the effects of increased traditional public works on wage rates in the private sector; after all, the WPA and CETA in their early stages had done just that.149 For the core economic departments, loosely gathered around Schultze’s leadership, the HHA threatened to reopen a legislative assault on fiscal and monetary orthodoxy that they had only just fended off. As they

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put it, a “majority of agencies believes that the rigid goals and timetables specified in the bill are mutually inconsistent, and that an attempt to achieve them would have undesirable side effects on the rate of inflation, on private labor markets, on the quality of policymaking, and on the size of government.”150 The departments of Commerce and Treasury, the OMB, and the CEA shared a common orthodox perspective, as can be seen from their complaints. Commerce argued that the HHA’s assumption that “policies . . . that aim at reducing unemployment can do so without causing undue inflation” was “not supported by the available evidence,” and Treasury concurred that the bill’s authors had incorrectly “never conceded that there is any (orthodox) connection between monetary expansion and inflation.”151 These departments similarly agreed that the bill contained “too many goals . . . mutually inconsistent and difficult or impossible to achieve,” and the “three percent adult unemployment target set in the bill is inconsistent with reasonable price stability.”152 Underlying all of these criticisms was a broader strategic fear that “sooner or later policymakers would be forced” to choose between unemployment and inflation and would choose the former. The economic departments worried that the NAIRU was quite high. Schultze spoke for them when he wrote that “when the overall unemployment rate gets into the five or six percent rate,” a “new round of accelerating inflation . . . is bound to result.”153 A fear of galloping inflation went hand in hand with an implicit concern that these voices, which had dominated national policymaking in the postwar period, might lose their grip in the face of a challenge from organized labor, congressional liberals, and the representatives of the civil rights movement. President Carter’s own political commitments mattered to the outcome. During the 1976 campaign, candidate Carter had endorsed the HHA and was thus committed to some version of the bill.154 As the New York Times put it, “A tepid endorsement of it that year helped keep Jimmy Carter out of trouble with the party’s black constituency” and “fostered support among white liberals.”155 Carter’s support had also been broadly popular. A Harris Poll conducted in 1975 had found 79 percent of the country in favor of “a federal program to give productive jobs to the unemployed,” with majorities specifically rejecting the opposition view that such a “federal job program will turn into a lot of make-work jobs such as they had in the WPA during the depression, and that is bad.”156

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During his campaign, Carter employed the Cambridge Survey Research (CSR) Corporation to conduct a further opinion poll on “guaranteed jobs, guaranteed income and government priorities” in order to help him negotiate the tricky terrain of welfare reform. CSR had found the country split on the GMI, with 48 percent in favor and 47 percent opposed, but most Americans, some 68 percent, favored a formal guarantee of a job, with 73 percent of Carter voters, 67 percent of undecided voters, and 63 percent of Ford voters in support of that.157 For once, a political candidate’s promise to the Left of his party was not only a winner in the Democratic primary but also broadly popular in the general electorate. Following the narrow election of 1976 (which Carter carried with only 50.1 percent of the popular vote), the president’s political advisors argued that “it is important for us not to disappoint the bill’s supporters,” because “this is one of the few bills in which we are clearly aligned with our major constituencies—labor and the minority community. To disappoint them when . . . we have already taken whatever heat we will take would be a dramatic mistake.”158 At the same time, Eizenstat warned that “the politics of the Humphrey-Hawkins bill . . . is highly charged,” with downsides to any course of action. “The business community will undoubtedly blast us for endorsing the bill. . . . [T]here is not a great deal of sympathy for the legislation outside of the black community and the very liberal element of the Democratic Party.” At the same time, “the more warmly we can endorse the bill . . . the more we will solidify our relationship with the Black Caucus and the black community, as well as the liberal community. . . . [R]efusal on our part to agree to any timetable . . . would leave us open to the charge that we had gutted the legislation.”159 Just as with the PBJI, the Carter administration was divided on the question of whether to support a policy that sought to directly provide work to the unemployed or to prioritize fighting inflation instead. The Labor Department was the lone supporter of the HHA, sharing its proponents’ economic theories and their support of direct job creation. The core economic departments, all believers in the Phillips curve and fearful of inflation, bitterly opposed the HHA. The president himself was mildly in support of the legislation, but largely from a desire to keep labor and African Americans in his political coalition, and he was easily swayed by arguments about fiscal orthodoxy. The major difference this time was that HEW no longer had any commitment to the underlying legislation, given the absence of guaranteed income provisions.

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Carter Negotiates with Humphrey-Hawkins Negotiations between the Carter administration and the sponsors of Humphrey-Hawkins thus began on the wrong foot. As we have seen already, negotiations only got under way in June 1977. While the negotiations were given a very high profile by the presence of Labor Secretary Ray Marshall, the political advisor Stu Eizenstat, and the CEA chairman Charles Schultze as the administration’s chief negotiators, Schultze’s well-known opposition would prove to be a source of mistrust and repeated deadlocks.160 On the other side of the table, Humphrey and Hawkins felt that they had already made significant compromises in the 1977 draft both with their congressional peers and “at the specific request of candidate Carter” and were therefore unwilling to countenance further concessions.161 Major stumbling blocks arose on three issues central to the bill: (1) whether the bill would include numerical goals for a reduced unemployment rate and whether these goals would be binding on the executive; (2) whether the bill would be inflationary in itself and whether inflation should be considered an equal priority to unemployment; and, most crucially, (3) whether a right to a job backed by direct job creation should remain within the bill. Of these issues, Humphrey, Hawkins, Keyserling, and their allies were determined to keep binding numerical goals into the bill: “the pursuit of and achievement of the interim goals of reducing unemployment . . . are the foundation for the immediate pursuit and achievement of . . . full employment.”162 While they were willing to give on the numbers, with a “reduction of unemployment to 3 percent within four years . . . to . . . 4 percent overall,” all three felt that to remove them completely would be to violate the Democratic Party platform that both Congress and the president had run on in 1976.163 Schultze was just as determined to get rid of the targets and was willing to deploy language that would enable the administration to bypass them. In his view, “the Humphrey-Hawkins goals were exceedingly ambitious. . . . [A]chievement of them by 1983 is virtually impossible . . . [and] would require growth of real GNP of more than 7 percent per year. . . . [T]hat is not only impossible but would be highly inflationary if we tried.” Schultze noted darkly that “accepting this language would probably antagonize the business and financial community, because it would seem that the Administration has given greater priority to reducing unemployment than to fighting inflation.”164

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How sincere Schultze was about the numerical goals (7 percent growth assumed that reductions in unemployment would come entirely from the private sector), his opposition to their inflationary nature was unmistakable and profoundly shaped the Carter administration’s negotiating strategy. Internal briefing memos followed Schultze’s arguments nearly exactly, arguing that “once the unemployment rate is pushed down to the neighborhood of 5 percent, further progress is likely to be inflationary . . . . [S]etting ambitious goals . . . by legislative mandate . . . is a bad idea.”165 Not only did the administration’s talking points stress the negative effects of numerical goals, but they also tried to argue against their theoretical validity, arguing that “because of continuing changes in the characteristics of the labor force and the difficulty of . . . reduc[ing] structural unemployment and increas[ing] the skills of the work force, we cannot be certain what the ‘full employment rate’ will be.”166 This combination of an intellectual belief in a high natural rate of unemployment, strict allegiance to the Phillips curve—to the point of arguing that inflation would kick in at any spending level above the status quo—and hostility to congressional leadership on economic policy (all positions inimical to supporters of the HHA) would come to dominate the executive’s public position. Humphrey, Hawkins, and Keyserling, who remembered Schultze’s enmity from their confrontation in 1976, felt that the administration’s resistance flowed directly from Schultze, who was personally so opposed to the bill that he was acting as a deliberate spoiler. In their opinion, “Language, insisted upon by the sponsors, is objected to . . . really only by Dr. Schultze,” because of his intellectual inflexibility. “This is in practical accord with Dr. Schultze’s oft repeated view that overall unemployment of much less than 5 percent necessarily entails roaring inflation. But he has offered no empirical evidence to support this generalization.”167 The sponsors viewed Schultze’s behavior as a political betrayal: “his position violates the Democratic Platform; it violates the formulation which candidate Carter got the sponsors of the Bill to accept; and because the maximum tends to become the minimum, it means that about 5 percent overall unemployment would enduringly become the standard compatible with full employment.”168 Seeing Schultze as a barrier to the liberal project of full employment itself, they insisted that the president needed to overrule his advisor or face a breach with the liberal wing of the Democratic Party. Members of the Carter administration, especially in the Labor Department, basically agreed with Humphrey, Hawkins, and Keyserling on this

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point. Marshall had openly opposed Schultze on the inflation trade-off question in 1976, and he continued his opposition in congressional hearings in 1977. Simultaneously, the secretary went over the heads of the administration’s negotiators to appeal directly to the president and try to work out a compromise. Marshall “recommend[ed] we accept the compromise bill offered by Humphrey and Hawkins. This compromise requires us to accept a goal for unemployment of ‘about 4 percent’ in 1983,” but a short-term delay could be entered in the timetable if the president found it to be too inflationary. Moreover, Marshall argued, “I believe we can get near a 4 percent unemployment rate in 1983 without causing inflation to accelerate . . . with a combination of aggressive monetary and fiscal policies and carefully designed structural programs, including public employment.”169 Negotiations were carried out on both political and intellectual lines. Eizenstat and the political staff saw Schultze as dangerously extending the negotiations through his stubbornness, notably by proposing his own bill. “Charlie Schultze’s ‘substitute’ legislation for the Humphrey Hawkins bill . . . will highlight and sharpen public and congressional perceptions of these disagreements [between Schultze and Humphrey and Hawkins]. . . . We are backing ourselves into a corner.” Eizenstat’s staff struck back: if the administration did not reach a compromise, it would be “liable to be attacked by the Black Caucus and the AFL-CIO. . . . [It] would be caught in the crossfire with criticism from business coupled with cries of betrayal from the liberals.”170 However, Schultze’s position was backstopped by the Carter administration’s own views on inflation, strongly influenced by the core economic departments. As Schultze himself noted in a memo to Marshall and Califano, the “Council of Economic Advisors, Department of Commerce . . . Office of Management and Budget, and Treasury Department . . . [believe] that the rigid goals and timetables specified in the bill are mutually inconsistent, and that an attempt to achieve them . . . is both unnecessary and undesirable,” due to the effect on “the rate of inflation, on private labor markets . . . and on the size of government.”171 In the face of this united opposition, HEW was noticeably silent, recusing itself from the negotiations despite its position as the lead agency in the Social Policy Group. Its efforts were confined to working behind the scenes with the NWRO to add guaranteed income provisions to the bill. When Marshall finally wrote directly to the president, urging him to accept the bill, he had clearly given up on getting the executive branch to

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support legislation that retained any of the bold innovation of the 1976 draft. Given the lack of support within the administration, he was reduced to seeking a face-saving compromise. Marshall emphasized that on the ELR requirement, the “sponsors recognize you will not make an open-ended commitment to provide employment,” and that on numerical goals for unemployment, “they recognize that you will not accept a single figure that will hold for the next decade.”172 For their part, the sponsors tried to pass off their compromise as an acceptable victory. “The President may recommend modification of the goals and/or timetable,” Keyserling wrote. “This change was essential to . . . win the approval of the President. The sponsors do not regard this change as critical. The most vital thing . . . is not the precise figure for the goals or timetable to rule out the practice whereby . . . the Executive Branch of the government had no goals and timetable.”173 In their eyes, no administration would be foolish enough to go back on announced goals and suffer the political consequences. What Humphrey, Hawkins, and Keyserling failed to appreciate was that some members of the administration were prepared to go a long way in the name of flexibility—even all the way to ditching the bill entirely. Schultze wrote to the president that “the Act also gives you the authority . . . to recommend modification of the timetable for achieving those goals. . . . [I]f Congress sets its own timetable, the Act does not require that you adopt it. Your modified timetable would remain the Administration’s.”174 In other words, a loophole was lurking. Carter now had sole discretion to delay implementation of the HHA, and Schultze intended to use it. In an internal memorandum on how to avoid implementation, Schultze argued that “between now and 1983, a recession will probably occur, and this would provide a readily understandable and politically acceptable opportunity to change the goal and/or timetable.” That was hardly a sign of negotiations in good faith.175 The bill’s sponsors were in the dark about all of this. They had no idea Schultze was going behind their backs to try to scuttle congressional capacity to enforce the numerical goals and timetables. Schulze contacted Senator William Proxmire privately “to express concern with . . . a one-house legislative veto resolution . . . whenever the President recommends in the Economic Report a goal for unemployment other than the 4 percent goal.” Urging the senator to water down that provision, Schultze promised that “members of the Administration will be pleased to cooperate with you and

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other members of the Senate” who were opposed or skeptical about the bill.176 Even in the murky waters of Washington politics, this was a new low in Janus-faced behavior. Backstopped by Keyserling’s equally furious intellectual rejection, Humphrey and Hawkins remained firm on the question of unemployment goals. “The sponsors of the legislation feel compelled to stand firm in their positions on . . . the medium term goals and the treatment of the unemployment inflation problem,” Keyserling wrote, “lest they exhaust the patience, impair the faith, and alienate the support of [those] who have already joined the sponsors in making many concessions . . . and waiting so long.”177 Over the months they had agreed to limitations on eligibility, pay, and delays on direct job creation and a declaration that “predominant reliance on private sector jobs” would remain national policy, but they would go no further.178 As Keyserling admitted privately, the “employer of last resort [was] hardest of all” to get the president to agree to.179 From the outset, the core economic departments of the Carter administration viewed the ELR as “unnecessary and undesirable” compared to traditional Keynesian stimulus. Even the Labor Department was worried for a time that the ELR requirement might derail the PBJI.180 Schultze repeatedly (and often selfcontradictingly) argued that “the job guarantee envisioned . . . may create problems. . . . [I]t may add to inflation[,] . . . it may draw additional workers into the labor force[,] . . . could lure workers away from private employment[,] . . . [and] would inevitably result in a much larger public sector.” To prevent this, the CEA director urged the president to “simplify Title II [the section containing direct job creation provisions] to increase the Administration’s flexibility for developing programs[,] . . . substitute broad language requiring the president to set forth plans for . . . public service employment,” and “remove the time deadlines for developing such programs.”181 Direct job creation was inextricably linked to the right to a job—the Carter administration did not want to “establish the government as a general employer of last resort” that, when used by the courts, would force the federal government to honor “an open-ended job guarantee for all unemployed individuals.”182 Even after the right to sue was eliminated, the Carter administration fought hard to weaken both the force of any remaining right and the new direct job creation measures. “The reservoir jobs provision of the bill has been watered down to the point where the President could

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satisfy its provisions . . . by expanding existing jobs programs,” administration negotiators reported. At the same time, negotiators called for “a carefully worded [statement] elsewhere in the bill . . . indicating that establishing a right to work does not mean a legally-binding commitment for the Federal government to provide a job.”183 Even after winning such concessions as work tests, the elimination of the “prevailing wage” from reservoir jobs (a key inflationary concern of Schultze’s from the 1975 hearings), and a new requirement that workers “must be unemployed for at least eight weeks” and that “they must have exhausted the possibilities available through the CETA program and through placement in a private sector job,” before becoming eligible for Standby Job Corps employment, Carter still planned to “agree to disagree . . . with [Humphrey and Hawkins’s] version of the last resort jobs section of the bill.”184 Ever the true believer, Keyserling saw a chance to salvage the bill by agreeing to the Carter administration’s desire to change the right to a job from being “established” in law to being a goal that the bill sought to “translate into practical reality.” In his opinion, “this is no weakening of the provision because the clear meaning is the right exists,” and in any case “the current draft retains, with undiminished strength, all of the provisions for comprehensive and integrated planning,” which Keyserling considered to be “by far the most important provision[s] of the bill.”185 As in 1945, Keyserling viewed economic planning through the federal budget and numerical targets as the most important part of the bill and was willing to sacrifice direct job creation to save them. Ironically, having conceded an independent means of enforcing the goals (through a legal right to a job) and an established programmatic vehicle for accomplishing such a task (namely direct job creation), Keyserling had rendered it impossible for Congress to enforce those goals over the objections of a president who did not want to carry them out. Keyserling hoped that Carter would uphold the agreement as the congressional sponsors understood it. He would be swiftly disabused. The result of all this wrangling was a bill that drifted further to the right, well beyond compromises made in 1975 and 1976. The 1977 draft version of the right to a job contained language declaring that “the right of all adult Americans . . . able, willing and seeking work” would be achieved through a “primary emphasis upon the expansion of private employment.”186 From a goal of 3 percent unemployment within four years, the sponsors had shifted to a goal of 3 percent unemployment for adults (and

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4 percent overall) within four years—and had added a goal for inflation no higher than the 5.2 percent of the time. However, to underline their continued belief in Keyserling’s approach to inflation, the bill’s authors balanced this addition with a requirement that “achievement of reasonable price stability shall be sought through the methods” outlined in the bill “and shall not be sought through any weakening of the goals and timetable relating to reduction of unemployment.”187 New sections on “economy in government” and “anti-inflation” policies had been added to mollify more conservative Democrats, but also a section on income maintenance was added to mollify the Left (a key sign of mission creep). The bill retained the federal government as the ELR to backstop the right to a job. The president was directed to establish a Full Employment Office within the Department of Labor to coordinate existing programs; to “refer people able, willing, and seeking to work”; and to develop a reservoir of jobs to be activated unless the president could show Congress that such means were not necessary for achieving unemployment goals. The Full Employment Office would directly create jobs “only to the extent that adult Americans . . . are not provided with the private job opportunities,” and only following “a finding by the President . . . that other means of employment are not yielding enough jobs” to meet the numerical unemployment goals.188 It was a departure from presumptive direct job creation to conditional direct job creation, though the basic framework of a federal office and reservoirs and a preapproved authorization of funds remained. Introduced as the Humphrey-Hawkins Act of 1978, this draft showed real signs of fractured intent, especially as it left the committees that Hawkins and Humphrey sat on and proceeded through the House and Senate. The sponsors began to lose control, as conservative Democrats, whom the Carter administration was supposed to corral (but were secretly encouraging to oppose the bill), began to attach hostile amendments. Left-wing Democrats retaliated against further compromise. In the House, conservatives attached a balanced budget requirement and inserted a numerical goal of 3 percent inflation. Liberals sought to undo the compromise over numerical goals for unemployment, ironically by counting public service employees as unemployed—thereby lowering the effective numerical goal closer to 2.5–3 percent unemployment. Schultze found this intolerable.189 Progressives added requirements for the president to draw up a public works program in addition to direct job creation, hoping to restore some authorizing muscle to an otherwise largely declarative bill. In the

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Senate, conservatives added poison pill amendments that called for 0 percent inflation by 1980 and sought to limit the federal government to 20 percent of GDP; liberals retaliated by restoring legislative vetoes if the president failed to meet the unemployment goals. Plainly, the wheels had come off the wagon. Humphrey and Hawkins blamed the White House for failing to provide leadership. The Carter administration belatedly took action, dispatching Schultze to give the moderates assurances that the bill had been sufficiently watered down. Marshall was dispatched to reassure the liberals that the ultimate victory of full employment had been assured. The Humphrey-Hawkins Act of 1978, which passed the House 257 to 52 in March and the Senate by 70 to 19 in October, was a far cry from the radical proposals of just three years earlier. The “establishment” of a right to a job was turned into a mere “national goal” to establish such a right. The balanced budget amendment, which even Schultze had considered “silly,” remained, as did a weaker version of the GDP restriction. The final compromise on numerical goals mandated a 4 percent overall unemployment rate within five years and a provision for 0 percent inflation by 1988—inflation had officially overtaken unemployment as a national concern. Finally, and most crucially, this much-weakened bill excised any authorization for a Full Employment Office and a reservoir of jobs. The president was allowed to recommend one, but Congress could not authorize it on its own.190 And yet this was a bill that significant parts of the Carter administration still considered to be so dangerous to fiscal rectitude that it had to be killed after enactment.

Death to the Humphrey-Hawkins Act After President Carter signed it into law on October 27, 1978, the Humphrey-Hawkins Act took up residence in a strange legislative limbo, neither repealed nor challenged in court, but simply ignored. This was not an accidental fate, but rather the deliberate strategy of an administration that sought to kill a law without being seen to do so. The Carter administration felt it was well within its rights to take this tack, given the “compromises” they argued had been agreed to during the negotiations: on the issue of the numerical goals, they observed that “the

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President may include modifications in the goals . . . if he finds it necessary to do so. The bill does not specify the reasons for modification.” On the issue of direct job creation, White House staffers briefed Cabinet departments that “additional public service jobs may be created only after an official finding by the President that all other means of reaching the unemployment goals of the bill are insufficient,” lest the Labor Department get ideas into its head.191 So concerned was the Carter administration about the incredibly limited right to a job retained by the 1978 act that it consulted the Office of Legal Counsel in order to get an opinion that held that “concerning the bill’s creation of a ‘right’ to employment opportunities . . . reasonable judicial interpretation would find no actionable entitlement.”192 As we have seen in recent history, an administration’s “understanding” of what a law means can matter as much as the text of the law itself. The administration’s efforts were helped by the act’s structure, which required presidential goal setting, proposal making, and reporting to Congress. These processes, meant to bind the president to full employment, ended up giving the Carter administration the stronger hand in dealing with Congress, which could not act without the president’s first move. Carter had already imagined a possible recession as an excuse for inaction while the negotiations were still under way. He seized on the 1979 oil crisis as a reason to “postpone the timetable for achieving the Humphrey-Hawkins goals for unemployment and inflation.” “Recogniz[ing] the realities imposed on us by sharply rising world oil prices,” he slammed the brakes on a go-cart that was barely moving. In a pattern termed “stagflation,” the oil crisis created entirely opposite economic forces than a normal recession. Prices rose and so did unemployment.193 Secretary Marshall was dispatched to break the news to Hawkins that “achievement of four percent unemployment by 1983 is simply untenable given the recent OPEC [Organization of the Petroleum Exporting Countries] oil price increases,” while faintly arguing that “these policies represent the most feasible approach for ultimately achieving the goals of the Humphrey-Hawkins Act.”194 The administration’s economic departments had succeeded in using congressional leeway to avoid the numerical targets in 1979 and 1980. Eizenstat and the White House political staff were incredibly leery of the political fallout of their efforts, recognizing that “the Administration’s response to the spirit and letter of the Humphrey-Hawkins bill will be one of the most critical elements in determining our relationship next year with the black community and, to a lesser degree, with organized labor.”195 While

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still believing that “dealing with inflation first, even at the expense of some rise in the unemployment rate in the near term,” had to be “a basic thrust of this Administration’s fiscal policy,” the executive realized that a public repudiation of the HHA would lose “blacks, liberals and labor” without picking up “perceptible support from conservative elements.”196 Instead, administration officials either tried to argue that “efforts to reduce inflation now are needed to avoid recession that would make the goals unattainable,” or suggested dropping the 1980 goal of 4 percent unemployment while still paying lip service to the ultimate 1983 benchmark.197 This effort at avoiding a political break with the liberal wing of the party was a total failure. Congressman Hawkins publicly charged the administration with “ignoring the Full Employment and Balanced Growth Act” and warned Carter that “your Administration will be charged with continuing . . . policies, which you say are supposedly fighting inflation, [but] have actually increased inflation” while offering only “pious consolation to the neglected.”198 His reply to Marshall indicated a sense of personal betrayal, lamenting “the Administration’s lack of candor” and pointing out that “as you very well know . . . to ignore the essential nature of . . . setting goals and trying to obtain them” was “a breach of trust to all who put their faith in our government.”199 As Cowie and Stein have written, organized labor had already been alienated by the Carter administration’s failure on laborlaw reform, universal health care, and tariff policy—the HHA was one more straw landing on the camel’s back. The irony of the administration’s efforts to stealthily kill the HHA was twofold. First, in attempting to steer between the Charybdis and Scylla of the Left and Right, between inflation and unemployment, Carter provoked an open left-wing rebellion from Ted Kennedy (who would put the president’s failure to enforce the HHA at the heart of his critique of the administration’s policies). Despite Carter’s efforts to avoid it, he opened himself up to a bruising primary election that would leave the Democratic Party badly divided. Second, as Cowie notes, without Humphrey-Hawkins, the “liberals’ core weapon was sheathed,” preventing Carter from making use of policy tools that could have softened the blow of Volcker’s anti-inflation crusade enough in order to secure his reelection. Heading into a presidential election in the midst of a recession, “the Democrats were effectively disarmed,” having concluded that their “major policy weapons were the cause of inflation.”200

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Conclusion John F. Kennedy famously said of the Bay of Pigs debacle that “victory has a thousand fathers, defeat is an orphan.” The question for us on the HHA is how do we track down the name of the father who abandoned the last, best opportunity in the twentieth century for direct job creation? The failure of the HHA can be traced to a breakdown in two coalitions. In the first case, the conflict between GMI and direct job creation advocates over which group would control the PBJI compounded the conflicts between pro-spending and antispending groups within the Carter administration. It poisoned the waters just as the HHA came before the executive branch. In the second case, the breakdown in the Keynesianism tent meant that, rather than being allies as they had been in the 1930s or even being competitors in the 1940s and 1960s, conservative Keynesians acted as ideological assets for a growing neoliberal coalition. This right-wing drift promoted an alternate economic strategy of shrinking the welfare state, creating supply-side tax cuts, and retreating from government intervention for the unemployed. We have to acknowledge the importance of contingency to explain the breakdown in the case of PBJI. Conservative Keynesians in the Carter administration were able to win the day as a result. The German historian Rudolf Stadelmann is well known for his “any Coburg prince theory” of the failure of the 1848 Revolution in Germany. In his view, any German prince other than Frederick of Prussia would have accepted a compromise with democratic forces and established a constitutional German federation. This prince’s excessive conservatism doomed German liberal democracy. A similar argument might be made for Jimmy Carter. The average Democratic governor would probably not have botched the HHA or created his own crises by staffing his administration in ways that fomented conflict and competition as the administration tried to wrestle with unemployment and poverty. There would have been difficulty anyway, given the divisions within the Democratic Party, but without the rudderless conflict within the executive and the critical eighteen-month delay caused by the extended negotiations, a much stronger bill would have stood a much better chance of victory. In the end though, without direction from a unified executive, the Democratic Party itself failed to synthesize a successful approach to the 1979 recession. This, more than any other factor, probably doomed it in the election that brought Ronald Reagan to power and drove the momentum behind direct job creation to an end for the foreseeable future.

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Conclusion

Jobs and the Policy Imagination

Much to the dismay of Senator Humphrey and Congressman Hawkins, their bill was the last in a long line of efforts to make direct job creation the law of the land, and it ended up being the final opportunity of the twentieth century. These opportunities were rare: as we saw in Chapters 1, 2, and 3, the Great Depression provided the first and New Dealers rushed to exploit it, building from their first experiments a full-fledged body of practice and theory as to how a “job state” could be constructed. Chapter 4 made clear that the opportunity of the Full Employment Bill was wasted, largely because of the confidence of liberal economists that Keynesian economics had made direct job creation obsolete. Another chance would not come again until after the 1958 midterms, the election of JFK in 1960, and LBJ’s decision to launch the War on Poverty. As we saw in Chapter 5, this opportunity was again lost, despite an enormous amount of policy learning (or rather re-learning), due to the confidence of social scientists in mistaken theories of poverty and fiscal Keynesianism. After 1978, it would be a long, long time until the next opening. The election of Ronald Reagan is often seen as the death knell of liberalism’s ambitions. Reagan’s elimination of War on Poverty and Great Society programs, his massive tax cuts, regulatory cutbacks, and the elevation of supply-side and monetarist economics struck heavy blows against the activist state. Although Reagan failed to cut Social Security, his military buildups and massive deficits that foreclosed options for expanding social programs for a generation were effective in “starving the beast,” to use a phrase often deployed to describe Margaret Thatcher’s efforts to do something similar in the United Kingdom. Above all, Reagan’s rhetorical assaults on the liberal conception of the state as an agent of reform killed off the ideals of several previous generations.1

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And for direct job creation, there is some truth to the story: Reagan had been a vociferous opponent of government efforts to provide work to the unemployed, referring to the Humphrey-Hawkins Act as “a design for fascism.”2 He was determined to downsize the role of government in helping the poor, restore the primacy of business interests in economic policymaking, and return to an earlier rhetoric of blaming the unemployed for their lack of personal responsibility. His famous speech in which he brandished a copy of the help wanted ads from the newspaper to “prove” that unemployment was voluntary is a memorable example. Once elected, Reagan acted swiftly to abolish the Comprehensive Employment and Training Act (CETA) and any remaining War on Poverty jobs programs.3 Henceforth, the federal government’s responsibility for the unemployed would be—at best—to provide training programs to make unemployed workers more attractive to employers.4 President Reagan’s wholehearted embrace of Volckerism, monetarism, the primacy of low inflation over low unemployment rates, and a strong dollar, all of which brought on the brutal 1981–1982 recession with 10.8 percent peak unemployment, showed that the Humphrey-Hawkins Act was a dead letter. The federal government would not even pretend to enforce its provisions. The fact that the Reagan administration’s response to this recession (the 1982 budget deal) was a $100 billion tax increase, rather than an economic stimulus package, pointed to the decline of Keynesianism in American economic policy. Conventional wisdom had slid further to the right; if Keynesianism was now out of the question, direct job creation was exiled to the deepest abyss. However, it is the response of the Democratic Party that is more enlightening, and it complicates the story of Reagan’s destruction of liberal hopes. Congressional Democrats voted in droves for Reagan’s budget cuts—including the termination of CETA—and when the recession came in 1981, it was the Democratic delegation that called for corporate tax hikes and cuts in defense spending. Democrats made the 1982 budget deal a bipartisan one. This represented a major change from the behavior of Democratic Congresses in their dealings with Republican presidents in 1973 and 1975 (or in 1953 and 1958 for that matter). They had abandoned their longtime allegiance to countercyclical deficit spending and instead had adopted the balanced-budget orthodoxy of Eisenhower and Hoover. Notably, no new CETA was proposed following the 1982 midterm elections when the Democrats retook the House.

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The rightward drift in the Democratic Party can be seen vividly in the 1984 presidential primaries. Walter Mondale, a Democratic senator for much of the 1960s and 1970s and Jimmy Carter’s vice president, was portrayed during the contest by both the news media and his opponents as an “old-fashioned” New Deal Democrat. But his campaign was ideologically confusing. On the one hand, he opposed Reagan’s cuts to Medicare, Medicaid, and Aid to Families with Dependent Children, and he supported job programs in general. On the other hand, the centerpiece of his campaign was a pledge to cut the deficit by raising taxes and cutting spending. This went entirely against Keynesian logic at a time when unemployment still stood above 7 percent.5 His main rival for the nomination, Senator Gary Hart, was one of a new breed of “Atari Democrats,” who ran against a Democratic establishment beholden to “special interests” (read: unions, blacks, feminists, and poor people) and “ineffective programs” (read: welfare and antipoverty programs). Instead of jobs programs, Hart called for “Individual Training Accounts,” deregulation, and increased investments in research and development to spur productivity growth and competitiveness.6 While Mondale eventually won the Democratic nomination in 1984, his victory was slim, especially for a former vice president seeking his party’s nomination. In a three-way split between himself, Gary Hart, and Jesse Jackson, Mondale eked out a narrow plurality of the popular vote with just 450,000 votes (or 2.5 percent) between him and Hart; Hart actually carried three more states.7 Mondale would go on to lose the general election by a margin of 18 percent. Mondale would be the last “New Deal” Democrat to be nominated by the Democratic Party. In 1988, Michael Dukakis was put forward as a moderate alternative to Jesse Jackson’s Rainbow Coalition, and by 1992, all of the leading Democratic presidential candidates (Paul Tsongas, Bob Kerrey, Jerry Brown, and Bill Clinton) ran in opposition to traditional New Deal– style policies. They endorsed low-deficit, low-interest-rate policies favored by the New Democrats. Direct job creation had largely passed out of the realm of reputable political discourse. Left-wing economists (including some major figures like Hyman Minsky, William Vickrey, James K. Galbraith, etc.) still supported the idea, but they were not the brain trust who had the ear of policymakers in the Democratic Party. What remained of the Rainbow Coalition, as well as other black political organizations, also retained an institutional memory

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of direct job creation.8 The American Federation of Labor and Congress of Industrial Organizations likewise carried the banner for jobs programs and brought their institutional power to bear with the creation of proposals and lobbying.9 However, national figures in the Democratic Party were no longer willing to consider government job programs as an alternative to Republican economic policies. The 1991 recession framed the election season, but no Democratic candidate called for direct job creation or even moderate Keynesian stimulus. Bill Clinton’s campaign artfully straddled the line between traditional Democratic appeals for universal health care and the New Democratic agenda, but his economic agenda was very different from any Democrat that came before. The key moment here was his first budget in 1993. Given a choice between Labor Secretary Robert Reich’s proposal of public works and investments in human capital and Treasury Secretary Robert Rubin’s package of spending cuts and tax increases, Clinton and a Democratic Congress went with the latter.10 The outcome rather understates how the terms of debate had shifted: Reich’s package of a mere $50 billion was largely premised on the argument that compensatory services would enable the unemployed to reenter the workforce, whereas traditional public works only made up $20 billion per year (1.3 percent of the federal budget). It would take another two recessions before the Democratic Party even temporarily supported full-bore Keynesian stimulus policies. This history helps to explain both why the American Recovery and Relief Act (ARRA) of 2009—which allocated $288 billion in tax breaks; $144 billion in aid to state and local governments; $81 billion to Unemployment Insurance (UI), Food Stamps, and other programs for the poor; $59 billion in health care spending; $53 billion in education and training; $43 billion in clean energy; and a total of $113 billion in traditional public works and research—was so controversial. Not only did the Obama stimulus go against twenty-nine years of Republican orthodoxy, but it also departed from Democratic orthodoxy from the 1990s. In this context, renewed calls for direct job creation were off the table. Paul Krugman’s call for a stimulus twice the size of the ARRA was out of the question as far as congressional approval was concerned. Arguments made by Larry Mishel, Josh Bivens, Ross Eisenbrey, and Andrew Fieldhouse from the Economic Policy Institute for direct job creation were not even debated by the Obama administration.11 Notably, the one provision of ARRA that Republican senators Olympia Snowe and Susan Collins

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demanded be struck from the bill in exchange for their support in breaking a Republican filibuster was $50 billion put into the bill by Speaker Nancy Pelosi to rehire or maintain public school teachers, police officers, and other government employees. That part of the bill had ended up being the most similar to direct job creation. The ARRA, which would have seemed utterly unexceptional in the days of FDR or Truman or Kennedy or LBJ, was the first and last major Keynesian stimulus of the Great Recession. In their own response to the economic crisis, European governments spent less money for less time than the United States and promptly shifted to a ruinous policy of austerity.12 While the United States has largely avoided that fate, thanks to repeated extensions to automatic stabilizers and the enactment of a payroll tax cut, since 2010 it has been almost impossible to shift national politics back to economic stimulus and government job programs. Mainstream Keynesianism, banished from the courts of Europe and the halls of Washington since the 1970s, was barely tolerated for a year before governments across the developed world returned to a policy of austerity; the Works Progress Administration (WPA) was briefly popular as a topic for magazines and popular history, but at no point in time was direct job creation considered as a strategy for dealing with mass unemployment. At a time when our economies are incredibly vulnerable to persistent high levels of unemployment, there is a desperate need for new ideas and new approaches, and yet our policy imagination has atrophied. If progressives are to offer a coherent alternative to the economic policies of the nineteenth century, uncovering a “viable past” of policy tools is a good place to start. History allows us to look outside of both institutional constraints and conventional wisdom to a time when the possibilities were much broader, to investigate paths not taken or abandoned to see if alternatives were dropped either because they were tried and found wanting or because political and ideological reasons no longer applied to them. There are tools for grappling with mass unemployment, and they have worked. Direct job creation was abandoned by liberals who placed their faith in a technocratic vision of Keynesianism as a science beyond partisan conflict, who believed that human capital improvements and antidiscrimination would defeat poverty, and who longed for respectability because of the loss of the Phillips curve. This, ultimately, is the cost of the failure of American liberalism to adopt direct job creation as a foundation of economic and social policy.

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We have not merely refused to use this set of tools; we have forgotten the toolbox ever existed. Yet less than eighty years ago, those very tools rescued more than four million Americans from the scourge of unemployment and lifted them from poverty from the sweat of their own brows. None of them are alive any more to tell that story, but even a casual glance through the annals of Dorothea Lange’s photographs reminds us of how deep the pain was, just as a read through grateful letters to Franklin and Eleanor Roosevelt tells us that what people wanted in that deep, dark time was nothing more than a job.

Direct Job Creation for the Twenty-First Century This project has never been solely academic for me. The purpose of policy history is not merely to trace where we have come from and why, but to show us the paths not traveled, the tools discarded and forgotten but still useful, so that we can make use of them in the here and now. No small part of my objective in researching and writing People Must Live by Work has been to make the argument that direct job creation worked, that it brought the country out of the Great Depression. The reasons for its abandonment—overconfidence of Keynesian economists in planning during the 1940s and 1960s and their lack of confidence in their own methods in the 1970s, the accidents of timing between policy learning and congressional majority, the opposition of Dixiecrats and anticommunists to federal authority—were rooted in politics rather than practical shortcomings. They are no longer relevant today. Direct job creation could and should be used again. In the wake of the Great Recession of 2008, which saw millions and millions of people thrown out of work across the world, suffering the effects of foreclosure, eviction, the permanent loss of income, and the blighting of their life chances, it is clearer than ever before that we need new policies. We need to provide new forms of “insurance” for the unemployed and employed alike. This is particularly urgent because UI systems designed around lifetime employment have lost much of their effectiveness, given the rise of temporary, part-time, and low-wage work. I cannot resist the temptation to draw from the historical record to suggest how such a system could work. Building on the ideas of Emerson

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Ross and his colleagues in the New Deal, of Leon Keyserling and the advocates for the Freedom Budget, and of Ray Marshall’s Labor Department and Augustus Hawkins’s staff, we could consider the following.

Eligibility As policy scholars have pointed out for decades, social insurance creates a strong potential for systems to entrench themselves over time by creating large constituencies of present and future beneficiaries who have invested in the system. However, I would also argue that contributory programs tap into a strong reciprocal element in the social contract, as we can see from the universal popularity of Social Security and Medicare, even among otherwise virulently antigovernment Tea Party voters. Combining that with the equally strong position of work as a virtue within the social contract can solidify the program’s position for the long term. In a “job insurance” system, the contributory principle and genuinely universal eligibility can be achieved in two ways: first, contributions should be counted on a cumulative basis over the year (as opposed to requiring a certain number of monthly payments) so that part-time and temporary workers are not penalized, and they should be on a progressive sliding scale, so that low-income workers are not penalized. Second, workers with poor histories of contributions (whether because they are just joining the labor force, or have been out of the labor force for an extended period) should be allowed to make contributions retroactively while employed on direct job creation projects, maintaining the contributory principle but providing operational flexibility.

Jobs The heart of a “job insurance” system would be to provide people with employment that combines flexibility, a level of income that will prevent unemployed people from falling into poverty (another area where UI falls short), and the production of needed public goods and services. A major advance over previous job programs would be to provide both part-time and full-time jobs (thus meeting the needs of both the unemployed and the underemployed). Similarly, by providing employment on a renewable sixmonth basis, such a system would allow the program to help people dealing

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with seasonal layoffs, providing more useful assistance in normal job-search periods as well as longer-term assistance during extended recessions. Building on the experience of the New Deal’s white-collar divisions— the Civil Works Service division of the Civil Works Administration and the WPA’s Art, Writing, and Theater Projects—and CETA’s innovation in public service employment during the 1970s, work would include a diverse array of light construction projects designed to maximize labor intensity, “semiprofessional” public service employment in the public sector, and a variety of public arts and cultural projects. In this fashion, the system would maximize the chances of providing unemployed people with jobs that match their existing skill sets at various skill and educational levels. These projects would be designed and drawn up following the HumphreyHawkins Act’s original model, with local planning councils proposing initiatives that meet local needs and priorities, assisted by experts from the federal government who could provide them with model projects and technical assistance. In order to avoid CETA’s problems with local control leading to substitution effects and political conflict, the federal government would choose which projects get approved and would then finance and manage the projects. More importantly, these jobs would provide a basic income floor sufficient to keep a family out of poverty. Following the example of the Fight for Fifteen movement, the base minimum wage would be $15 an hour. According to estimates based both on historical examples of work-program costs and on estimates done by the economists Alan Blinder of Princeton University, Kevin Hassett of the American Enterprise Institute, and Larry Mishel of the Economic Policy Institute, total annual costs per job would come out to $40,000.13 Finance and Payroll This per-worker figure speaks to the enormous potential for a job insurance system to generate jobs en masse—at $40,000 per job per year, such a system would be able to create a million jobs at a cost of $40 billion. While this estimate might seem large, in contrast to a traditional Keynesian stimulus, it is remarkably efficient: in 2009, the ARRA distributed $787 billion in stimulus spending and created 3.3 million jobs, at the cost of $238 billion per million jobs created—six times the cost of a potential direct job creation system. Had the ARRA embraced a direct job creation approach instead of

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a traditional stimulus, it could have covered all of the 15.4 million officially unemployed at the nadir of the Great Recession at a price tag that would have been $171 billion less. Establishing direct job creation as a “social insurance” system has the added advantage of creating an independent financial reserve, less dependent on the willingness of Congress to embrace deficit spending. The equivalent of a 1 percent payroll tax (assessed on a progressive sliding scale) would generate $44 billion a year in revenue—these reserves could support a massive job program for more than five million workers within five years. This level of fiscal capacity could be greatly expanded by allowing the job insurance system to take out loans from the Federal Reserve, allowing for a massive expansion of jobs in an emergency like the Great Recession. In this fashion, a job insurance program could borrow from the Fed in bad times and gradually pay it back as the economy recovers. In turn, the Federal Reserve would gain an entirely new means to accomplish its statutory mission of “maximum employment” that does not rely on adjusting interest rates or quantitative easing. Beyond the special case of a Great Recession, the size of a job insurance workforce should naturally fluctuate. During recessions, the workforce should be expanded in step with job losses to keep the unemployment rate stable, working as an automatic stabilizer for the labor market and shortcircuiting the negative spiral by which job losses lead to declining consumer spending. We would want to avoid increasing fears about future downturns, which in turn become a self-fulfilling prophecy that produces further layoffs. In good times, the size of the workforce is essentially a political decision: what level of unemployment do we want in America? Do we want to keep it at 4 percent, which produced growing wages in the late 1990s without high levels of inflation? Do we want to keep it at 3 percent or lower, where William Beveridge calculated there would always be more vacant jobs than idle workers, restricting unemployment to the “frictional” level caused by people moving between jobs of their own volition? Or do we want to try to achieve the sub-2 percent levels of unemployment experienced by the social democracies of Western Europe during “les trente glorieuses,” even if that means living with a somewhat higher rate of inflation? The important point is that in a social and economic policy regime where “job insurance” guarantees the right to a job, we have the ability to make that choice, to “control the mighty commercial forces which [we] have called into being.”14

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Introduction 1. Mark Horowitz, review of The Many Faces of Thomas Cromwell, Reviews in History (no. 1168), http://www.history.ac.uk/reviews/review/1168. 2. Karl Polanyi, Great Transformation (Boston: Beacon, 1944), pp. 110–111. 3. Alan Forrest, The French Revolution and the Poor (New York: St. Martin’s, 1981), pp. 1–33, 99–115; Lisa DiCaprio, Origins of the Welfare State (Urbana-Champaign: University of Illinois Press, 2007), pp. 93–145, 195–209; Douglas Moggach and Paul Leduc Browne, eds., The Social Question and the Democratic Revolution: Marx and the Legacy of 1848 (Ottawa: University of Ottawa Press, 2000), pp. 3–20, 43–70. 4. Alex Keyssar, Out of Work (Cambridge: Cambridge University Press, 1986), pp. 39–76, 143–299. 5. Kevin P. Phillips, Wealth and Democracy (New York: Broadway, 2002), p. 280. 6. Herbert G. Gutman, “The Failure of the Movement by the Unemployed for Public Works in 1873,” Political Science Quarterly 80, no. 2 (June 1965): 254–276. 7. Eric Arnesen, ed., Encyclopedia of United States Labor and Working Class History (New York: Routledge, 2007), pp. 326–328. 8. Alexander Keyssar, The Right to Vote (New York: Basic Books, 2000), pp. 190–193. 9. John Larson, Internal Improvement (Chapel Hill: University of North Carolina Press, 2001). 10. Polanyi, Great Transformation, pp. 3–14. 11. Nancy Cohen, Reconstruction of American Liberalism (Chapel Hill: University of North Carolina Press, 2002), p. 4. 12. Ibid., p. 46. 13. Ibid., p. 121. 14. Ibid., p. 132. 15. James D. Savage, Balanced Budgets and American Politics, chap. 4, cited in Margaret Weir, Politics and Jobs (Princeton, NJ: Princeton University Press, 1992), p. 33. For a case study of Progressive Era suspicion on government spending patterns on public works, see Robert Caro, The Power Broker (New York: Vintage, 1974), pp. 59–90. 16. Sherri Berman, The Social Democratic Moment (Cambridge, MA: Harvard University Press, 1998). 17. For POUR and PECE, see Edwin Amenta, Bold Relief (Princeton, NJ: Princeton University Press, 1998), pp. 69–72. For Hoover’s vetoes, see http://www.senate.gov/reference/ Legislation/Vetoes/Presidents/HooverH.pdf. As Robert Leighninger points out in Long-Range

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Public Investment (Columbia: University of South Carolina Press, 2007), pp. 173–175, despite the new work being done in the 1920s by thinkers like William T. Foster and Waddill Catchings in breaking with Say’s law and arguing for the use of public works to fight underconsumption, the primary intellectual commitment to the balanced budget crippled Hooverite public works planners. 18. Leighninger, Long-Range Public Investment, p. 9. 19. Production-for-use advocates called for the federal government (and, in the case of Upton Sinclair, California’s state government) to operate factories to employ the unemployed and produce goods that would be distributed without charge to consumers. 20. “Dewey Denounces New Deal Zigzag in Economic Policy,” New York Times, December 17, 1939. 21. Paul Kurzman, Harry Hopkins and the New Deal (New York: R. E. Burdick, 1974), pp. 71–72. 22. Joseph Verdicchio, New Deal Work Relief and New York City (New York: New York University Press, 1980), p. 102. 23. June Hopkins, “Harry Hopkins and Work Relief,” http://www.socialwelfarehistory .com/eras/harry-hopkins-and-work-relief-during-the-great-depression/; Arthur Schlesinger Jr., Coming of the New Deal (Boston: Houghton Mifflin, 1958), p. 266. 24. Schlesinger, Coming of the New Deal, p. 105. 25. Ibid., p. 263. 26. Bonnie Schwartz, Civil Works Administration (Princeton, NJ: Princeton University Press, 1984), p. 35. 27. Hopkins speech in Baltimore, November 1933, Folder “Speeches 1933,” Harry Hopkins Papers, box 9, Franklin Delano Roosevelt Presidential Library, Hyde Park, NY (hereafter, FDRPL). 28. Edwin Amenta and Drew Halfmann, “Who Voted with Hopkins,” Journal of Policy History 13, no. 2 (2001): 251–287; Edwin Amenta, Drew Halfmann, et al., “Bring Back the WPA,” Studies in American Political Development 12 (Spring 1998): 1–56; Edwin Amenta and Drew Halfmann, “Wage Wars: Institutional Politics, WPA Wages, and the Struggle for U.S. Social Policy,” American Sociological Review 65, no. 4 (August 2000): 506–528. 29. Margaret Weir and Theda Skocpol, “State Structures and the Possibilities for ‘Keynesian’ Responses to the Great Depression,” in Bringing the State Back In (Cambridge: Cambridge University Press, 1985); Margaret Weir, “The Federal Government and Unemployment: The Frustration of Policy Innovation from the New Deal to the Great Society,” in Politics of Social Policy, ed. Margaret Weir, Ann Shola Orloff, and Theda Skocpol (Princeton, NJ: Princeton University Press, 1988). 30. Brian Balogh, The Associational State (Philadelphia: University of Pennsylvania Press, 2015), pp. 3–21, 24, 33. 31. Ibid., pp. 140–145, 150, 157–160. 32. Indeed, Cowie’s exceptionalism argument seems to contradict his argument in Stayin’ Alive that the rightward shift of the working class in the 1970s was a contingent event that could have been avoided. Jefferson Cowie, The Great Exception (Princeton, NJ: Princeton University Press, 2016), pp. 7, 10–11, 88–89, 100, 102, 211, 216. 33. Larson, Internal Improvement, p. 3. 34. Leighninger, Long-Range Public Investment, p. 3.

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35. Ibid. 36. Udo Sautter, “Government and Unemployment: The Use of Public Works Before the New Deal,” Journal of American History 73, no. 1 (June 1986): 59–86, quote on 68–69. 37. Jason Scott Smith, Building New Deal Liberalism (New York: Cambridge University Press, 2006), p. 3. 38. Ibid., pp. 3–4, 12–14. 39. Ibid., p. 3. 40. Leighninger, Long-Range Public Investment, p. 173. 41. Ibid., pp. 35–42, 80–101. 42. Indeed, even studies outside of the literature on public works combine the two; Weir in Politics and Jobs fuses the two together as part of a Keynesian project on federal spending, as opposed to economic development. See pp. 10, 29–32, 35, 40–41. 43. Smith, Building New Deal Liberalism, pp. 232–257. 44. Notably, Smith points out many of these differences in ibid., pp. 86, 96–97, while downplaying the importance of these theoretical differences. 45. Amity Shlaes, “Cheering for Obama Stimulus Buys into 1930s Myth,” Bloomberg News, February 19, 2009; Amity Shlaes, “When My Recession Becomes Your Great Depression,” Bloomberg News, December 17, 2008; Amity Shlaes, “Obama Will Take Us Backward by Channeling Keynes,” Bloomberg News, November 19, 2008; Amity Shlaes, “Obama’s Tax Planning Needs New View of New Deal,” Bloomberg News, November 12, 2008; Amity Shlaes, “The Krugman Recipe for Depression,” Wall Street Journal, November 29, 2008; Amity Shlaes, “Taking Revenge on the Rich Will Not Bring Recovery,” Wall Street Journal, September 20, 2008; Amity Shlaes, “The New Deal Jobs Myth,” Wall Street Journal, December 31, 2007. For conservatives citing Shlaes or using her arguments, see Bill Sher, “Conservative Fiction: The New Deal Sucked,” http://ourfuture.org/blog-entry/2008104429/conservative-fiction-new -deal-sucked. 46. Amity Shlaes, Forgotten Man (New York: HarperCollins, 2007); Burton W. Folsom Jr., New Deal or Raw Deal? (New York: Simon and Schuster, 2008); Jim Powell, FDR’s Folly (New York: Random House, 2003); Richard K. Vedder and Lowell Eugene Galloway, Out of Work (New York: New York University Press, 1997); Gary Dean Best, Pride, Prejudice and Politics (New York: Praeger, 1991). 47. This phrase is part of the masthead of the Journal of Policy History.

Chapter 1 1. Schlesinger Coming of the New Deal, p. 294; David Kennedy, Freedom from Fear (New York: Oxford University Press, 1999), pp. 207, 288. 2. Schlesinger, Coming of the New Deal, pp. 290–305. 3. Ibid. 4. Ibid. 5. Edwin Amenta, When Movements Matter (Princeton, NJ: Princeton University Press, 2006), pp. 62–104, 176–220. 6. Ibid., p. 216. 7. Robert F. Sherwood, Roosevelt and Hopkins: An Intimate History (New York: Grosset and Dunlop, 1948), p. 65. 8. Schlesinger, Coming of the New Deal, p. 217. 9. Ibid., p. 301.

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10. “Members of the CES Advisory Committee,” undated, Executive Committee Minutes, General Records of the Executive Director, Records of the Committee on Economic Security, Group 47, National Archives II Building, College Park, MD (hereafter, Records of the CES). 11. E. Pendleton Hierring to Edwin Witte, February 4, 1935, General Correspondence, General Records of the Executive Director, Records of the CES. 12. Alan Brinkley, “The New Deal and the Idea of the State,” in Rise and Fall of the New Deal Order, ed. Steven Fraser and Gary Gerstle (Princeton, NJ: Princeton University Press, 1989), pp. 85–112. 13. Schlesinger, Coming of the New Deal, pp. 297–312. 14. Otis Graham, “Franklin Roosevelt and the Intended New Deal,” in Essays in Honor of James Macgregor Burns, ed. Michael Beschloss and Thomas Cronin (Saddle River, NJ: Prentice Hall Press, 1989), pp. 15–37; John Jeffries, “A Third New Deal?” Journal of Policy History 8, no. 4 (1996): 392–402; Barry Karl, “Constitution and Central Planning: The Third New Deal Revisited,” Supreme Court Review (1988): 184–190. 15. Alan Brinkley, End of Reform (New York: Vintage, 1998). 16. T. H. Marshall, Citizenship and Social Class (Cambridge: Cambridge University Press, 1950), p. 11. 17. Alice Kessler-Harris, In Pursuit of Equity (New York: Oxford University Press, 2001), p. 5, passim. 18. Linda Gordon in Pitied but Not Entitled emphasizes much more the human rights and social citizenship tradition. Gordon, Pitied but Not Entitled (Ann Arbor: University of Michigan Press, 1994), pp. 287–306. Eileen Boris and Dorothy Sue Cobble, in studying women in the labor movement, take a more mixed approach that acknowledges the importance of recognizing women’s labors in both the factory and the home. Boris, “Review: Labor Feminist Foremothers,” Women’s Review of Books 21, no. 8 (May 2004): 18; Cobble, The Other Women’s Movement (Princeton, NJ: Princeton University Press, 2004), pp. 56–60. 19. Suzanne Mettler, Dividing Citizens (Ithaca, NY: Cornell University Press, 1998), pp. 1–27; Ira Katznelson, When Affirmative Action Was White (New York: W. W. Norton, 2005), pp. 25–52. 20. Amenta et al., “Bring Back the WPA,” p. 3. 21. Jason Scott Smith, Building New Deal Liberalism (New York: Cambridge University Press, 2006), p. 15. 22. Chad Allen Goldberg. “Contesting the Status of Relief Workers During the New Deal,” Social Science History 29, no. 3 (Fall 2005): 337–371. 23. George Field et al., Final Report of the WPA (Washington, DC: Government Printing Office, 1943), pp. 41–45. 24. Mary Furner and Barry Supple, eds., The State and Economic Knowledge (Cambridge: Cambridge University Press, 1990), pp. 3–39; Alice O’Connor, Social Science for What? (New York: Russell Sage Foundation, 2007), pp. 11–70. 25. William Beveridge was responsible for the 1942 Beveridge Report, which laid the foundations for the postwar British welfare state. 26. William Manchester, The Glory and the Dream (New York: Brown & Co., 1974), p. 86. 27. William Beveridge, Full Employment in a Free Society (London: George Allen and Unwin, 1944), p. 19.

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28. Gøsta Esping-Anderson, The Three Worlds of Welfare Capitalism (Cambridge: Cambridge University Press, 1990), pp. 26–28. 29. Amenta et al., “Bring Back the WPA,” pp. 1–8. 30. Edwin Witte, Development of the Social Security Act (Washington, DC: U.S. Government Printing Office, 1963), p. xii. 31. Ibid., p. 27. 32. Ibid. 33. Ibid., pp. 31–32. 34. Ibid. 35. Ibid., p. 74. 36. Ibid., p. 63. 37. Ibid., p. 218. 38. Ibid., p. 304. 39. Ibid., pp. 308–310. 40. Donald Howard, The WPA and Federal Relief Policy (New York: Russell Sage Foundation, 1943), pp. 170–171. 41. Ibid., p. 354. 42. Ibid., pp. 716–719. 43. The liberal bloc of the Roosevelt administration was an unofficial faction of officials who collectively favored increased government spending, a larger role for government regulation of the economy, and the need for antiracist action. Senior members included Labor Secretary Perkins, Hopkins, and Wallace, as well as Interior Secretary Harold Ickes. The liberal bloc often fought for control over administration policy against a conservative bloc composed of Treasury Secretary Henry Morgenthau, Bureau of the Budget Director Lewis Douglas, and the financier Bernard Baruch, who all favored balanced budgets, lower government spending, and maintenance of the gold standard. The two groups clashed over direct job creation and public works spending in 1933–1934, and the blocs would clash again in 1937 over balanced or deficits budgets. See Schlesinger, Coming of the New Deal, pp. 291–292; Kennedy, Freedom from Fear, pp. 352–358. 44. “Members of the Executive Board,” undated, Folder “Executive Committee Minutes,” General Records of the Executive Director, Records of the CES. 45. The literature on University of Wisconsin economists and UI is quite broad, but chapters 1–2 in Mettler, Dividing Citizens, provide a good overview of the differences between the Wisconsin and Ohio schools of UI theory. 46. “Members of the Executive Board.” 47. The Ohio plan for UI, as opposed to the Wisconsin plan advocated by Witte and Altmeyer, proposed a far more universal model by which contributions from workers, employers, and the general fund would be collectively pooled to provide more generous benefits to all workers (as opposed to each worker building up his or her own contributions, and employers being taxed at differential rates according to their rates of layoffs). Sanford Jacoby, Modern Manors (Princeton, NJ: Princeton University Press, 1997), p. 209. 48. Ibid. 49. “Possible General Approaches to Problem of Economic Security,” “Basic Questions of Policy,” “Preliminary Outline of Work of Staff,” “Preliminary Report of the Technical Board,” “Preliminary Report of the Executive Staff,” “First Tentative Draft of Final Report,”

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276

Notes to Pages 34–41

“Report of Advisory Council,” “Report to the President by the Committee on Economic Security,” and miscellaneous untitled letters, all within multiple subfiles, Records of the CES. 50. Hugh Stanley, Roosevelt—and Then? (New York: Harper & Row, 1937), pp. 131–135. 51. Ibid. 52. Josephine Brown, Public Relief (New York: H. H. Holt, 1940), pp. 226–228. 53. In this, they were quite similar to the turn-of-the-century Progressives studied by Eldon Eisenach in Lost Promise of Progressivism (Lawrence: University of Kansas Press, 1994). 54. Brown, Public Relief; William Bremer, Depression Winters (Philadelphia: Temple University Press, 1984), pp. 27–62. 55. Larson, Internal Improvement, pp. 1–70. 56. Bonnie Schwartz, Civil Works Administration (Princeton, NJ: Princeton University Press, 1984), pp. 1–5. 57. Jacob Baker, “A National Program for Economic Security,” undated, Folder “Economic and Social Security June–Nov 1934,” box 48, Henry Hopkins Papers, FDRPL. 58. Ibid. 59. Ibid. 60. Ibid. 61. Ibid. 62. Ibid. 63. Ibid. 64. Ibid. 65. Economic Security Associates, and its analyst, Lewis Baxter, are something of a historical mystery—the collections of FERA and the CES at the National Archives and at the FDRPL do not contain any correspondence that might shed light on the background of this short-lived organization or the writer who produced this fascinating historical document. Outside of this document, the only other places where I have found mentions of this organization and individual are a brief notice in the Illinois Municipal Review of 1935 and an unsolicited letter sent to Supreme Court Justice Charles Evans Hughes (regarding the Gold Clause Cases of 1935). 66. Lewis Baxter, “National Balance Sheet,” undated, Staff Subject Files Miscellaneous, Staff Subject Files, Records of the CES. 67. Ibid. 68. Ibid. 69. Ibid. 70. Ibid. 71. Baker, “National Program for Economic Security.” 72. Baxter. 73. Ibid. 74. Corrington Gill, “Basic Considerations Affecting a National Public Assistance Program,” p. 1, Folder “Corrington Gill, 1935–1939,” box 61, Records of the WPA Commissioner, Record Group 69, National Archives II, College Park, MD. 75. Ibid., p. 13. 76. Ibid., pp. 2–4, 8, 9, 11. For more on Means and Tugwell, see Theodore Rosenof’s Economics in the Long Run (Chapel Hill: University of North Carolina Press, 1997) and Kathleen Donohue, Freedom from Want (Baltimore, MD: Johns Hopkins University Press, 2003).

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77. Gill, “Basic Considerations,” p. 12. 78. Ibid. 79. Corrington Gill, “Work Program,” Folder “Wage Scale Policies 33–35,” box 49, Hopkins Papers, FDRPL; Gill to Hopkins, Folder “Correspondence, Memoranda, and Misc. 1935,” box 79, Hopkins Papers, FDRPL. 80. “Work Program,” pp. 1, 10. 81. Ibid., p. 19. 82. Jacob Baker, “A Program for Social and Economic Security,” Folder “Jacob Baker’s Memoranda on Work Program,” box 49, Hopkins Papers, FDRPL. 83. This figure is based on a comparison of Jacob Baker, “Program of Social and Economic Security,” Folder “Economic and Society Security June-November 34,” box 48, Hopkins Papers, FDRPL; Corrington Gill, “Work Program”; Emerson Ross, “National Program,” Folder “Economic and Society Security June-November 34,” box 48, Hopkins Papers, FDRPL; and so on. 84. “Appendix A,” “Public Employment as a Means of Economic Security,” “Possible General Approaches,” all within multiple subfiles, Records of the CES. 85. “Appendix G,” Folder “Technical Board Reports,” General Records of Executive Director, box 1, Records of the CES. 86. Ibid. 87. “Security Employment,” Folder “Economic and Social Security June–Nov 34,” box 48, Harry Hopkins Papers, FDRPL; “Public Employment Program,” Folder “Technical Board Reports,” General Records of Executive Director, box 1, Records of the CES. 88. “Security Employent.” 89. Ira Katznelson, Fear Itself (New York: W. W. Norton, 2013), pp. 3, 9–11, 14–16. 90. Amenta et al., “Bring Back the WPA.” 91. “Security Employment.” 92. Eveline Burns, “Appendix Eight,” Folder “Davis, Michael,” Staff Reports, box 18, Records of the CES. 93. Ross, “National Program”; Givens, “Appendix Eight.” 94. Committee on Economic Security, “First Preliminary Report of Staff,” Folder “Preliminary Report on Economic Security, Sept. 34,” box 48, Hopkins Papers, FDRPL. 95. “First Tentative Draft of Technical Board,” Folder “Preliminary Report on Economic Security, Sept. 34,” box 48, Hopkins Papers, FDRPL. 96. One further sign of the fluidity of these ideas is that individual experts would straddle various ideological lines. Emerson Ross, who was an aggressive partisan for direct job creation within the CES, nonetheless argued for the restriction of direct job creation to one individual per family. Meredith Givens, who tended to be more conservative on the scope of the program, nevertheless was critical of work tests. Jacob Baker generally argued for an expansive program open to all, but he was willing to accept security wages over prevailing wages. 97. A number of scholars have focused on how language and rhetoric shape political ideology and public policy. For Clifford Geertz (Geertz, “Ideology as Cultural System,” in The Interpretation of Cultures [New York: Basic Books, 1973], pp. 193–233), political ideologies are understood as frameworks for constructing understandings of the world that are needed for public decisions to be taken. James Farr (Farr, “Understanding Political Change Conceptually,” in Political Innovation and Conceptual Change, ed. Terrence Ball, James Farr, Russell

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Notes to Pages 45–53

L. Hanson. [New York: Cambridge University Press, 1989], pp. 24–49) thought that the use of language to change political concepts in order to reconcile contradictions between reality and their ideals can be thought of as a kind of microstudy of how political ideologies are constructed. 98. “Basic Questions of Policy,” Folder “CES General,” General Records of the Executive Director, box 1, Records of the CES. 99. “Possible General Approaches,” Folder “CES General,” General Records of the Executive Director, box 1, Records of the CES. 100. Ibid. 101. “Unpublished CES Studies,” http://www.ssa.gov/history/reports/ces/ces10vol.html. 102. “Outline of Work,” Folder “CES General,” General Records of the Executive Director, box 1, Records of the CES. 103. Ibid. 104. Ibid. 105. Ibid. 106. Emerson Ross to Edwin Witte, October 5, 1934, Folder “Correspondence 1934,” General Records of the Executive Director, Records of the CES. 107. Members of the CES are listed on the following website: http://www.ssa.gov/history/ reports/ces6.html. 108. Emerson Ross to Edwin Witte. 109. “Unpublished CES Studies.” 110. Ibid. 111. Emerson Ross, “A Public Work Program as a Means of Economic Security,” Folder “Preliminary Report,” General Records of Executive Director, box 6, Records of the CES. 112. Ibid. 113. Ibid. 114. Ibid. 115. Ibid. 116. Ibid. 117. Ibid. 118. Ibid. 119. “First Tentative Draft of Technical Board.” 120. Ibid. 121. “Preliminary Report of the Executive Staff.” 122. Ibid. 123. Ibid. 124. Ibid. 125. Ibid. 126. Ibid. 127. Ibid. 128. “Report to the President by the Committee on Economic Security,” pp. 1–2. 129. Ibid. 130. Ibid., p. 55. 131. Ibid., pp. 3, 7. 132. Ibid., p. 5.

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133. Ibid., p. 6. 134. Ibid. 135. Ibid. 136. Ibid., p. 12. 137. While the literature on public planning is enormous, a good foundation can be found in Mary Furner and Barry Supple, The State and Economic Knowledge (Cambridge: Cambridge University Press, 1990), pp. 73–97, 103–135, 138–168, 241–284, 299–323. 138. Amenta, When Movements Matter, pp. 10–11. 139. Witte, Development of the Social Security Act, p. 70. 140. Field et al., Final Report, p. 42. 141. Liz Cohen, Making a New Deal (New York: Cambridge University Press, 1990), pp. 258–281.

Chapter 2 1. Executive Order 7034, in “WPA Handbook of Procedures,” Container 647, Printed Materials, FDRPL. 2. Lester Seligman and Elmer Cornwell, New Deal Mosaic: Franklin Delano Roosevelt Confers with His National Emergency Council (Eugene: University of Oregon Press, 2002), pp. 34–35, 79, 100–112. 3. It is important to note that the PWA and the WPA, although they were the most prominent, were not the only projects considered by the ACA. The ACA was a clearinghouse for the entire administration’s spending program: the CCC’s 400,000 urban youth did forestry and conservation works in the nation’s parks and protected wildlife areas; the NYA provided summer and part-time jobs and education stipends for high school and college students; the Rural Electrification Administration proposed lighting up the dark places of rural America; and there were accelerated spending programs within the regular departments (the Navy, for example, constructed the aircraft carriers Yorktown and Exeter through public works provisions in the ERA). However, the PWA and the WPA were the two largest programs and the largest sources of political contention within the Advisory Committee on Allotments. 4. Schlesinger, Coming of the New Deal, p. 294; Kennedy, Freedom from Fear, pp. 207, 288. 5. Arthur Schlesinger Jr., The Politics of Upheaval (Boston: Houghton Mifflin, 1960), p. 385. 6. Draft of presidential relief message, Folder “Draft of Presidential Relief Message,” box 54, Harry Hopkins Papers, FDRPL. 7. “Vote on Relief Bill 1935,” Folder “Vote on Relief Bill 1935,” box 80, Harry Hopkins Papers, FDRPL. For more on the debate, see Leighninger, Long-Range Public Investment, p. 59. 8. Edwin Amenta and Drew Halfmann, “Wage Wars: Institutional Politics, WPA Wages, and the Struggle for U.S. Social Policy,” American Sociological Review 65, no. 4 (August 2000): 507; Amenta et al., “Bring Back the WPA,” pp. 3, 8. Ira Katznelson’s work in both When Affirmative Action Was White and Fear Itself further suggests that this was part of a larger bargain within the Democratic Party where the sectional and racial interests of the Dixiecrats were acceded to in exchange for their support of the New Deal. 9. “Emergency Relief Appropriation Act of 1935,” box 2, PWA General Classified Files, Record Group 135, National Archives II, College Park, MD.

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Notes to Pages 62–67

10. Executive Order 7034, p. 3 in “WPA Handbook of Procedures, Appendix A—Executive Orders,” Container 647, Printed Materials, FDRPL. 11. For more on FDR’s style of administration, see Richard Neustadt, Presidential Power and the Modern Presidents (New York: Free Press, 1990), pp. 80–140. 12. Untitled press release, Folder “Misc. Proposals on Setup of WPA Program,” box 51, Harry Hopkins Papers, FDRPL. 13. Harold Ickes, Secret Diary of Harold Ickes, Volume I (New York: Simon and Schuster, 1953), pp. 19, 28. 14. Ibid., p. 34. 15. For a pre´cis on traditional poorhouse thinking, see Michael B. Katz, In the Shadow of the Poorhouse (New York: Basic Books, 1986), pp. 3–60; Walter Trattner, From Poor Law to Welfare State (New York: Free Press, 1974), pp. 1–77; or Gwendolyn Mink and Alice O’Connor, Poverty in the United States (Santa Barbara, CA: ABC-CLIO, 2004), p. 552. 16. Kessler-Harris, In Pursuit of Equity, p. 5, passim. Kessler-Harris defines economic citizenship as “the independent status that provides the possibility of full participation in the polity,” buttressed by wage income and access to superior social benefits. 17. Steven Attewell, “Killed in Action: The Civil Works Administration in New York City” (Senior thesis, Columbia University, 2005). The CWA and WPA provide an interesting case for studying economic citizenship: Chad Allen Goldberg (“Contesting the Status of Relief Workers During the New Deal,” Social Science History 29, no. 3 [Fall 2005]: 337–371; “Legitimating Social Welfare Policies Through Work? A Comparison of Old Age Insurance and the Works Progress Administration, 1935–1950,” http://www.allacademic.com/meta/p19515 _index.html) points to the conceptual and ideological importance of work as a strategy pursued both by the radical Workers Alliance and the WPA to reposition the unemployed from the dehumanized category of relief clients to full participants in Kessler-Harris’s economic citizenship. The militant and masculine imagery was no accident—Goldberg argues (and I agree) that workers and administrators alike were attempting to “resist pauperization . . . [by] claiming a largely masculine standard of citizenship.” “Legitimating Social Welfare Policies Through Work,” p. 352. Advocates for CWA and WPA workers asserted those workers’ masculinity to prove that they were workers, and simultaneously asserted that their work was proof of masculinity, ignoring the fact that hundreds of thousands of these workers were women. 18. “Security Employment.” 19. Ibid. 20. Ibid. 21. Untitled memo, Folder “Jacob Baker’s Memoranda on a Works Program 2,” box 49, Harry Hopkins Papers, FDRPL. 22. “Program for Social and Economic Security.” 23. Corrington Gill, “Work Program,” Folder “Labor Wage Scales—Wage Policies 1933– 1935,” box 49, Hopkins Papers, FDRPL. Here I break with Leighninger (Long-Range Public Investment, p. 64), who argues that the WPA never had the opportunity to develop a vision of a better program than the status quo. 24. “Jacob Baker, “Cost of an Expanded Work Program,” Folder “Funds Needed,” box 48, Hopkins Papers, FDRPL. 25. Jacob Baker, “Comparing PWA to FERA,” Folder “Jacob Baker’s Memoranda on a Works Program—2,” box 49, Hopkins Papers, FDRPL; Jacob Baker, “Summary of Relief

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281

Requirements,” Folder “Funds Needed,” box 48, Hopkins Papers, FDRPL; Final Report of the WPA. Ironically, Baker had lowballed his estimates for WPA efficiency: the WPA actually spent only 12.8 percent of its budget on nonlabor costs in 1935, and that figure dropped in succeeding years. 26. For more on WPA policy putting people first, see Leighninger, Long-Range Public Investment, p. 54. 27. Katherine S. Newman and Elisabeth S. Jacobs, Who Cares? (Princeton, NJ: Princeton University Press, 2010), pp. 11–55. 28. This procedure is known as a “force account.” 29. “The Cost of an Expanded Public Employment Program,” “Summary of Relief Requirements,” “The Work Program,” “A Plan to Give Work to the Able-Bodied,” “Comparing PWA to FERA,” “Transition from Work Relief to the Work Program,” “The Works Program,” “Two Pages on Politics,” “Memorandum to the President,” “A Program for Social and Economic Security,” all within multiple folders, WPA Papers, National Archives II, College Park, MD, and Harry Hopkins Papers, FDRPL. 30. Leighninger, Long-Range Public Investment, p. 59. 31. Baker, “Outline of Work Program.” 32. Ibid. 33. Jacob Baker, untitled memo, Folder “Policy July–Dec 1935,” box 5, FERA—Files of Jacob Baker, National Archives II, College Park, MD. 34. Jacob Baker, “A National Work Program,” Folder “Jacob Baker’s Memoranda on Work Program,” box 49, Harry Hopkins Papers, FDRPL. 35. Gill, “Basic Considerations,” p. 3. 36. Ibid., p. 23. 37. “Gill to Hopkins,” p. 2. 38. Baker, “Program for Social and Economic Security.” 39. Baker, “National Work Program.” 40. Historians should rethink whether “emergency” or “permanent” either were labels fashioned by policy designers within the New Deal (and therefore indicative of New Deal priorities and beliefs about the role of the government) or were the outcomes of a contested and uncertain political process, in which the views of Congress were ultimately critical for placing programs on one side of the line or the other. For more on the WPA and a permanent status, see Leighninger, Long-Range Public Investment, p. 22. 41. Jacob Baker, Corrington Gill, and untitled authors, “Summary of Relief Requirements,” “Transition from Work Relief to National Work Program,” “Estimated Requirements,” “Cost of Expanded Work Program,” within multiple folders, boxes 48, 49, Harry Hopkins Papers, FDRPL. 42. For a pre´cis on nineteenth-century public works, see Larson, Internal Improvement. 43. Robert Leighninger, Building Louisiana: The Legacy of the Public Works Administration (Jackson: University Press of Mississippi, 2007), pp. 28–71. Leighninger points to Louisiana, where PWA funds were used to punish the Huey Long machine and reward its successor, as the rare exception to an otherwise exemplary record of fiscal probity. 44. “Estimated Total Value of Construction,” Folder “Jacob Baker’s Memoranda on a Works Program 2,” box 49, Harry Hopkins Papers, FDRPL. 45. “Construction and Housing,” in U.S. Bureau of the Census, Historical Statistics of the United States 1789–1945 (Washington, DC: Government Printing Office, 1949), p. 160.

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Notes to Pages 74–85

46. David Engerman, Modernization from the Other Shore: American Intellectuals and the Romance of Russian Development (Cambridge, MA: Harvard University Press, 2004), pp. 153–194. 47. For more on producerist thought in the New Deal, see Donohue, Freedom from Want, pp. 8–41, 198–243. 48. Harold Ickes, Back to Work: The Story of the PWA (New York: Macmillan, 1933), p. 199. 49. Leighninger, Long-Range Public Investment, pp. 3–10, 35–42, 80–101; Smith, Building New Deal Liberalism, pp. 1–53, 190–257. 50. Staff report, “National Construction Program,” p. 3, Folder “National Construction Program,” box 48, Harry Hopkins Papers, FDRPL. 51. Ibid. 52. Ickes, Back to Work, pp. 81, 143. 53. “National Construction Program,” p. 4. 54. Harvard Sitkoff, A New Deal for Blacks (New York: Oxford University Press, 1978), pp. 45–78. 55. Meg Jacobs, Pocketbook Politics (Princeton, NJ: Princeton University Press, 2007). 56. Donohue, Freedom from Want, pp. 198–243. 57. Engerman, Modernization from the Other Shore; Howard Brick, Transcending Capitalism (Ithaca, NY: Cornell University Press, 2006). 58. Bruce Schulman, From Cottonbelt to Sunbelt (New York: Oxford University Press, 1991), pp. 3–39. 59. “National Construction Program,” p. 6. 60. https://en.wikipedia.org/wiki/Morris_Llewellyn_Cooke. 61. John Recchiuti, Civic Engagement (Philadelphia: University of Pennsylvania Press, 2007), pp. 107–116. For a case study of a Progressive who became a pioneer in public works, see Caro, Power Broker, pp. 59–91. 62. Ickes, Back to Work, pp. 35–36. 63. Baker, “National Work Program.” 64. Morris L. Cooke, Cooke Report, Folder “20 Year Public Works Program by ML Cooke,” box 50, Harry Hopkins Papers, FDRPL. 65. For more on the vision of transformation through public works, see David Lilienthal, “Dreamers with Shovels,” in Democracy on the March (New York: Harper Press, 1944). 66. Executive Order 7034, http://www.presidency.ucsb.edu/ws/index.php?pid15053. 67. “Confidential,” Folder “Executive and National Emergency Councils 4,” box 46, Harry Hopkins Papers, FDRPL. 68. Untitled memo on PWA spending, 1934, Folder “National Executive and Emergency Councils 1,” box 46, Harry Hopkins Papers, FDRPL. 69. Report to NEC, Folder “Executive and National Emergency Council 2,” box 46, Harry Hopkins Papers, FDRPL. 70. Ickes to FDR, June 26, 1935, Folder “Sec. Ickes to FDR,” box 50, Harry Hopkins Papers, FDRPL. 71. Ibid. 72. Ibid. 73. July 2, 1935, press conference, Folder “Sec. Ickes Press Conferences,” box 27, Harry Hopkins Papers, FDRPL.

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74. August 30, 1935, press conference, Folder “Sec. Ickes Press Conferences,” box 27, Harry Hopkins Papers, FDRPL. 75. September 10, 1935, press conference, Folder “Sec. Ickes Press Conferences,” box 27, Harry Hopkins Papers, FDRPL. 76. “National Construction Program.” 77. May 6, 1935, minutes, Folder “Proceedings of the Advisory Committee on Allotments,” box 47, Harry Hopkins Papers, FDRPL. For more on Perkins as a WPA ally, see Leighninger, Long-Range Public Investment, p. 38. 78. May 25, 1935, minutes, Folder “Proceedings of the Advisory Committee on Allotments,” box 47, Harry Hopkins Papers, FDRPL. 79. Ibid. 80. May 6, 1935, minutes, Folder “Proceedings of the Advisory Committee on Allotments,” Box 47, Harry Hopkins Papers, FDRPL. 81. Ibid. 82. May 7, 1935, minutes, Folder “Proceedings of the Advisory Committee on Allotments,” box 47, Harry Hopkins Papers, FDRPL. 83. Ibid. 84. May 6, 1935, minutes. 85. “Supplemental Information for Supplemental Agenda of Aug 13, 1935,” Folder “Agenda June–Aug 1935,” box 47, Harry Hopkins Papers, FDRPL. 86. Michael Darby, “Three-and-a-Half Million U.S. Employees Have Been Mislaid: Or, an Explanation of Unemployment, 1934–1941,” Journal of Political Economy 84, no. 1 (February 1976): 1–16. For the political salience of direct job creation in the 1936 election, see Cohen, Making a New Deal, pp. 258–288; Smith, Building New Deal Liberalism, pp. 54–84, 135–190.

Chapter 3 1. Unknown author, “Summary Charts and Statistics,” September 1938, WPA Division of Statistics and Economic Research, Folder “Summary Charts and Statistics,” Container 628, Printed Materials, FDRPL. 2. As can be seen from Figure 4, unemployment dropped from what would have been 20.3 percent in 1935 without New Deal job programs to 9.2 percent in 1937 with those programs up and running. Of that 11 percentage-point decline, Figure 4 shows that an average of six percentage points of that decline are directly attributable to New Deal job programs. Moreover, as is discussed in note 45 when the multiplier effect of that spending is taken into account, another 2.5 percentage points of that decline are indirectly attributable to New Deal job programs. Together, these two factors make up about 77 percent of that total decline in unemployment. 3. Smith, Building New Deal Liberalism, pp. 113–115. 4. For examples of political historians and other scholars examining these particular questions, see Katznelson, When Affirmative Action Was White; Patrick Reagan, Designing a New America (Amherst: University of Massachusetts Press, 2000); and Michael Denning, Cultural Front (New York: Verso Press, 1998). 5. Lebergott, quoted in Darby, “Three-and-a-Half Million U.S. Employees Have Been Mislaid,” p. 3. 6. Ironically, what Lebergott and those who cite him fail to grapple with is that, even with this skewed data, his statistics still show a robust recovery in the 1930s: even leaving out

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Notes to Pages 93–97

the (direct) effects of direct job creation, we see a 42.8 percent drop in unemployment in FDR’s first term. Ibid., p. 8. 7. Ibid. 8. Ibid. 9. For comparison, the average unemployment rate between 1948 and 2014 was 5.8 percent. A rate of 6 percent unemployment is certainly not full employment, but it is average by historical standards. Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey,” Series LNS14000000. It is certainly not anywhere near the level of unemployment associated with years of negative economic growth (i.e., depressions) and indeed is quite compatible with a growing economy, as was the case in 1941, 1971, 1978, 1987, 1994, 2003, and 2014. Bureau of Economic Analysis, “National Income and Product Accounts Tables,” “Table 1.1.1. Percent Change from Preceding Period in Real Gross Domestic Product,” https://www.bea.gov/national/xls/gdpchg.xlsx. 10. While the formal definition of a depression is either a decline in real GDP exceeding 10 percent or a recession lasting more than two years, unemployment rates at or above 10 percent are frequently used as an informal metric for depression-level rates of unemployment. For examples, see Mehmet Odekson, ed., Encyclopedia of World Poverty (London: Sage, 2006), p. 926; Vedder and Galloway, Out of Work, p. 129, Nicholas Crafts and Peter Fearon, The Great Depression of the 1930s: Lessons for Today (Oxford: Oxford University Press, 2013), p. 31; Dean Baker, The End of Loser Liberalism (Washington, DC: Center for Economic and Policy Research, 2011), p. 25. 11. Ben Bernanke, “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression,” American Economic Review 73, no. 2 (1983): 257–276; Ben Bernanke, Mark Gertler, and Simon Gilchrist, “The Financial Accelerator and the Flight to Quality,” Review of Economics and Statistics 78, no. 1 (February 1996): 1–15; Ben Bernanke, “The Macroeconomics of the Great Depression: A Comparative Approach,” Journal of Money, Credit and Banking 27, no. 1 (February 1995): 1–28. 12. Ben Bernanke and Martin Parkinson, “Unemployment, Inflation, and Wages in the Great Depression,” National Bureau of Economic Research Working Paper (1989). 13. Christina Romer, “What Ended the Great Depression?” Journal of Economic History 52, no. 4 (December 1992): 757–784, quote on 757. 14. Brad DeLong and Larry Summers, “How Does Macroeconomic Policy Affect Output?” Brookings Papers on Economic Activity 2 (1988): 433–494, quote on 467. 15. Barry Eichengreen, Golden Fetters (New York: Oxford University Press, 1992), p. 1. 16. Ibid., p. 393. 17. J. R. Vernon, “World War II Fiscal Policies and the End of the Great Depression,” Journal of Economic History 54, no. 4 (December 1994): 850–868, quote on 851, 865. 18. Robert J. Gordon and Robert Krenn, “The End of the Great Depression, 1939–1941: Policy Contributions and Fiscal Multipliers,” National Bureau of Economic Research Working Paper (2010), p. 3. 19. Ibid., p. 20. 20. Ibid., p. 19: “Economists differ across a spectrum regarding the factors that lifted the U.S. economy out of the Great Depression.” Christina Romer (“What Ended the Great Depression?”) finds that fiscal policy had little to do with the recovery, and she suggests that expansionary monetary policy after 1934 was the true source. In contrast, Christopher Sims

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(“The Role of Interest Rate Policy in the Generation and Propagation of Business Cycles,” Federal Reserve Bank Annual Research Conference [1998], 20) concludes that “during the Great Depression, the role of interest rate policy in generating and propagating cycles was modest.” Vernon (“World War II Fiscal Policies”) also disagrees with Romer’s monetary explanation, finding that the fiscal expansion related to World War II was the major factor in the recovery. Alternative ideas exist as well, including those of DeLong and Summers (“How Does Macroeconomic Policy Affect Output?”) and Bernanke and Parkinson (“Unemployment, Inflation, and Wages in the Great Depression”), who promote the idea that the recovery was largely due to the “self-correcting or mean-reverting forces inherent in the structure of the economy.” 21. This frame of reference helps to explain why Romer and Paul Krugman thought that the 2009 stimulus was too small in relation to the decline in GDP to produce the kind of recovery that was necessary to get the United States back on track, and why DeLong, Romer, Summers, and Krugman all, at the present time, back further stimulus. 22. Vernon, “World War II Fiscal Policies,” pp. 2, 7. 23. Gordon and Krenn, “End of the Great Depression,” pp. 2, 5, 25–37. 24. Romer, “What Ended the Great Depression?” p. 758. 25. Ibid., p. 771. 26. That is true but not particularly relevant for the question of what the unemployment rate was or the effectiveness of New Deal job policy—in modern times (as in the tight labor markets of the 1990s), workers who leave low-paying jobs for better jobs are still counted as having been employed in the former. Gordon and Krenn, “End of the Great Depression,” p. 16. 27. Romer, “What Ended the Great Depression?” pp. 757, 760–761. 28. Eric Rauchway, “New Deal Denialism,” Dissent (Winter 2010); Eric Rauchway, “Edge of the American West,” https://edgeofthewest.wordpress.com/; Eric Rauchway, The Great Depression and the New Deal: A Very Short Introduction (New York: Oxford University Press, 2008). 29. Smith, Building New Deal Liberalism, pp. 9–10. 30. Eric Foner, Give Me Liberty! (New York; W. W. Norton, 2005), pp. 833, 846; Pat Cohen et al., The American Promise (New York: Bedford Press, 2007), pp. 637, 647. 31. See note 45 in the Introduction. 32. Weir, Politics and Jobs, pp. 34–39; Weir and Skocpol, “State Structures,” p. 111. 33. Weir, Politics and Jobs; Weir and Skocpol, “State Structures.” 34. Brinkley, End of Reform, pp. 3–31, 86–105. Brinkley’s periodization has been questioned in recent years, because, by ending the narrative in 1937 and thereby separating the New Deal from the wartime boom, FDR’s Four Freedoms and Second Bill of Rights speeches, and their legislative embodiment in the Wagner-Murray-Dingell and Full Employment Bills, Brinkley’s periodization leaves out both those New Deal projects that gained strength after 1937 and the persistence of statist New Deal ideology during the war. This is especially the case when one contrasts Brinkley’s labeling of postwar liberalism as narrowly fiscally Keynesian with accounts that bring into consideration reform efforts such as price control (as Meg Jacobs does in Pocketbook Politics), healthcare (Jennifer Klein in For All These Rights [Princeton, NJ: Princeton University Press, 2003]), the consolidation of CIO unions (Nelson Lichtenstein in Labor’s War at Home [Philadelphia: Temple University Press, 2003]), or civil

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rights (Martha Biondi in To Stand and Fight [Cambridge, MA: Harvard University Press, 2003]), Patricia Sullivan in Days of Hope (Chapel Hill: University of North Carolina Press, 1996), and Tom Sugrue in Sweet Land of Liberty (New York: Random House Press, 2009)). 35. Brinkley, End of Reform, pp. 29, 132. 36. Bureau of Economic Analysis, “National Income and Product Accounts Tables.” In addition, Bernanke and Parkinson (“Unemployment, Inflation, and Wages in the Great Depression”) as well as Romer (“What Ended the Great Depression?”) describe the 1930s as a period of strong economic growth and rapid recovery. Moreover, while GDP data cannot directly prove or disprove the accuracy of either data set, it is very hard to explain how the United States generated such incredibly high economic growth with the persistently high unemployment seen in Lebergott’s data set, as opposed to Darby’s scenario of a rapid recovery of employment. 37. Brinkley, “New Deal and the Idea of the State,” pp. 87, 98. 38. Alan Brinkley, “No Deal,” New Republic, December 31, 2008, https://newrepublic .com/article/64397/no-deal. 39. In addition, Brinkley’s description that “at no time did economic activity reach levels comparable to those of a decade earlier” is also inaccurate: GDP had returned to 1929 levels by 1936 and never fell below this mark, even during the 1937–1938 recession. Rauchway, “New Deal Denialism,” p. 68. 40. Katznelson, Fear Itself, pp. 123, 341. Other references to Lebergott statistics can be found on pp. 216 and 230. 41. An increase in unemployment from 9.2 percent to 12.5 percent (according to Darby) is roughly one-third, whereas Katznelson characterizes Lebergott’s figures for those years as doubling. Ibid., p. 318. 42. Smith, Building New Deal Liberalism, p. 4. For Smith on Darby, see Jason Scott Smith, A Concise History of the New Deal (Cambridge: Cambridge University Press, 2014), p. 19. 43. Smith, Building New Deal Liberalism, pp. 113–115; Leighninger, Long-Range Public Investment, pp. 35–101; Nick Taylor, American-Made (New York: Random House, 2009), p. 359. 44. Patrick Renshaw, “Was There a Keynesian Economy in the USA Between 1933 and 1945?” Journal of Contemporary History 34, no. 3 (July 1999): 337–364, quote on 340–341. 45. Average current-dollar GDP for the years 1935–1937 is $84.1 billion a year. Average spending on job creation for those same years is $4.21 billion a year. The figure 4.21 divided by 84.1 gives us 5.005 percent, and Okun’s law in reverse states that 2 percent of GDP is required for a 1 percent decline in unemployment. Five percent divided by two gives us 2.5 percent. For spending on a job creation program, see Amenta et al., “Bring Back the WPA,” pp. 4–7. For U.S. GDP levels, see Bureau of Economic Analysis, “Current Dollar and ‘Real’ Gross Domestic Product,” https://www.bea.gov/national/xls/gdplev.xls. 46. Bureau of Labor Statistics, “Employment by Major Industry Sector,” http://www.bls .gov/emp/ep_table_201.htm. 47. Jacobs, Pocketbook Politics, pp. 179–221; Klein, For All These Rights, pp. 162–203. 48. In addition to the persistence of the WPA as an employer, there is also the fact that World War II as an economic policy consisted of hiring twelve million men to work directly for the federal government at $50 a month, with $40 billion in spending per year on government purchases and public works. That public employees were assigned to the destruction of

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fascism and that public expenditures came in the form of aircraft carriers and B-42 bombers is a distinction without difference. 49. Field et al., Final Report, pp. 84–89. 50. The efforts in the 1970s to produce a lasting recovery are more universally recognized as failures: Nixon began with 4 percent unemployment in 1969, but saw that increase to 6 percent in late 1970, recover during the “Keynesian turn” in 1972–1973, but then fall apart with an increase to 7.2 percent by late 1974. Ford’s embrace of austerity economics saw an increase from 7.2 percent to a high of 9 percent in May 1975 but then remained virtually at 8 percent throughout 1976. Carter’s initial embrace of stimulus spending brought unemployment down to 5.7 percent in mid-1978, but the Volckerite turn in 1979–1980 saw rates increase again to a height of 7.8 percent in July 1980. See http://data.bls.gov/timeseries/LNS 14000000. 51. Dylan Matthews, “Did the Stimulus Work? A Review of the Nine Best Studies on the Subject,” Washington Post, August 4, 2011, http://www.washingtonpost.com/blogs/wonkblog/ post/did-the-stimulus-work-a-review-of-the-nine-best-studies-on-the-subject/2011/08/16/ gIQAThbibJ_blog.html. 52. Given the persuasiveness of Larry Barte’s work regarding the impact of recent economic conditions on the outcome of presidential elections in Unequal Democracy (Princeton, NJ: Princeton University Press, 2009), the latter is a much more likely explanation. 53. Executive Order 7034 in “Handbook of Procedures II—Executive Orders,” Folder “Handbook of Procedures,” Container 647, Published Materials Collection, FDRPL. For the purposes of comparison, $25,000 in 1935 is equivalent to $387,213.50 in 2009 dollars. 54. Jacob Baker to Senator Lewis, October 27, 1934, Folder “Policy WD 1934,” box 3, Jacob Baker Files, Records of the Federal Emergency Relief Administration, Record Group 69, National Archives II, College Park, MD. 55. Smith, Building New Deal Liberalism, p. 111. 56. WPA wages went through a similar dialectical process—in which wage rates were a by-product of a conflict over whether the WPA would be a relief program (and thus subject to all the restraints of poor-law tradition) or whether it would be more genuinely social democratic. WPA wages started at a set “security wage” calculated by social workers to support a family on relief (although that wage of $50–55 a month still represented almost a fourfold increase from pre–New Deal relief and a more than twofold increase from the WPA’s own FERA). For pre-FERA and FERA relief, see “Average General Relief Benefits, 1933–1938,” Folder “Average General Relief Benefits,” Container 628 of Published Materials, FDRPL. For CWA and WPA wages, see Field et al., Final Report, pp. 4, 103. Due to combined pressures from within, from more Left-leaning figures within the WPA like Johnstone, Baker, and (eventually) Williams; from without, from a multitude of WPA unions from the AFL (who wanted to prevent the program from undercutting prevailing wage standards in construction), the CIO (who wanted to ensure that the WPA provided adequate support for seasonally unemployed manufacturing workers), and the Popular Front (who looked to use the program to organize the unemployed); and from “pro-spending” members of Congress who wanted to expand purchasing power by boosting WPA wages, this began to change. Jacob Baker to Harry Hopkins, “Statement of Workers’ Alliance,” Folder “140— Memoranda of Jacob Baker,” box 41, New General Subject Files, Records of the WPA, Record Group 69, National Archives II, College Park, MD; Jacob Baker to Harry Hopkins, “Work

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Relief Strike in Colorado,” Folder “Labor Relations,” box 4, Jacob Baker Files, Records of the WPA, Record Group 69, National Archives II, College Park, MD; Nels Anderson to Jacob Baker, December 19, 1934, Folder “Labor Relations,” box 4, Jacob Baker Files, Records of the WPA, Record Group 69, National Archives II, College Park, MD. As a result of the ad hoc coalition between these groups, average WPA wages increased by 38 percent between 1936 and 1943, from $55 a month to $76. And while that might not seem like much, we have to consider these wage rates in relation to the wages that unskilled laborers (who made up 70 percent of the WPA’s workforce) were making in the private sector at the same time. As Amenta and colleagues point out, “In September 1939, average [WPA] wages dropped to 44 cents per hour; but even this was about 85 percent of the average entrylevel pay of common laborers in 1940—51 cents per hour.” For the vast majority of WPA workers, the WPA’s new wage rates represented a solid maintenance of their previous living standard in a way that “security wages” simply had not. Field et al., Final Report, p. 102. 57. Recent historical work on the WPA has suggested that a path-dependent process did take place between 1935 and 1938. Amenta, Bold Relief; Amenta et al., “Bring Back the WPA”; Amenta and Halfmann, “Wage Wars”; and Amenta and Halfmann, “Who Voted with Hopkins,” make this case the most explicitly. Even historians who do not adopt American political development theory agree that the New Deal’s job programs did generate popular support over time. Smith, in Building New Deal Liberalism, argues that “the PWA’s bureaucracy and its projects, once functioning, did play a key role in building and solidifying the Democratic Party at federal, state, and local levels of government” (p. 74), through the distribution of jobs and contracts to marginal states and congressional districts and the resulting networks between Democratic parties, interests, and the government. Similarly, the WPA’s projects were wildly popular with the electorate, because they were sponsored by local government bodies, such that “93 percent of communities found that the WPA’s projects were ‘badly needed and of benefit’ ” (p. 136). Smith notes that voters based their opinion of the WPA on the local projects in their communities, despite accusations of boondoggling, such that “opponents of the New Deal were not able to convince the public that all of the New Deal’s [works] projects were worthless” (p. 146). Liz Cohen, in Making a New Deal, points to the WPA as the key force motivating black voters in the North to shift to the Democratic Party (pp. 258–261). 58. Amenta and Halfmann, “Who Voted with Hopkins,” p. 260. 59. Katznelson, in both When Affirmative Action Was White and Fear Itself. Interestingly, the WPA avoided the ire of Southern Democrats, despite employing a large population of black workers (with 426,000 on the rolls in February 1939). Once the Southern Democrats turned on the WPA, the proportion of African Americans on the rolls actually increased, rising to 20 percent by October 1942. 60. Amenta and Halfmann, “Who Voted with Hopkins,” p. 259. 61. Ibid. 62. Ibid., pp. 270–272. 63. Amenta et al., “Bring Back the WPA,” p. 48. Katznelson’s When Affirmative Action Was White and Fear Itself provide a useful addition to Amenta’s thesis, linking initial Southern support for New Deal programs to the New Deal’s willingness to toe the color line—although given that the WPA (and the PWA) did not toe the color line in important areas such as wage rates and eligibility, it is worth asking why the New Deal’s job programs were allowed to

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remain an exception for as long as they were and why the South eventually came to see the WPA as a threat to the Southern labor market system and showing how a permanent WPA program as part of an overall program of expanded executive power offered black workers a direct connection to federal employment and thus an escape from economic intimidation. James Lorence’s The Unemployed People’s Movement (Athens: University of Georgia Press, 2009), pp. 127–188, provides an excellent case study of how this process unfolded in Georgia. 64. Smith, Building New Deal Liberalism, pp. 135–159. 65. “Survey Shows WPA Rules Balk Useful Projects,” Chicago Daily Tribune, June 23, 1935; ”Warns New Deal ‘Can Never Live Down Its Waste,’ ” Chicago Daily Tribune, February 2, 1936; W. Edwards, “President Sees ‘Boondoggling’ as Trade Spur,” Chicago Daily Tribune, January 19, 1936; Virginia Gardner, “WPA’s Actors Give Santa a Great Big Hand,” Chicago Daily Tribune, November 13, 1935; ”Study Assails Money Wasted in Boondoggling,” Chicago Daily Tribune, November 13, 1935; “WPA to Enlarge on Boondoggle Program of EEP,” Chicago Daily Tribune, September 28, 1935. 66. Eric Rauchway, “Make-Work,” December 15, 2008, http://chronicle.com/blognet work/edgeofthewest/2008/12/15/make-work/. 67. “WPA Chief Sounds Appeal for Votes,” New York Times, June 28, 1938; “Alliance Upheld in WPA Bargaining: Williams Overrules Ridder in Granting Right to Workers’ Group Here,” New York Times, June 14, 1936; “WPA to Investigate Charges Made Here: Williams Promises Action to Workers Alliance,” New York Times, June 28, 1936. For more on the WPA’s tacit alliance with the United Auto Workers in organizing the WPA, see James J. Lorence, Organizing the Unemployed (Albany: State University of New York Press, 1996), pp. 125–190. 68. “Radio Staff Meeting,” June 20, 1936, Folder “Radio Staff Meeting,” box 53, Harry Hopkins Papers, FDRPL; Gallup Poll, February 1939, Folder “Gallup Poll,” box 55, Harry Hopkins Papers, FDRPL. 69. Smith, Building New Deal Liberalism, pp. 54, 88, 121. 70. Brinkley, End of Reform, pp. 24–28. 71. For more on the fiscal conservativism of turn-of-the-century “liberals,” see Cohen, Reconstruction of American Liberalism, , pp. 86–89, 91–95, 113–122. 72. “Curried” Keynesianism refers to proto-Keynesian proposals for deficit spending to artificially stimulate demand, as advanced by Lachlan Currie before and after the publication of the General Theory in 1935, with the most famous being the Spend-Lend Bill of 1939 that sought to fund direct job creation and public works spending through deliberate deficit financing. 73. Lachlan Currie, “Causes of the Recession,” April 1, 1938, Folder “Lachlan Currie Report,” box 55, Harry Hopkins Papers, FDRPL. 74. Ibid. 75. At the time, Henderson worked for the WPA as one of Hopkins’s economic advisors. This position occurred in between his stint at the NRA and his time at the Securities and Exchange Commission and, later, the Office of Price Administration. For more on Henderson at the WPA, see Leighninger, Long-Range Public Investment, p. 177. 76. Leon Henderson to Harry Hopkins, May 23, 1938, Folder “Henderson Memoranda,” box 54, Harry Hopkins Papers, FDRPL. 77. Ibid.

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78. Ibid. 79. Ibid. 80. “Suggested WPA Program to Expand Purchasing Power as Rapidly as Possible,” Folder “Suggested Changes to Relief Policies,” box 55, Hopkins Papers, FDRPL. 81. Ibid. 82. Jacob Baker, “Public Work Program for Increasing Employment,” Folder “Byrnes Committee,” box 12, Records of the Division of Social Research, Record Group 69, National Archives II, College Park, MD. 83. Corrington Gill, “Recommendations for the Proposed Department of Social Welfare,” Folder “Recommendations for the Proposed Department of Social Welfare,” box 55, Hopkins Papers, FDRPL. 84. Alan Johnstone, “Proposed Work Program,” Folder “Proposed Work Program by Alan Johnstone,” box 55, Harry Hopkins Papers, FDRPL. 85. Unknown author, “Suggested Program” and “Summary of Suggested Changes in Relief Policy and Structural Organization,” Folder “Suggested Changes in Relief Policy,” box 55, Harry Hopkins Papers, FDRPL. 86. See Chapter 1. 87. Henry Cabot Lodge Jr. et al., “Preliminary Minority Views,” April 20, 1938, Folder “Byrnes Committee,” box 83, Harry Hopkins Papers, FDRPL. 88. Ibid. 89. Ibid. 90. Ibid. 91. James F. Byrnes, “Preliminary Report,” Folder “Byrnes Committee,” box 83, Harry Hopkins Papers, FDRPL. 92. Ibid. 93. Taking Lebergott’s 10.39 million unemployed in 1938 as the total number of people needing jobs (some of whom we know got jobs through the WPA) and Darby’s 3.35 million unemployed in 1941 as the total number who needed jobs once the New Deal’s job programs were in effect, unemployment declined by 7.04 million people in that period. Taking the difference between Darby’s 1938 and 1941 figures as the 3.448 million jobs created in the private sector, the remaining 3.55 million (or 51.03 percent) jobs are the public sector’s contributions. 94. Unknown author, “Report of Progress of the Works Program,” July 15, 1935, Folder “Reports on Progress of WPA,” Container 647, Published Material Collection, FDRPL. 95. Col. Harrington, “Mission of the Works Progress Administration,” Folder “Col. Harrington’s Report on WPA Setup,” box 51, Harry Hopkins Papers, FDRPL. 96. Corrington Gill and Emerson Ross, “An Analysis of Employment on WPA Projects in December 1935,” Folder “Analysis of Employment on WPA Projects,” Container 628, Published Material Collection, FDRPL. 97. Jacob Baker memo, August 23, 1935, Folder “Genesis of Relief 3/3,” box “Genesis of Relief Project,” FERA Central Files, Record Group 69, National Archives II, College Park, MD. 98. Ibid. 99. Jacob Baker, “The Relief Problem” and “The Work Relief Program,” Folder “Genesis of Relief 3/3,” box “Genesis of Relief Project,” FERA Central Files, Record Group 69, National Archives II, College Park, MD.

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100. Baker, “Work Relief Program.” 101. Ibid. 102. Inventory of the WPA, Folder “Inventory of the WPA,” box 55, Harry Hopkins Papers, FDRPL. 103. Ibid. 104. Fields et al., Final Report, p. iii. 105. Ibid., p. 1. 106. Ibid., p. iii. 107. Ibid., pp. iii, v. 108. Amenta et al., “Bring Back the WPA.” 109. Katherine Newman and Elisabeth Jacobs, Brothers’ Keepers? The Limits of Solidarity from the New Deal to the Second Gilded Age (Princeton, NJ: Princeton University Press, 2010), p. 48.

Chapter 4 1. “Output Lag Called Economic Threat,” New York Times, January 11, 1944; “Reconversion Lag Seen by Industry,” New York Times, August 11, 1945; Felix Belair Jr., “Homefront Problems Press for Solution,” New York Times, August 12, 1945; “Post-War Jobless Seen Invading City,” New York Times, January 9, 1944. 2. Donald K. Pickens, Leon H. Keyserling: A Progressive Economist (Lanham, MD: Lexington Books, 2003), p. 122. 3. William Beveridge loomed like a giant over American full-employment planners. Here was an unquestioned expert with both Oxford training and populist appeal who could square the circle of technocratic efficiency and democracy. As a result, American writers sought to claim Beveridge for their own. Gerhard Colm used Beveridge as evidence of Keynesian policy at its best, excising Beveridge’s calls for nationalization and state direction of industry in order to do so. See Colm memo, November 30, 1944, Folder: “Full Employment-Miscellaneous [1944–45] 1,” box 1, Colm Papers, Harry S. Truman Presidential Library and Museum, Independence, MO (hereafter, HTPL). Mordechai Ezekiel went so far as to argue that nationalization and central planning were merely “Keynesianism plus” and that the Beveridge plan would serve as a powerful retort to American fears of collectivization. Mordechai Ezekiel, “Full Employment—The Beveridge Model,” Nation, Folder: Publications, box 39, Ezekiel Papers, FDRPL. Alvin Hansen seized on Beveridge’s comments that “the ratio of tax revenues to expenditure should be based, not on considerations of finance and budgetary equilibrium, but on broad grounds of social and economic policy” and “in order to end the giant social evils . . . it may well be necessary that the public outlays in the total national budget be greater than the amount necessary to create an adequate total command. Private consumption and private industry may accordingly . . . have to be restrained” to bolster the case for his own social Keynesian agenda. See Alvin Hansen, Full Employment and Economic Policy (New York: McGraw-Hill, 1947), pp. 77–78. 4. For media hostility to full employment, see Ruth Ellen Wasem, Tackling Unemployment: The Legislative Dynamics of the Employment Act of 1946 (Kalamazoo, MI: Upjohn Institute, 2013), pp. 39–67. 5. Ibid., pp. 49–55. 6. Ibid., pp. 44, 52–53, 56–57.

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7. Theodore Rosenof, Economics in the Long Run (Chapel Hill: University of North Carolina Press, 1997), esp. pp. 66–94, 105–145. Yuval Yunay describes a similar process of conflict between institutionalists and neoclassical economists taking place in the interwar period in Struggle for the Soul of Economics (Princeton, NJ: Princeton University Press, 1998), esp. pp. 77–99. 8. Donohue, Freedom from Want, pp. 115–197. 9. Wasem, Tackling Unemployment, pp. 71–73. 10. This in turns calls into question path-dependent theories of employment policy, such as those described by Weir in relation to this bill and by Amenta and others in regards to the New Deal. While it is true that the FEB might have acted as the catalyst to a path-dependent process, the drafting of the bill itself does not lend itself toward institutional explanations. 11. In “State Structures and Social Keynesianism” (International Journal of Comparative Sociology 24 [1983]: 4–29, quote on 4), Theda Skocpol and Margaret Weir (who would extend this line further in “The Federal Government and Unemployment,” in Weir, Orloff, and Skocpol, Politics of Social Policy; and in Weir, Politics and Jobs) argue that institutional structure, especially the presence or absence of a well-developed civil service and the centralization or lack thereof of political power, was the driving factor behind why Sweden permanently established a system of direct job creation called beredskeparbete, but the United States did not. 12. In the Seventy-ninth Congress, Democrats enjoyed a nominal majority of fifty-three in the House and nineteen in the Senate. Taking James T. Patterson’s estimates in Congressional Conservatism and the New Deal (Lexington: University of Kentucky Press, 1967), esp. pp. 339, 347, as a guide, even the forty-nine conservative Democrats in the House would vote for the New Deal 75 percent of the time, and the twenty-six conservative Democrats in the Senate 88 percent of the time, leaving the proponents of the FEB with ample room to maneuver. 13. For more on how scholars have virtually equated Keynesianism and the FEB, see Wasem, Tackling Unemployment, pp. 4–6. 14. Brinkley, “New Deal and the Idea of the State,” pp. 85–121; Steven Fraser, Labor Will Rule (Ithaca, NY: Cornell University Press, 1991), p. 410; Gary Gerstle, Working Class Americanism (Princeton, NJ: Princeton University Press, 2002), pp. 267–268; Weir and Skocpol, “Social Keynesianism and State Structure.” 15. Brinkley, End of Reform, pp. 3–31, 86–105. 16. Weir, Politics and Jobs, p. 27. 17. Ibid., pp. 34–37, 41–43. 18. Ibid., pp. 5, 7–8, 16, 19, 24. 19. Rosenof, Economics in the Long Run, pp. 66–87, 115–126. 20. Richard Parker, John Kenneth Galbraith (New York: HarperCollins, 2005); Robert Skidelsky, Keynes: Return of the Master (New York: Public Affairs, 2010). 21. Parker, John Kenneth Galbraith, pp. 65–88, 273–310, 435–451. For Galbraith as a qualitative liberal, see Kevin Mattson, When America Was Great (New York: Routledge, 2006), pp. 124–153. 22. Skidelsky, Keynes, pp. 58, 82 on Keynes’s suspicion of models; pp. 88, 90 on econometrics; pp. 73, 80, 83–88 on uncertainty. 23. Ibid., pp. 96, 102–103, 111.

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24. For Weir’s categorization, see Politics and Jobs, p. 10. For an example of undifferentiated treatment of different policies, see pp. 30–61, where public works is used synonymously to describe the PWA as well as Hoover-era proposals and the WPA’s job creation policies. 25. For the radicalism of direct job creation, see Chapter 2. For job training as a conservative alternative to a job creation program, see Gordon Lafer, The Job Training Charade (Ithaca, NY: Cornell University Press, 2002), pp. 1–45, 156–189. 26. Weir, Politics and Jobs, pp. 42–43. 27. Ibid., pp. 45–47. 28. Jacobs, Pocketbook Politics, pp. 179–261; Klein, For All These Rights, pp. 116–257. 29. Smith, Building New Deal Liberalism, pp. 198–245. 30. Lewis Lorwin (NRPB), “Memorandum for the President,” Folder “NRPB 1941,” box 143, Secretary’s Files, FDRPL. Lewis Lorwin, a Left-leaning economist who would later work for the International Labour Organization, advised the NRPB on economic planning issues. 31. Field et al., Final Report, p. iii. 32. Ibid., pp. iii, v. 33. John Kenneth Galbraith et al., The Economic Effects of Public Works Spending (Washington, DC: Government Printing Office, 1940), p. 8. These four views, summed up on pp. 3–4, are neoclassical (which holds that recessions are self-correcting and public works are counterproductive), countercyclical (which holds that public works are useful, while still believing that recessions are ultimately a departure from the norm), Keynesian (which both accepts the need for public works and argues that suboptimal equilibrium is always possible and likely unless counteracted), and stagnationist (which sees suboptimal equilibrium as the norm, but, unlike strict Keynesianism, sees long-term changes in demography and technology as requiring constant government stimulus). 34. Ibid., pp. 3, 74. 35. Ibid., pp. 74, 107. 36. Ibid., pp. 32, 55. 37. Ibid., pp. 38–54. 38. Ibid., p. 55. 39. Ibid., p 74. 40. Ibid., pp. 75–111. For more on WPA administrators’ proposals from the 1930s onward to make their agency permanent, see Chapters 1–3. 41. “NRPB Conference on Post-War Reconversion (1942),” pp. 14, 16, Folder “NRPB,” box 203, Harry Hopkins Papers, FDRPL; “Assumptions for Planning,” p. 3, Folder “Post-War Planning—3,” box 24, Aubrey Williams Papers, FDRPL; “Broad Outline for White Paper on Employment Policy,” Folder “Post-War Planning,” box 24, Aubrey Williams Papers, FDRPL. 42. Eveline Burns, Corrington Gill, et al., Security, Work, and Relief (Washington, DC: Government Printing Office, 1942), pp. 37, 69. 43. Ibid., p. 2. 44. Ibid., p. 487. 45. “NRPB Conference on Post-War Reconversion (1942),” p. 14. 46. Ibid., p. 491. 47. Ibid., pp. 102, 504. 48. Ibid., p. 506. The mention of UI eligibility shows an especially strong influence from earlier WPA proposals made in 1934–1935 to merge a “work insurance” program with UI. See Chapter 1 for the discussion of Emerson Ross’s proposals in the CES deliberations.

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49. Donohue, Freedom from Want, pp. 198–275. 50. Stephen Kamp Bailey, Congress Makes a Law (New York: Columbia University Press, 1950), p. 45. Despite his current obscurity, Pierson’s writings were important enough at the time for both Alvin Hansen and Mordechai Ezekiel to rebut in their own published writings. 51. Rosenof, Economics in the Long Run, pp. 32–35. 52. Ibid., pp. 37–38. 53. Brinkley, End of Reform, pp. 65–85. While Means’s economic theories could be categorized in a number of different ways, Theodore Rosenof makes a persuasive argument in pp. 66–88 of Economics in the Long Run that Means’s point of view, especially in debates over the causes and cures for unemployment with Keynes himself, should be categorized as institutionalist. 54. Gardiner Means, The Structure of the American Economy (Washington, DC: Government Printing Office, 1941), pp. 6–7. Means specifically pointed to administered prices throughout the economy as the main cause for industrial concentration in the Northeast, mechanization leading to decreased labor demand, sectoral divisions between durable and nondurable goods (with the latter acting more like his model), huge swings in housing, and lack of purchasing power. 55. Ibid., p. 10. 56. Gardiner Means, “A Program for Eight Million Jobs,” Folder “A Program for 8 Million Jobs,” box 89, Means Papers, FDRPL. To be fair, like his erstwhile rival Alvin Hansen, Means adopted many elements of full-employment policy favored by Keynesians— countercyclical taxation, budget, and social insurance policies designed to counteract deficiencies of purchasing power, and the use of government construction to regularize capital investment—as supplemental measures. 57. Gardiner Means, “Collective Capitalism and Economic Theory,” p. 5, Folder “Collective Capitalism and Economic Theory,” box 86, Means Papers, FDRPL. 58. Gardiner Means, “A Program for Full Employment in 1973,” Folder “A Full Employment Program—1973,” box 89, Means Papers, FDRPL. 59. Gardiner Means, “The American Economy in the Interwar Years,” pp. 2, 5, Folder “American Economy in Interwar Years,” box 86, Means Papers, FDRPL. Summarized, Means believed that Keynes had erred by assuming that changes in the real money supply only affected aggregate demand through interest rates. Means argued that there was also a direct and a wealth effect, which meant that the propensity to consume and invest was conditioned by the “financial restraint,” but also that in conditions of administered prices, an increase in the real supply of money might have no effect on interest rates, which would allow monetary expansion to increase aggregate demand and the propensity to consume—making it a much more powerful tool than Keynesians held. See “The Basic Flaw in the Keynesian Analysis,” Folder “Basic Flaw,” box 89, Means Papers, FDRPL. 60. Means, “American Economy in the Interwar Years,” pp. 1, 4. Interestingly, Christina Romer, Ben Bernanke, and other post-Keynesian economists would later agree even more strongly with Means on the importance of New Deal monetary policy. 61. Means, “Basic Flaw in the Keynesian Analysis,” pp. 20–30; Gardiner Means, “A Program to Achieve Full Employment in One Year,” p. 3, Folder “A Program to Achieve Full Employment in One Year,” box 89, Means Papers, FDRPL. 62. John H. G. Pierson, Full Employment Without Inflation (New York: Rowman and Littlefield, 1980), p. 222.

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63. Ibid., pp. 196–197. 64. Ibid., pp. 54, 163, 196–197. 65. Ibid., p. 202. 66. Ibid., pp. 138, 158. 67. Ibid., p. 222. 68. Ibid., p. 140. 69. Ibid., p. 218. 70. Ibid., p. 190. 71. Rosenof, Economics in the Long Run, p. 14. 72. Mordechai Ezekiel, “A Plan for Postwar Employment,” pp. 31–35, in Pabst Blue Ribbon Plans for the Future, Folder “Pabst Postwar Plans,” box 37, Ezekiel Papers, FDRPL. 73. Ibid., p. 34. 74. Mordechai Ezekiel, “Possible Lines of Action,” p. 18, Subject File, box 35, Ezekiel Papers, FDRPL. 75. See Jim Tomlinson, Employment Policy: The Crucial Years, 1939–1955 (Oxford: Oxford University Press, 1987); and Richard Toye, The Labour Party and the Planned Economy (Suffolk, UK: Boydell Press, 2003). 76. Ezekiel, “Plan for Postwar Employment,” pp. 32–34. 77. Mordechai Ezekiel, “Full Employment—the Challenge to Democracy,” p. 15, Folder “FE: Challenge to Democracy,” box 35, Ezekiel Papers, FDRPL. 78. Ibid., p. 38. 79. For a discussion of WPA proposals on a permanent agency, see discussion in Chapters 2 and 3. For NRPB, see Galbraith et al., Economic Effects of Public Works Spending, pp. 75–111. 80. Ezekiel, “Possible Lines of Action,” pp. 1–2. 81. Alonzo Hamby, “Sixty Million Jobs and the People’s Revolution: The Liberals, the New Deal, and World War II,” Historian 30, no. 4 (August 1968): 578–598. Wallace’s proposals did follow Ezekiel’s to some extent—emphasizing the eighty-eight million man-years of employment and $350 billion in production lost in the Great Depression, and calling an ambitious program of investments to deal with “unfinished national business,” including sixteen to eighteen million new homes and nine to ten million renovations, national healthcare, and the extension of the Tennessee Valley Authority system. See Henry Wallace, Sixty Million Jobs (New York: Simon and Schuster, 1945), pp. 18–21, 99–111. However, Wallace and Ezekiel were also decidedly moderate given their provenance. Wallace explicitly argued that if the government would “make an outright commitment, irrespective of the cost, to give work to everyone who wants a job but cannot find one . . . on [a] useful public project,” then “our free-enterprise system would not thrive for long. . . . [S]uch an employment policy [would] inevitably lead to state regimentation” (Wallace, Sixty Million Jobs, pp. 152–153). His proposed “Budget for Sixty Million Jobs” assumed that a $200 billion GDP would be divided so that consumers would earn and consume $135 billion, and business another $35 billion, with the federal government sharing $35 billion (or 17.5 percent of GDP) with state and local government (ibid., pp. 177–184). Ezekiel’s lack of influence on Wallace is somewhat surprising, but it may well suggest the impact that the introduction of the Keyserling-drafted FEB had on the political debate, if even a leading Left liberal was so ready to discount the role that direct job creation should play—especially when Wallace had been one of the WPA’s key supporters during spending battles in 1938.

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Notes to Pages 152–155

82. Alvin H. Hansen, “A General View of the Institutional Effects of the War,” American Economic Review 32, no. 1, pt. 2 (March 1942): 351–359; Alvin H. Hansen, “A Note on Fiscal Policy: A Clarification,” American Economic Review 35, no. 3 (June 1945): 408–410; Alvin H. Hansen, “Three Methods of Expansion through Fiscal Policy,” American Economic Review 35, no. 3 (June 1945): 382–387; Alvin H. Hansen, “Hansen’s ‘Three Methods of Expansion Through Fiscal Policy’: Comment,” American Economic Review 35, no. 5 (December 1945): 928; Alvin H. Hansen, “Extensive Expansion and Population Growth,” Journal of Political Economy 48, no. 4 (August 1940): 583–585; Alvin H. Hansen, “Keynes and the General Theory,” Review of Economics and Statistics 28, no. 4 (November 1946): 182–187; Alvin H. Hansen, “A New Goal of National Policy: Full Employment,” Review of Economics and Statistics 27, no. 3 (August 1945): 102–103; Alvin H. Hansen, “A Brief Note on ‘Fundamental Disequilibrium,’ ” Review of Economics and Statistics 26, no. 4 (November 1944): 182–184. 83. On the importance of Alvin Hansen as a Keynesian thinker, see Rosenof, Economics in the Long Run, pp. 44–76; on Leon Keyserling’s position on Wagner’s staff, see Bailey, Congress Makes a Law, pp. 64–78. 84. Donald Pickens, Leon Keyserling (Lanham, MD: Lexington Books, 2009), pp. 1–57. 85. Leon Keyserling, “Economics of the Truman Administration,” Folder “Economics of the Truman Administration,” box 47, Speeches and Articles, Keyserling Papers, HTPL. 86. Alvin Hansen, Economic Policy and Full Employment (New York: McGraw-Hill, 1947), pp. 33, 40. 87. Ibid., pp. 12–13, 145. 88. Ibid., pp. 21, 178. 89. Ibid., pp. 43, 45. 90. Ibid., pp. 166–167, 21. As we will see, this put Hansen at odds with pro-consumption advocates. 91. Ibid., p. 23. 92. Ibid., pp. 167, 183. 93. Ibid., pp. 22, 140. 94. Ibid., p. 42. 95. Leon Keyserling, “The American Economic Goal,” in Pabst Blue Ribbon Postwar Employment Awards, p. 11, Folder “Postwar Plans,” box 37, Ezekiel Papers, FDRPL. 96. Ibid. Keyserling’s plan did have in its tripartism a certain social tinge. The dominant motif in Keyserling’s writings in the 1940s was the superior virtue of cooperation between social groups. In “From Patchwork to Purpose,” he argued that one of the causes of the Great Depression was that “we have not yet arrived at enough fundamental agreements—or even the machinery for achieving them—with respect to the content or application of an integrated economic policy.” The FEB would solve this flaw in the American economic system by “blend[ing] the economic programs of private enterprise and public agencies.” Leon Keyserling, “From Patchwork to Purpose,” p. 4, Folder “From Patchwork to Purpose—Full Employment—American Bill,” box 28, Speeches and Articles, Keyserling Papers, HTPL. 97. Keyserling, “From Patchwork to Purpose,” pp. 12–13. 98. Ibid. 99. Ibid., p. 13. 100. Ibid., p. 4. 101. There is an alternative explanation for Keyserling’s stance. As Landon Storrs points out in “Red Scare Politics and the Suppression of Popular Front Feminism: The Loyalty

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Investigation of Mary Dublin Keyserling” (Journal of American History 90, no. 2 [2003]: 491– 524) and in The Second Red Scare (Princeton, NJ: Princeton University Press, 2013), Keyserling and his wife were both under investigation for communist sympathies in the mid-1940s, and Keyserling especially was forced to moderate his politics, especially on NSC-68 and socalled military Keynesianism in order to avoid political exile. It may well be that the same pressure led him to moderate himself on full-employment policies. On the other hand, Keyserling’s troubles did not really intensify until 1948, which throws some doubt on whether Keyserling would be self-censoring before 1945 to such an extent. 102. Storrs, Second Red Scare, p. 4. 103. Leon Keyserling, “Employment and Government Policy,” p. 1, Folder “Employment and Government Policy,” box 28, Speeches and Articles, Keyserling Papers, HTPL. 104. David Ciepley, Liberalism in the Shadow of Totalitarianism (Cambridge, MA: Harvard University Press, 2006), pp. 129–164. 105. Since this was the case, this suggests that a straightforward process of path dependency was not taking place, as one might expect the path-dependent effects of having authored the Social Security Act, the Wagner Act, and the Wagner-Murray-Dingell Act to produce a more Left-leaning bill than median proposals. Instead, this suggests the power of Keyserling’s influence as a policy entrepreneur. 106. Assuring Full Employment (Washington, DC: U.S. Government Printing Office, 1945), p. 9. 107. Senator Wagner’s staff, “Evolution of the Employment Act of 1946,” p. 10, Folder “Origins of the Employment Act,” box 2, Nourse Papers, HTPL. 108. Ibid., p. 11. 109. Wagner Committee, “Declaration of Policy,” Folder “S.380–1,” box 30, Senate Papers Relating to Specific Bills, National Archives I, Washington, DC. 110. “Area for Amendments,” Folder “Full Employment Bill—Amendments,” box 12, Louis Bean Papers, FDRPL. 111. “Suggested Revision for Full Employment Bill,” Folder “Full Employment Bill— Amendments,” box 12, Louis Bean Papers, FDRPL. 112. Assuring Full Employment, p. 7. 113. Ibid., p. 8. 114. Wasem, Tackling Unemployment, pp. 87, 99–101, 110. 115. See Tomlinson, Employment Policy; Toye, Labour Party and the Planned Economy. These authors argue that one of the major reasons why the Attlee government was unable to realize its larger ambitions was that the Labour Party was divided in its vision, with advocates of economic planning actively trying to block nationalization on the grounds that it had become outmoded with the development of modern planning, advocates of nationalization (especially Herbert Morrison) trying to stymie central planning on the grounds that it placed too-high demands on nationalized industries, and Keynesians like Hugh Dalton at war with central planners like Stanford Cripps over the direction of economic planning. 116. One possible explanation for why the archival materials on the Full Employment Act do not speak either positively or negatively on why liberals did this is that there was a sincere ideological turn against statism, along the lines suggested in Ciepley, Liberalism in the Shadow of Totalitarianism, pp. 129–164. 117. Assuring Full Employment, p. 7.

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Notes to Pages 160–166

118. Ibid. Also see the discussion in Wasem, Tackling Unemployment, pp. 24–25, 78, 86, 89. 119. Radcliffe, Taft, et al., “Assuring Full Employment in a Free, Competitive Economy—Minority Report,” pp. 1–2, Folder “S.380–1,” box 30, Senate Papers Relating to Specific Bills, National Archives I, Washington, DC. 120. Ibid., p. 3. 121. Ibid., p. 4. 122. Ibid. 123. Congressman Whittington, Employment-Production Act, Folder “Full Employment Bill—Printed Legislation,” box 12, Louis Bean Papers, FDRPL. 124. Senator Hickenlooper, Amendment to S.380, Folder “S.380–2,” box 30, Senate Papers Relating to Specific Bills, National Archives I, Washington, DC. 125. Radcliffe, Taft Amendment, and Dirksen Amendment, Folder “S.380–2,” Senate Papers Relating to Specific Bills, National Archives I, Washington, DC. 126. Bailey, Congress Makes a Law, p. 3. Also see Wasem, Tackling Unemployment. 127. Assuring Full Employment, p. 8. 128. Ibid. For more on the attempt by New Dealers to expand economic rights through the courts, see Risa Goluboff, Lost Promise of Civil Rights (Cambridge, MA: Harvard University Press, 2007). 129. First Princeton polling memo, pp. 7, 10, Folder “Post-War Planning 1943,” box 328, Hopkins Papers, FDRPL; second Princeton polling memo, p. 12, Folder “Post-War Planning 1943,” box 328, Hopkins Papers, FDRPL; Wasem, Tackling Unemployment, pp. 39–56. As Margaret Weir notes on p. 52 of Politics and Jobs, this followed from an earlier pattern of public approval of government provision of the right to a job, with 77 percent in favor in 1935, dipping down to 61 percent in favor in 1939, but rebounding to 68 percent in 1944. 130. Second Princeton polling memo, pp. 15, 16. 131. First Princeton polling memo, p. 16; second Princeton polling memo, p. 17. 132. Representative Patton, Patton Amendment, Folder “S.380–1,” box 30, Papers Relating to Specific Bills, National Archives I, Washington, DC. 133. Louis Bean, “Proposed Revision of S.380,” Folder “Full Employment Bill—Printed Legislation,” box 12, Louis Bean Papers, FDRPL. 134. Hansen, Economic Policy and Full Employment, pp. 57–105. 135. Testimony of the California State Chamber of Commerce, in Wasem, Tackling Unemployment, p. 99. 136. Ibid., p. 108. 137. Bailey, Congress Makes a Law, p. 243; Assuring Full Employment, p. 81. 138. Wagner Committee, “Declaration of Policy”; Assuring Full Employment, p. 81. 139. Bailey, Congress Makes a Law, pp. 79–98. 140. Marriner Eccles and Gerhard Colm memo to FDR, October 6, 1944, Folder “Origins of the Employment Act of 1946—1,” box 2, Nourse Papers, HTPL; Bailey, Congress Makes a Law, p. 45. 141. Alvin Hansen, “Postwar Employment Program,” pp. 4–5, Folder “Postwar Employment Program of Interagency Group [1944–45] 2,” box 1, Colm Papers, HTPL. 142. Eccles and Colm memo to FDR. 143. Gerhard Colm, “Legislative and Administrative Machinery,” September 8, 1944, Folder “Postwar Employment Program of Interagency Group [1944–45] 2,” box 1, Colm Papers, HTPL.

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144. White Paper Committee, “Postwar Employment—Tentative Draft,” October 9, 1944, in Folder “Origins of the Full Employment Act—1,” box 2, Nourse Papers, HTPL. 145. Gerhard Colm to Weldon Jones, August 11, 1944, Folder “The Employment Act Symposium—Postwar Employment, 1944,” box 1, Colm Papers, HTPL. As Jason Scott Smith points out in Building New Deal Liberalism, “boondoggling” was political code specifically targeted at the WPA, alleging that its projects were worthless leaf-raking exercises. Smith argues that the boondoggling charge was spectacularly ineffective, which would make the White Paper Committee’s decision ironically the opposite of pragmatic strategy. 146. Colm to Jones. 147. Ibid. 148. Fear of being red-baited may also have played a role. See note 101. 149. Hansen, “Postwar Employment Program,” p. 5. 150. Hansen, Economic Policy and Full Employment, pp. 106–120. 151. See Reagan, Designing a New America, pp. 196–223. 152. Indeed, much of the later political and historiographical controversy over full employment and the New Deal can be traced to the development of unemployment statistics. See the discussion of Lebergott and Darby in Chapter 3. 153. Alan Brinkley, “The Problem of American Conservatism,” American Historical Review 99, no. 2 (April 1994): 414–415. 154. Kim Phillips-Fein, Invisible Hands (New York: W. W. Norton, 2009), pp. 19–20, 30–34. 155. Angus Burgin, The Great Persuasion (Cambridge, MA: Harvard University Press, 2012), pp. 56–57. 156. Phillips-Fein, Invisible Hands, pp. 56–58. 157. Jacobs, Pocketbook Politics, pp. 221–261. 158. Smith, Building New Deal Liberalism, pp. 244–245.

Chapter 5 1. Bayard Rustin, “Signs to Be Carried on the March,” August 21, 1963, Folder “March on Washington, 1963, August 14–26,” box 25, National Urban League Papers, Library of Congress. 2. G. Calvin Mackenzie and Robert Weisbrot, The Liberal Hour (New York: Penguin, 2008), pp. 39–43, 74–85. 3. Storrs, Second Red Scare; Storrs, “Red Scare Politics.” 4. Robert M. Collins, More (New York: Oxford University Press, 2000), pp. 48–54. 5. Bureau of Labor Statistics, http://data.bls.gov/pdq/SurveyOutputServlet. 6. However, any decline had leveled out years earlier, with 57 percent in favor in 1956 and 1958, which suggests a persistent large majority in favor of direct job creation, but not the nigh-universal support seen during the 1930s. In the 1970s and 1980s, support would return to the 68 percent mark. American National Election Studies for 1956, 1958, and 1960, http://www.electionstudies.org/nesguide/toptable/tab4a_4a.htm; for 1948, see Judith Russell, Economics, Bureaucracy, and Race (New York: Columbia University Press, 2003), p. 171. 7. James Patterson, America’s Struggle Against Poverty (Cambridge, MA: Harvard University Press, 1981), pp. 112–115, 130–131. Irving Bernstein in Guns and Butter (New York: Oxford University, 1996), pp. 86–92, follows a quite similar narrative, also focusing on Galbraith, Paul Douglas, and Leon Keyserling as structuralists, Cloward and Ohlin as cultural deprivation theorists, and Oscar Lewis as a culture-of-poverty theorist.

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Notes to Pages 175–179

8. Patterson, America’s Struggle Against Poverty, p. 146. 9. Alice O’Connor, Poverty Knowledge (Princeton, NJ: Princeton University Press, 2001), pp. 99–122. 10. Ibid., p. 121. 11. Ibid., p. 132. 12. Ibid., pp. 139–143, 147–149, 152. 13. Ibid., pp. 155–165. 14. Kevin Boyle, The UAW and the Heyday of American Liberalism (Ithaca, NY: Cornell University Press, 1995), pp. 24–26, 94–95, 135, 148, 186–187. 15. Ibid., pp. 162, 171, 176, 190, 183. 16. Thomas F. Jackson, From Civil Rights to Human Rights (Philadelphia: University of Pennsylvania Press, 2007), pp. 168–179, 245–275. 17. Guian McKee, The Problem of Jobs (Chicago: University of Chicago Press, 2008), pp. 12–13, 83–91. 18. Patterson, America’s Struggle Against Poverty, pp. 109–112. 19. Bernstein, Guns and Butter, pp. 90–102. 20. O’Connor, Poverty Knowledge, pp. 147–149. 21. Ibid., pp. 122, 149–150, 203–207. 22. Bernstein, Guns and Butter, pp. 97, 104–107. 23. Patterson, America’s Struggle Against Poverty, pp. 132, 138. 24. Weir, Politics and Jobs, pp. 64, 68–72, 82. 25. Ibid., p. 83. 26. Ibid., p. 84. 27. Ibid., p. 88. 28. This noticeably differed from Richard Cloward and Frances Fox Piven’s thesis that crisis would bring about political compromise. Ibid., pp. 87, 89, 92. 29. Russell, Economics, Bureaucracy, and Race, p. 14. 30. Frank Stricker, Why America Lost the War on Poverty (Chapel Hill: University of North Carolina Press, 2007), pp. 36, 79. 31. Ibid., pp. 79, 42. 32. Ibid., p. 59. 33. O’Connor, Poverty Knowledge, pp. 167–171, 178–179, 182; Brian Steensland, The Failed Welfare Revolution (Princeton, NJ: Princeton University Press, 2008), pp. 41–43, 52–57. 34. Speaking of influences on the midterm elections, the urban riots of the 1960s also played a major rule in slamming the door shut on any expansion of the War on Poverty after 1965, when the Watts riots in 1965 through to the “long hot summer” of 1967 played a significant if sometimes nebulous part in splitting the ruling Democratic coalition and contributing to conservative backlash. (According to the Harris Poll, for example, public support for the War on Poverty dropped from 60 percent in October 1965 to 41 percent in September 1966.) As Alice O’Connor and Margaret Weir point out, one of the major impacts of the 1960s riots was to further racialize poverty by casting public assistance to the poor as “riot insurance” paid out to unruly minorities while struggling working-class whites went without (O’Connor, Poverty Knowledge, pp. 196–211; Weir, Politics and Jobs, pp. 62–98). And while job programs on their own tended to avoid this stigma more than other categories—as we

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can see from the continuing popularity of job policy; see ibid., p. 245)—the increasing racialization of poverty meant that these programs were now increasingly vulnerable to stigma by association. 35. Another major participant, Wilbur Cohen of HEW, did not follow human capital theory, but rather a quantitative analysis focused on the need to close the “poverty gap” in incomes by expanding existing programs of social welfare. However, Cohen and HEW were largely uninterested in job policy in favor of expanding income transfers and medical care to the nonworking or nonworking-age poor. Stricker, Why America Lost the War on Poverty, pp. 35–61; Patterson, America’s Struggle Against Poverty, pp. 126, 132. 36. Walter Heller, “Confidential Memo on Poverty,” Folder “War on Poverty (1963),” box 92, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 37. Heller’s perspective had a point in regards to how the experience of unemployment had changed. With the advent of mass unionism post–World War II, one-third of the workforce was largely shielded from the worst of recessions. As Nelson Lichtenstein has pointed out, with the combination of state-provided UI and collectively bargained supplemental UI benefits, job banks, seniority systems and the regularization of employment contracts, and other private welfare measures, unemployment was both less permanent and less damaging to incomes for union members. See Nelson Lichtenstein, Most Dangerous Man in Detroit (New York: Basic Books, 1995), pp. 175–193, 271–299. In the 1930s, the labor movement had supported direct job creation in no small part because seasonal cycles and the casualization of labor in many industries had exposed their membership to mass unemployment even during the recovery, and the WPA offered a way out. In the 1960s, while the leadership still favored job creation and the rank-and-file were broadly sympathetic, the urgency was missing. 38. Walter Heller, “Problem of Poverty in America,” Folder “Documentary Supplement Chapter I [2 of 2],” in Administrative History—OEO Box II, Lyndon Baines Johnson Library and Museum, Austin, TX (hereafter, LBJL). 39. Walter Heller, “What Price Great Society,” December 21, 1965, Folder “WE9 Poverty Program (Great Society, 1964–1966),” box 89, Confidential Files—War on Poverty, LBJL. 40. Walter Heller, “Confidential—Attack on Poverty,” December 20, 1963, Folder “War on Poverty (1963),” box 92, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 41. Walter Heller to John F. Kennedy, December 1, 1972, Folder “White House— President (1962),” box 4, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 42. Patterson, America’s Struggle Against Poverty, pp. 133–135; O’Connor, Poverty Knowledge, pp. 127–134, 167; Bernstein, Guns and Butter, pp. 88, 95–96. 43. Heller, “What Price Great Society”; Heller, “Confidential—Attack on Poverty.” 44. Labor Department internal proposals, list of Labor Department materials for Heller, October 30, 1963, Folder “War on Poverty (1963),” box 92, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 45. Willard Wirtz, “Unconditional War on Poverty,” January 23, 1964, Folder “White House—General (1964),” box 125, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 46. Ibid. 47. Ibid.

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Notes to Pages 183–187

48. Willard Wirtz to Walter Heller, November 19, 1963, Folder “War on Poverty,” box 92, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 49. Walter Heller, “Widening Participation in Prosperity,” Folder “War on Poverty,” box 92, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 50. Memo regarding labor priorities not being included, Folder “War on Poverty,” box 92, Willard Wirtz Papers, Record Group 174, National Archives II, Washington, DC. 51. Heller, “Widening Participation in Poverty”; Walter Heller, “Problems of Poverty in America,” Folder “Volume II—Documentary Supplement,” box 1, Administrative History of OEO, LBJL. 52. James Farmer speech, Folder “March on Washington, 1963, Aug 14–26,” box 25, National Urban League, Part II, Series A, Library of Congress; John Lewis speech, Folder “March on Washington Press Releases,” box 31, Bayard Rustin Papers, Library of Congress. 53. McKee, Problem of Jobs, pp. 83–89, 137–210. 54. Robert O. Self, American Babylon (Princeton, NJ: Princeton University Press, 2003), pp. 227, 237–238, 310. 55. Bayard Rustin, Church Assembly pamphlet, Folder “March on Washington, 1963, Jan–Aug 13,” box 25, National Urban League Papers, Library of Congress. 56. “The beginning of 1947 is a fair point for me to begin because that was when the Employment Act of 1946 and the Council of Economic Advisers became operative. Between 1947 and 1953 the real average annual rate of economic growth was between 4.8 percent and 5 percent. Now let nobody say that was because of the stimulus of the Korean War. We went through a Vietnam war, and during the years encompassing that period the real rate of economic growth averaged 21/2 percent. . . . [T]he unemployment rate under Harry Truman was reduced to 2.9 percent. . . . [T]hat sounds incredible in terms of anything that has happened since. The average also is much lower than anything that has happened since.” Leon Keyserling, “Economics of the Truman Administration,” box 47, “Speeches and Articles,” Keyserling Papers, HTPL. 57. Leon Keyserling, “The Poverty of American Economics,” box 48, “Speeches and Articles,” Keyserling Papers, HTPL. 58. Leon Keyserling, “Toward Bolder Action,” Folder “WE9 Poverty Program (Great Society, 12/11/1964–12/24/1964),” box 25, White House Confidential File, Subject File— Welfare, LBJL. 59. Leon Keyserling, “A Freedom Budget for All Americans,” box 86, “Publications,” Keyserling Papers, HTPL. 60. Ibid. 61. CEA response to Leon Keyserling, Folder “WE9 Poverty Program (Great Society, 12/ 11/1964–12/24/1964),” box 25, White House Confidential File, Subject File—Welfare, LBJL. 62. Reuther memo, Folder “WE9 Poverty Program (Great Society, 12/26/64–1/31/65),” box 25, White House Confidential File, Subject File—Welfare, LBJL. 63. UAW resolution on War on Poverty, Folder “War on Poverty: March 1964,” box 179, Record Group 174, National Archives II, Washington, DC. 64. AFL-CIO statement on War on Poverty, Folder “Suggestions—A,” box 1, Record Group 381, National Archives II, Washington, DC. 65. Ibid. Judith Stein also points to efforts by labor to bolt job policies into the Great Society in Running Steel, Running America (Chapel Hill: University of North Carolina Press, 1998), pp. 69–89.

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Notes to Pages 188–196

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66. Bernstein, Guns and Butter, p. 102; Russell, Economics, Bureaucracy, and Race, p. 52. 67. Michael Harrington memo, Folder “Documentary Supplement Chapter I,” box 2, Administrative History—OEO, Volume II, LBJL. 68. Ibid. 69. Michael Harrington, Paul Jacobs, and Frank Mankiewicz, “The Long-Term View,” Folder “Documentary Supplement Chapter I,” box 2, Administrative History—OEO, Volume II, LBJL. 70. U.S. Census, Historical Poverty Tables, https://census.gov/data/tables/time-series/ demo/income-poverty/historical-poverty-people.html. 71. Stricker, Why America Lost the War on Poverty, p. 2. 72. Russell, Economics, Bureaucracy, and Race, p. 52; Stricker, Why America Lost the War on Poverty, p. 49. 73. Russell, Economics, Bureaucracy, and Race, p. 52. 74. Daniel Patrick Moynihan, “The Negro Family: The Case for National Action” (Washington, DC: U.S. Department of Labor, March 1965), pp. 19–20. 75. Ibid., p. 47. 76. Ibid. 77. O’Connor, Poverty Knowledge, pp. 122, 203–207. 78. Steensland, Failed Welfare Revolution, p. 79. 79. O’Connor, Poverty Knowledge, p. 207. 80. Patterson, America’s Struggle Against Poverty, p. 130. 81. O’Connor, Poverty Knowledge, pp. 150–162. 82. Boyle, UAW and the Heyday of American Liberalism, pp. 171, 176, 180, 183, 186–187; Jackson, From Civil Rights to Human Rights, pp. 188–217. 83. Lyndon Johnson, quoted in Guian McKee, “The Government Is with Us,” in The War on Poverty: A New Grassroots History, ed. Annelise Orleck and Lisa Hazirjian (Atlanta: University of Georgia Press, 2011), pp. 44–45. Irwin Unger concurs with this analysis of LBJ in The Best of Intentions (New York: Doubleday, 1996), p. 32. 84. Russell, Economics, Bureaucracy, and Race, pp. 111, 131; Stricker, Why America Lost the War on Poverty, p. 49. 85. “Administrative History of the Office of Economic Opportunity,” Folder “Volume I, Part 1 (Narrative History),” box 1, Administrative History—OEO, Volume I, LBJL. 86. Lyndon Johnson, quoted in Guian McKee, “The Government Is with Us,” p. 54. 87. Ibid. 88. OMB memo on Nelson Bill, December 24, 1964, Folder “WE9 Poverty Program (Great Society, 12/11/1964–12/24/1964),” box 25, White House Confidential File, Subject File—Welfare, LBJL. 89. Edmund G. Brown to Willard Wirtz, November 5, 1965, Folder “Committee— Special Presidential Task Force to Coordinate LA Rehabilitation,” box 248, Department of Labor—Willard Wirtz Papers, National Archives II, Washington, DC. 90. “A Suggested Strategy for Developing Jobs,” March 10, 1965, Folder “Committee— Task Force on Rehabilitation of Substandard Housing for Creation of Jobs,” box 248, Department of Labor—Willard Wirtz Papers, National Archives II, Washington, DC. 91. “Low Productivity Jobs in the Great Society,” Folder “War on Poverty (1963),” box 92, Department of Labor—Willard Wirtz Papers, National Archives II, Washington, DC.

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Notes to Pages 196–202

92. Memo on adult work and training programs, January 18, 1966, Folder “White House—Task Force on Adult Work and Training,” box 322, Department of Labor—Willard Wirtz Papers, National Archives II, Washington, DC. 93. “Administrative History of Department of Labor,” p. 14, box 1, Administrative Histories Papers, LBJL. 94. “The Concentrated Employment Program,” Folder “Draft Bills (Poverty) (1967),” box 507, Record Group 174, National Archives II, Washington, DC. 95. Memo from Frank Erwin to James F. Tucker and Jack Howard, May 9, 1967, Folder “Bureau of Work Programs—Summary Plans and Reports,” box 535, Record Group 174, National Archives II, Washington, DC. 96. Memo from William Kolberg to Frank Erwin on Urban Unemployment Task Force, May 1, 1967, Folder “White House—1968 Legislation (Task Force on Urban Employment Opportunities),” box 437, Record Group 174, National Archives II, Washington, DC. 97. Bernstein, Guns and Butter, p. 104. 98. O’Connor, Poverty Knowledge, p. 176; Patterson, America’s Struggle Against Poverty, p. 124. 99. Patterson, America’s Struggle Against Poverty, p. 124. 100. Sargent Shriver memo on OEO, Folder “WE9 Poverty Program (Great Society, 10/ 01/1964–12/10/1964),” box 25, White House Confidential File, Subject File—Welfare, LBJL. 101. Ibid. 102. Ibid. 103. “A Public Employment Program for the Unemployed Poor,” November 30, 1965, Folder “Employment Division,” box 22, Record Group 381, National Archives II, Washington, DC. 104. Ibid. 105. Ibid. 106. Ibid. 107. Office of RPP&E, “Public Employment Proposal,” Folder “Employment Division,” box 22, Record Group 381, National Archives II, Washington, DC. 108. Ibid. 109. Ibid. 110. Shriver memo on 1966 Plan, Folder “WE9 Poverty Program (Great Society, 10/ 24–12/17/65),” box 26, White House Confidential File, Subject File—Welfare, LBJL. 111. Ibid. 112. Kenneth M. Brown, “Evaluation of Public Employment Programs,” February 27, 1969, Folder “Brown Evaluation of Employment Programs,” box 3, Record Group 381, National Archives II, Washington, DC. 113. Sargent Shriver to CEA, Folder “Office of Economic Opportunity, 1967,” box 129, Confidential File—Agency Reports, OEO, LBJL. 114. Memo from Joe Califano, Folder “WE9 Poverty Program (Great Society 1967, 1 of 2),” box 89, Confidential File—War on Poverty, LBJL. 115. Task-force report on L.A. riots, August 11–15, 1965, box 10, Task Force Reports, LBJL. 116. Ibid. 117. Ibid.

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118. Ibid. 119. Task Force on Urban Employment Opportunities report, May 1, 1967, Folder “White House—1968 Legislation (Task Force on Urban Employment Opportunities),” box 437, Record Group 174, National Archives II, Washington, DC. 120. Ibid. 121. Ibid. 122. Ibid. 123. Memo from Califano. 124. Charles Schultze to Joe Califano, Folder “Poverty—2,” box 7, Aides—Califano Papers, LBJL. 125. Memo from James Gaither on jobs, Folder “Campaign: Jobs,” box 289, Aides— Gaither Papers, LBJL. 126. “Administrative History of the Office of Economic Opportunity.” 127. McKee, “Government Is with Us,” p. 32. 128. Ibid., p. 49. 129. “Guaranteed Employment Act,” Folder “Employment Issues, Guaranteed Employment Act,” box 18, Bayard Rustin Papers, Library of Congress. 130. 1968 Democratic Party Platform, http://www.presidency.ucsb.edu/ws/index.php ?pid29604axzz1caSrOp9F. 131. Robert Paehlke to Bayard Rustin, February 27, 1967, Folder “ Freedom Budget Correspondence General 1966–7,” box 19, Bayard Rustin Papers, Library of Congress. 132. James P. Breeden memo, February 1967, Folder “Freedom Budget Correspondence General 1966–7,” box 19, Bayard Rustin Papers, Library of Congress. 133. Leon Keyserling to Hubert Humphrey, June and August 1968, Folder “Humphrey— 3,” box 19, Keyserling Papers, HTPL.

Chapter 6 1. Cowie, Stayin’ Alive, p. 273. 2. Yet another argument is that Carter sought to appeal to the confidence of businessmen who saw such a program as a threat to their control over the labor market in a time of enhanced labor conflict. See Michal Kalecki, “Political Aspects of Full Employment,” Political Quarterly (1943). 3. Gary M. Fink and Hugh Davis Graham, eds., The Carter Presidency: Policy Choices in the Post–New Deal Era (Lawrence: University of Kansas Press, 1998), p. 2. 4. Gary M. Fink and Hugh Davis Graham, eds., The Carter Presidency: Policy Choices in the Post–New Deal Era (Lawrence: University of Kansas Press, 1998), pp. 51–71, 208–209, 226, 299. 5. Ibid., pp. 117–136. 6. Jefferson Cowie, Stayin’ Alive (New York: New Press, 2010), p. 262. 7. Ibid., pp. 278–280. 8. Ibid., p. 291. 9. Judith Stein, Pivotal Decade (New Haven, CT: Yale University Press, 2010), pp. 159, 171, 207. 10. Ibid., pp. 207, 200–204. 11. Alice O’Connor, “The False Dawn of Poor Law Reform,” Journal of Policy History 10, no. 1 (January 1998): 99–129, quote on 100.

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Notes to Pages 214–220

12. Ibid., p. 108. 13. Ibid., p. 114. 14. Ibid., p. 115. 15. Jeff Bloodworth, “The Program for Better Jobs and Income,” International Social Science Review (September 22, 2006): 135–150, quote on p. 2. 16. Ibid., p. 4. 17. Here, Bloodworth echoes Steensland’s theories of how “symbolic pollution” influenced perceptions, rhetorics, and politics around guaranteed incomes. Steensland, Failed Welfare Revolution, pp. 9, 21. 18. Weir, Politics and Jobs, p. 131. 19. Ibid., pp. 132, 136, 139, 145. 20. Ibid., pp. 137, 153–157. 21. Steensland, Failed Welfare Revolution, pp. 129, 143, 147, 166. 22. Clifford Johnson, Direct Federal Job Creation: Key Issues (Ann Arbor: University of Michigan Press, 1985), p. 5. 23. Ibid. 24. This failure to learn ultimately can be traced to the failure of institutional continuity between the 1940s and 1960s, discussed in Chapter 5. 25. C. Johnson, Direct Federal Job Creation, p. 6. 26. Ibid., pp. 3–6. 27. Ibid., p. 12; Organisation for Economic Co-operation and Development (OECD), Direct Job Creation in the Public Sector (Paris: OECD, 1980), p. 15. 28. C. Johnson, Direct Federal Job Creation, p. 16; OECD, Direct Job Creation in the Public Sector, p. 24. 29. O’Connor, “False Dawn of Poor Law Reform.” 30. George E. Johnson, in John L. Palmer, ed., Creating Jobs (Washington, DC: Brookings Institution, 1978), pp. 6, 48, 83, 137–138. Notably, Johnson urged that job programs be federally administered to avoid this problem. 31. OECD, Direct Job Creation in the Public Sector p. 26. 32. G. Johnson, Creating Jobs, p. 21. 33. Cowie, Stayin’ Alive, pp. 261–312. 34. Kenneth Brown, “Getting Rid of Poverty,” April 25, 1969, Folder “Brown Evaluation of Public Employment Programs,” box 3, Record Group 381, National Archives II, College Park, MD. 35. Ibid. 36. Ibid. 37. Report of the Task Force on Income Maintenance, Folder “Income Maintenance— Poverty (1 of 2),” box 353, Gaither Papers, LBJL. 38. O’Connor, “False Dawn of Poor Law Reform”; Steensland, Failed Welfare Revolution, pp. 46–174. 39. The idea, based on the historical tradition of British Conservatives like Benjamin Disraeli and Randolph Churchill, is that conservatives rather than liberals are the true reformers of capitalism. 40. Steensland, Failed Welfare Revolution, p. 62. 41. Bloodworth, “Program for Better Jobs and Income,” p. 4.

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42. Patterson, in Fink and Graham, Carter Presidency, p. 179; Steensland, Failed Welfare Revolution, p. 37. 43. O’Connor, “False Dawn of Poor Law Reform,” p. 115. Steensland makes the same point Failed Welfare Revolution, p. 182. 44. Fink and Graham, Carter Presidency, pp. 180–181. 45. Ibid., pp. 183–184. 46. O’Connor, “False Dawn of Poor Law Reform,” p. 115. 47. Steensland, Failed Welfare Revolution, pp. 114, 151, 176. For Nixon’s guaranteedincome commercial, see http://www.livingroomcandidate.org/commercials/1972/mcgovern -welfare. 48. Steensland, Failed Welfare Revolution, pp. 67, 129. 49. Ibid., p. 50. 50. Ibid., p. 69. 51. Guida West, The National Welfare Rights Movement (New York: Praeger, 1981). 52. Weir, Politics and Jobs, p. 132. 53. Helen Ginsburg, Full Employment and Public Policy: The United States and Sweden (Boston: Lexington, 1983); 1975 draft of the Humphrey-Hawkins Act, Folder “HR 50,” box 1, 95th Congress Committee Papers, Record Group 233, National Archives I, Washington, DC. 54. 1975 draft of the Humphrey-Hawkins Act. 55. This idea is different from what was mentioned in the 1945–1946 bill, which merely insisted that the right to a job was a national priority in order to maintain a certain level of “job opportunities,” and not a right vested in the individual. 56. Leon Keyserling to Hubert Humphrey, memo on campaign and platform, Folder “Humphrey—3,” box 19, Keyserling Papers, HTPL. 57. Keyserling proposal for amending the 1946 Full Employment Act, Folder “Employment Act of 1946—Proposed Amendment,” box 16, Keyserling Papers, HTPL. 58. Leon Keyserling to Nat Weinburg, March 4, 1975, Folder “Materials Regarding HH—1,” box 22, Keyserling Papers, HTPL. 59. Keyserling to Weinburg; Keyserling to Bertram Gross, December 12, 1974, Folder “Materials Regarding HH—1,” box 22, Keyserling Papers, HTPL. 60. Leon Keyserling, summary of October 8 version of 1975 Bill, Folder “Materials Regarding the HH Act (’75) 1,” box 22, Keyserling Papers, HTPL. 61. The 9.5 percent estimate was based on an assumption that unemployment goals would be achieved through an exclusive reliance on the private sector to generate employment, rather than on direct job creation as Hawkins envisioned (because such a job program could create jobs without relying on private-sector employers). Keyserling memo regarding the feasibility of the 3 percent goal, Folder “Correspondence 1976,” box 22, Keyserling Papers, HTPL. 62. 1976 draft of the Humphrey-Hawkins Act, Folder “National Committee on PSE,” box 16, Keyserling Papers, HTPL. 63. See Chapter 4. 64. Leon Keyserling, “Restoring a Full Economy and Reducing Price Inflation,” Folder “Material Regarding Humphrey-Hawkins—2,” box 22, Keyserling Papers, HTPL. 65. Keyserling memo on Congressional Budget Office criticisms, Folder “Material Regarding Humphrey-Hawkins—2,” box 22, Keyserling Papers, HTPL.

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Notes to Pages 225–230

66. Ibid. 67. Augustus Hawkins, “Full Employment for America’s Needs,” Folder “Materials Regarding the Humphrey-Hawkins Act (1975)—2,” box 22, Keyserling Papers, HTPL; Congressman Hawkins, statement to Budget Committee, box 46, “Speeches and Articles,” Keyserling Papers, HTPL. 68. As Nancy MacLean points out in Freedom Is Not Enough (Cambridge: Harvard University Press, 2006), the greatest expansions of employment for women and minorities under affirmative action during the 1970s were in industries like textiles (in the case of black workers in the Carolinas) and construction (for both blacks and women in urban labor markets). These industries suffered significant setbacks during the economic dislocations of the 1970s, and their shrinking share of both domestic and export markets meant that new cohorts of workers saw their jobs soon vanish. These economic transformations blunted the impact of affirmative action and thus made full employment an important vehicle for legal activists who wanted to transform equal employment rights from de jure to de facto. Judith Stein’s Running Steel, Running America shows a similar pattern in the steel industry, but she also ties the rise and fall of affirmative action efforts to national economic policymaking that ignored industrial protection, industrial policy, and full employment—in the name of pushing down prices through import substitution. 69. Parker, John Kenneth Galbraith, p. 345. 70. Ibid., p. 344. 71. Cowie, Stayin’ Alive, p. 275. 72. James K. Galbraith, “Time to Ditch the NAIRU,” Journal of Economic Perspectives 11, no. 1 (Winter 1997): 93–108, quote on 96. 73. Parker, John Kenneth Galbraith, pp. 535–538; Skidelsky, Keynes, pp. 103–104. 74. Friedman, quoted in James K. Galbraith, “Time to Ditch the NAIRU,” p. 96. 75. Ibid., p. 98. 76. James K. Galbraith, “We Are All Keynesians Again,” Washington Monthly, https:// lbj.utexas.edu/publications/4130. Parker describes the same crisis within fiscal Keynesianism in John Kenneth Galbraith, p. 526. 77. Fink and Graham, Carter Presidency, p. 20. 78. James K. Galbraith, “We Are All Keynesians Again”; James K. Galbraith, “Fed Ache,” Washington Monthly, https://www.unz.com/print/WashingtonMonthly-2004jul-00056/. 79. Testimony of Leon Keyserling before the Senate Subcommittee on Employment, Poverty, and Migratory Labor of the Senate Committee on Labor and Public Welfare, May 14, 1976, pp. 89–90, in Folder “Press Release,” box 45, Keyserling Papers, Truman Archive. 80. Ibid. 81. Ibid., p. 78. 82. Leon Keyserling, “Tight Money Has Been Inflationary,” Folder “Correspondence with Humphrey,” box 19, Keyserling Papers, HTPL. 83. Leon Keyserling to Hubert Humphrey, June 7, 1974, Folder “Humphrey 3,” box 19, Keyserling Papers, HTPL; Leon Keyserling to Hubert Humphrey, November 11, 1976, Folder “Humphrey 3,” box 19, Keyserling Papers, HTPL. 84. Keyserling testimony, pp. 82, 110. 85. Ibid., p. 81. 86. Ibid., p. 104.

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Notes to Pages 230–237

309

87. Ibid., p. 82. 88. Ibid., p. 94. 89. James K. Galbraith, “We Are All Keynesians Again”; James K. Galbraith, “Fed Ache.” 90. James K. Galbraith, “We Are All Keynesians Again.” 91. One of the difficulties in dealing with unemployment in the 1970s is that unemployment was unevenly experienced along lines of race and class especially; hence a relatively low national unemployment rate could be concealing near full employment among skilled white male workers and near-Depression levels among African Americans and young people. Trying to use macroeconomic policy to boost the employment of the latter might risk wage demand– driven inflation among the former. 92. Weir, Politics and Jobs, p. 137. 93. Testimony of Alice Rivlin before the Senate Committee on Banking, Housing, and Urban Affairs, May 20, 1976, p. 73, Folder “Humphrey-Hawkins—Alice M. Rivlin— Statements Related to Humphrey-Hawkins Bill (1976),” box 26, Keyserling Papers, Truman Archive. 94. Ibid., p. 85. 95. Testimony of John K. Galbraith before the Senate Committee on Banking, Housing, and Urban Affairs, May 21, 1976, p. 91, Folder “Humphrey-Hawkins—Testimony on H.R. 50, 1976 by Others,” box 26, Keyserling Papers, Truman Archive. 96. Ibid. 97. Ibid. 98. Charles Schultze testimony, 1976, Folder “Briefing Book: Humphrey-Hawkins Testimony,” box 122, Schultze Briefing Book Files, Jimmy Carter Presidential Library and Museum, Atlanta, GA (hereafter, JCPL). 99. Leon Keyserling to Augustus Hawkins, Folder “Humphrey—3,” box 19, Keyserling Papers, HTPL. 100. Leon Keyserling to Charles Schultze, Folder “Correspondence 1976,” box 22, Keyserling Papers, HTPL. 101. Ray Marshall, prepared remarks for testimony, Folder “Marshall Testimony,” box 25, Keyserling Papers, HTPL. 102. Testimony of Arthur Laffer before Senate Subcommittee on Employment, Poverty, and Migratory Labor of the Senate Committee on Labor and Public Welfare, May 14, 1976, p. 172, Folder “Humphrey-Hawkins—Testimony on H.R. 50, 1976 by Others,” box 26, Keyserling Papers, Truman Archive. 103. Ibid., p. 173. 104. Ibid., p. 174. 105. Testimony of Alan Greenspan before Senate Committee on Banking, Housing, and Urban Affairs, May 20, 1976, pp. 59–60, Folder “Humphrey-Hawkins—Testimony on H.R. 50, 1976 by Others,” box 26, Keyserling Papers, Truman Archive. 106. Ibid., p. 55. 107. Kiron K. Skinner, Martin Anderson, and Annelise Anderson, eds., Reagan, in His Own Hand (New York: Touchstone, 2002), pp. 264–265. 108. Robert O. Self, All in the Family (New York: Hill and Wang, 2012), pp. 3–16, 309–398. 109. Phillips-Fein, Invisible Hands, p. 188.

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310

Notes to Pages 237–242

110. Bruce Schulman, “Slouching to the Supply Side,” in Fink and Graham, Carter Presidency, pp. 56–60. 111. Phillips-Fein, Invisible Hands, p. 183; Schulman, “Slouching,” pp. 65–66. 112. Daniel Rogers, Age of Fracture (Cambridge, MA: Harvard University Press, 2011), pp. 45–75. 113. Phillips-Fein, Invisible Hands, p. 189. 114. However, it does seem quite likely, as both Margaret Weir (Politics and Jobs, p. 136) and Jefferson Cowie (Stayin’ Alive, p. 275) conclude. 115. To be fair to those more cautious Keynesian economists, one of the things that should be remembered when trying to explain why liberal economists lost faith in their own nostrums is the interconnected, whipsawing nature of economic crises of the 1970s. Rather than a single economic downturn, economists had to wrestle with a balance of payments deficit that spiraled into a gold reserve crisis and then a sudden reordering of international foreign exchange, then rolling supply shocks in the form of the 1973 oil embargo and subsequent attempts by suppliers of other raw materials to emulate OPEC, then the shock of “stagflation” in the midst of what was already the deepest recession since World War II. See Stein, Pivotal Decade, chaps. 4–8. Thus, even if liberal economists had been more confident in the continuing validity of the Phillips curve and the IS/LM model, which, as Daniel Rogers points out, was increasingly not the case, they would have been under intensely contradictory pressures. See Rogers, Age of Fracture, pp. 48–75. 116. Maurice Isserman, The Other American (New York: Perseus, 2000), pp. 333–337. 117. 1976 Democratic Party Platform, UCSB American Presidency Project. 118. Ibid. 119. Stu Eizenstat, quoted in Fink and Graham, Carter Presidency, p. 12. 120. Cowie, Stayin’ Alive, p. 14. 121. Jimmy Carter, quoted in Fink and Graham, Carter Presidency, p. 97. 122. See Bruce Schulman, From Cotton Belt to Sunbelt (Durham, NC: Duke University Press, 1994), pp. 3–134; Collins, More, pp. 17–67; Balogh, Associational State, pp. 139–171. 123. Jefferson Cowie, Capital Moves (New York: New Press, 1999), pp. 73–99. 124. Jimmy Carter, “President Carter’s Proposal for Welfare Reform,” Folder “Welfare Reform Fact Sheet—Presidential Proposals,” box 21, Staff Offices—DPS Prioleau Papers, JCPL. 125. Bloodworth, “Program for Better Jobs and Income,” p. 5. 126. Joseph Califano to Ray Marshall, January 26, 1977, Folder “HEW: April–May,” box 34, Department of Labor—Marshall Papers, National Archives II, College Park, MD. 127. Memo on Hawkins meeting, Folder “Summary Plans and Reports—Welfare Reform,” box 105, Department of Labor—Marshall Papers, National Archives II, College Park, MD. 128. Memo on meeting with the president, Folder “Summary Plans and Reports— Welfare Reform,” box 105, Department of Labor—Marshall Papers, National Archives II, College Park, MD. 129. Packer memo on full employment, Folder “Summary Plans and Reports—Welfare Reform,” box 105, Department of Labor—Marshall Papers, National Archives II, College Park, MD. 130. Packer memo on cash benefits, Packer memo on HEW strategy, both in Folder “Summary Plans and Reports—Welfare Reform,” box 105, Department of Labor—Marshall Papers, National Archives II, College Park, MD.

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Notes to Pages 243–248

311

131. Packer memo on low-wage labor, Folder “Summary Plans and Reports—Welfare Reform,” box 105, Department of Labor—Marshall Papers, National Archives II, College Park, MD. 132. Arnold Packer to Ray Marshall, May 16, 1977, Folder “HEW: May–Oct,” box 34, Department of Labor—Marshall Papers, National Archives II, College Park, MD; Ray Marshall to Joseph Califano, May 13, 1977, Folder “HEW: May–Oct,” box 34, Department of Labor—Marshall Papers, National Archives II, College Park, MD. 133. Memo from Packer to OMB, Folder “SPR—Welfare Reform,” box 105, Department of Labor—Marshall Papers, National Archives II, College Park, MD. 134. Untitled memo on “triple track,” Folder “Summary Plans and Reports—Welfare Reform,” box 105, Department of Labor—Ray Marshall Papers, National Archives II, College Park, MD. 135. Arnold Packer memo to Ray Marshall regarding “today’s meeting with the president,” April 26, 1977, Folder “Summary Plans and Reports—Welfare Reform,” box 105, Department of Labor—Ray Marshall Papers, National Archives II, College Park, MD. 136. Arnold Packer to Ray Marshall on compromise with HEW, April 27, 1977, in Folder “HEW Jan–April,” boxes 34, 105, Department of Labor—Ray Marshall Papers, National Archives II, College Park, MD. 137. “Cash, Earned Income Credit, or Special Job Option,” Folder “Summary Plans and Reports—Welfare Reform,” box 105, Department of Labor—Ray Marshall Papers, National Archives II, College Park, MD. 138. Ibid.; Packer to Marshall on compromise with HEW. 139. Charles Schultze to Jimmy Carter, May 4, 1978, Folder “LA 2 1/20/77–1/20/81,” box LA-2, White House Confidential File Subject File, JCPL. 140. Bloodworth, “Program for Better Jobs and Income,” p. 6. 141. Fink and Graham, Carter Presidency, p. 125. 142. Daniel Patrick Moynihan, quoted in Fink and Graham, Carter Presidency, p. 126. 143. O’Connor, “False Dawn of Poor Law Reform,” p. 17. 144. Quoted in Fink and Graham, Carter Presidency, p. 129. 145. Bloodworth, “Program for Better Jobs and Income,” p. 9. 146. Ibid., pp. 4, 7. 147. Arnold Packer memo on inflation, August 25, 1977, Folder “Summary Plans and Report—Inflation,” box 105, Department of Labor—Ray Marshall Papers, National Archives II, College Park, MD. 148. Ray Marshall to CEA, “Labor Department’s View on the Humphrey-Hawkins Bill,” March 1, 1977, Folder “Humphrey-Hawkins Bill (9),” box 37, Staff Office—CEA Schultze Subject Files, JCPL; William Nichols to Ray Marshall on inflation and 4 percent unemployment, October 4, 1977, Folder “Humphrey-Hawkins Bill (9),” box 37, Staff Office—CEA Schultze Subject Files, JCPL. 149. Nichols to Marshall. 150. Agency comments on Humphrey-Hawkins Act, March 11, 1977, Folder “Humphrey-Hawkins Bill (7),” box 37, Staff Office—CEA Schultze Subject Files, JCPL. 151. Ibid. 152. Ibid. 153. Ibid.

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Notes to Pages 248–253

154. Cowie, Stayin’ Alive, pp. 278–279. 155. Arlan J. Large, “A Monument to Wheel-Spinning,” New York Times, Folder “Humphrey-Hawkins (4),” box 37, Staff Office—CEA Schultze Subject Files, JCPL. 156. Harris Poll survey, Folder “Poverty, Welfare, and Welfare Reform,” box 126, Presidential Campaign, Issues Office—Domestic Issues Papers, JCPL. 157. CRS survey on jobs and income, Folder “CRS Report on HH,” box 24, Keyserling Papers, HTPL. 158. Stu Eizenstat to Jimmy Carter, August 9, 1978, Folder, “Welfare Reform—Strategy,” box 22, Staff Offices—DPS Prioleau Papers, JCPL. 159. Stu Eizenstat to Jimmy Carter, “Humphrey-Hawkins/Political Considerations,” October 6, 1977, Folder “Humphrey-Hawkins Bill [O/A 6342] (3),” box 221, Staff Offices— Domestic Policy Staff Eizenstat Papers, JCPL. 160. Leon Keyserling, “Current Status of Humphrey-Hawkins Bill and Outstanding Issues,” September 27, 1977, Folder “H.H. Memoranda Regarding October 77 Draft of Bill,” box 22, Keyserling Papers, HTPL. 161. Leon Keyserling, “Remaining Points of Difference in the Humphrey-Hawkins Bill,” October 12, 1977, Folder “H.H. Memoranda Regarding October 77 Draft of Bill,” box 22, Keyserling Papers, HTPL. 162. House Committee on Education and Labor, report on full-employment goal, Folder “Humphrey-Hawkins Bill, 10/78,” box 24, Special Advisor Kahn Papers, JCPL. 163. Keyserling, “Remaining Points of Difference.” 164. “Pros and Cons of Options on the Numerical Goal for Unemployment in the Humphrey-Hawkins Bill,” Folder “Humphrey-Hawkins Bill (11),” box 37, Staff Office—CEA Schultze Subject Files, JCPL. 165. Ibid. 166. “Talking Points on Humphrey-Hawkins,” Folder “Humphrey-Hawkins Bill (4),” box 37, Staff Office—CEA Schultze Subject Files, JCPL. 167. Leon Keyserling, “Remaining Points of Difference in the Humphrey-Hawkins Bill.” 168. Keyserling, “Remaining Points of Difference.” 169. Charles Schultze memo, “Administration Position on the Humphrey-Hawkins Bill,” March 14, 1977, Folder “Humphrey-Hawkins,” box 11, Martha Mitchell Papers, JCPL; Keyserling, “Remaining Points of Difference”; Ray Marshall to Jimmy Carter, October 14, 1977, Folder “Humphrey-Hawkins Bill [O/A 6342] (3),” box 221, Staff Offices—Domestic Policy Staff, Eizenstat Papers, JCPL. 170. Bert Carp, Bill Johnson, and Bill Spring to Stu Eizenstat, April 22, 1977, Folder “LA 2 4/1/77–5/15/77,” box LA-2, WHCF Subject File, JCPL. 171. Schultze memo, “Administration Position on the Humphrey-Hawkins Bill.” 172. Ray Marshall to Jimmy Carter, June 10, 1977, Folder “Humphrey-Hawkins Bill (8),” box 37, Staff Office—CEA, Schultze Subject Files, JCPL. 173. Leon Keyserling, “Agreements to Date Between Sponsors and Representatives of the President,” October 21, 1977, Folder “HH Press Release and Summary on Agreed Upon Draft,” box 22, Keyserling Papers, HTPL. 174. Charles Schultze to Jimmy Carter, “Humphrey-Hawkins Goals for Unemployment and Inflation,” Folder Humphrey-Hawkins Bill (4), box 37, CEA, Schultze Subject Files, JCPL.

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Notes to Pages 253–259

313

175. “Pros and Cons of Options.” 176. Charles Schultze to William Proxmire, Folder “Humphrey-Hawkins Bill (1),” box 22, Staff Office—Domestic Policy Staff Papers, JCPL. 177. Keyserling, “Agreements to Date Between Sponsors and Representatives of the President.” 178. Ibid. 179. Keyserling, “Remaining Points of Difference.” 180. “Talking Points on Humphrey-Hawkins.” 181. Schultze memo, “Administration Position on the Humphrey-Hawkins Bill.” 182. Lyle Gramley to Charles Schultze on talking points, July 12, 1977, Folder “Humphrey-Hawkins Bill (7),” box 37, Staff Office—CEA Schultze Subject Files, JCPL. 183. Lyle Gramley and Bill Spring to Ray Marshall, Charles Schultze, and Stu Eizenstat, October 4, 1977, Folder “Humphrey-Hawkins Bill (11),” box 37, Staff Office—CEA Schultze Subject Files, JCPL. 184. Ibid. 185. Keyserling, “Agreements to Date Between Sponsors and Representatives of the President.” 186. Augustus Hawkins, 1977 draft of Humphrey-Hawkins Act, Folder “HR 50 as Enrolled,” box 1, Committee Papers, 95th Congress, Record Group 233, National Archives I, Washington, DC. 187. Ibid. 188. Ibid. 189. White House memo on House amendments, Folder “Briefing Book: HumphreyHawkins Bill (1),” box 122, Staff Office—CEA Schultze Briefing Book Files, JCPL. 190. “Comparison of the Earlier and the Present Versions of the Humphrey-Hawkins Bill,” Folder “Briefing Book Humphrey-Hawkins Bill (3),” box 123, Staff Office—CEA Schultze Briefing Book Files, JCPL. 191. White House summary on Humphrey-Hawkins, “Briefing Notes on H.H.,” Folder “Briefing Book: Humphrey Hawkins Bill (1),” box 122, Staff Office—CEA Schultze Briefing Book Files, JCPL. 192. Larry Hammond to Margaret McKenna, October 26, 1977, Folder “HumphreyHawkins Legislation,” box 132, Staff Office—Counsel Papers, JCPL. 193. “Talking Points on Humphrey-Hawkins.” 194. Ray Marshall to Augustus Hawkins, April 8, 1980, Folder “Hawkins, Marshall, Carter Correspondence,” box 24, Keyserling Papers, HTPL. 195. “Humphrey-Hawkins: Some Options for Response,” Folder “Employment Humphrey-Hawkins Bill (5),” box 22, Staff Office—Domestic Policy Staff Papers, JCPL. 196. Ibid. 197. Ibid. 198. Augustus Hawkins to Jimmy Carter, January 8, 1980, Folder “Briefing Book: Humphrey Hawkins Bill (1),” box 122, Staff Office—CEA Schultze Briefing Book Files, JCPL. 199. Augustus Hawkins to Ray Marshall, February 12, 1980, Folder “Hawkins, Marshall, Carter Correspondence,” box 24, Keyserling Papers, HTPL. 200. Cowie, Stayin’ Alive, p. 360.

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314

Notes to Pages 261–269

Conclusion 1. Patrick Garry, Liberalism and American Identity (Kent, OH: Kent State University Press, 1992), pp. 10–23; Sean Wilentz, The Age of Reagan (New York: HarperCollins, 2008), pp. 16–24, 60–83, 171–175. 2. Mike Feinsilber, “Quotes Return to Haunt Reagan,” Associated Press, August 24, 1980. 3. Gordon Lafer, The Job Training Charade (Ithaca, NY: Cornell University Press, 2002), pp. 2–22. As Lafer points out, this decision had subtle but important consequences for how the federal government looked at poverty and unemployment. Rather than being seen as a systemic failure, such as a deficiency of demand, unemployment was seen as a failing of individuals who “lacked the skills or motivation to make themselves employable.” This attitude was hardly confined to Republicans either. As Lafer points out (pp. 190–209), the same shift in thinking occurred during the development of the Clinton welfare-reform package. 4. Ibid. 5. Steven Gillon, The Democrats’ Dilemma (New York: Columbia University Press, 1992), pp. 99–142. 6. Ibid., pp. 153, 300–320. 7. While carrying 3.5 million votes and Washington, DC, South Carolina, Louisiana, and a tie in Mississippi for the Rainbow Coalition, Jackson derailed his campaign through illadvised remarks about Jews in New York City, but he still pulled 21 percent of the total primary vote that (in all likelihood) would have otherwise gone to Mondale. 8. Ollie Johnson and Karin Stanford, eds., Black Political Organizations in the Post–Civil Rights Era (Piscataway, NJ: Rutgers University Press, 2002), pp. 150–169, 182–186. 9. Karen Ball, “AFL-CIO Open Meeting with Call for Jobs Legislation,” Associated Press, February 19, 1991. 10. Robert Reich, Locked in the Cabinet (New York: Vintage, 1997), pp. 4, 8, 14, 25, 40–41, 65, 71. 11. Ross Eisenbrey, Lawrence Mishel, Josh Bivens, and Andrew Fieldhouse, “Putting America Back to Work: Policies for Job Creation and Stronger Economic Growth,” Economic Policy Institute, Briefing Paper 325, September 2, 2011, http://www.epi.org/files/temp2011/ BriefingPaper325.pdf. 12. Mark Blyth, Austerity: History of a Dangerous Idea (New York: Oxford University Press, 2013), pp. 46, 54–62. 13. Arthur Delaney and Shahien Nasiripour, “Americans Want to Get Back to Work: Why Won’t the Government Hire Them?,” Huffington Post, June 17, 2010, http://www.huffing tonpost.com/2010/02/24/americans-want-to-get-bac_n_474487.html. 14. Theodore Roosevelt, Osawatamie Address, 1910, retrieved at https://obamawhite house.archives.gov/blog/2011/12/06/archives-president-teddy-roosevelts-new-nationalism -speech.

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Index

AAA (Agricultural Adjustment Administration), 19–20, 41, 58–59, 126, 140, 149, 152 Abernathy, Ralph, 220 ACA (Advisory Committee on Allotments), 57, 59, 62–63, 72, 80–82, 85–87, 279, 283 Acheson, Dean, 173 Advisory Committee on Allotments. See ACA AFDC. See Aid to Families with Dependent Children AFL. See American Federation of Labor AFL-CIO, 187, 217, 226, 252 African Americans, 24, 26, 115, 215, 237, 249, 288, 309 Aggregate demand, 130, 135, 137, 141, 153– 54, 294 Agricultural Adjustment Administration. See AAA Aid to Families with Dependent Children (AFDC), 24, 200, 220, 242, 263 Amenta, Edwin, 9–11, 29, 60, 88, 111–14, 119, 168, 271–75, 277, 279, 286, 288, 291–92 American Federation of Labor (AFL), 73, 114, 187, 217, 264, 287 American political development (APD), 9, 28, 81, 88, 111, 178, 240, 272, 288 Area Redevelopment Act, 184, 196 ARRA (American Recovery and Relief Act), 108–9, 264–65, 268 Baade, Fritz, 5 Baker, Jacob, 33–34, 36–37, 40, 42, 44, 50, 56, 64–67, 69–72, 81, 114, 116, 118–19, 121–23, 173, 191, 276–77, 280–82, 287– 88, 290–91 Bakke, E. White, 26, 189

................. 19154$

INDX

Balogh, Brian, 10, 272, 310 Baxter, Lewis, 38–40, 64, 276 Bean, Louis, 163, 298 Bernanke, Ben, 96, 104, 284–86, 294 Bernstein, Barton, 15 Bernstein, Irving, 177–78, 299, 300–301, 303–4 Beveridge, William, 27, 131, 164, 171, 174, 269, 274, 291 Bivens, Josh, 264, 314 Bloodworth, Jeff, 214, 306, 310–11 Bluestone, Barry, 232 Bollers, John, 2 Boondoggle, 114, 289 Boris, Eileen, 24, 274 Boyle, Kevin, 177, 303 Breeden, Reverend James P., 207, 305 Bremer, William, 34, 276 Brinkley, Alan, 22–23, 54, 100–101, 106, 135, 139, 169, 274, 285–86, 289, 292, 294, 299 Brown, Edmund G., 303 Brown, Jerry, 263 Brown, Josephine, 11, 31, 34, 56, 121, 276 Brown, Kenneth, 201, 304, 306 Burns, Eveline, 34, 43, 51, 141, 143, 277, 293 Califano, Joe, 206, 214, 241–42, 244–45, 252, 304–5, 310–11 CAPs (community action programs), 176, 181–82, 192, 197–98, 200 Carter, Jimmy, 107, 208, 211, 213–16, 232, 237, 239–41, 244–46, 248–49, 253, 255, 257–60, 263, 287, 305, 310–13 Carter administration, 211–16, 221, 228, 237, 240–41, 244, 246–47, 249–52, 254–58, 260 CCC (Civilian Conservation Corps), 46, 60, 67, 142, 150, 181, 279

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316

Index

CEA (Committee of Economic Advisors), 152, 155, 174, 176, 178, 180–81, 185, 187– 88, 199, 201, 204–6, 209, 211, 224, 229, 234, 242, 244, 248, 304, 311–12 CETA (Comprehensive Employment and Training Act), 210, 214, 216–19, 242–43, 247, 262 CIO. See Congress of Industrial Organizations Civilian Conservation Corps. See CCC Civil rights movement, 12–13, 176–77, 184– 85, 190–91, 209, 223, 248 Civil Works Administration. See CWA Clark Amendment, 206 Cleveland, Grover, 111, 116 Clinton, Bill, 108, 263–64 Cloward, Richard, 181, 300 Cobble, Dorothy Sue, 24, 274 Cohen, Nancy, 4, 271 Cohen, Pat, 99, 285 Cohen, Wilbur, 32, 202, 301 Collins, Susan, 264 Colm, Gerhard, 166–67, 291, 298–99 Commerce Department, 205, 242, 244, 252 Committee of Economic Advisors. See CEA Commons, John R., 32–33, 40, 132 Community action programs. See CAPs Comprehensive Employment and Training Act. See CETA Concentrated Employment Program, 196– 97, 304 Congressional Black Caucus, 223, 231, 239 Congressional Budget Office, 130, 233, 307 Congress of Industrial Organizations (CIO), 114, 138, 187, 217, 264, 287 Conservativism, 10, 169, 245 Construction, 3, 8, 15, 23, 36, 46, 61, 71, 73, 75–76, 79, 84–85, 102, 110, 142, 161, 234, 281, 287, 308 Contractors, 10, 73, 76, 138 Cooke, Morris L., 77–79, 282 Cooke, Jay, 3 Core economic departments, 205, 212, 215, 242, 245–47, 249, 252, 254 Cowie, Jefferson, 10, 213, 216, 239, 259, 272, 305–6, 308, 310, 312–13 Cox, James, 116 Cromwell, Thomas, 2, 271 Currie, Lachlan, 116–18, 121, 289 CWA (Civil Works Administration), 16, 18, 20–21, 23, 31, 35–36, 43, 46, 55–56, 62–

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65, 67–69, 72, 101, 116, 122, 156, 268, 272, 276, 280 Darby, Michael, 93–95, 98, 105, 283, 286, 290, 299 Deficits, 98, 111, 117, 153, 245, 263 Delaney, Arthur, 314 DeLong, Bradford, 96, 104, 284–85 Democratic Party, 6, 116, 136, 138–39, 156, 159, 174, 184, 207–8, 210, 213, 226, 237– 41, 249–51, 259–60, 262–64, 279, 288 Dernburg, Thomas, 232 DiCaprio, Lisa, 2, 271 Direct job creation, 1–2, 8–9, 11, 13–14, 16– 19, 21–23, 25–26, 28–31, 33, 35–51, 53– 56, 59, 61–66, 68, 70, 75–77, 80, 82, 85, 87–92, 98, 104, 109, 111, 118–19, 121–23, 126–28, 132–33, 138–40, 143–45, 148, 150–51, 156, 158, 161, 164–68, 170–75, 177, 180, 182–84, 187–88, 190–91, 195, 199–204, 206–16, 218–20, 222, 228, 230– 32, 239–40, 242–43, 246–47, 249–50, 254–56, 258, 260–66, 269, 275, 277, 283– 84, 289, 292–93, 295, 299, 306–7 Disraeli, Benjamin, 306 Dixiecrats, 25, 106, 116, 118, 128, 164, 167, 266, 279 Donohue, Kathleen, 76, 132, 276, 282, 292, 294 Douglas, Lewis, 57, 63, 115 Dukakis, Michael, 263 Dumbrell, John, 212 Earned Income Tax Credit. See EITC Eccles, Marriner, 116, 166, 298 Economic citizenship, 23–27, 65, 280 Economic development, 4, 14–16, 25, 77, 101, 273 Economic growth, 41, 76, 107, 143, 180, 192–93, 200, 302 Economic planning, 13, 22, 53, 71, 74, 129, 135, 159, 163–64, 167, 170, 177, 223, 228– 29, 240, 297 Economic policy, 1, 6, 18, 42, 88, 90, 93, 102, 109, 126, 143, 149, 153, 171, 184, 205, 227, 235, 238–40, 251, 264–65, 272, 286, 291, 296, 298–99 Economics, 6, 34, 92–93, 95, 132, 136–37, 149, 152, 162, 201, 212, 284, 292, 294–96,

INDX

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Index 299–300, 302–3; institutionalist, 136; liberal, 5; neoclassical, 41, 132, 146, 152, 215, 227; supply-side, 237 Economic security, 19–20, 23, 25, 31, 36–40, 43, 45, 47, 51–54, 65–66, 68, 71, 116, 141, 274–78, 280–81 Economic Security Associates, 38, 276 Economists: conservative, 227, 235; heterodox, 132, 140, 232; historical, 93; liberal, 261, 310; neoclassical, 132, 237, 292; postKeynesian, 294 Eichengreen, Barry, 96, 284 Eisenbrey, Ross, 264, 314 Eisenhower, Dwight, 16, 170, 172, 262 Eisenhower administration, 174, 185 Eisner, Robert, 231 EITC (Earned Income Tax Credit), 181, 214, 242–44, 246 Eizenstat, Stu, 237, 239, 249, 252, 258, 310, 212–13 Elliot, Thomas, 32–33 Ely, Richard T., 144, 150 Emergency Banking Act, 96 Emergency Relief Act, 6–7, 55, 111 Employment, private-sector, 26, 200 Employment Act, 154, 156, 165, 167, 171, 185–86, 204, 210–11, 223, 229, 246, 291, 297–99, 302, 307 Employment policy, 8, 56, 136, 138, 292–93, 295, 297 Employment programs, 10, 66, 179, 201, 217, 236, 304 Epstein, Abraham, 32 Esping-Anderson, Gøsta 28, 275 Ezekiel, Mordechai, 140, 147, 149–51, 155– 56, 166, 291, 294–95 Fair Labor Standards Act, 119 Farmer, James, 184, 302 FEB (Full Employment Bill), 127, 130, 132– 36, 138–39, 142, 145, 151–52, 157–65, 167–68, 171, 185, 191, 210, 228, 230, 237, 240, 261, 285, 292, 296–98 Federal Emergency Relief Administration. See FERA Federal Housing Act, 171 Federal Housing Administration, 200 Federal Reserve, 96, 116, 166–67, 211, 269 Federal Works Agency, 127, 139, 148, 170

................. 19154$

INDX

317

FERA (Federal Emergency Relief Administration), 6–7, 19, 21, 32–37, 40, 43, 46, 50, 64–65, 67–68, 71, 92, 119, 141, 156, 276, 281, 287 Field, George, 103, 105, 108, 112, 124, 274 Fieldhouse, Andrew, 264, 314 Fink, Gary, 212, 305 Fiscal Keynesianism, 12, 135, 137, 167, 172, 182, 228, 261, 308 Fiscal Keynesians, 135–36, 139, 148, 154, 209, 226–28, 233 Fiscal policy, 5, 91, 95–98, 102, 104, 117, 121, 135, 138, 235, 252, 259, 284, 296 Foner, Eric, 99, 285 Foote, Nelson, 181 Frank, Thomas, 11, 14 Fraser, Steven, 135, 274, 292 Freedom Budget, 185–86, 194, 207–8, 231, 267, 302 Friedman, Milton, 170, 227, 238, 308 Full employment, 129, 153, 157, 210, 223, 238, 259, 274, 291, 294–96, 298–99, 305, 307–8 Full Employment Bill. See FEB Furner, Mary, 26, 274, 279, 317 Gaither, James, 305 Galbraith, John K., 128, 137, 141–43, 149, 153, 176, 199, 231–33, 292–93, 295, 299, 308–9 Galbraith, James K., 228, 231, 263, 308–9 Gardner, Virginia 289 Garner, Sam, 73 GDP (gross domestic product), 97–98, 102, 104, 169, 201, 257, 285–86, 295 Gerstle, Gary, 135, 274, 292 Gill, Corrington, 33, 40–42, 56, 64, 69, 71– 72, 81, 85, 116, 119, 121–22, 141, 143, 173, 276–77, 281, 290, 293 Givens, Meredith, 30, 34, 44, 51, 56, 191, 277 GMIs (guaranteed minimum incomes), 212, 219–22, 241–42, 245, 249 Goldberg, Chad Allen, 11, 25, 274, 280 Gordon, Linda, 24, 274, 285 Gordon, Robert, 97–98 Government spending, 37–38, 96, 98, 102, 147, 153, 167, 230, 234 Graham, Otis, 22, 23 Graham, Hugh Davis, 212, 205 Gramley, Lyle, 313

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318

Index

Gramlich, Edward, 232 Great Depression, 1, 5, 8, 13, 15–17, 21–22, 25, 28, 34–36, 46, 58–59, 63–65, 72–75, 80–81, 91–93, 95–102, 105, 117, 126, 132, 135, 143, 146, 152, 164, 208, 211, 246, 261, 266, 272–73, 284–86, 295–96 Great Recession, 91, 265–66, 269 Great Society, 188, 193–94, 207, 239, 272, 301–4 Greenleigh Associates, 199–200 Greenspan, Alan, 235–36, 309 Gross domestic product. See GDP Guaranteed minimum incomes. See GMIs Hacker, Jacob, 28 Hackett, David, 181 Halfmann, Drew, 9–11, 29, 60, 88, 111–12, 272, 279, 288 Hansen, Alvin, 136–37, 141, 145, 147–49, 151–55, 157–58, 166–67, 186 Hargrove, Erwin, 212 Harrington, Michael, 175, 177–78, 188–91, 209, 290, 303 Harris, Joseph, 32 Harrison, Bennett, 232 Hart, Gary, 263 Hassett, Kevin, 268 Hawkins, Augustus, 223–26, 230, 234, 238, 250–58, 267, 307–9, 313 Hayek, Friedrich, 170 Health, Education, and Welfare, Department of. See HEW Heller, Walter, 76, 175, 180–83, 188, 190, 194, 205, 301–2 Henderson, Leon, 116–17, 121, 289 HEW (Health, Education, and Welfare, Department of), 176, 178, 181, 200, 202, 211–12, 220–22, 241–42, 244–46, 249, 252, 301, 310–11 Hicks, John, 138, 152 Hoover, Herbert, 5–6, 54, 73, 127, 170, 262 Hopkins, Harry, 6–7, 20–21, 32–35, 42, 55, 61–62, 66, 80, 82–86, 110, 112–14, 116– 17, 120, 122, 156, 162, 166, 173, 191, 272– 73, 275, 277, 287–89, 291 Howard, Donald, 11, 31, 275 Humphrey, Hubert, 185, 208, 223, 225, 239, 250–51, 253, 255–56, 305, 307–8, 313 Humphrey-Hawkins Act, 210–13, 215–17, 219, 221, 223, 225, 227, 229, 231, 233–35,

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237, 239–241, 243, 245, 247, 249, 250–53, 255–59, 262, 268, 307–9, 311–13 Ickes, Harold, 55, 61–63, 73–79, 83–85, 87, 280, 282 Ideology, 3, 42, 44, 57, 64, 67, 71–73, 77, 81, 100, 125–26, 138, 159, 239 Indirect employment, 75, 87 Inflation, 4, 110, 141, 147–48, 150, 172, 201, 205, 212, 215–16, 225–35, 238, 243, 245, 247–52, 254, 256–59, 269, 284–86, 294, 309, 311–12; accelerating, 227, 234, 248; fears of, 225, 238; theory of, 227, 233 Inflationary expectations, 227 Infrastructure, 15, 38, 76, 82, 181 Interest rates, 86, 227, 294 IS/LM, 227–8 Isserman, Maurice, 310 Jackson, Jesse, 263 Jackson, Thomas F., 177, 300 Jacobs, Meg, 76, 107, 139, 282, 285 Jeffries, John, 22–23, 274 Job Corps, 181, 189, 198 Job guarantees, 163, 185, 214, 221, 254 Jobs policy, 8–14, 27, 100, 139, 178–79, 186, 192, 216, 232, 301 Jobs programs, 8–13, 22, 26, 29, 33, 56, 67, 72, 81, 88, 92, 100, 104, 128, 148, 150, 156, 172, 174–75, 177, 183, 187–88, 190, 192, 197, 200, 203–4, 208, 215, 218, 220–22, 242, 244–45, 255, 263–64, 267, 300, 306–7 Job training, 8, 138, 181, 201, 203–4, 222, 293 Johnson, Clifford, 217, 306 Johnson, George E., 218, 306 Johnson, Lyndon B., 107, 172, 175, 180, 191– 94, 204, 206, 208, 219, 234, 241, 265, 303 Johnson administration, 12, 175, 179–80, 184–85, 187, 197, 202–3, 206, 208, 214, 220 Johnstone, Alan, 44, 56, 116, 118–19, 121, 191, 287, 290 Jones, Charles, 212 Kahn, Tom, 177 Kaldor, Nicholas, 231 Kalecki, Michal, 231, 305 Karl, Barry, 22, 274 Kennedy, John F., 13, 108, 136–37, 174–75, 185, 188, 192, 260, 265

INDX

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Index Kennedy, Robert F., 178, 193, 206 Kennedy, Ted, 259 Kennedy administration, 137, 175, 184–85, 220 Kerrey, Bob, 263 Kershaw, Joseph, 202 Kessler-Harris, Alice, 23–24, 274, 280 Keynes, John Meynard, 74, 95, 135–38, 141, 146–47, 152, 161, 164, 227, 292, 294, 308 Keynesian economics, 100, 132, 140, 149, 152, 206, 212, 227, 261 Keynesian economists, 100, 118, 132, 153, 169, 172, 228, 234, 237, 266, 310 Keynesianism, 121, 132, 136–37, 147, 151, 160–61, 192, 206, 216, 228, 230, 232–33, 262, 265; military, 107, 169, 172, 185, 297 Keyserling, Leon, 133, 177, 185, 223–24, 229, 231–32, 267, 296–97, 291, 299, 302, 305, 307–9, 312 Keyserling, Mary, 173 King, Coretta Scott, 226 King, Martin Luther, Jr., 172, 177, 185, 190– 91, 208–9, 220 Klein, Jennifer, 107, 139, 285–86, 293 Korean War, 152, 170, 185, 302 Krenn, Robert, 97, 284 Krugman, Paul, 264 Labor Department, 12, 21, 26, 32–33, 41, 47, 50–51, 85, 92, 119, 145, 174, 178–79, 182– 83, 190–91, 194–98, 200–204, 206–9, 215, 219, 221–23, 242–44, 247, 249, 251, 254, 256, 258, 301, 303–4, 310–11 Labor movement, 176, 184, 194, 213, 238, 274, 301 Laffer, Arthur, 235, 237, 309 LaFollette, Robert, 73 LaGuardia, Fiorello, 58, 86–87, 130 Lange, Dorothea, 124, 266 Larson, John, 14, 272, 276, 281 Lebergott, 92–94, 99, 107, 283, 290, 299 Leighninger, Robert D., 11, 14, 16, 102, 271– 73, 279, 280–83, 286, 289 Leuchtenburg, William, 10, 90, 99 Lewis, John, 184, 302 Liberalism, 17, 136, 156, 211–12, 214, 245, 297 Lieberman, Robert, 24 Lodge, Henry Cabot, Jr., 110, 118, 120, 290 Long, Huey, 21, 281

................. 19154$

INDX

319

Long, Russell, 217, 246 Lorence, James J., 11, 289 Lublin, Isador, 33 MacMahon, Arthur, 11 Margo, Robert, 98 Marshall, Ray, 232, 235, 244, 247, 250, 252– 53, 257–59, 267, 274, 309–13 Marshall, T. H., 23, 274 Marshall Plan, 194 Mass unemployment, 18, 36, 40, 52, 63–64, 80, 97, 102, 104, 125, 140, 146, 150, 162, 208, 265, 301 Mayors, big-city, 58, 86, 115, 138, 191 McKee, Guian, 13, 177, 191, 302–3, 305 Means, Gardiner, 41, 132, 136, 140, 145–49, 151, 157, 233, 276, 294 Meany, George, 187, 226 Mellon, Andrew, 6 Mettler, Suzanne, 24, 274 Mills, Wilbur, 192–93, 206 Minsky, Hyman, 231–32, 263 Mishel, Larry, 264, 268, 314 Moley, Raymond, 63 Mondale, Walter, 263, 314 Monetarists, 212 Monetary policies, 96–98, 104, 121, 145, 147, 213, 224–25, 231, 234, 247 Moynihan, Daniel Patrick, 177–78, 188–91, 209, 220, 245–46, 303, 311 Multiplier effects, 37, 59, 75–76, 81, 86, 98, 104, 116, 118, 121, 137, 283 Myrdal, Gunnar, 176–77, 231 National Defense Highway Act, 171 National Industrial Recovery Act (NIRA), 63, 82, 86, 152 NEC (National Emergency Council), 57–58, 61–62, 279, 282 Negative Income Tax. See NIT Neighborhood Youth Corps, 179, 197, 209 New Deal, 6, 8–10, 12–22, 25, 29–31, 35, 37, 41–42, 55–59, 62–63, 68, 73, 76–77, 80, 87–93, 95–102, 104–7, 109, 112, 114–19, 121–22, 125, 127–28, 133–38, 140, 143, 147, 150, 157–59, 162, 166, 168–69, 171, 173, 176, 181, 188, 192, 205, 210, 213–15, 217, 229, 239–40, 267–68, 272–75, 279– 83, 285–89, 291–92, 294–95, 299 New Frontier, 194, 239

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PAGE 319

320

Index

New Left, 15, 99, 191, 207 New York City, 3, 6, 58, 65, 86, 130, 272, 280, 314 NIRA (National Industrial Recovery Act), 63, 82, 86, 152 NIT (Negative Income Tax), 201, 219–20, 244 Nixon, Richard, 107, 216–17, 220–21, 241, 287, 307 NRA (National Recovery Administration), 19–20, 41, 58–59, 63, 71, 76, 115–16, 126, 140, 154, 289 NRPB (National Resources Planning Board), 21, 58, 71, 88, 121, 126, 128, 133, 139–46, 148–51, 155–57, 167, 177, 190, 199, 293, 295 NWRO (National Welfare Rights Organization), 220–22, 241, 252 NYA (National Youth Authority), 67, 150, 191–92, 279 Obama, Barack, 108–9, 273 Obama administration, 11, 108–9, 264, 273, O’Connor, Alice, 26, 175, 177–78, 190, 214, 274, 280, 300–301, 303–7, 317 OEO (Office of Economic Opportunity), 174–76, 178–82, 193–95, 197–206, 211, 219–22, 302–5 Office of Economic Opportunity. See OEO Office of Management and Budget. See OMB Ohlin, Lloyd, 181 Old Age Assistance, 24, 119 Olds, Leland, 173 OMB (Office of Management and Budget), 211, 228, 242, 244, 248, 252, 311 Overproductionists, 76 Packer, Arnold, 242–43, 247, 310–11 Parker, Alton, 116 Parker, Richard, 137, 226, 292 Patterson, James T., 175, 177–78, 213, 299– 301, 303–4, 307 PBJI (Program for Better Jobs and Income), 210–16, 219, 221, 240–42, 244–47, 249, 254, 260, 306, 310–11 Perkins, Frances, 21, 32, 57, 63, 82, 85–86, 116, 275, 283 Piven, Frances Fox, 221, 300 Phillips curve, 145, 212, 215, 225–35, 249, 251, 265

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Phillips, William, 226 Phillips-Fein, Kimberly, 169–70, 237, 299, 309–10 Polanyi, Karl, 3, 271 Political economy, 23, 73–74, 94, 105, 132– 33, 283, 296 Poor Law, 2, 124, 140, 214, 280, 287, 305–7, 311 Poor relief, 11, 26, 37, 41, 44, 48, 71, 122, 126 Post-Keynesians, 231–32 Poverty, 7–8, 12–13, 17, 23, 43, 46, 67, 136, 172, 174–83, 185–95, 197–209, 219, 221– 22, 224, 238, 240–45, 260–61, 266–68, 280, 299–304, 306, 308–9, 312, 314; culture of, 175–76, 178 Powell, Jim, 17, 273 Price controls, 13, 41, 107, 139, 150, 155, 285 Prices, administered, 117, 119, 137, 146, 294 Producerists, 115 Program for Better Jobs and Income. See PBJI Proxmire, William, 253, 313 PSE (public service employment), 8, 198, 217, 230, 232–35, 242, 247, 254, 268, 307 Public employment, 8, 41, 50, 53, 81, 85, 119, 124, 126, 141, 201, 235, 252, 277 Public service employment. See PSE Public works, 4–5, 8, 10–11, 14–16, 21, 32, 36, 46, 59, 61–63, 66, 70–80, 82, 85, 102, 113, 120, 125, 128, 135, 138, 141–43, 148– 49, 158–59, 161, 164, 167, 174, 182, 187, 198–99, 264, 271, 273, 281–82, 286, 293; idea of, 3, 115; use of, 272–73 Public Works Administration. See PWA Purchasing power, 37–38, 44, 52–53, 58, 81, 110, 116–19, 146, 151, 287, 294 PWA (Public Works Administration), 15–16, 46, 55, 58, 61–63, 66–67, 70, 72–88, 90, 110, 122, 124, 127, 132, 142, 279, 281–82, 288, 293 Quadagno, Jill, 28 Race, 11–12, 24, 80, 176, 178, 184, 188, 299– 300, 303, 309 Radcliffe, George, 161 Radosh, Ronald, 15, 99 Randolph, A. Phillip, 176–77, 185, 188, 209, 231 Reagan, Ronald, 91, 107–8, 235–36, 260–63

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Index Recchiuti, John, 78, 282 Relief, 2, 5, 7, 14, 19, 27, 31, 33–34, 42–44, 46, 48, 51, 60, 63, 65, 67–69, 81, 85, 87, 109–10, 118, 121, 125, 127, 129–30, 143– 45, 156, 161, 167, 218, 280, 287, 293 Reuther, Walter, 176, 187–88, 191 Right to work, 129, 131, 133, 135, 137, 139– 41, 143, 145, 147, 149, 151, 153, 155, 157, 159, 161, 163, 165, 167, 169, 171 Rivlin, Alice, 233, 309 Romer, Christina, 96–98, 104, 284–86, 294 Roosevelt, Eleanor, 266 Roosevelt, Franklin D., 5–6, 17, 20–21, 30, 33, 52–55, 57–58, 60–62, 66, 75, 82–84, 86–87, 89, 95–96, 100, 104, 107, 109, 113, 115–16, 118, 125–28, 139, 191, 238, 265, 273, 276–77, 282, 284–85, 298 Roosevelt, Theodore, 314 Roosevelt administration, 22, 25, 29, 56–57, 60, 82, 91, 93, 98, 100, 109, 111, 114, 118, 126–27, 140, 145, 149, 152, 167, 191, 275 Roosevelt Recession, 92, 95, 100–101, 116, 118 Rose, Nancy, 11, 90, 101 Rosenof, Theodore, 132, 136–37, 151, 292, 294–96 Ross, Emerson, 30, 33–34, 44, 46–48, 50–51, 56, 69, 119, 121–22, 173, 191, 267, 277–78, 290 Rubinow, Isaac, 32 Russell, Judith, 13, 179, 197, 277, 299–300, 303 Rustin, Bayard, 177, 185, 188, 190, 207–8, 231, 299, 302, 305 Salant, Walter, 167 Samuelson, Paul, 138, 152 Sautter, Udo, 15, 273 Schlesinger, Arthur, Jr., 10, 22–23, 90, 99, 272–75, 279 Schultze, Charles, 204, 216, 233–36, 245, 248, 250–57, 305, 309, 311–13 Schwartz, Bonnie, 11, 14, 272, 276 Sheppard, Harold, 232 Shriver, Sargent, 182, 188, 193–94, 197–201, 206, 304 Skidelsky, Robert, 137, 292, 308 Skocpol, Theda, 10, 28, 99–100, 135, 246, 272, 285, 292

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Smith, Jason Scott, 11, 14–15, 25, 90, 101–2, 139, 273–4, 282–83, 285–89, 293, 299 Social insurance, 8, 21–23, 25, 28–33, 44–46, 48–53, 55, 66, 68, 71, 119, 126, 143, 267 Social Keynesianism, 42, 136, 138, 148, 150, 154–55, 159, 168–69, 292 Social policy, 11–12, 29, 67, 134, 136, 168, 239, 265, 272, 279, 292 Social Policy Group. See SPG Social science, 34, 48, 93, 121, 124, 159, 175, 274 Social Security, 13, 21–22, 28–29, 54–55, 63, 119, 152, 154, 157–58, 162, 166, 168, 170, 261, 267 Social Security Act, 29–30, 33, 46, 54–55, 60, 275, 279, 297 Solow, Robert, 226 Sorensen, Theodore, 194 SPG (Social Policy Group), 241, 243–44, 252 Staats, Elmer, 202 Stagflation, 17, 107, 212, 232, 258, 310 Steensland, Brian, 179, 221, 300, 303, 306–7 Stein, Judith, 213–14, 259, 302, 305, 308, 310 Stricker, Frank, 12–13, 179, 300–301, 303 Structuralists, 135, 175, 177, 190, 299 Sullivan, Leon, 184 Summers, Larry, 96, 284 Supple, Barry, 26, 274, 279 Supply-siders, 180, 212 Taft, Robert, 160 Tarnow, Fritz, 5 Task forces, 174–75, 180, 188–90, 193, 195, 199, 202–3, 220 Taylor, Nick, 102, 286 Tennessee Valley Authority (TVA), 79, 140 Thorstein Veblen, 132 Townsend, Francis, 20–21 Truman, Harry, 130, 191, 302 Truman administration, 133, 137, 169, 172, 174, 185, 205, 229, 234, 296, 302 Tsongas, Paul, 263 Tugwell, Rexford, 41, 63, 149, 152, 173 TVA (Tennessee Valley Authority), 79, 140 UI (Unemployment Insurance), 20–21, 30– 32, 45–51, 53, 133, 144, 183, 243, 264, 267, 275, 293 Underemployment, 12, 182, 186–87, 195

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Index

Unemployment, 1–4, 7, 12, 14, 16–18, 20, 26–27, 32–34, 36, 38, 46, 48, 51, 53, 71–72, 75, 81, 89, 92–95, 97–101, 105–9, 118–19, 121, 124–25, 127–28, 138, 141, 145, 148, 154, 157, 163, 168–69, 171, 174, 176–77, 179–80, 182, 185–87, 189–90, 195–96, 199–200, 202, 207–8, 212, 215, 217–18, 224–31, 233–36, 241, 245–47, 250–53, 255–56, 258–60, 262–63, 265–66, 272–73, 283–87, 290, 292, 294, 298, 301, 309, 311– 12, 314; aggregate, 233; cyclical, 64; frictional, 40; involuntary, 223; levels of, 82, 106, 269, 284; numerical goals for, 247, 253, 256, 312; structural, 2, 177, 190, 251 Unemployment Insurance. See UI Unemployment rates, 1, 8, 35, 67, 88, 91–92, 94, 98, 100, 102–5, 108, 174, 217, 233, 246, 248, 251–52, 257, 259, 269, 284–85, 302 Unemployment statistics, 93, 99, 299 Vedder, Richard K., 17, 273, 284 Vernon, J. R., 97, 284–85 Vickrey, William, 231–32, 263 Vietnam War, 193, 302 Volcker, Paul, 211 Wages, prevailing, 31, 44–45, 69, 76, 110, 126–27, 141, 144, 148, 150, 207, 234–35, 255, 277 Wagner, Robert, 5, 19–21, 55, 63, 73, 133–34, 146, 152, 154, 157–58, 160–63, 165–66, 168, 285, 296–98 Wagner Act, 152, 157, 297 Wagner Committee, 134, 146, 154, 157–58, 160, 162–63, 165–66, 168, 297–98 Wagner-Murray-Dingell Act, 297 Walker, Frank, 58, 61 Wallace, Henry, 130, 149, 151, 275, 295 War on Poverty, 8, 12–13, 17, 136, 172, 174– 83, 187–95, 197–98, 202, 204–6, 208–9, 221, 240, 243, 261, 300–304 Wasem, Ruth Ellin, 131, 291–92, 297–98 Weir, Margaret, 10, 13, 29, 90, 99–101, 135– 36, 138–39, 168, 178–79, 197, 215–16, 233,

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271–72, 285, 292–93, 298, 300–301, 306–7, 309–10 Welfare, 8, 11, 22, 24–28, 55, 71, 76, 181, 189, 211, 213–14, 218, 221–22, 240, 242, 244– 46, 263, 302–4, 310, 312 Welfare reform, 43, 213–14, 216, 236, 241, 244, 249, 310–12 Williams, Aubrey, 33–34, 41, 44, 49, 56, 114, 116, 121, 156, 173, 191, 287, 289 Wirtz, Willard, 182–84, 188, 190–91, 194, 196, 206, 214, 220, 301–3 Witte, Edwin, 21, 27, 30–33, 45–46, 48–51, 274–75, 278–79 Woodcock, Leonard, 226 Work, 1–3, 8–9, 13, 17–18, 20–21, 24–27, 29, 34–39, 42–44, 46, 48–51, 53–55, 60–62, 65–67, 69–70, 72, 75, 78, 82, 84, 87, 90, 93, 98–99, 101–2, 107, 110, 112, 120–21, 123–27, 129, 131, 133, 135, 137, 139–41, 143–45, 147, 149, 151, 153–59, 161–65, 167, 169, 171, 173–74, 179, 181–82, 185, 187–89, 193, 196–98, 202–3, 207, 209, 211, 213, 216–17, 220–21, 223–25, 230, 235–36, 238, 241–44, 249, 252, 255–56, 262, 266–68, 271, 273, 275, 280, 282, 284, 286–88, 293, 295, 314 Work programs, 8, 26, 46–49, 61–63, 68, 71– 72, 84, 90, 122–24, 143, 156, 163, 185, 192, 194, 277, 280–81, 290, 304 Work relief, 8, 15, 44, 48, 60, 63, 66, 68–69, 118–19, 123, 125, 189, 272, 281 Works Progress Administration. See WPA World War II, 1, 8, 13, 73, 92, 95–97, 99–101, 104–5, 107, 121, 130, 133, 137, 139, 168, 229, 233, 285–86, 295, 301, 310 Woytinsky, Wladimir, 5 WPA (Works Progress Administration), 9–11, 16, 22–23, 25–26, 29, 31, 55–58, 61– 75, 78, 80–88, 90–92, 95, 100, 102–28, 131–32, 135, 139–40, 142, 144, 150–51, 156, 158–59, 164, 173, 190, 196, 199, 202, 217–18, 247–48, 265, 272, 274–75, 277, 279–81, 286–91, 299, 301 Yunay, Yuval, 292 Zinn, Howard, 15, 99

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Acknowledgments

First of all, I must thank Alice O’Connor, Nelson Lichtenstein, and Mary O. Furner for their endless patience, invaluable support, and unstinting assistance in putting this project together. Without your help, none of this would have been possible. Next, I’d like to thank my parents and my brother for putting up with years of my monomania about an obscure area of public policy, reading innumerable drafts, letting me crash on their couch while I spent weeks at the Archives in College Park or Poughkeepsie, and reminding me that this would actually be finished. Next, an enormous amount of thanks goes out to the Labor and Employment Research Fund, Michael Lind and the New America Foundation, and UAW 2865 for respectively funding my research and keeping me employed while I wrote and researched on my off-hours. Without your generous support, the financial realities of academia in the twenty-first century might well have prevented me from completing my research. Next, I would like to thank Steve Fraser, Phillip Harvey, Peter Agree, my unnamed reviewer, and the staff of the University of Pennsylvania Press for helping to shepherd this book through to the finish. I’m immensely grateful to the librarians and archival staffs of the National Archives, the Library of Congress, the FDR Library at Hyde Park, the Truman Library in Independence, the JFK Library in Boston, the LBJ Library in Austin, the Carter Library in Atlanta, and the Davidson Library at the University of California Santa Barbara. Their professional expertise in both American history and the organization of government archives, and their generosity with their time in helping me find material, places to stay, and transportation were critical to the success of this project.

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