Unemployment Compensation: An Economic Tool

Abstract

The whittling down of wartime controls climaxed by the end of effective price control has engendered a mood of holiday gaiety in certain circles as they envisage the killing which lies ahead. The most raucous laughter is reserved for those prophets who foresaw the likelihood of widespread and prolonged unemployment as a result of the sudden collapse of the war economy. Currently, after short spells of idleness immediately after V-J Day, there is numerically employment, and at least in retrospect such a situation was fully to be expected in view of the colossal store of demand for all sorts of products built up in the war years. Whatever government officials may have said in a desperate effort to obtain continuation of vital controls and the enactment of employment legislation, the following prognosis would have had a strong basi-and it may be speculated it's the one they actually had in mind: That the first 2, 3, or 4, or even possibly 5 years after the war would more or less take care of themselves; that the satisfaction of demands left unsatisfied at war's end would utilize labor resources with a great degree of completeness; but that danger lay ahead after the leveling off of demand to a point where it fell below supply, unless measures were taken in advance to prevent the collapse in employment which might follow. No reason is evident for abandoning that analysis, except to dilute it with pessimism. Though we are currently in a state of numerically full employment, jobs remain unfilled and perhaps two or three million are unemployed. Of these a portion are receiving unemployment compensation. Another group has already exhausted its rights but continues without work. It is not too surprising that this seeming paradox should provoke widespread exspos6s of in the administration of unemployment compensation. The most systematic, though not the only effort in this direction is the series of articles which recently appeared in the Baltimore Sun relating to the administration of the Maryland law. A major point of emphasis in this seriesas in other critical comments-has been the opportunity given to unemployed workers to refuse unsuitable work without loss of compensation rights. The object of this paper is not to consider these charg s, but it may be appropriate to point out that their nature and the spirit in which they are evidently made permit the suspicion that more than an attack on abuses is involved. There is evidence that to a large extent the wages offered for unfilled jobs are lower than maximum benefit rates, to which, of course, only higher bracket wage-earners would be entitled. Such rates in turn are very much below current wages for skilled-and in many cases-unskilled work. Labor organizations look upon the current attack as an attempt to depress wage levels; but whether this is so or not, there is at least some basis for considering it as aimed at unemployment compensation itself as much as at abuses in its administration. The melancholy possibility of a bust after the current boom and the recent essays in exposure suggest the need for a new look at the basic function of unemployment compensation or insurance in our system of economic relations. If anything may be taken as axiomatic about unemployment compensation, it is the proposition that it must always be thought of as part of a total social policy. At bottom the proper end of a social policy is the expansion to the greatest possible degree of the living standards of those to whom it purports to minister. To put the matter a bit differently, the central aim of social life is to make increasingly available the means necessary for human fulfillment. The notion of higher living standards implies a decrease in the effort necessary for the satisfaction of bodily needs and a correspondingly wider opportunity to satisfy those of a non-bodily character. Unemployment compensation, along with other social programs, must find its appropriate place in the scene set by this aim. As a result of economic conditions in the late 20's and early 30's, security has taken on an importance in our thinking it never before possessed. The fear of economic insecurity has been and may in the future continue to be deeply influential in the shaping of our social, economic, and political institutions. Though much has been done in America in the last decade to allay this