The Employment Act of 1946 represented the legislative outcome of a hotly contested policy dispute over the federal government’s role in providing full employment for Americans.
Based on sections of the “Economic Bill of Rights” enunciated in Franklin D. Roosevelt’s 1944 State of the Union message, the bill was first introduced in January 1945 as the “full employment bill” by five prominent New Deal senators, including Democrat James Murray of Montana and Democrat Robert Wagner of New York. It was rewritten almost beyond recognition before becoming law over a year later.
Originally the bill required the president to provide Congress with annual estimates of both the nation’s projected workforce and the number of jobs likely to be created by the public and private sectors. If the number of jobs amounted to less than the predicted labor force, the president was to propose action that would stimulate private-sector job creation, such as tax incentives, or cause more public sector employment, such as public works programs. A joint committee of Congress was to have final say over which of the president’s suggestions would be adopted. To preempt opposition that suggested the bill paved the way for direct federal government involvement in the economy, limits were placed on what the president could recommend.
Opposition erupted. Influential members of Congress and several powerful organizations, including the National Association of Manufacturers, the U. S. Chamber of Commerce, and the Farm Bureau, opposed the bill. Many arguments against the bill involved practical matters, such as the difficulty of making the type of employment forecasts called for and the potential cost. A few even suggested that unemployment was positive because fear of job loss kept workers from slacking off. The most passionate arguments against the bill linked full employment policies with the fascist and communists governments feared by most Americans. Ohio Republican senator Robert A. Taet warned, “we can provide for full employment in the United States,
Russia does it; Germany does it. . . if we are willing to sacrifice freedom, we can secure employment.”
The bill supporters, including many labor unions and congressional New Dealers, also used fear of totalitarianism. Republican senator Wayne Morse of Oregon reminded his colleagues that “it was unemployment of the masses in Germany and in Italy. . . that brought about the rise of Mussolini and Hitler.” Already sensing the cold war struggle for the world’s loyalty, Senator Murray promised, “that through this measure. . . we can prevent unemployment and prove to the world that democracy can work.” Supporters emphasized domestic benefits of the bill as well. They claimed that full employment would raise the standard of living for all Americans as well as take away the incentive of big BUSINESS to wipe out its smaller competitors.
The bill generated considerable debate, though it did not divide along partisan lines. Congressional Quarterly noted, “party lines practically vanished during the debate.” Although the bill passed, the changes made to it indicate that its opponents were largely successful in rendering it ineffective. Phrasing was changed to dilute the government’s commitment to full employment, with the word “full” even being dropped from the bill’s title. Instead of detailed estimates and policy proposals, the final bill stipulated that the president was merely to provide a yearly economic report to Congress on America’s employment situation and how federal policy affected it. The joint congressional committee was given power to review the report, but not to initiate legislation. An important addition to the bill was the creation of a Council of Economic Advisors to assist the president in preparing the economic report.
Despite its weakened final form, some believed that, with sympathetic people in the Council of Economic Advisors and the Joint Economic Committee in Congress, the law could affect major policy changes. The Republican victory in 1946 dashed those hopes, as the new majority made Senator Taft chair of the committee.
This ineffectiveness has led to questions about whether it was a failure. Certainly, it did not live up to the hopes expressed in Roosevelt’s “Economic Bill of Rights.” Nevertheless, the bill did create the Council of Economic Advisors. Although the council might not have gained the trust of Congress, it has been an invaluable aid to presidents in considering a host of economic issues since its creation.
Further reading: Stephen Kemp Bailey, Congress Makes a Law: The Story behind the Employment Act of 1946 (New York: Columbia University Press, 1950); J. Brod-ford Delong, Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946 (Cambridge, Mass.: National Bureau of Economic Research, 1996).
—Dave Price
World History
