People Must Live by Work. Steven Attewell
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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.
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 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 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—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