§ 15. Individual maladjustment in finding jobs. Another kind of individual maladjustment is the failure of the jobless man to connect with the manless job. A certain amount of this maladjustment must exist in the most stable industries and in the most settled industrial conditions. Fluctuations occur in the market demand for the products of various establishments, requiring the taking on or laying off of some men. Fluctuations occur in the plans both of employers and of wage workers as a result of age, of removal for reasons more or less non-economic, of desire to change occupations, of variations in health, and of countless other causes. The needs of the employer for a worker, and of the worker for a job, are mutual. To a large degree these various fluctuations are mutually compensatory, workers going and coming, orders increasing here and decreasing there. Total jobs and total workers capable of filling the jobs are at any moment in normal times equal quantities, if they can be brought together, the wage being adjusted, like any market price, so as to equilibrate demand for and supply of labor.13 But almost everywhere is lacking a real labor market. The substitutes for it are largely ineffective: trade-union action, employers' associations, "want ads," cards in shop-windows, weary walks from door to door, lines of waiting men outside of factories, private employment agencies. At their best the private employment agencies perform valuable services within limited fields, but they are uncoordinated and utterly inadequate to meet the chief need, and at their worst they are the instruments of great abuses against the unemployed.

11 See ch. 21, § 9, on the minimum wage.

12 See Vol. I, p. 223, on friction in the adjustment of wages.

§ 16. Public employment offices. Vigorous efforts to create local "free employment offices" or "labor exchanges" began in a number of countries about 1895. The movement gained headway in the next ten years and has since steadily grown. In Germany the chief exchanges have been founded and conducted by the municipalities (while others have been controlled by the unions and by groups of employers) and have remained largely decentralized, though cooperating to some extent through voluntary state conferences of officials -of the exchanges, and after 1915 required to report to the imperial statistical office. The general results were remarkably good, although not completely satisfactory. In the revolution that marked the military collapse of Germany in November, 1918, the trade-unions got from the employers recognition of the principle of "parity" in the management of the offices of employment, along with recognition of the unions, the eight-hour day, and various other claims that they long had urged.

13 See Vol. I, especially chs. 7, 19, and 28.

Every industrial country of Europe has done something to provide free labor markets. Great Britain, after some ex-experiment with a local system, established in 1909 the first national system of " labor exchanges." In America the movement is developing in three directions - through municipal, state, and federal offices. These united, in 1913, in an "American Association of Public Employment Offices." In 1915 there were known to be ninety-nine state and city employment offices distributed through thirty states, besides federal offices operated in eighteen cities in connection with the Bureau of Immigration. The federal service in the Department of Labor, the management of which had been much criticized, was brought to an end, just when most needed, in the midst of demobilization in 1919, by the failure of Congress to appropriate the necessary funds. The clearly recognized task is now to cooordinate these various agencies into an efficient national system, eliminating partizan politics and elevating the management of all branches to the plane of professional service. Through these agencies should be operated an industrial service analogous in function to the Weather Bureau, and reporting from day to day the pressure of demand and the prospects for labor in various parts of the country. The economic results of a complete, exclusive, and efficient service of this kind would far exceed its cost to the community.

§ 17. Fluctuations of industry causing unemployment. Any one of the maladjustments in employment thus far considered may occur at a given moment, in static conditions of industry. But there are also maladjustments resulting from more general industrial changes throughout a period of time. The two main types of these are seasonal and cyclical changes, the one occurring within a year, and the other occurring within the longer period of the business cycle. At the downward swing of these seasonal and cyclical changes the number of would-be workers exceeds the number of jobs,14 and the resulting unemployment is greatest when the minor and the major swings are both downward, about midwinter, in a period of industrial depression. Thus in 1893-94, and to a lessening degree in 1894-95, 1895-96, in 1907-08, and 1914-15. The unemployment beginning with the onset of the crisis in the summer of 1920 grew almost steadily worse, even after the return of spring in 1921, as prices tobogganed swiftly to lower and lower levels, and business of nearly all kinds was reduced in volume. The railroads alone, in desperate financial straits, discharged about 500,000 workers, and the total number of industrial unemployed in the nation was estimated to be from three to six millions. Of course, employment offices alone are no remedy for the exceptional difficulties of such times, and the individual, whether he be an unfortunate "out-of-work" or a more fortunate well-wisher, feels helpless in the face of the overwhelming burden of distress. Such a situation is declared by the radical communists to spell the bankruptcy of the wage system; while the most conservative students of the subject confess that this periodic chaos in the labor market is the strongest indictment of, and involves the gravest dangers to, the existing economic and social order.

§ 18. Remedies for seasonal fluctuations. But of late there has been a growing hope that an answer may be found to this economic riddle of the Sphinx. A number of different measures are being experimentally tested and applied. Many years of effort will be required for the perfecting of these plans separately and collectively. Some of these plans may be here indicated, however, briefly. To remedy seasonal fluctuations within the establishments, (1) output may be regularized by taking orders in advance; (2) by producing various products successively in the same factory; (3) by overcoming weather conditions, as has been done successfully in brick- and tile-making, ditch-digging, and building operations; (4) by trans14 See ch. 10, § 6 and § 7, on the industrial crisis.

ferring workers from one department of an establishment to another; (5) by improving the employment departments so as to build up a more stable force, thus reducing the great expense of "hiring and firing" and the loss through training "green hands"; (6) by varying the length of the working-day while keeping the same working force throughout the year; (7) by cooperating with other industries to build up a regular working force and transferring it from one establishment to another with seasonal changes.

Of great aid in a number of these measures is a broader industrial training for the workers, making them more able to change from one occupation to another. For this purpose every period of unemployment and of temporary shortening of the working-day ought to be used as a time for trade education, by the recently devised and successfully applied "short-unit courses for wage-earners."15

§ 19. Reducing cyclical unemployment and its effects. The maladjustments due to the movement of the business cycle are even more difficult to remedy completely, but will be diminished by every measure that helps to reduce the great financial fluctuations.16 Further, many communities have already begun to plan large public works more systematically so that they may be carried on mainly when private business is more slack. A comparatively small amount of such emergency work would maintain the balance of employment for a large part of the less skilled workers. It has been estimated by Bowley, an English statistician, that in the United Kingdom it would be necessary to set aside only 3 per cent of the annual expenditure for public works to be used additionally in years of industrial depression, in order to balance the wage loss at such times. This well-nigh incredibly small proportion may be compared to that between the weight of the gyroscope and the car or ship to which it is applied. It is hardly to be doubted that hitherto, in America, public undertakings have been executed much more largely in periods of business prosperity, and have been diminished during "hard times," thus greatly accentuating the harmful swing of the labor demand. Finally, unemployment insurance, which has already been applied by parliamentary legislation in Great Britain to a group of nearly three million wage-workers, is an indispensable and highly hopeful measure of relief. The place of this in a general system of industrial insurance will be indicated in the next chapter.

15 See Bulletin of the United States Bureau of Labor Statistics, No. 159 (April, 1915).

16 See ch. 8, § 6, § 7; ch. 9, § 6, § 8; ch. 10, § 14, § 16; ch. 14 12.

References

Commons, J. R. and associates, History of labor in the United States.

2 vois. N. Y. Macmillan. 1918. Commons and Andrews, Principles of labor legislation in the U. S.

Chs. VI, VII, IX. N. Y. Harper. 1920. Pigou, A. C., Unemployment. N. Y. Holt. 1914. Sumner, E. L., and Merritt, E. A., Child labor legislation in the United States. U. S. Children's Bureau. Supt. of Docs. 1915. United States Bureau of Labor Statistics, Bul. 159. 1915.