DOCUMENTRESUME ED 029 957 VT 007 884 By-Haber. Wi !UK Kruger. Daniel The Role of the United States Employment Servicein a Ci)anging Economy. Studies in Employment and Unemployment. Upjohn (W.E.) Inst. for Employment Research, Kalamazoo. Mich. Pub Date Feb 64 Note-129p. Available from-W.E. Upjohn Institute for Employment Research. 1101Seventeenth Street. N.W.. Washington. D.C. 20036 (without charge) EDRS Price MF-S0.75 HC-S6.55 Descriptors-Agencies. *Agency Role. Employment Programs. tmployment Services.Federal Legislation. Federal Programs. Federal State Relationship. *Historical Reviews. Job Placement.Job Training, Labor Market. Manpower Utilization. *Organizational Change. Program Administration.Program Improvement. Vocational Counseling Identifiers-United States Employment Service. USES . This monograph examines the developments whichhave Influenced the United States EmploymentServiceduringthe 30 yearsofitshistory.sincethe Wagner-Peyser Act of 1933. The maior social andecohomic developments, the enabling legislation. and the issues and problems regardingthe proper role of that service are discussed. Some of the historical roots of employmentservice concepts are traced as far back as 1834. The various services available Throughthe Employment Service suchas pladement counseling, labor market information and research. industrial services. training, and othersare described and the rationale for their existence is presented. Some of theproblems and issues analyzedare: (1) for whom is the Employment Service intended.(2) relationships with colleges and universities. (3) relationships with private employmentagencies. and (4) federalization versusfederal-state system. A variety of proposalsfor strengthening and improvement are presented along witha critical discussion of the proposals. Seven specific suggestions for improvementare advanced in the areas of: federal leadership. finance, evaluation. personnel. localoffice operations. community support. and research. Tables and organization chartsare included (ET) EDUCATION & WELFARE U.S. DEPARTMENTOF HEALTH, OFFICE Of EDUCATION REPRODUCED EXACTLY ASRECEIVED FROM 1HE THIS DOCUMENT' HAS DEER ORIGINATING IT. POINTSOf VIEW OR OPINIONS PERSON OR ORGANIZATION OFFICIAL OFFICE OfEDUCATION tr, STATED DO NOTNECESSARILY REPRESENT cr POSITION OR POLICY. c, THE ROLEOF THE UNITEDSTATES EMPLOYMENTSERVICE IN ACHANGINGECONOMY:_i By WILLIAM HABER,Ph.D. The University ofMichigan and DANIEL H. KRUGER,Ph.D. School of Labor andIndustrial Relations Michigan State University February 1964 -2 cv).4'ublished by The W. E.Upjohl.Institutr forEmployment Research 300 South WestnedgeAvenue Kalamazoo, Michian49007 1.,90 00.101.00.1.11nolimm.n. Foreword The problems and issues which haveconfronted the federal-state employ- ment service since itsestablishment during the early thirtiesclearly suggest an increasingly importantrole of this service in our changing economy. This monograph waswritten in order to provide some perspec- tive for considering what its role shouldbe. The authors of this report are widelyknown in the field of labor eco- nomics as experienced and competentinvestigators. Both have authored other reports published by the Institute.Dr. Haber has been associated with the Institute as a consultant for many yearsand presently is also its Director of Unemployment InsuranceResearch. Without taking a position on the many issueswhich are raised, the Insti- tute is pleased to publish this report. HAROLD C. TAYLOR, Director The W. E. Upjohn Institute for Employment Research February 1964 iii THE W. E. UPJOHNINSTITUTE FOR EMPLOYMENTRESEARCH THE INSTITUTE, aprivately sponsored nonprofitresearch organiza- tion, was established onJuly 1, 1945. It is an activityof the W. E. formed in Upjohn UnemploymentTrustee Corporation, which was 1932 to administer a fund setaside by the late Dr. W. E.Upjohn for the purpose of carrying on"research into the causes and effectsof unemployment and measuresfor the alleviation ofunemployment." One copy of this bulletin may beobtained without charge from the Institute in Kalamazoo or from theWashington office, 1101 Seven- teenth Street, N.W., Washington,D.C., 20036. Additional copies may be obtained fromthe Kalamazoo office at a cost of50c per copy. Preface Since its inception 30 years ago, the United States Employment Service has had a checkered career. It was born in the midst of the greatest de- pression in the nation's history. Before the state legislatures could enact laws necessary for the federal-state cooperative program, a whole series of measures were adopted to deal with the economic ravages of the great depression. These included CWA, WPA, CCC, NYA, FERA, and PWA, among others all enacted in 1933. To serve these agencies, the federal government established a National Reemployment Service even before a federal-state plan could get underway. In 1935 Congress enacted a Social Security Act which immediately involved the local offices of the United States Employment Service in the administration of the "work test" re- quired to qualify persons for unemployment insurance benefits. Then came World War II and the federalization of the United StatesEmploy. ment Service, including its shift from the Social Security Agency tothe Department of Labor. At the close of the war, with the return of the Em- ployment Service to the states, there was an opportunity to begin the de- velopment of a federal-state employment service on the principles con- templated by the original Wagner-Peyser Act of 1933. In the meantime, however, as a result of the development of public policy in the manpcwer field, the Employment Service developed beyond the idea of a simple labor exchange under which it was conceived. Addi- tional responsibilities were constantly being imposed upon it. These had to do with special services for veterans, the handicapped, minority groups, youth, and the elderly people in the labor force. There was an expansion in its counseling, testing, and guidance functions. It became involved and increasingly skilled in the procurement of labor market information and, in fact, in community "labor market planning." The "imposition" of ad- ditional functions has continued almost to the present time. More recent- ly, in addition to responsibilities connected with the administration of un- employment insurance, the local and state offices have become involved in the nation's manpower development and training programs. In brief, the more than 1,900 local offices affiliated with the United States Employ- ment Service have become in a broad sense "manpower centers" serving the local community, the state, and the nation. In this monograph we undertake to examine the developments which have influenced the United States Employment Service during the 30 years of its history. We are mindful of the fact that this long period can- not be fully treated in a relatively short monograph. We hope, however, v that in highlighting the majordevelopments and in emphasizing the evolv- ing issues and problems this monographwill contribute constructively to the public discussion currentlybeing carried on regarding the properrole of the United States EmploymentService in a changing economy. One of the authors has, for many years,served as a member first, of the Technical Advisory Board to the United StatesEmployment Service, and since 1948 for 10 years as Chairmanand since then as a member ofthe Federal Advisory Council on EmploymentSecurity. These associations have made it possible for him toobserve the developing problems affect- ing the employment service operationsin the United States. The United States Employment Service isbut the lengthened shadow of many persons who have worked overthe years in implementing the intent of the Wagner-Peyser Act andsubsequent pertinent legislation. We have known many of these public servantsin the national office in Wash- ington, in state administrative offices, and in manylocal offices across the country. In our discussionswith them, we have learned muchabout the problems of operating a public employmentservice. To all of them, we owe our indebtedness. We express our sincere appreciation toMr. Louis Levine, Director, United States Employment Service, andhis staff members who read the manuscript. Their comments andsuggestions were most helpful. Special thanks go to to Dr. Harold Taylor,Director, the W. E. Upjohn Institute for Employment Research, formaking this study possible. Two of the Institute staff members wereof special assistance: Mr. Samuel Ben- nett helped us get themanuscript into its final draft; and Mrs.Jared H. Ford edited and prepared it for publication. We also want to thank Mrs.Gretchen Foster, who provided helpful editorial assistance, and Mrs. EdwardFoster of the Michigan State Uni- versity School of Labor and IndustrialRelations, who cheerfully typed and retyped the several drafts ofthe manuscript. WILLIAM HABER DANIEL H. KRUGER December 1963 vi Contents Foreword iii Preface I. Introduction 1 II. The Job Economy 7 Labor Force and Job Supply 7 How Worker and Employer Find Each Other 9 Changes in the Manpower Supply 10 The Manpower Problem 17 III. Historical Development From a Labor Exchange to an Employment Service 21 European Origins of Employment Service Concepts 21 Early Steps in the Establishment of Public Employment Offices in the United States, 1834-1907 Efforts Toward the Establishment of a Nationwide Federal-State System, 1907-1932 25 The Wagner-Peyser Act and Its Implementation, 1933-1937 26 Continuing Expansion of Responsibilities and the Advent