AN APPRAISAL OF A NATIONAL POLICY: THE EMPLOYMENT ACT OF 1946 Item Type text; Dissertation-Reproduction (electronic) Authors Lansdowne, Jerry W. Publisher The University of Arizona. Rights Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author. Download date 04/10/2021 12:36:28 Link to Item http://hdl.handle.net/10150/290209 This dissertation has been microfilmed exactly as received 68-13,547 LANSDOWNE, Jerry Wayman, 1931- AN APPRAISAL OF A NATIONAL POLICY: THE EMPLOYMENT ACT OF 1946. University of Arizona, Ph.D„ 1968 Political Science, general University Microfilms, Inc., Ann Arbor, Michigan AN APPRAISAL OF A NATIONAL POLICY: THE EMPLOYMENT ACT OF 1946 by Jerry Waymati Lansdowne A Dissertation Submitted to the Faculty of the DEPARTMENT OF GOVERNMENT In Partial Fulfillment of the Requirements For the Degree of DOCTOR OF PHILOSOPHY v. In the Graduate College THE UNIVERSITY OF ARIZONA 1968 THE UNIVERSITY OF ARIZONA GRADUATE COLLEGE I hereby recommend that this dissertation prepared under my direction by Jerry Wayman Lansdowne entitled An Appraisal of a National Policy. The Employment Act of 19^6 be accepted as fulfilling the dissertation requirement of the degree of Doctor of Philosophy * | VJ i- - <—<>_ Cp & Dissertation Director Date After inspection of the final copy of the dissertation, the following members of the Final Examination Committee concur in its approval and recommend its acceptance:'" 3 - V &' 3 -c y s? - O 1 •6,^ (o & This approval and acceptance is contingent on the candidate's adequate performance and defense of this dissertation at the final oral examination. The inclusion of this sheet bound into the library copy of the dissertation is evidence of satisfactory performance at the final examination. STATEMENT BY AUTHOR This dissertation has been submitted in partial fulfillment of requirements for an advanced degree at The University of Arizona and is deposited in the University Library to be made available to borrowers under rules of the Library. Brief quotations from this dissertation are allowable without special permission, provided that accurate acknowledgment of source is made. Requests for permission for extended quotation from or reproduction of this manuscript in whole or in part may be granted by the head of the major department or the Dean of the Graduate College when in his judgment the proposed use of the material is in the interests of scholarship. In all other instances, however, permission must be obtained from the author. ACKNOWLEDGMENT X am particularly grateful to Currin V. Shields and Vincent Ostrom for their intellectual guidance. Without their help at critical junctures, I would not have had the opportunity to explore the new and exciting field of political economy nor would the occasion for writing this dissertation in political science have arisen. I also wish to thank the bevy of lovely ladies who devoted a considerable amount of time in making the following pages presentable. In this regard, I hope I am still friends with Ann Brown, Pat Brauch and Jane Deming. I also hope to re-establish friendly relations with Jill Lansdowne who may be more responsible than I for what sense the following pages might make. iii I TABLE OF CONTENTS Page LIST OF TABLES vii ABSTRACT viii CHAPTER I INTRODUCTION 1 The Function of Appraisal and the Policy Process ... 1 Identification, Packaging, and Measurement 5 Systems Analysis and the Function of Appraisal .... 9 II THE EMPLOYMENT ACT AND GOVERNMENT POLICY 15 Complications 23 The Keynesian Foundation and Compensatory Fiscal- Monetary Policy 27 Inflation and Recession? 32 Profits and Administered Pricing 34 Cost-Push Inflation? 39 III THE GOVERNMENT POLICY DILEMMA 45 Institutional Inflation 48 Other Problems 57 Structural Unemployment 62 A Total Time Use Model? 64 Summary 67 IV EMPLOYMENT AND UNEMPLOYMENT SINCE THE ENACTMENT OF THE EMPLOYMENT ACT OF 1946 69 General Economic Behavior Since 1946 69 Trends in Employment 74 Unemployment Characteristics 81 The Skilled and Unskilled Worker 81 White Collar Workers 86 Some Problems of Definition 87 Age, Sex, and Color 92 iv V TABLE OF CONTENTS--Continued CHAPTER Page Recent Innovations in Measuring Employment and Unemployment 103 Long-Term Unemployment 106 Underemployment and Underutilization 107 The Controversy Over Cause 109 Summary 112 V ADMINISTRATION ACCORDING TO THE EMPLOYMENT ACT OF 1946 115 The Joint Economic Committee ..... 116 Standing Committees on Taxing and Appropriations .... 122 Other Congressional Committees 125 Administrative Agencies and The Employment Act 125 The Council of Economic Advisors 128 VI ECONOMIC POLICIES SUBSEQUENT TO THE EMPLOYMENT ACT ... 134 The Early Years 1946-1952 134 Summary 153 Post Script to the 1949 Recession 155 VII THE EARLY EISENHOWER YEARS 158 The Transition Between Administrations 163 The New Administration 165 The J.E.C. and the 1953-54 Recession 173 VIII THE 1957-58 RECESSION 181 The Intervening Years 181 The Second Eisenhower Administration Recession 183 Federal Reserve Policy 187 The Joint Economic Committee 190 Final Congressional Actions 199 IX THE 1960-61 RECESSION 201 Congress and the Recession 203 The Joint Economic Committee 207 Kennedy and the 1960-61 Recession . 211 The New Council of Economic Advisors 215 The Response of Congress and the Joint Economic Committee 222 The Slow Recovery in 1963 and 1964 227 vi TABLE OF CONTENTS—Continued CHAPTER Page X CONCLUSIONS 232 The Problem of Measurement 233 The Problem of Recognition 235 The Joint Economic Committee and Council of Economic Advisors 239 The Special Case of the Federal Reserve System 242 The Function of Appraisal 244 LIST OF REFERENCES 246 \ LIST OF TABLES TABLE Page I Employment Status of the Labor Force 71 II Nonagricultural Employment 76 III Unemployment Rates and Percent Distribution of the Unemployed by Major Occupation Group: Annual Averages, 1947-64 83 IV Unemployment by Occupation: Hypothetical Full Employ­ ment Target Compared with Actual Data for 1953, 1957, and 1963 89 V Contribution of Persons by Major Occupation Group to Total Unemployment: Annual Averages, 1947-64 90 VI Unemployment Rates, by Sex and Age: Annual Averages 1947-64 94 VII Unemployment Rates for Men, by Age, in Four Business Cycles (Seasonally Adjusted Quarterly Averages) .... 98 VIII Unemployment Rate for Nonwhite Workers as Percent of Rate for White Workers, 1947-64 101 vii ABSTRACT The following conceptualization of the policy process gives to the function of appraisal a place of importance equal to the more traditional foci of policy formulation and administration. The total policy process includes: the formation of a public in response to a perceived problem; the development and articulation of the public's preferred state of affairs in relation to the problem; the authoritative prescription of this state of affairs; the application of this pre­ scription to the system that produced the problem; the appraisal of the applied policy relative to the desired goals announced in the policy; and the resulting reformulation of policy designed to bring performance in the regulated environment continually closer to the public's preferred state of affairs. The Employment Act of 1946 was a major prescription for future economic behavior. It resulted from a perceived threat that the post World War II economy might return to depression levels. The Act prescribed that the federal government provide for maximum employment and purchasing power while maintaining a free enterprise economy. The Joint Economic Committee of Congress and the Council of Economic Advisors to the President were organized by the Act to perform economic intelli­ gence functions. Meaningful appraisal of the Employment Act required that operational goals be agreed upon by those responsible for its viii ix implementation. This first step, leading to the continuous appraisal of the policy, was finally taken by the Joint Economic Committee when the Committee majority agreed that the major goal must be full employment. The employment goal was further operationalized by the Kennedy Adminis­ tration when it established 47. unemployment as the full employment target. One other value conflict was evident concerning the Employment Act goals. The goal of maximum pruchasing power implied to many that the government should use its fiscal-monetary tools to reduce aggregate demand during periods of inflation. This goal was actively pursued during the 1950's by the Administration and the Board of Governors of the Federal Reserve System. The attempts to mitigate inflation during this decade aided in the development of three recessions and slow economic growth with increasingly high levels of unemployment. It was during the 1950's that the Joint Economic Committee developed its capability for the continuous appraisal of economic performance under the Employment Act. In its appraisal of feedback from the economic system, the Committee concentrated on a number of impedi­ ments to the realization of Employment Act goals. The phenomenon of inflation during a recession was analyzed, problems of accurate measure­ ment techniques were studied, and considerable attention was focused on structural unemployment. The intelligence gathered by the Committee had its greatest impact on students of economic policy rather than on policy-makers. Policies