Park, MD.
Baxter argued that direct job creation offered two further advantages over other antirecession strategies. First, it provided for the prospect of recovery through growth by putting potential labor to use. “The point to be emphasized here,” he wrote, “is that allowing an over-supply of human productive energy to go to waste in idleness, which might be utilized to create general benefits, deflates the entire price and investment structure.”70 By putting labor power to work, direct job creation would push the economy to its maximum level of production, reduce the downward push on wages caused by mass unemployment and decreasing demand, and restore an imbalance in the distribution of capital between consumers and investors by shifting tax revenue taken from the rich toward wages for the poor.
In the memo “A National Program for Economic Security,” Baker concurred with Baxter’s emphasis on the effects of inequality on hypercapitalization, speculation, and underconsumption, theorizing that greater redistributive impact could be had by financing direct job creation through a tax on securities. “The more money that is hoarded or thrown into nonproductive uses, the greater become the number of such instruments of debts, and consequently the broader the base for such a tax,” he noted. “The imposition of such a tax … tends to force money into productive use,” complementing the government’s direct efforts.71
Second, direct job creation would decommodify work. By expanding government’s role into that of an employer and producer, direct job creation blurred the distinction between the private and public sectors. Public industry “differs from the others only with reference to the nature of its products and the methods of marketing them,” Baxter argued.72 This emphasis on the similarity of government and business implicitly argued for a gradualist strategy in which the basic economic structures would evolve without seeming to change. “Total income remains constant. The average personal income remains constant. The sole change is that the average producer is buying less individually and more cooperatively.”73
This perspective was not wholly embraced by everyone at FERA. Corrington Gill represented the more orthodox strain of economic theory. He approached direct job creation from much the same angle that John R. Commons would have: empirically, institutionally, and with a slightly conservative tinge to otherwise progressive aims. In his memo entitled “Basic Considerations Affecting a National Public Assistance Program,” Gill laid out his interpretation of the theory underlying direct job creation. In his view, persistent unemployment was driven by a mixture of frictional, structural, and cyclical factors. While frictional unemployment was “inevitable in a dynamic economy,” structural and cyclical factors were not. They reflected instead the force of technology and the shifting availability of natural resources, which could both be shaped by government intervention.74
“Since full employment is not in prospect in the predictable future,” Gill noted, “[people] other [than] marginal workers will be in need of public assistance.”75 The federal government would have to establish a permanent system of marginal direct job creation to ensure full employment, “play an increasing role in the field of public investment,” and avoid European-style dependence on nonwork-related welfare. Direct job creation, therefore, was an important element in the toolbox of New Deal liberalism, functioning in unison with a Keynesian “flexible public spending program [as] … a permanent aspect of public policy.” Along with wage and price controls it could avoid the kind of rigidity feared by Gardiner Means, a “price balance” policy between agriculture and industry along the lines envisioned by Rexford Tugwell, as well as “compulsory standards for wages and hours, guaranteed annual wage plans, and wide extension of unionization.”76 This intellectual work was a key part of coalition building; by explaining how direct job creation could complement other New Deal projects, Gill provided Williams and other FERA staffers with arguments they could use in conversation with the “spending faction,” key advisors to the NRA and AAA, and significant sections of the Labor Department.
Gill worked hard to ensure that direct job creation projects would not undercut private manufacturing and displace workers from the labor market. He looked to the empirical data to argue that “inasmuch as these projects would not have been undertaken in the immediate future through the regular channels,” the decline in private spending meant that “displacement of the labor forces of private contractors is not involved.”77 From a more traditional economic theory perspective, Gill noted that conservative complaints were based on the “lump of work doctrine” rejected even by neoclassical economics. Finally, Gill pointed to direct job creation as an engine of economic growth. It was a “failure to utilize the productive services of idle men,” he argued. “[It] … has cost us at least 200 billion dollars in income which we might have produced but didn’t.”78
As much as his economic arguments sought to place direct job creation on a sound theoretical platform, Gill was actually one of the more conservative FERA thinkers. He maintained that the old “security wage” derived from poor relief should be maintained in any new program in order to reduce dependency and forestall the movement of private-sector employees to government employment. Wage differentials should not become incentives to seek public employment. Gill maintained that FERA’s program should concentrate on relief clients, thereby maintaining the means test and limitation of jobs to heads of households.79 What is more, in contrast to most of his compatriots, he did not believe in the absolute right to a job as he thought such a guarantee was beyond the fiscal means of the federal government.
Nonetheless, even the most conservative of the FERA’s policy experts placed direct job creation at the heart of New Deal economic policy, a keystone of social Keynesianism. Gill argued that since “normal times have ceased to mean full employment … others besides marginal workers will be in need” of publicly provided work.80 If the economy continued to lag below full employment, he was prepared to abolish the means test that he had argued for elsewhere: “Mr. Hopkins has said that ‘we should reach a concept in America where the able-bodied unemployed are entitled to a job as a matter of right.’ … Abolition of the needs basis of hiring [and means testing], therefore, may be regarded as a desideratum which it has been impossible to achieve thus far because of … necessity.”81
The major dividing line over the means tests and the right to a job was, at least as Gill saw it, less an ideological issue than a practical matter. However, for people like Baker, the issue was very much an ideological dividing line. For Baker, fundamental social rights were at stake. The United States needed to promise a new social contract between worker-citizens and the state—one founded on a reciprocal exchange of work for wages. In a memo titled “A Program for Social and Economic Policy,” he wrote, “We, therefore, propose that the government assume the obligation of providing the opportunity for gainful work to all its citizens able and willing to work,” even as he proposed the elimination of federal direct relief.82
A common criticism of New Deal job programs now and in the past is that they failed to employ everyone who needed a job. This was not by design. Gill, Baker, and others envisioned a much more comprehensive program, embracing anywhere from 3.5 million workers (roughly 35 percent of the total unemployed) to eight million workers (roughly 80 percent of the same population).83 Their eyes were far bigger than the budgets that were available to them, but this was not for lack of imagination. Moreover, with the exception of Gill, who thought of direct job reaction as an emergency stopgap, the rest of the FERA brain trust was moving in a more fundamental direction: permanent direct job creation and eventually the fulfillment of a sacred principle that every American has the right to a job.
Origins of an Ideology
In the minds of FERA staffers, direct job creation was simultaneously an economic policy and an ideology. As administrators of programs that had to register millions of people on relief, collect data on the programs they were enrolled in, and find a way to provide sustenance for everyone, FERA officials focused primarily on the needs of poor people. They used experiential data, as sociologists might have used
