The Brutal Fact of Unemployment

Glancing at the political landscape in 1974, Coretta Scott King could see the growing urgency of the economic situation. The stagflation crisis — a previously unseen mix of high unemployment and high inflation — was devastating the most marginalized workers and their families. Scott King began work to create the National Committee for Full Employment/Full Employment Action Council (NCFE/FEAC) in order to continue the struggle for full employment.

Around the same time, labor-friendly legislators like Augustus Hawkins and Hubert Humphrey were working towards similar ends in their own spheres of influence. In October 1973, Hawkins helped organize a conference between researchers and policymakers at UCLA. In his introductory remarks, Hawkins noted some of the legacies of the 1946 Employment Act:

Thirty years ago, as the war-time election of 1944 came close, both the Democratic and Republican candidates pledged themselves to ‘jobs for all’ in the postwar period . . . Under the Employment Act, America took two important steps in the right direction. First, it expressed the country’s determination never again to tolerate a mass depression. Second, it set up the first beginnings of democratic machinery for national policy making and planning.

Yet significant unemployment remained, especially for African Americans: “Much more work remains to be done,” Hawkins argued. “The brutal fact remains that the full employment levels achieved during World War II have never again been attained.”

Although Hawkins and Humphrey were focused on advocating robust fiscal policy, they knew that one of the key impediments to greater coordination of economic policy (and, by extension, full employment) was a Federal Reserve that was inattentive to both the policy implications of the Employment Act and the Joint Economic Committee, the congressional body the legislation had created. At the UCLA symposium, Loughlin McHugh, a senior economist for the JEC, complained that they had trouble even obtaining data from the Fed. “We on the Joint Economic Committee staff — and the members of the committee — have been trying for years to get [Fed chair] Arthur Burns and his predecessors to tell us why it is that they changed the money supply by so much over such and such a period. Burns finally agreed to send us a quarterly report, and it’s nothing more than a draft of an article that’s going to appear in a forthcoming Federal Reserve Bulletin.”

Over the coming years, as interest rates and unemployment climbed higher, NCFE/FEAC continued to build their movement, while Hawkins and Humphrey drafted and introduced legislation to ameliorate the crisis of joblessness. Hawkins drew explicitly on the stifled efforts of previous years. He cautioned: “We must not replay the drama of events which led to the watering down and lessening of the full employment commitment contained in the Employment Act of 1946. The three decades that have since passed, combined with the current situation, thrust before us the urgent need for a commitment to the goals of genuine full employment and the guaranteed right to a job for each individual who wants to work.”

Hawkins was concerned that “full employment” had become a mystified concept, allowing policymakers or economists to define the term however it suited them. He sought to clarify this in the legislation, stating “full employment is redefined as ‘a situation under which there are useful and rewarding employment opportunities for all adult Americans willing and able to work,’ in contrast to the current practice of setting a tolerable level of official unemployment for a narrowly defined labor force.” This sentiment echoed that of NCFE/FEAC, which sought to refute the “sophisticated ‘numbers game’ whereby ‘full employment’ is defined as an ever-increasing percentage of unemployment.”

Technocracy vs Democracy

As unemployment spiked to a post–Great Depression high of 9 percent in May 1975, the need for full employment legislation revealed itself with ever-greater force. Representative Hawkins, a founding member of the Congressional Black Caucus (CBC), teamed up with Senator Humphrey to author legislation requiring national economic planning to achieve full employment. The early versions of what would become the Humphrey-Hawkins Act called for the creation of a Job Guarantee Office and established the government as the “employer of last resort” to ensure that all who wanted a job had one, at prevailing wages and where they were located.

Labor and civil rights groups like NCFE/FEAC coalesced to push candidates in the 1976 elections to support the bill, including Democratic presidential hopeful Jimmy Carter. (By the time Carter backed the legislation, it had become so strongly associated with civil rights figures that President Gerald Ford accused Carter of pandering to people of color.) When Carter took office in 1977, the national unemployment rate was still stubbornly high, and the black unemployment rate stood at 14.5 percent.

Humphrey-Hawkins remained a leading legislative priority for King, CBC members, and labor leaders. President Carter, however, was hearing demands from economic advisers and business interests that the bill include language addressing their concerns about inflation. The prospects for the bill, as well as the form it would take, were still very much up in the air.

Senator Humphrey was holding hearings on how the economic crisis was impacting people throughout the country. At the time, unemployment was widely considered the necessary antidote to inflation. Many of those suffering balked at such a prescription. At the Chicago hearings, the civil rights and labor organizer Addie Wyatt explained to Humphrey and the committee, “As much as we dislike inflation, we can see no cure for its evils in heavy doses of unemployment. Such medicine is not only ineffective, it is in itself worse than the disease it fails to cure.”

Robert Mayo, president of the Chicago Federal Reserve, held the opposite view, which dominated at the Fed: that inflation should take priority over unemployment. “Inflationary attitudes have taken on an increasingly prominent role in our society,” he argued at the hearings. “If we focus successively, gentlemen, on the correction of short run unemployment problems, serious as though they are, without thought of the consequences on purchasing power, we will have failed to consider fully the priorities which our resources should meet. We will have failed the true goals of the Employment Act.”

This confrontation spoke to the key issues of inflation, unemployment, and public policy in the postwar United States. The problem, for civil rights activists like Wyatt, was that although Mayo would bewail his displeasure with unemployment, it was not his community that was being treated as collateral damage in the war against inflation. As Scott King had put it during the Atlanta hearings, “the unemployed are not pawns to be sacrificed in some economic chess game.”

Also at issue was the extent to which ordinary people would be able to influence the economy. As Scott King and others pushed for greater economic democracy, they came into conflict with members of the Fed like Mayo and Burns, who saw economic policy as their prerogative. Burns’ resentment toward democratic governance in economic affairs resounded during an address one year after leaving the Fed. The “persistence [of inflation] reflects … the philosophic and political currents of thought that have impinged on economic life since the Great Depression and particularly since the mid-1960s,” he said. This clash of visions is one element of what the Humphrey-Hawkins Act sought to settle.

After a tumultuous legislative journey — which witnessed immense opposition from the Business Roundtable and the National Association of Manufacturers — Humphrey-Hawkins became law in 1978 as the Full Employment and Balanced Growth Act of 1978. The legislation mandated greater coordination between fiscal and monetary policy, toward the goal of full employment.

In his signing statement, President Carter explained the bill’s intent: “This Nation is putting its long-term economic goal of full employment with stable prices into law. This act requires that the Congress and the president and the Federal Reserve Board cooperate in probably an unprecedented way in indicating each year the policies that will be followed to achieve these goals.” The Fed was now required to submit semiannual written reports outlining what they were doing to fulfill the goals of the new law, as well as provide Congress with semiannual testimony about their actions.

Coretta Scott King praised the law at the same press conference:

This is indeed a great historical occasion, perhaps as significant as the signing of the Civil Rights Act of 1964 and the Voting Rights Act of 1965. Perhaps in the future, history will record that it may be even more significant, Mr. President, because I think it deals with an issue on a basic human right that’s the most basic of all human rights, the right to a job. And that is a central priority now of our economic policy with the signing of this act into law today.

For Humphrey, Scott King, and others who advocates of full employment, the law was a first step, not the last. After all, the law’s proponents had granted numerous concessions during the legislative process, weakening the full employment mandate from a “commitment” to a “goal,” and scrapping the pledge that government would be the “employer of last resort.”

In the coming years, those concessions — and Reagan’s election — would undermine the promise that Scott King had seen in the legislation. While the law called for the unemployment rate to be reduced to no more than 3 percent for people over twenty years old within five years, the Federal Reserve — intent on taming runaway inflation once and for all — jacked up interest rates and sent the unemployment rate soaring. A genuine full employment economy remained a key goal for labor and civil rights activists. But it was still out of reach.

A Stifled Legacy

Nearly forty years after Humphrey-Hawkins was signed into law, a full employment economy that fulfills Coretta Scott King’s vision for racial and economic justice has yet to be achieved. Significant racial disparities in wages, unemployment, labor force participation, and other key measurements of economic conditions persist.

Joblessness for black workers, transgender workers, formerly imprisoned workers, and those who face discrimination remains significantly higher than the overall unemployment rate of 3.9 percent. The unemployment rate in Puerto Rico is 9.8 percent. This despite the fact that Humphrey-Hawkins demanded that “every effort shall be made to reduce those differences between the rates of unemployment among youth, women, minorities, handicapped persons, veterans, middle-aged and older persons and other labor force groups.” Is every effort being made? Not yet. Not by a long shot.

At the same time, the relatively low rate of unemployment should be seen as one of the victories of Humphrey-Hawkins. There are hundreds of thousands of people who have jobs today because of the Fed’s employment mandate, as well as work of the Center for Popular Democracy’s Fed Up Campaign, which has forced the Fed to take their employment mandate seriously.

But more work is needed. As these debates heat up in advance of the 2020 election, it is imperative that social movements are prepared when there is a chance at legislation. When a window of opportunity closes, it may not appear again for decades. It is social movements that will drive this policy change. And it is social movements that will ensure that any guaranteed jobs plan match Coretta Scott King’s vision: environmental justice, housing and health care for all, reduced working hours, and lower retirement ages.