This week’s stunning surge in unemployment brings the last month's total to more than 22 million Americans who have filed for unemployment. By comparison, during the Great Depression of the 1930s about 20 million Americans became unemployed.
Do we have more unemployed now than we did back then? Not in terms of percentages. Prior to the stock market crash of October-November 1929, the total population of the United States was about 120 million; and taking into account the average family size of 4.11 individuals per household, the total working population was estimated at about 60 million men and women, meaning that in the depths of the Depression, one-third of the country’s workers were unemployed. Today our population is 330 million, and it’s estimated that one-tenth of workers are unemployed so far.
The Depression’s huge unemployment rate did not happen overnight, and initially did not appear as too ominous. The Friday after the first market crash, 100,000 people got pink slips; but then that pace continued, with inexorable steadiness, every Friday for the next four years, until in 1933 the total reached 20 million. Even worse, many of those who became unemployed remained out of work for years, some until preparations for World War II began ramping up in 1938-39. And during most of the Depression years, there was no unemployment insurance in the U.S.
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Several other factors affected the employment and living climate then in ways that contrast with what is happening at present. First, the type of employment: in 1929, the U.S. was still largely an agricultural and manufacturing country, with about two-thirds of the economy coming from those sectors and a similar percentage of the jobs; today the overwhelming majority of American jobs are in the service sector, and most of those are dependent on individual consumer demand, which is way down -- most Americans are currently not out shopping in the malls, or eating in restaurants, or even in dental offices having their teeth cleaned.
Second, Americans then were not as crowded into big cities as they are today; and a much greater share of Americans lived closer to the land, either on farms, or with farms nearby, or with enough land (and knowledge) to grow their own vegetables, raise chickens, and otherwise provide food for themselves and their neighbors. Moreover – as my parents’ generation never ceased to tell us – when everyone around you was poor and needy and had to grub for food, one’s own neediness did not hurt as much.
Third, back then there was a belief that government could do very little to compensate for what was happening. Herbert Hoover, the engineer, businessman, manager, former Secretary of Commerce and head of the Unemployment Conference during the Warren Harding presidency, was seen as a supremely capable president . But when faced with the 1929 crash and the ensuing depression, his free-market ideology hampered him and hog-tied the country he led. While in November of 1929 he was successful in convincing business leaders to pledge to keep people employed – and GM and Ford to reduce the prices of their new cars — and labor leaders to withdraw demands for higher wages so that more people could remain employed, it was what he did not do that defined him then and forever. He refused to use the powers of the executive branch to boost the economy, or to succor the unemployed, or even to ask Congress to do anything at all in those directions.
“I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering,” Hoover wrote, and just to make sure he was not misunderstood, elaborated on his idea: “Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body – the producers and consumers themselves.”
Franklin D. Roosevelt swept into office in 1932 mostly because he had demonstrated as governor of New York State that he was unafraid to use the power of government to assist people and industries. Yet the unemployment caused by the Depression could not be fully cured and gotten beyond until factories once again started to manufacture products.
Decades ago, when I corresponded with many ‘survivors’ of the 1929 Crash, they worried that when they were gone, their children and grandchildren would forget the pain involved in the Great Depression. Would they understand the past well enough to draw lessons from it? Or would they blithely feel that our prosperity would go on forever, unchallenged? These questions reverberate more today than they did a quarter-century ago.
Today, since American manufacturing accounts for a far smaller percentage of American jobs, the key to recovery will be consumer demand, which – everyone hopes – will have a resurgence once the majority of Americans are released from lock-down conditions. Whether that release will mean the rehiring of most of those who have been laid off – and whether our economy can fully recover within months rather than in multiple years, no one can credibly predict.
