Labor Legislation

Federal. Perhaps the most important labor law passed by the 85th Congress in 1958 was the Welfare and Pension Plans Disclosure Act, previously mentioned. It requires the administrators of such plans to make available to participants and beneficiaries descriptions of their plans and annual reports and to file copies of such documents with the Secretary of Labor, to be available for public inspection.

Other acts of significance included those providing for: Optional Federal loans to States for a temporary 50-percent extension of unemployment benefits to jobless workers who have exhausted their benefits under State and Federal programs; increases of Federal old-age, survivors, and disability benefits by about 7 percent; and an unemployment insurance program for certain veterans of the Armed Forces whose service began on or after January 31, 1955, to be financed entirely by the Federal Government within the social security system.

In addition: Federal employees covered by the Classification Act and postal workers, as well as most members of the Armed Forces, were given wage and salary increases; the Secretary of Labor was authorized to establish and enforce safety standards for longshore employment; the Mexican migratory labor program was extended for 2 years; and war-risk compensation for Government contractors' employees doing work outside the United States and benefits for Federal workers abroad who incur injury during detention by an enemy country were made permanent.

weekly benefits were made in Arizona, Delaware, Kentucky, Louisiana, and New York.

Major improvements in workmen's compensation were made in three States. Mississippi, New York, and Virginia each raised maximum weekly benefits granted in the case of death and all types of disability. The maximum total amount payable was also raised in Mississippi and Virginia.

Older workers were given considerable attention by the legislatures of several States. New York amended its fair employment practices act to prohibit discrimination on account of age, as well as on account of race, creed, color, or national origin. Michigan, Maryland, and New Jersey provided for studies concerning employment of older workers.

Maryland and Rhode Island joined the growing number of States which have made provision for committees to study problems of migrant farm workers and promote improved working and living conditions for such workers. The New York laws for the protection of migrant workers were strengthened in several respects. One new provision requires farm labor contractors and crew leaders to keep certain payroll records and to give each worker with his pay a written statement showing wages, hours, and withholdings.

Labor and the Law

In two cases which could have far-reaching effects on union strength, the U. S. Supreme Court ruled that the Taft-Hartley Act does not deprive State courts of power to award actual and punitive damages to workers for loss of employment caused by a union even where the workers could have recovered lost wages from the union in a back-pay award under an NLRB proceeding (International Association of Machinists and Truar v. Gonzales, and International Union, United Automobile Workers and Volk v. Russell, May 26).

In a third important ruling, the Court held that a "hot cargo" clause of a collective bargaining contract is not in itself illegal, but the employer's voluntary consent is essential for it to be invoked (Local 1976, United Brotherhood of Carpenters v. NLRB, and two companion cases, June 16).

In another case, the High Court ruled unconstitutional a city ordinance which prohibited solicitation of members for a dues-collecting

organization without a license which was issuable by city officials at their discretion (Staub v. City of Baxley, January 13).

Among other significant rulings of the Supreme Court were the two following: (1) The NLRB cannot direct an employer to withhold recognition of a union which refuses to comply with the act's filing requirements because to do so would amount to disestablishing completely the noncomplying union (NLRB v. District 50, United Mine Workers, February 3); and (2) it is an unfair labor practice for an employer to insist, as a condition precedent to signing a collective bargaining contract, that there be a clause calling for a secret prestrike vote of all workers in the bargaining unit on the employer's last offer and that the contract recognition clause exclude as a party to the contract the international union which had been certified as the bargaining agent (NLRB v. Wooster Division of Borg-Warner Corp., May 5).

An important development in labor-law administration was the NLRB's revision of its jurisdictional standards. By lowering (effective October 2, 1958) the dollar value of interstate business qualifying an establishment for Board services, the Board, in effect, reduced the gap between its

jurisdiction and that of States in various industries, particularly newspapers, public utilities, and trade.

Important among the Board's decisions during the year was a series of rulings, issued in September and October, which revised its doctrines on when a collective bargaining contract constitutes a bar to representation election (Keystone Coat, Apron & Towel Supply Co., September 17, and five other subsequent decisions in September and October). Among the cases were rulings that a contract will not bar an election if it contains a union security clause which "on its face" does not meet the Taft-Hartley Act's requirements, if it has been in effect for 2 years or longer, if there is a schism within the union, or if the contracting union is not in compliance with the Taft-Hartley Act's filing requirements.

In February, the NLRB General Counsel ordered construction employers and building trades unions to discontinue illegal, but widely prevalent, closed-shop hiring arrangements by June 1 (later extended to September 1) or face prosecution. The Board later established rules for legal operation of union hiring halls (Mountain Pacific, March 27).

so.

Current and Prospective Labor Force Problems*

FOR SOME TIME, it has been clear that the American economy is on the upgrade from the bottom of the 1957-58 recession. All the indicators-gross national product, factory production, personal income, hours of work, manufacturers' orders, construction, etc.-have gone up markedly from the low of late spring of 1958.

New construction alone will provide a substantial upward thrust to the 1959 economy. Dollar volume will probably rise about $3% billion. For the first time since 1956, private construction will rise, chiefly because of a large increase in expenditures for private housing. Well over half the advance in public works will be financed by the Federal Government, as programs initiated as antirecession measures last year gather momentum in 1959.

However, there is still a considerable volume of unemployment, despite marked improvement in the situation in the latter part of 1958. More than 4 million workers were unemployed in December 1958, %4 million more than a year earlier and almost 11⁄2 million more than 2 years ago. Unfortunately, about one-third of the unemployed have been out of work 4 months or more, and many of these have long since used up their unemployment insurance benefits.

The recession hit mainly at hard-goods manufacturing industries. Despite some rehiring in the fall of 1958, 1 out of 13 workers from these industries was still jobless in November, accounting for almost 20 percent of all the unemployed. Unemployment was especially high among automobile workers, many of whom had been out of work for long periods of time. The occupations which still have the greatest proportions of unemployed are, as might be expected, the semiskilled factory operatives and unskilled laborers.

Older workers, generally because of high seniority ratings, fared relatively well during the downturn, but experience during the recovery periods in 1950 and 1955 suggests that those who lost their jobs can expect some difficulty in getting rehired. Negro workers were hit hard by the recession, because many of them work in the industries and occupations which were most severely affected. According to the Bureau of the Census, when the economy was at the bottom of the recession in the spring of 1958, 1 out of every 7 nonwhite workers was out of a job, and there were still 1 out of 10 unemployed in November 1958. Economic Portents

Given this situation of a recession recently behind us and pockets of unemployment still remaining, what are the economic portents?

After

First, the "big crash," which many people have been expecting since the end of World War II, had not made its appearance by late 1958. the Civil War, there was a period of 8 years before the collapse of 1873, a collapse which ushered in about 6 years of the deepest depression the United States had endured up to that time. Eleven years elapsed from the end of World War I in 1918 to the crash of 1929. More than 13 years have passed since the close of World War II. So when the business downturn in 1957 began, it seemed possible that it was about time for the great postwar depression. In fact, some economists proclaimed it, but it did not occur. However, we shall have to be ready to guard against the possibility that a small recession at some future time might generate a real depression.

Second, it has again been demonstrated that the short-cycle recession is a part of our economic pattern. After World War 1, downturns of a substantial character occurred in 1921, 1924, and

*This article was adapted from two speeches delivered in November 1958 by Ewan Clague, Commissioner of Labor Statistics. Available data for December 1958 were used to bring the analyses up to date.

1927, prior to the big depression beginning in 1929. After World War II, downturns took place beginning in 1949, 1953, and 1957. Typically, then, we can expect a period of business revival and prosperity, and then another downturn. This sequence is not inevitable, but history would indicate a relatively mild inventory recession every 3 or 4 years. During such recessions no extensive downward spiral or deep depression develops; however, to those workers who are unemployed or on short worktime, it will of course not appear mild. Third, it is apparent that, so far as the business cycle is concerned, some preventive measures have been developed in the past several decades. One of almost transcendent importance is bank deposit insurance. In the depths of the depression in the 1930's, banks failed throughout the country by the thousands, causing a destruction of purchasing power which aggravated the downward spiral of business. At the present time, the Nation has very few bank failures, and when one does occur, depositors are paid off without great delay, thus enabling them to continue their business ventures or family expenditures. There has been no hoarding of currency during the recent recession. One could argue with conviction that the depths of the depression in 1932-33 were reached solely because the banking system failed.

Another preventive is the Employment Act of 1946. Neither of these measures means that we have yet discovered how to prevent business fluctuations or any foolproof method of insuring continuous full employment. There is not even a set definition of full employment. Even in the most prosperous times some frictional unemployment-largely reflecting voluntary job changes, entries into and exits from the labor force, and the ordinary geographic mobility of workersnecessarily exists; and it may be accompanied by serious labor shortages in many lines.

However, the Federal Government has been charged with responsibility for doing whatever it can to counteract business downturns and to maintain maximum stability of the economy and maximum economic growth. Without doubt, the Employment Act, along with the administrative machinery built around it, has been partly responsible for the general high level prosperity enjoyed since the end of World War II.

Offsetting Measures to Recessions

Attention should be called to the measures which have brought about a cushioning of business downturns. When the Social Security Act was adopted in the middle 1930's, it was assumed that its unemployment insurance provisions would help check a business downturn by providing purchasing power to the unemployed. This was thought to have some countercyclical effect, since the unemployment payments would be large at the bottom of the recession, when unemployment is high, and would decline as business improved and workers got jobs. To some extent, the same countercyclical action can result from the old-age and survivors' insurance benefit payments. When times are good, older people can find work, and they frequently return to the labor market while their pension payments are suspended. When times are bad, retirements pick up and the benefit outlays are increased. In addition, the general welfare expenditures of State and local governments have somewhat the same countercyclical effect. The hope that these measures would operate to smooth out the business cycle has in fact been partly realized.

An example of this effect can be found in the 1957-58 slump. Labor income, which represents the total payments of all kinds to wage and salary earning persons declined by a total of $9 billion from the late summer of 1957 to the spring of 1958. During that same period, transfer payments increased by about $4 billion and, in the next few months, gained another billion dollars. Transfer payments are the unemployment insurance, oldage and survivors' insurance, private pensions, and other types of payments to persons not working. These payments have had their own direct effect in sustaining the purchasing power of the unemployed and the partially employed. As is evident from the figures, about one-half the total decline in labor income for the economy as a whole was offset by a rise in transfer payments, practically all of which are spent on consumption items.

In an indirect way, the value of social security measures may be even greater. In the first place, they reassure those who are still employed, thereby enabling them to continue their level of expenditure. There is little evidence that employed

consumers seriously cut back on their consumption plans during the recent business decline. This does not mean that they failed to economize in their purchases-for example, in the purchase of new automobiles. But it does mean that they did not begin any hoarding of purchasing power or any cutback in their basic consumption wants.

An excellent example of this phase of the subject is shown by the behavior of consumers in the purchase of houses. Homebuilding had declined in the peak of prosperity in 1956 and early 1957, largely because of a shortage of consumer credit for home purchase but partly because of high interest rates. The shrinkage in home buying continued in the early months of the recession until, in February 1958, homebuilding reached the lowest level in over 10 years an annual rate of a little more than 900,000 units a year, including units for rent. With the onset of the recession, interest rates fell and legislative and administrative actions were taken by the Government to facilitate the purchase of homes, particularly by veterans. The effect of these measures produced one of the sharpest upturns in the history of homebuilding. In October 1958, the annual rate had passed 14 million units, and housing starts were the highest ever recorded for that month.

The maintenance of consumption also constituted an assurance to businessmen that inventories would eventually be worked off. The businessman, while cutting down on his plant and equipment expenditures, did not have to look forward to a period in which these should be suspended entirely. All during 1958, businessmen proceeded with new plants and new equipment designed for the longer future.

Money in the hands of consumers in 1959 will be augmented by wage increases. About 2.9 million workers covered under major collective bargaining agreements are scheduled to receive deferred wage increases in 1959. As in the past few years, these increases are concentrated in the metalworking and transportation industries (typically 6 to 8 cents an hour) and in construction (usually 10 or 15 cents an hour).

1 See Deferred Increases and Escalator Clauses (in Monthly Labor Review, December 1958, pp. 1362-1365).

Labor Force Problems

In the Short Run. Previous experience shows that at the conclusion of a business downturn, production usually picks up faster than employmen because (a) economies in production introduced during a recession eliminate some of the labor force previously required, (b) maintenance and repair expenditures are often postponed, and (c) some of the closed, often the least efficient, plants are slow to resume operations and, alas, some never do. So reemployment lagged during the business revival of 1958, and will continue to lag in 1959 until the expansion in production reduces unemployment to minimum levels.

Thus, in 1959, the volume of production will have to pick up sufficiently to provide for three kinds of employment. First, the amount of labor displaced by economies in production and by other short-cut methods which take the form of increased productivity. An allowance of a 3-percent increase in productivity for the economy as a whole would save about 2 million jobs-that is, at the same volume of production. Second, absorption of the existing unemployed. To reach the low levels of unemployment in 1957 would require the absorption of about 1 million unemployed. Third, the increase in the labor force which now amounts to 750,000 workers a year. Adding all these together, it is apparent that a restoration to the levels of production in the summer of 1957 would leave us almost 4 million jobs short of reasonably minimal unemployment-about 3 million unemployed, which compares favorably with the levels of 1955, 1956, and prerecession 1957.

Of course, this does not mean that this volume of unemployment will continue. Production will not stop at previous levels, but will move to new high ground. On this type of crude estimate, a rise of about $35 to $40 billion in gross national product will be needed to pick up 4 million jobs and bring us back to the full employment enjoyed in early 1957. Gross national product would have to rise to about $475 billion, assuming no increase in prices.

In the Long Run. However, our relief at feeling that our recent misfortune is about over should