EXTENT OF UNEMPLOYMENT IS HARD TO DETERMINE
Nothing Except War or Great Physical Catastrophe Could Be Worse Than to Have Large Numbers Out of Work
Nothing except war or a great physical catastrophe could be worse than for multitudes of people to be genuinely seeking employment and unable to find any of any kind. It is disagreeable but not so distressing for multitudes of people to be unable to find as agreeable or as remunerative employment as they would like to have. The latter is the normal condition of most of us, and it is only when it shades off into the former that it presents a real social problem. To what extent the present situation is of the latter and to what extent it is of the former kind is not easy to determine, and can only be answered by the most careful analysis of the evidence.
It is a foregone conclusion, of course, that there should be much exaggeration and misrepresentation, as well as many hasty and immature opinions. Those whose chief purpose is to keep themselves in the public eye and to magnify their own importance, as well as those who make their living by stirring up discontent, can be relied upon to exaggerate the conditions in a time like the present. This is the reason why no public commission on employment, made up of politicians and agitators, will ever publish the sober and verifiable findings of its own statistical experts.
The sudden expansion of certain war industries made it necessary for them to get labor at any wage. This caused a vast shifting of our labor force everywhere. It occasioned an apparent dearth in all other industries and they began bidding against one another for the remaining supply. Only those industries that could pay the highest wages could get labor. Farmers lost out in this competition and the supply of farm labor was greatly reduced. Domestic service suffered a similar depletion. Even the schools were robbed of some of their pupils. The unusual demand for labor also drew into industry multitudes of people, mostly women, who normally are not wage earners at all. The present situation is in part a reversal of the whole shifting process, and this is disagreeable. A properly balanced economic system in peace time requires that some of the factory workers shall find their way back onto the farms and into the homes and schools. Some will remain unemployed for a time before they will accept this.
Lower Wages Disagreeable
It is also disagreeable to have to accept lower wages after having received higher. This is a most important factor in the present situation. Any industry will start up whenever its managers think that they can pay expenses out of receipts. When industries run, men are employed. Until the managers see some way of paying expenses out of receipts, industries will not run and men will remain unemployed. Here we have the crux of the whole question.
There are many reasons why an industry may not be able to pay expenses out of receipts. Expenses may simply be so high as to make it impossible to sell the product or the service at a price that will tempt buyers. There is no cure for that except to reduce expenses. If wages are the chief expense, that may necessitate a reduction of wages. If the laborers will not accept that, they remain unemployed. In that case they can not be said to be unable to find employment; they are only unable to find as remunerative employment as they would like to have. This is sometimes euphemized by saying that they can not get work at wages that will enable them to live according to the standard to which they have become accustomed, which merely means that they can not live as well as they would like to live.
Another reason may be that the managers of the industry in question are not smart enough to keep expenses down, or to turn out a product that will sell at a remunerative price. Undoubtedly there is a chronic dearth of managing ability of a high order. When a man is found who possesses it, it is a very fortunate thing for laborers. He can keep an industry running which, without him, could not run. That means employment instead of unemployment for a number of men. One such competent manager does more for labor than ten thousand agitators.
Many Factors Complicate Problem
There are so many factors of so many different kinds entering into the cost of production as to complicate greatly the problem of keeping down expenses. The cost of raw materials, the cost of transportation, the labor cost, interest and other overhead expenses are only a few of the items; besides, there are many factors entering into the cost of each of these items. If any of these items could be cheapened, certain industries could run even if the other items were not cheapened. For example, if freight rates could be reduced, certain industries could pay expenses out of receipts without reducing wages or any other item of expense. Similarly, if wages could be reduced, they could pay expenses without any reduction of freight rates. Again, if the wages of one kind of labor could be reduced, it might not be necessary to reduce the wages of any other kind. Again, if capital could be had at lower interest rates, if competent managers could be found who would work for lower salaries, if enterprisers could be found who could be lured into undertaking the risks of business by lower profits, etc., etc., more industries could run than are now running. But this multiplication of "its" does not solve any problem or give employment to any men.
Meanwhile, the present situation is in part a deadlock among the various interests involved. It is apparent that some of the many items of expense must be cut down before all our industries can start up. They who contribute each item want some other item cut down instead of their own. Each group is holding off and maneuvering in order to shift the burden onto some one else. This is accompanied by much recrimination and laying of the blame on some one else. This is done by those on the inside who know exactly what they are about. While this contest is going on, there is much barking on the outside by people who know nothing about it, but are only excited by the fracas.
So far as can be determined at the present time, retail merchants are the greatest sinners in the matter of standing pat and forcing others to bear the burden of a reduction of prices. Labor unions are a close second. The threatened railroad strike is simply a maneuver to prevent a reduction in the cost of transportation, and force some other group to bear the burden of a reduced cost of production. Farmers and other producers of raw materials have already been forced to suffer a marked reduction in the prices of their products, which prices are costs of production to the secondary industries and to merchants. Few other classes have as yet accepted a corresponding reduction in the prices of their products or services. Until they do, it will remain difficult for the secondary interests, that is, factories and transportation agencies, to pay expenses out of receipts. Until they can, they will remain idle or poorly equipped and there will be unemployment.