Reports & Studies

The Committee on Economic Security (CES)

"Social Security In America"

APPENDIXES

APPENDIX IV

THE HISTORY AND DEVELOPMENT OF THE UNITED STATES EMPLOYMENT SERVICE {1}

This report is a brief summary of the history of the United States Employment Service and an outline of its functions and activities. The data are presented under the following heads:

(1) The Pre-War Period, (2) Activities During the World War, (3) The Post-War Period, (4) The Contribution of the Demonstration Centers, (5) The Reorganization of 1931, (6) The Principles of the Wagner-Peyser Act, (7) Operation Under the Wagner-Peyser Act, (8) Emergency Needs and the National Reemployment Offices, (9) The Progress Record in Employment Work.

The development of a public employment system in the United States has been spasmodic and irregular because it has been conceived until recently as an emergency service to meet a temporary and limited type of public-welfare need. Public employment offices in this country were originally established to meet the problem of distributing immigrant labor which tended to concentrate in ports of entry to inland industrial centers. This service was later expanded to enable workers for the agricultural districts to be recruited from across State boundaries. The first program of national significance arose in answer to the needs of (1) recruiting workers for the war industries during the World War and (2) demobilizing soldiers and workers after the war. It was not until 1933 that the foundations of a sound public employment system were paid in the Wagner-Peyser Act, which was passed as part of the recovery program. With the passage of the Federal Social Security Act of August 1935 the public employment offices became a permanent branch of the socialwelfare agencies of the country.

THE PRE-WAR PERIOD

The United States Employment Service had its inception in the creation, in February 1907, of the Division of Information in the Bureau of Immigration and Naturalization, a unit in the (then) Department of Commerce and Labor. There were two aspects of its work at that time, the first being the direction of the flow of immigrant labor to job openings, the second the collection of information that would be of value in this distribution process.{2} From the beginning it was realized that all functions of the Service were dependent upon

{1} This report was prepared by Gladys L. Palmer.

{2} The purpose of the Division of Information, as expressed by the Secretary of Commerce and Labor, was "to bring about a distribution of immigrants arriving in this country, thus preventing, as far as possible, the congestion in our larger Atlantic seaport cities that has attended the immigration of recent years; and, second, to supply information to all our workers, whether native, foreign-born, or alien, so that they may be constantly advised in respect to every part of the country as to what kind of labor may be in demand, the conditions surrounding it, the rate of wages, and the cost of living in the respective localities." U.S. Department of Commerce and Labor, Annual Report, 1908 (U.S. Government Printing Office, Washington, D. C., 1909), p. 25.

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accurate knowledge of available jobs and of available workers, and of economic conditions in the area in which the Service was operating. Contacts were made with widespread sources of information: Associations of manufacturers, individual employers of labor, trade-unions, township correspondents of the Department of Agriculture, postmasters, farmers, State boards of agriculture, State bureaus of labor and statistics, boards of trade, chambers of commerce, factory inspection departments, newspaper items announcing new work or new factories. Material from these sources presented the first outline picture of the employment market throughout the country.

Little actual placement or distribution work was done by the Division. The information collected on lands available for rent and sale, soil, climate, and market conditions, on details of farm and farm work, and to a lesser extent of business and industrial opportunities, was published in bulletins and made available to those immigrants who wanted it. Some effort was made to list openings and to direct applicants to specific jobs, but the placement accomplished was unimportant and was limited by the resources of the Division itself and the fact that few newly arrived immigrants were able to pay their transportation to inland points where jobs were to be had. The work of the Division did not extend much beyond that of helping aliens, although no limitation in this respect was imposed either by law or policy. One employee in each of the immigration offices was detailed to the information and distribution work.

Two conditions resulting from the outbreak of the World War in 1914 were conducive to an expansion in the functioning of the Division of Information. On the one hand, immigration decreased materially and left the immigration offices with little to do, and, on the other hand, unemployment became serious in the country as a result of the industrial dislocation caused by the war.

The Federal Department of Commerce and Labor had been reorganized into two separate departments in 1913. The Bureau of Immigration, and with it the Division of Information, became a bureau of the newly created Department of Labor. Legislative authority to include among its duties advancement of opportunities of workers "for profitable employment" was contained in the organic act establishing the Department of Labor. The three factors--the need for finding work for large numbers of unemployed, together with available personnel, and the legislative authority to carry out an employment program--were so timed that a Nation-wide placement agency for citizens resulted. A serious unemployment situation was thus responsible for the first recognition of the need of a public employment system.

Plans were formulated for an organization of Federal employment exchanges upon a national scale. The country was divided into 18 administrative zones, each zone in charge of a supervisor delegated from the personnel of the immigration offices within the zone. The entire distribution service was thus coordinated with the immigration field service.

The Farm Labor Service was the first of the specialized employment services to be developed. Through cooperation with the Post Office Department and the Department of Agriculture, representatives of the employment service who were located in the harvest and fruit districts directed applicants across State boundaries. The Farm Labor Service made the first move toward educating the public and gaining its cooperation by arranging with railroad representatives to report farm labor shortages to public, rather than private, employment agencies. The Division of Information served the shipmasters, who complained of a shortage of qualified seamen. It also directed the unemployed to other States, the successful placement of persons thrown out of work after

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the Salem fire being an example. It helped in placing Mexican refugees in 1915 and 1916 and directed 15,000 returning National Guardsmen to jobs.{3} Thus, during the years from 1914 to 1916, the character of the Employment Service changed from that of directing aliens to inland jobs to that of a placement agency for the unemployed. The number of citizen applicants for placement first exceeded the number of alien applicants in 1916.

ACTIVITIES DURING THE WORLD WAR

The entrance of the United States into the World War in April 1917 again changed the major functions and administrative relationships of the Employment Service. All phases of the Service were now devoted to directing the human productive energies of the Nation into the channels most necessary for carrying on the war. Fundamentally the task of the Federal Employment Service became one of recruiting labor, both on behalf of private industry and the Government. It had also to direct and apportion the labor supply, once recruited, to the work most essential in the war emergency.

The Employment Service underwent numerous changes during the latter half of 1917 and the first half of 1918. Reorganization was necessary in the development of the Service to meet the war needs of the country. State lines were made zone lines. The increasing volume of war work and changing concepts concerning the function of the Service brought a demand for the separation of the Employment Service from the Bureau of Immigration. This was accomplished in January 1918.

The difficulties under which the public employment offices were conducted at this time seriously affected their efficiency.{4} The public had not yet realized that the Service was not limited to aliens; most of the headquarters and sub-branches were in charge of persons who had had little or no experience with any sort of placement work. In addition it was felt throughout the Immigration Service that the employment work was merely incidental and that with the return of immigration, such as the country had had before the war, the employees in the Division of Information would be reassigned to regular immigration work. In the mind of the public, the Employment Service was still overshadowed by the Immigration Service, and the demands of war necessitated basic changes in organization.

As reorganized in January 1918, the Employment Service was made a separate bureau of the Department of Labor, and the Division of Information was made a part of the enlarged Employment Service. This had been made possible by a congressional appropriation of $250,000 in October 1917 and by an allotment from the President's fund for "national security and defense" of $825,000 early in December of that year to defray expenses in connection with the work of the distribution of productive labor throughout the United States. The availability of new funds with which to organize services upon a more elaborate scale made it imperative that all the activities and facilities of the United States Employment Service should be placed under a single directing head. The Division of Information, which formerly included the United States Employment Service, was temporarily separated from the Bureau of Immigra-

{3} Smith, D. H., The Untied States Employment Service, Institute for Government Research, Service Monographs of United States Government, no. 28 (Johns Hopkins Press, Baltimore, 1923), pp. 5-8.

{4} Herndon, John J., Jr., Public Employment Offices in the United States, U.S. Department of Labor, Bureau of Labor Statistics, Bulletin no. 241. July 1918, p. 51.

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tion; the entire energy, until the close of the fiscal year, was devoted to the extension of the employment service.{5}

The United States was then divided into 13 employment districts, which approximately followed the geographical lines of the Federal Reserve Bank System, with the exception that the employment districts in all instances were organized to follow State lines. A memorandum of the Secretary of Labor, effective as of March 1, 1918, contained provisions for a director and assistant director of the Employment Service, and a Policies and Planning Board, composed of the chiefs of the eight different divisions into which the service was divided; a division of information, adminstration, and clearance; a division of personnel; a public-service reserve division; a boys' working-reserve division; a farm-service division; a woman's division; a Negro division; and a division whose duty it was to issue the United States Employment Service Bulletin. The Policies and Planning Board was abandoned shortly after its creation, but the organization of the other divisions remained substantially the same to the end of the fiscal year.

The newly established plan of organization soon became insufficient to meet the emergency employment needs of the country. The War Labor Policies Board took the initiative in proposing that the employment function in all war contract work be centralized in the United States Employment Service.{6} This was immediately followed by a Presidential proclamation which pointed out that "a central agency must have sole direction of all recruiting of civilian workers in war work; and in taking over this great responsibility must, at the same time, have power to assure essential industry an adequate supply of labor, even to the extent of withdrawing workers from nonessential production." The President therefore urged "all employers engaged in war work to refrain after August 1, 1918, from recruiting unskilled labor in any manner except through this central agency." The task thus imposed resulted in an acute situation for the Employment Service, and its executives realized the inadequacy of the organization to fulfill the new demands placed upon it. Upon recommendation of a committee of employment experts, they adopted a policy of centralized control and decentralized operation. In substance, the changes made in the organization consisted in (a) abolition of the system of 13 employment districts, thereby automatically making the State the unit of operation, gradually eliminating the district superintendencies; (b) centralization of responsibility for field organization in the Federal directors of employment for the States; (c) establishment of uniform methods of office operation; and (d) concentration of the administrative work at Washington into five divisions, each in charge of a director.{7} These five divisions-control, field organization, clearance, personnel, and information-

{5} All officers, clerks, and employees of the Bureau of Information and the Immigration Service who were found to be experienced in the work of the U. S. Employment Service were transferred without prejudice to the Employment Service with the understanding that should appropriations for this purpose be discontinued such officers, clerks, and employees should be retranaferred to their former positions. Sixth Annual Report of the Secretary of Labor (U.S. Government Printing Office, Washington, D. C., 1918), p. 207.

{6} "All recruiting of industrial labor for public or private work connected with the war shall be conducted through or in accordance with methods authorized by the U. S. Employment Service. * * * The full power of the Government shall be exercised through such agency to supply all the labor requirements of war industry and by means of volunteer recruitment to transfer men to such extent as may be necessary from nonwar work to war work. * * * An immediate campaign to secure the unskilled labor needed in war work shall be made by the U. S. Employment Service." Quoted in "Public Employment Services", Monthly Labor Review, vol. 32, no. 1, January 1931, p. 17.

{7} Sixth Annual Report of the Secretary of Labor (U. S. Government Printing Office, Washington, D. C., 1918), p. 218.

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absorbed the previously existing services, sections, and divisions. The specialized work of these units, however, was carried on without a break. This new plan went into effect August 5, 1918.

In order to assist in the recruiting of unskilled labor for war work and to aid in the further extension of the machinery of the Employment Service throughout the country, a system of State advisory boards, community labor boards, and State organization committees, composed of joint representation from employers, employees, and the United States Employment Service was initiated. There were, in addition, industrial advisers who furnished information concerning the need for skilled labor and the labor supply in each community and who assisted the district boards in arriving at their decisions as to whether or not individuals were performing work necessary to the effective operation of the military forces. The results of this entire plan were evidenced in a reduction of labor turnover, the expedition of transfer of unskilled labor from nonwar work to war work, and the direction of the unemployed or partially employed to industries closely allied to the prosecution of the war.

Some appreciation of the contribution rendered by the United States Employment Service may be had from the following brief summary of its activities during the 18 months the United States was in the War.{8} Few of the prewar specialized services retained their identity. The Farm Labor Service was an exception, and it continued its distribution of farm labor to the wheat, cotton, apple, peach, and grape districts. The United States Boys' Working Reserve was made up of boys over 16 who were organized from the cities in order to help with the seasonal farm work. There was some guidance toward work with a reasonable future career for those boys desiring industrial employment. The Women's Land Army was a group of trained and supervised women who helped with the cultivation and harvesting of crops. Efforts were made to place the "aged" worker as a measure of alleviating the drain upon manpower. One of the largest divisions of work was that of the Public Service Reserve which acted as a registration agency for patriotic citizens desiring to offer their services to the Government with or without pay. It registered over 300,000 men of various skilled and unskilled trades. A shipyard and marine section was one of the emergency services of the Employment Service. It recruited 19,000 mechanics for the United States Shipping Board and aided in directing and placing stevedores and other marine workers who are ordinarily an immobile labor group. On October 1, 1917, the Department of Labor took over the work of the National League for Women's Service which had been contacting, registering, and placing women available for war work. There was the large task of informing the public, and particularly manufacturers, concerning the service. The greatest volume of work came in connection with the selection and placement of skilled and unskilled labor. The work of this division exceeded even that of the Farm Labor Division. It appealed to trade-unions, it arranged for the furlough of men of certain trades from the Army into industry, it recruited all unskilled labor except for railroads, farms, and nonwar work, after August 1, 1918 ; and it administered a revolving fund of $250,000 for the transportation of labor. This fund was left almost intact, since in most cases the employer receiving the labor was charged with the cost of transportation.

At the height of its war-time expansion in the fiscal year 1918-19, the United States Employment Service registered over 6 million workers, received

{8} Smith, D. H., The United States Employment Service, Institute for Government Research, Service Monographs of United States Government, no. 28 (Johns Hopkins Press, Baltimore, 1923), pp. 13-28.

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notice of over 10 million job openings, and placed approximately 5 million workers.{9} There were 773 offices located in 605 cities in 48 States and the District of Columbia. The total Federal appropriation for operation of the employment offices in the fiscal year 1918-19 was $5,772,000.{10}

THE POST-WAR PERIOD

The end of the war brought a complete reversal in the employment situation and consequently necessitated a readjustment of the activities of the United States Employment Service to meet the new conditions. The Employment Service was now faced with the problem of finding jobs for all the returning soldiers as well as for all those who had been employed in the war industries and were no longer needed. From a seasonal point of view the armistice came at a difficult time: jobs were needed in the early winter months when normal out-of-door work was being suspended and when farmers, having just released all the extra help which they had employed during the summer and fall, made no demands for additional labor.

Cooperation between the War Department, the War Industries Board, and the Department of Labor led to a judicious cancelation of war contracts, demobilization of the Army with the least possible danger to the labor situation, and the creation of over 2,000 bureaus throughout the country for assisting returning soldiers and sailors. The war-time divisions, such as the Boys' Working Reserve, the Public Service Reserve, the Stevedores and Marine Workers' Division, and the Mining Division, were discontinued. After the armistice was signed several special types of work were undertaken, the most significant ones being the Junior Section for the purpose of giving vocational guidance to boys and girls between the ages of 16 and 21, the Handicap Section for the purpose of helping persons handicapped by age or some physical disability, and the Professional and Special Section for the purpose of assisting highly trained men and women to find positions for which they were qualified.

The major problem facing the United States Employment Service after the war was the inadequacy of financial appropriations. Because the service had been considered by the public as an emergency service rather than a part of a permanent program for organizing the labor market in the country, there was not sufficient public support to maintain a permanent public employment system on an adequate basis. Within a year after the peak of maximum activity in 1918, the entire chain of Federal employment offices was abandoned or turned over to the States and municipalities for continuation.

From 1919 to 1931 the United States Employment Service continued to function only as a clearing house for information, standards, and statistics, and, to a limited extent, for interstate clearance on placements. A skeleton organization was maintained which operated on an annual budget of about $200,000. The Farm Labor Division for recruiting and distributing harvest labor was maintained, some activity was continued in the Junior Division, and the placement service for handicapped workers was carried on in cooperation with rehabilitation agencies. Leadership in the development of adequate public employment offices throughout the country, however, passed to the municipalities and the States and to private organizations interested in the field.

The States had taken the initial lead in the development of public employment offices in this country. As early as 1890 Ohio passed a law establishing

{9} Compiled from the Seventh Annual Report of the Secretary of Labor (U.S. Government Printing Office, Washington, D. C., 1919), p. 275 and p. 292.

{10} Harrison and Associates, Public Employment Offices, Russell Sage Foundation (New York, 1924), p. 624.

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State-city employment offices in its five principal cities. By January 1, 1933, about half of the States supported 139 such offices. Many of these offices had unsuitable quarters and were staffed with untrained or poorly qualified personnel, because appropriations were meager and salaries too low to attract the type of person needed for the work.

THE CONTRIBUTION OF THE DEMONSTRATION CENTERS

The major exceptions to the inadequate type of local employment office that generally prevailed were found in certain experimental centers. Three such centers were supported jointly by State funds and private foundation grants in the years from 1931 to 1933. These demonstration centers were instrumental in promoting the development of adequate standards of operating efficiency in local employment offices and had planned a research program designed to promote a better understanding of unemployment problems and the difficulties involved in a large-scale effort to organize the labor market. Duluth, Minneapolis, and St. Paul were combined into a tri-city demonstration center under the Employment Stabilization Institute of the University of Minnesota. Special experimental offices were developed in Rochester and Philadelphia, and some experimentation was also carried on in the New York City employment offices. In connection with these demonstrations, and in other States as well, a number of State commissions were appointed to study unemployment problems or to improve the existing facilities of the public employment offices.

It is difficult to appraise adequately the contribution of the demonstration centers, hence only a brief summary of their activities is attempted here. The Minnesota experiment emphasized research. A well-rounded program of research was developed, stressing analysis of the economic factors governing employment and unemployment in the State and analysis of the individual unemployed person in relation to his vocational aptitudes and chances of success on a job. This clinical approach to the solution of the problems of unemployed individuals has received increasing attention, in recent years, and the Minnesota studies of occupational patterns or profiles have laid the groundwork for interesting experimentation in job analysis in terms of psychological test results. The Tri-City Employment Stabilization Committee also assumed advisory control of the Minnesota Employment Service for a 2-year period beginning in 1931. The functions and arrangements of the local employment offices were reorganized, a more adequate record-keeping system was introduced, and other improvements in the service effected.

In the Rochester Public Employment Center emphasis was placed on promoting community contacts, particularly those with employer groups, and on experimentation with refined public employment techniques. Considerable experimentation with psychological tests for clerical workers was made here, not primarily for research purposes as in Minnesota but as a tool for vocational guidance to the individual. The research program in Rochester stressed the analysis of costs of placement and other administrative problems in the local employment office. Possibly the outstanding contribution of the Rochester center was in the field of experimentation in record keeping and the analysis of functional or administrative problems in the office.

The Philadelphia Employment Office was, from the beginning of its experimental period, swamped with the problems arising from a high rate of unemployment in a large metropolitan center. Its contribution therefore came to be largely that of demonstrating adequate employment work for large numbers of applicants. The office made interesting experiments in lay-out and general office policy and procedure, and the results of many of these experiments were

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later adopted by the United States Employment Service. It demonstrated that adequate personal interviews could be given unemployed workers, although hundreds of thousands were "at the gates." The Philadelphia office actually did a great deal of vocational counseling in a wide range of occupations, although it was not equipped for psychological testing. Special research studies of the occupational trends in the city and of the characteristics of unemployed workers in the local labor market were made. The employment center and its sponsors, during the period of experimentation, laid the groundwork for a long-time program of research in the problems of the local employment market in Philadelphia.

It was upon the experience of these three demonstration centers and the work of such cities as Milwaukee and Cleveland and such States as Wisconsin and New York that the growing science of public employment administration was based. Out of this experience came the new principles of employment work incorporated in the Wagner-Peyser Act.

THE REORGANIZATION OF 1931

A number of attempts were made during the period from 1919 to 1932 to obtain Federal funds for a Nation-wide public employment system. Conferences of interested persons were held, and several bills were introduced into Congress. The Kenyon-Nolan bill was introduced in the Senate in June 1919. This bill in amended form was later sponsored by Senator Wagner and reached public hearings in 1928, 1929, and 1930. Although the bill passed both houses in 1931, it was vetoed by the President. The "Doak reorganization" of the employment offices was launched a few weeks later to meet the growing demand for public employment offices.

The reorganized employment service failed to take cognizance of much of the experience of the United States Employment Service during the war period and also failed to benefit by the experience of the States which had developed increasingly effective public employment offices between 1920 and 1931. The greatest need of the public employment offices at the time was for well-planned coordination of all public employment activities. Under Secretary Doak, Federal employment offices were set up as a competing system to other established services. Fifty-three of the 96 cities which had Federal employment offices in 1932 were cities in which a State or State-city employment office was already located." Even the veterans' employment offices and farm-labor agencies, which were under Federal control, were not coordinated with the other offices or the service as a whole.

A second major need of the public employment offices was for trained and well-qualified personnel. From its very beginning the effectiveness of the work and the reputation of the Federal service had been hampered by the "spoils system" and by the appointment of untrained workers. There was little indication of a reversal of this trend in the years 1931 and 1932.

A third major need of the public employment system in 1932 was for adequate standards of premises and operation. The United States Employment Service during this period sacrificed the adequacy of housing, lay-out, and effective operation of local employment offices to obtain geographic coverage on a Nation-wide scale. As a result, the competing offices set up in the cities where other employment offices were already in operation frequently had less attractive housing and were operated less efficiently than the older local offices

{11} Kellogg, Ruth, The United States Employment Service (University of Chicago Press, Chicago, 1933), p. 83.

on the other side of the street or around the corner. There was so much confusion in the use of terms and in the reporting systems of the Federal offices and those cooperating with them, that it is difficult to procure any reliable data on the activities of the Federal employment service during this period.

The inadequacy of the service rendered by the Federal organization, the waste engendered by two competing systems of public employment offices, and growing public interest in the problem led to the introduction of a revised employment service bill by Senator Wagner, later known as the Wagner-Peyser Act. This act was passed as part of the recovery program and became effechve June 6, 1933.

THE PRINCIPLES OF THE WAGNER-PEYSER ACT

The Wagner-Peyser Act abolished the then existing United States Employment Service and created a new service as a separate bureau in the Department of labor. Its mayor function is to promote and develop a national system of employment offices by assisting in establishing and maintining them in the States. This provision recognizes the principle that the organization and conduct of employment offices is best done by State and municipal governments. The function of the Federal office under this arrangement is to develop and maintain minimum standards of operation, promote uniformity in procedures and record keeping, maintain interstate clearance of labor, and thus integrate the local and State services into a Nation-wide employment system. The United States Employment Service is authorized on its own responsibility to maintain a special placement service for veterans and for farm labor and to operate a public employment office in the District of Columbia.{12}

The Wagner-Peyaer Act permits grants-in-aid to the State employment systems when affiliated with the United States Employment Service. For the first year of operation an appropriation of $1,500,000 was authorized, and $4,000,000 was authorized for each of the 4 succeeding years. Three-fourths of each annual appropriation is apportioned to the States on the basis of their populations. The remainder may be used for administrative purposes or to maintain authorized special services. The Federal funds granted to the affiliated State services will match each State appropriation, provided the State appropriation is not leas than 25 percent of the apportionment according to population, and in no event leas than $5,000 for the year. An amendment to the act was approved May 10, 1935, to the effect that after January 1, 1935, the minimum Federal appropriation to an affiliated State would be $10,000.

Under the act a plan for the operation of a State employment service must be submitted by the proper State agency and be approved by the United States Employment Service. In this plan of operation the State employment service must agree to conform to the standards of the United States Employment Service relating to personnel, premises, procedures, and other administrative arrangements, and to submit such reports of expenditures and operations as are required. A State advisory council, composed of representatives of employers,

{12} The veterans' placement service of the United States Employment Service formerly operated separate veterans' placement offices. These have been discontinued and a State veterans' placement representative acts to clear all employment questions affecting veterans and sees that the interests of veterans are protected in the regular work of the local offices. This is another step in the integration of the activities of various branches of the service. The farm-labor division is maintained as a semi-independent unit and the District of Columbia office is conducted as an independent unit of the service. All three units are responsible to the Director of the United States Employment Service.

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employees, and the public at large, must also be appointed with the cooperation of the United Staten Employment Service.

By November 1934, 22 State employment services had become affiliated with the United States Employment Service. These services are in the following States: Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Virginia, West Virginia, Wisconsin, and Wyoming. These State services operate 168 employment offices in 140 cities. The 140 cities include 85 percent of all cities with over half a million population and 62 percent of the cities with over 100,000 population. They also include 75 percent of the total workers normally engaged in manufacturing industries.{13} During the fiscal year ending June 30, 1934, when only 18 State employment systems were affiliated with the Federal Service, 3,445,553 new applications for employment were received and 1,470,131 job openings were filled by the affiliated offices.{14} By June 21, 1935, 24 States had presented plans for State employment offices which were approved as meeting the requirements of the Wagner-Peyser Act and 16 additional States had passed laws providing for affiliation with the United States Employment Service. Thus, only 8 States have made no provision for such affiliation.

OPERATION UNDER THE WAGNER-PEYSER ACT

Possibly the most interesting features in the Wagner-Peyser Act were (a) the establishment and formulation of standards as the major function of the Federal office, and ( b ) State compliance with minimum standards as a condition of Federal grants-in-aid. Federal grants had previously been given to States for other public-welfare needs, but no device had ever before been developed to set minimum technical standards of operation and then to test for compliance with the accepted standards. This process of setting Federal standards is still in a stage of experimentation for several reasons. The major interest of the United States Employment Service is to improve and strengthen existing employment offices rather than to exert pressure on States to "administer a system." The time required for conformity to standards must be somewhat flexible, and the local groups must be carried along in an educational campaign. No group of well-established local services can be changed overnight. The administrative organization in the States, for example, may have to be completely changed and the local offices relocated and reorganized. The adoption of a merit system in the appointment of personnel may work havoc in certain local centers. In the meantime the employment offices since 1933 have been under tremendous pressure to perform emergency services in connection with the relief program and other community activities in addition to their regular placement functions. All these factors make the establishment of standards a slow and experimental process.

The major work of Federal-State relationships under the Wagner-Peyser Act is at present divided between two sections of the central administrative organization in Washington. The Division of Operations approves operating agreements with the States, conducts "compliance surveys" to assure maintenance of standards, and controls such regional offices or field-work activities as may be

{13} Speech by Frank Persons, Director of the United States Employment Service, Boston, Sept. 29, 1934, before the International Association of Governmental Labor Officials.

{14} United States Employment Service, Twelve and One-half Million Registered for Work, 1934 (U. S. Government Printing Office, Washington, D. C., 1935), appendix tables.

established by the United States Employment Service. The Division of Standards and Research is responsible for the initial development of forms and procedures to be used in the States, for the organization of a statistical program, and for experimentation and research in the general field of employment problems.

Possibly the most interesting of the experiments in the formulation of standards by the United States Employment Service is in the field of personnel. Although the States affiliating with the Employment Service have been permitted several choices with regard to the selection of personnel, a majority of them have elected to use the merit system of appointments initiated by the United States Employment Service. In the fall of 1934 all but 4 of the 22 State affiliated systems and the District of Columbia had utilized the services of the merit examination system conducted by the United States Employment Service or had made appointments according to State civil-service requirements. This represents no mean achievement in the first 2 years of operation of the Wagner-Peyser Act.

A number of other important aspects of public employment work have received consideration and have been the basis of policy determination. Standards with regard to adequacy of premises and signs or other advertising have been developed as the minimum basis of operation of local employment offices. The State advisory councils have been considered valuable enough to be required as a condition of State affiliation with the Federal employment service and, in addition, local advisory councils have been recommended. Policy on such important questions as the referring of workers to plants in which there is a labor dispute has been developed on a uniform basis, insofar as State labor laws do not interfere with such uniformity. Other problems of policy and office procedure are being discussed and eventually minimum standards for these will also be developed.

To date, no program of field supervision has been worked out. The States have been left to administer their part of the agreement with little if any supervision. "Compliance surveys" may have had an indirect supervisory effect, but are not intended to replace the plans for regional supervision originally contemplated. Experimentation with expansion of the supervisory functions of the United States Employment Service has of necessity proceeded carefully, with due allowance for the State interests involved.

Progress has also been made in the direction of developing an adequate clearance system. Several States, such as Wisconsin, Pennsylvania, and New York, maintain intrastate clearance systems.{15} The United States Employment Service has developed plans for intrastate and interstate clearance for placement in public-works projects. This experiment like the others discussed above indicates the type of work which will be of increasing importance in future years when the public employment system becomes an established part of every community's public-welfare activities.

Under the Wagner-Peyser Act, the United States Employment Service is commissioned to publish information concerning "opportunities for employment and other information of value in the operation of the system." To this end the Division of Standards and Research has developed a statistical program based on daily reporting of the major activities of all local offices in the system. This statistical information, if sufficient analytical service can be maintained, will present the most detailed picture of the important economic factors in local

{15} Pennsylvania cleared over 500 applicants between offices in 1933 ; New York filled 40 jobs a month in the summer of 1934 through its district clearance system.

and national employment markets that any country has undertaken.{16} It should become in time the basis for a program of extensive planning on the occupational and vocational aspects of major unemployment situations. An allied activity of the Division of Standards and Research is the proposal of a job-specification research program. One phase of this project will be useful in establishing standard terminology in job specifications and occupational classifications. Another phase of this project will use clinical methods in studying individuals who are successful in the jobs analyzed and will attempt to define specification standards of training, experience, and ability. This project is being partially supported by private foundation grants and is being supervised by a technical advisory committee composed of members named by the Social Science Research Council and members designated from the national advisory council of the United States Employment Service.

Another service which has been performed by the Division of Standards and Research concerns the checking of alleged labor shortages throughout the country. The N.R.A. code authorities received requests to permit extension of the regulations on maximum hours because of alleged labor shortage in specified occupations in certain areas. The United States Employment Service checked the shortages through its local offices to see whether any bona fide labor shortages existed. Temporary local shortages may occur frequently, but it is seldom that a regional or Nation-wide labor shortage exists. In the spring of 1934, for example, many such requests were checked, and only one alleged Nation-wide shortage was actually verified upon investigation.

Most of the States which have been slow to take advantage of Federal subsidy under the Wagner-Peyser Act have been handicapped by lack of funds. This problem may delay for some years the affiliation of the States not now affiliated. But the 40 States which have provided for affiliation and which include most of the industrialized sections of the country are now assured of more adequate financial support and the technical assistance necessary to expand their functions and activities in a Nation-wide program of great future promise. The principles established in the Wagner-Peyser Act are viewed by most students of the question as a sound basis for the slow but permanent expansion of public employment work in the United States.

EMERGENCY NEEDS AND THE NATIONAL REEMPLOYMENT SERVICE

Although the Wagner-Peyser Act incorporated the principles considered important in a permanent development program of employment offices, it was not flexible enough to meet emergency needs for rapid expansion. The first emergency need arose in July 1933, when it was decided that labor for public-works projects (except for the employment of union labor in customary ways through recognized locals of the unions) was to be obtained through employment agencies designated by the United States Employment Service. This was to assure that the designated legal employment preferences {17} on public-works projects would be

{16} The Canadian employment offices supply similar information to a central office, but adequate statistical analysis has never been developed for the interpretation of local labor market conditions or of special occupational or industrial situations.

{17} Section 206 (4) of the National Industrial Recovery Act (48 Stat. 205) reads to the effect that "in the employment of labor in connection with any such (public-works) project, preference shall be given, where they are qualified, to ex-service men with dependents, and then in the following order: (a) To citizens of the United States and aliens who have declared their intention of becoming citizens, who are bona fide residents of the political subdivision and/or county in which the work is to be performed, and (b) to citizens of the United States and aliens who have declared their intention of becoming citizens, who are bona fide residents of the State, Territory, or District in which the work is to be performed, provided that these preferences shall apply only where such labor is available and qualified to perform the work to which the employment relates . . ." These preferences applied only to the work program of 1933-34.

maintained and that wasteful migration of labor from place to place would be discouraged. In November 1933 the Civil Works Program was launched, and the United States Employment Service was given the task of selecting half or more than half of the 4 million individuals placed on civil-works projects. The combination of these emergency tasks necessitated some sort of employment agency in every county in the United States. To meet this need the National Reemployment Service was created as an emergency organization, financed and administered by the Federal Government. It supplements the work of the permanent State employment services, and in no State is there overlapping or duplication of effort.

At the peak of its activity in 1933 the National Reemployment Service had 3,320 local offices and registered some 9,000,000 applicants within a 10 weeks' period. The number of offices has recently been reduced to 800 district offices, each serving an area of one or more counties.{18} For the fiscal year ending in June 1934, the National Reemployment Service registered 9,189,421 applicants and made 5,481,392 placements, 85 percent of which were in public employment.{19} During this same period the record of activity for all public employment offices in the country was a total of 12,634,974 applicants and 6,952,000 placements.{19}

The difficulties to be met in such a rapid expansion of public employment work were very real. Adequate facilities were frequently lacking; floor space and equipment had to be borrowed by the reemployment offices. The relief administrations generously gave personnel to staff the offices--in many States contributing half or more than half of the personnel required--and volunteer workers were effectively used in some States. The difficulties attendant upon providing adequate employment service in remote rural outposts tested the ingenuity of the staffs of the reemployment offices. Itinerant agents and chains of substations were tried. In some counties, as many as 36 substations were established for registration of the unemployed and of persons in families on relief. New workers had to be trained in the work of registration since few experienced employment experts were available at the time.

The facilities of the established employment offices in the affiliated systems were also taxed to the utmost to meet the demands of the emergency works program. Important community services in relation to the relief program have thus been performed by the public employment offices under both systems.

The National Reemployment Service has been an effective demonstration of registration and placement activities in many counties or States which have never before had a public employment office. It is to be hoped that this demonstration will stimulate popular support for acceptance of the provisions of the Wagner-Peyaer Act and for expansion of the existing employment service. The difficulty is that as long as the Federal Government establishes and maintains employment offices in the States and counties which do not have them, local legislators are under no incentive to match funds for affiliation under the Wagner-Peyser Act.

{18} Speech by W. Frank Persons, Director of the United States Employment Service, before the Twentieth Annual Meeting of the International Association of Government Labor Officials, Boston, Sept. 29, 1934.

{19} United States Employment Service, Twelve and One-half Million Registered for Work, op. cit., appendix tables.

Mr. Persons, the Director of the United States Employment Service, recently stated that "in those States which have affiliated employment services, it is the objective of the United States Employment Service to merge the State service and the National Reemployment Service as quickly as it is financially and administratively possible." {20} In New York, New Jersey, and Connecticut there has been an amalgamation of the two services. In other States, on the other hand, there are two uncoordinated services reporting to different divisions in the United Staten Employment Service, one under Federal control, and one under Federal-State control. There are, therefore, three relationships of States to the Federal Government in the Employment Service; one group of States has National Reemployment Service offices under Federal control only; one group has both National Reemployment Service and State employment service offices under separate Federal and Federal-State control and a third group has both types of offices under a unified administration. Eventually, both systems will probably meet the same standards of operation required by the United States Employment Service, but it is essential that the two services in the States where there is no coordination of activities be merged as rapidly as possible.

THE PROGRESS RECORD IN EMPLOYMENT WORK

It was only a few years ago that the future looked dark for public employment work except in one or two States and in a few demonstration cities. In the short time since the passage of the Wagner-Peyser Act and the development of an employment policy for placement on public-works and work-relief projects, tremendous progress had been made in the development of an adequate system of public employment offices in this country. There has been a slow but substantial improvement in the standards of operation of the offices already in existence which have become affliated with the United States Employment Service. Both the established offices and the emergency offices have benefited by the experience of registering and classifying large numbers of applicants and placing workers on all types of work projects.

The States which have had considerable experience with public employment offices have forged ahead with their experiments, assured of more financial support than was formerly available. Salaries in employment work are still low in comparison with similar types of professional work, and facilities are frequently less than adequate. In many communities the long-time program of developing a high type of placement service had to be temporarily set aside the past years to take care of emergency projects. But despite these drawbacks progress is noticeable in all States. Some cities, for example, are experimenting with specialized bureaus for certain industries or selected occupational groups. Special programs have been developed for young unemployed persons in a number of cities. Vocational training and retraining projects have been

{20} Speech before the International Association of Government Labor Officials, Boston, Sept. 29, 1934.

A recommendation of the Committee on Employment Exchanges adopted by the National Conference for Labor Legislation, Washington, Feb.14-15, 1934, stated: That the placement services now conducted by local offices of the National Reemployment Service in states where there are regular State employment services affiliated with the United States Employment Service, insofar as these local reemployment offices fit into the permanent long-time program of the State services, be merged with the latter as rapidly as practicable, with due regard to the financial problems involved and to the maintenance of the necessary placement services in the regions naturally tributary to the offices so merged." Report of Proceedings, p. 74.

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sponsored or assisted by the public employment offices in many centers. At least one State has experimented in the transfer of unemployed workers from dying trades in one county to expanding industries in another section of the State. Research projects in the problems of local and regional employment markets have been started or continued. All these local experiments need further financial support and might be more valuable if coordinated into a general research and planning program on unemployment problems in local employment centers. But the impression of most observers who have been in touch with public employment work for more than 2 years is that "the employment offices are on the upgrade."

The experience of the United States Employment Service since June 1933 has been invaluable preparation for the administration of an unemployment compensation plan, no matter what its form may take. The success of State unemployment compensation systems, as well as of any work-relief program, depends in part upon the adequacy of the placement work of the public employment offices and any other contribution they can make to the solution of unemployment problems. The development of this aspect of the work of a public employment service is at best a slow process. The administrative problems involved, for example, in attempting to offer a placement service or a qualified employment agent within the walking distance of every workingman in the country are stupendous. There is every reason to believe that the principles of expansion provided in the Wagner-Peyser Act are sound, and that the adequate functioning of the public employment systems should not be sacrificed to procure widespread geographic coverage in the immediate future.

The Federal Social Security Act specifies as a condition for approval of a State unemployment compensation plan that all benefits shall be paid through public employment offices or such other agencies as the Social Security Board may approve. When, in addition to the present placement activities of State employment offices and the National Reemployment Service, the public employment offices in the United States are called upon to handle the work of registry, certification, and payments for all unemployed persons within the State who are covered by the State unemployment compensation system, the number of branch offices and of personnel will need to be greatly increased. In the early summer of 1935, the total personnel in the United States employed by the State employment offices and the National Reemployment Service was 7,750, or approximately 1 per 3,500 persons who would be covered by unemployment compensation if all States enacted legislation with the same coverage as that of the Federal Social Security Act. This number would have to be increased at least fivefold to offer facilities comparable to those available in the German and British employment exchange systems. {21}

{21} In the administration of both placement and compensation functions, the British employment exchanges had in 1931 an average total staff of 25,521 persons, including those employed at the headquarters in Hew. This represents approximately 1 employee of the employment exchange for every 490 persons covered by the insurance system. In Germany the ratio of employment office personnel to persons insured was approximately 1:595 in 1932. Table IV-1 Indicates by States the distribution of employment office personnel in the United Staten, the approximate number of persona who would be covered by a State unemployment compensation system, and the number of employment office personnel who would be required on a basis of 1:500 persons covered. Approximately 44,000 persons will be needed to perform the employment office functions on this basis, an increase of 471 percent over the 1935 total personnel in State employment offices and the National Reemployment Service. The estimates of personnel required by States are purely relative and take no account of variations in the severity of unemployment between States. In times of widespread unemployment the work of the employment offices will be very extensive.

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(IMAGE OF TABLE IV-1)

A greater concentration of the employment function of the relief program in the public employment offices has accompanied recent work-program developments and appears to be good governmental administrative policy and sound economic policy. Local offices not only register and classify all employable persons on relief, but refer and place workers on all types of work projects What amounts to a perpetual occupational inventory of applicants on relief is

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maintained, and the labor supply available for all work projects is reported to the relief and works authorities. The employment offices report to the relief authorities when persons on relief are placed in private employment. The work program in the country as a whole should be enriched by utilization of employment techniques under skilled personnel and by the increasing use of the knowledge of employment office workers concerning local, State, and national employment conditions.

The program of the United States Employment Service, in the last analysis, is a long-time as well as an emergency program, with work ahead in good times as well as bad. Its contribution to the emergency needs of the present is not in any way minimized by this comment. The problem of lack of balance and adjustment between the demand for labor and its supply in the hundreds of occupations in which American workers are employed is always present. Endless "pounding the pavements", looking for work, is just as wasteful in periods of prosperity as in periods of depression. Careful selection of workers for jobs is an important social and economic function during any phase of the business cycle. The mass of American workers now depend, and will continue to depend, upon jobs in private employment as their main sources of income. Thus, the efforts of the public employment offices to organize the labor market constitute both a direct and an indirect approach to economic security for the individual. The United States Employment Service, consequently, is one of the most strategically placed governmental agencies for making an important and lasting contribution to the movement for greater economic security for American workers.