try this is practically the only approach to unemployment insurance. This is so
far true that many students regard the trade union as the best organization
through which to work.
The union is organized for collective bargaining, especially for the advance-
ment of wages, and it has a direct and constant interest in preventing the com-
petition of large numbers of unemployed workmen who are naturally eager to
'\V. H. Beveridge: Unemployment (1910); S. and B. Webb: The Prevention of Destitution (1911):
B. S. Rowntree and B. Lasker: Unemployment (1911).
92 REPORT OF THE MAYOR'S COMMISSION ON UNEMPLOYMENT
accept employment on almost any terms they can make. Outside of their strike
funds, some of the unions have out-of-work and traveling benefits which are
practically unemployment insurance funds. These funds become genuine insurance
only when they are legally a right of the members and when the fund is solvent.
The difficulty is at present that few of the unions can meet these two condi-
tions, and that multitudes of workmen are altogether outside the benefits of the
trade organizations. The dues which could be paid by the unskilled laborers
would necessarily be too low to provide a solvent fund.
A further limitation is that since unemployment is caused by general condi-
tions, and the evil of idleness is not confined to the wage-earners directly in-
volved, it is both unfair and impolitic to impose the whole cost of unemployment
insurance on the workmen even if their wages might possibly furnish adequate
premiums. All recent social insurance is based on the principle of distribution of
these inevitable losses over the whole nation, through public contributions to the
It is evident that employers cannot be asked to contribute to a fund which
can be used to support strikes, any more than workmen could be asked to create
a fund for indemnifying the employer who locks them out or suffers by their
Some writers conclude from this situation that a public insurance fund must
exclude trade unions. But is there not a safe alternative? May it not be arranged
that public insurance indemnities shall be refused to men who are out on strike
or lockout; that trade disputes shall not complicate the problem of insurance?
The first trade union which in Germany undertook unemployment aid was the
union of typesetters, founded in 1866. In 1875 it introduced aid for traveling
members in search of occupation. The Hirsch-Duncker union discussed a plan
VI. The Direction of Effort and Outlook.
We are in the habit now of asking ourselves very little about the summum
bonum, paradise, the "Ultimate Ideal" or "Golden Age," but rather what is the
next step. Experiment alone will open the way ; our headlight reveals only a few
rods of track in front of our eyes. We shall be wise to move forward by that
headlight and not pay too much attention to the red, green or blue light at the
tail of our train.
We can, at least, unite on improved labor exchanges. Our present employ-
ment bureaus, public and private, while they represent mental confusion, waste,
discouragement, are a huge tax on employers and employes. They compete with
each other and their conflicts defeat their social end. Here is a task for our new
Department of Labor; may it be granted the power to accomplish something and
its directors have the will and wisdom to put forth an effort worthy of a great
industrial nation !
Would it be possible to secure subsidies to trades unions and mutual benefit
societies to encourage them to carry unemployment insurance? This plan has a
limited success in Belgium. Would it succeed in the cities of the United States?
Unless some provision was made at the same time for working people outside trade
unions, such a use of public funds would be manifestly unfair, perhaps unconsti-
tutional. Is there any present evidence for believing that employers would wel-
come and further a measure which would strengthen trade unionism? The oppo-
sition of employers would present a very serious obstacle to this course.
Would it not be more fair, more full of promise for results within a reason-
able time, if all those who realize the monstrous injustice of neglect should
unite on a policy resembling in its main principles the British System?
Would it not be actually easier to secure a great measure for a great need, in a
great country, than a measure which must be confessed inadequate, petty and
weak from the first moment of discussion?
These are questions to which satisfactory answers cannot yet be given.
Probably we shall blunder on in the good old Anglo-Saxon way, try experi-^
ments on a small scale and keep the people thinking until some day the clouds lift
and the lawyers and judges find that after all a measure required by the national
welfare has all the time been lurking concealed in the cryptic oracles of the fine
old Constitution, even if our infallible and respectable ancestors who wrote that
instrument never dreamed of the problem as even a remote possibility. "Legal
fictions" have more than once delivered us from the "dead hand" and served
almost as well as the living truth itself, but not so well as truth itself.
UNEMPLOYED AND PUBLIC
I. Introduction . ' r . -,-. ... > . 97
II. The Function Assigned to the Public Employment Agency by
its Advocates . ... . . . .' 104
III. The Actual Functioning of Non-Public Employment Agencies
in the United States . . . . . . . . 109
IV. Functioning of Public Employment Agencies in the United
States .^ . 125
V. Possibilities in the Functioning of Public Employment Agencies 159
VI. The Assumed Function of Public Employment Agencies in
Relation to General Social Problems .... 167
Bibliography . . . . . . . . . .174
REPORT OF THE MAYOR'S COMMISSION ON UNEMPLOYMENT 95
UNEMPLOYMENT AND PUBLIC EMPLOYMENT AGENCIES.
By E. H. Sutherland.
In the modern industrial community unemployment is a continuous
phenomenon. It is found even when industry is being hampered by an in-
adequate labor supply. From the standpoint of the person unemployed it
is obviously the result chiefly of the inability to find employment imme-
diately after dismissal or displacement from an engagement, and may be
expected to recur periodically at the point of the cessation of occupations
or at irregular intervals at the point of disturbance in occupations. Some
workers are periodically dismissed at the end of the active seasons; others
are employed at odd jobs, and after a few hours or a few days become
unemployed; the engagement is characteristically permanent only in those
few occupations which, because of the greater continuity of employment,
have been called regular. In addition to the workers who are dismissed
at the end of their engagements, there are seasonal, casual and regular
workers who have become unemployed at times when they have been dis-
placed, either temporarily by such disturbances in their occupations as acci-
dents to the plant or lack of raw materials, or for longer periods by crises
or depressions, or permanently by the introduction of machinery or the
decay of the industry.
Undoubtedly the least efficient are selected for dismissal or displacement
whenever possible, but even if equal efficiency of all workers were assumed,
there would still be seasonal and casual occupations, introduction of new
machinery, decay of industries, depressions and accidents to the plant; con-
sequently, if other conditions remained the same, there would still be unem-
ployment. Equal efficiency of the workmen would not prevent the fluctua-
tions in the number of employes required. Efficiency is very important in
the determination of who shall be dismissed, but the condition of the in-
dustry is the important factor in the determination of how many shall be
dismissed. This becomes very apparent from a consideration of the co-
efficients of unemployment in different occupations.
Max Lazard, Le coefficient de risque professionnel de chomage
d'apres les trois derniers recensements franc,ais, Journ. de Soc. de
Statistique de Paris, 53:7-30, Jan., '12; Max Lazard, Le chomage et la
profession; New York, Report of Commission on Unemployment, 1911,
Charts IV and V. The complete title of this report, to which for the
sake of brevity reference is here made as the New York Commission
on Unemployment, is "Report to the Legislature of the State of New
York by the Commission to Inquire into the Question of Employers'
Liability and Other Matters. Third Report: Unemployment and Lack
of Farm Labor, 1911."
In order to center the attention on these industrial factors, the unem-
ployed are generally defined as those wage-earners who are able and willing
to work, but who cannot find work.
This definition is composed of three concepts: "Ability to work,"
"willingness to work" and "being without work." These are vague
concepts, have not been standardized and at present are not subject
to actual measurement. Any person other than a complete invalid is
able to do some work. "Willingness to work" is always dependent
on the conditions of the work and the ideals of the workman; the
96 REPORT OF THE MAYOR'S COMMISSION ON UNEMPLOYMENT
skilled mechanic frequently refuses to work as a common laborer, the
trade unionist sometimes refuses to work in an open shop, or the prohi-
bitionist in a saloon. It is difficult, also, to determine the exact mean-
ing of "being without work"; for instance, how should a workman
who is on the books of a firm and reports for work each day, but who
secures work only three days a week, be classified? The determination
of "ability to work" and "willingness to work" must be made with
reference to the local standards and conditions of employment, while
the presence of the worker in the labor market is the best criterion of
"being without work." The Imperial Statistical Office of Germany
has reported that the real difficulty in insuring against unemployment
is to secure a simple test of unemployment. See, Germany, Statis-
tisches Amt, Abteilung fur Arbeiterstatistik. Die bestehenden Ein-
richtungen zur Versicherung gegen die Folgen der Arbeitslosigkeit.
Berlin, 1906. Teil I, p. 3. The most thorough discussion of the defini-
tion of unemployment is by A. Griinspan. Ueber den Begriff der Ar-
beitslosigkeit, Soziale Praxis 21:692-96, Feb. 29, '12.
From these unemployed persons must be distinguished the unemployable,
who, on account of old age, sickness, laziness, weak-mindedness or other
personal characteristics, are not able or not willing to work, and therefore
have ceased temporarily or permanently to be wage-earners.
The extent of unemployment has never been accurately determined in
New York, Report of Commission on Unemployment, 1911, p. 27;
Webb, Public Organization of the Labour Market, p. 163; Rowntree
and Lasker, Unemployment, p. vii; Sargent, Bulletin U. S. Bureau of
Labor, No. 109, p. 6. Rowntree and Lasker have .made the most in-
tensive study of unemployment that has been made up to this time,
but it is confined to one city and to the unemployment which was
found on one day of the year.
This failure is due to the practical difficulties of computing the number
of days of work lost by each employe; but even if the enumeration were com-
plete, the total or the average of the days lost in the different kinds of un-
employment would be a mixture of quantities very disparate as to causes,
effects and the forms of control which are needed.
Beveridge, Unemployment, p. 27.
Crude indications of the extent of unemployment in the United States
have been secured by a number of periodical and special investigations
United States Census Reports of 1890 and 1900; United States Com-
missioner of Labor, 18th Annual Report, 1903; United States Geological
Survey; American Federationist, 1899-1909; Massachusetts, Census Re-
ports of 1885 and 1895; Massachusetts, Labor Bulletins, 1908-date;
Massachusetts. 32d Annual Report of Statistics of Labor, 1901; New
York, Bulletins of .Department of Labor, 1897-date; Rhode Island,
Census of 1908. There is considerable material, also, in the reports
of the various state bureaus of labor statistics. The best recent sum-
mary of the statistics of unemployment is in Sargent, loc. cit. pp. 5-34;
from which the general conclusion has been drawn that there are at all times
of the year some unemployed persons willing and able to work even when
employers are in need of help, and that this number increases greatly in
certain seasons and in years of depression. The New York Commission on
Unemployment estimated that in New York in years of ordinary prosperity
3 per cent of the wage-earners usually employed are out of work, that in the
winter months this increases to 8 or 10 per cent, and in years of depression
to from 15 to 30 per cent.
New York, Report of Commission on Unemployment, 1911, p. 27.
It is not possible to generalize for the >entire United States from this in-
formation; the nearest approach to equally accurate federal statistics is to
be found in an investigation, conducted in 1901 by the United States Com-
missioner of Labor, of families selected from thirty-three states according
REPORT OF THE MAYOR'S COMMISSION ON UNEMPLOYMENT 97
to the industrial importance of the states. Here it was found that of 24,402
heads of families with wages or salaries not over $1,200 a year, 12,154 (49.8
per 'cent) were unemployed during some part of the year, and that their
average period of unemployment was 9.43 weeks.
United States, 18th Annual Report of Commissioner of Labor,
1903, pp. 41-46. It should be noted, however, that this is not a state-
ment of unemployment as defined above, but includes unemployment
due to sickness, old age, strikes, etc.
In the absence of accurate statistics, the extent of unemployment is in-
dicated crudely by the report that of the many complaints made by work-
ingmen in the steel industry, none were so frequently repeated or so strong-
ly made as those in regard to the irregularity of employment.
United States, Report on the Condition of Employment in the
Iron and Steel Industry, 1913. Vol. Ill, pp. 21, 205.
Moreover, it is impossible to determine statistically whether unemploy-
ment has increased or decreased during the last half century, foi there have
been no statistics that could be used for comparative purposes previous to
1900 in the United States.
A study of the development of unemployment has been made on
the basis of English statistics, which show that unemployment de-
creased slightly in England from 1860 to 1885, and increased slightly
after 1885. G. H. Wood, Some Statistics Relating to Working Class
Progress Since 1860, Journal of the Royal Statistical Society, 62:640-
The effects of unemployment on the individual, his family and society
in general, can hardly be exaggerated. Adequate performance of social
duties presupposes regularity of employment and to the problem of irregu-
larity of employment almost all other social problems are intimately related.
But the psychosis of unemployment is not conducive to the performance
of what are ordinarily known as social duties. Unemployment is a shock or
In one of its phases unemployment is an illustration of Huxley's
statement that "the sense of being useless in the world is the greatest
shock the human system can receive." Quoted in the Survey 31:156,
Nov. 8, '13.
and is a point at which the accustomed habits and standards of morality
and industry prove inadequate, particularly when it is long continued or fre-
quently repeated and when consequent to it there is a partial or total failure
of the means of support. Consequently the unemployed tend to have a
characteristic mental attitude either of revolt against the system in an or-
ganized or an unorganized way, or of cessation of effort and acceptation of
the situation in a helpless, supine fashion. Many of the revolutions of mod-
ern times would have been impossible except for the unemployed; it is signifi-
cant that the motto of the French revolution was "The Right to Work,"
that the unemployed began the street fights in the revolution of 1830, that
the revolutions of 1848 followed immediately a world crisis, and that the
Paris Commune of 1872 was in the most intimate connection with unemploy-
ment. The undigested and radical demands made in 1893 by Coxey's Army
and the demonstration of the unemployed under Morrison I. Swift in Boston
in 1908 show similarly what may be the outcome of such a crisis.
Massachusetts Labor Bulletin, 56:58-62, Feb., '08.
It is easy for the unemployed man to become a socialist and the social-
ist theory expresses this revolt against unemployment. When the revolt
against the system is not organized, unemployment may simply lower the
border of vagrancy, theft and other crimes;
Alice W. Solenberger, One Thousand Homeless Men, pp. 139-55.
It is reported that in the great industrial centers of Germany and in St.
Petersburg prostitution increases and decreases directly as the amount of
98 REPORT OF THE MAYOR'S COMMISSION ON UNEMPLOYMENT
Blaschko, Conference internationale de Bruxelles, Enquetes 1:676,
Sturmer, Die Prostitution in Russland, p. 76.
These divergent habits are to be explained not by the absolute impossibility
of existence otherwise, but by the imputed increase in adequacy of the new
methods of conduct, due both to the inadequacy of the old methods and
to the stimulations to the formation of new habits.
The lodging houses, saloons and general environment of the home-
less men, as Mrs. Solenberger has pointed out, are important factors
in the personal deterioration of the unemployed; this applies, also,
to the unemployed who are not homeless. It is reported that one of
the boys in the gang which murdered Guelzoe in Chicago in 1912 had
never met the gang until in an out-of-work period five days before
the crime; as soon as he reached the penitentiary after conviction he
wrote his mother: "If I had not been out of work I never would'
have gotten into this trouble." Graham Taylor, Chicago City Club
Bulletin, 5:53-54, March 11, '12.
The unemployed may, on the other hand, cease to struggle against the
system, and accept it in an unenergetic, helpless, depressed fashion; at first
unable by repeated efforts to secure work, they come to refuse work when
it is offered; their physical fitness for work, their skill and habits of industry
become either intermittent or entirely lacking.
United States, Report on Conditions of Employment in the Iron
and Steel Industry, Vol. Ill, p. 380.
and they drop into the class of casual laborers or unemployables.
Solenberger, op. cit. pp. 139-55; Rowntree and Lasker, op. cit.,
for "nothing degenerates from lack of use faster than the capacity to work."
Unemployment has, also, more overt effects due to the inability to-
secure a satisfactory substitute for the labor of the breadwinner. The
standard of living of the unemployed and those dependent upon them is
lowered, frequently to the point of physical suffering,
New York, Report of Commission on Unemployment, 1911, p. 9.
as is evident from the applications for assistance from charity organizations,
bread-lines, municipal lodging houses and similar institutions, for some of
which unemployment is the sole cause of existence, for others the most
important cause. Unemployment is recorded as the principal cause of dis-
tress in the New York Charity Organization Society in 29 per cent of its
cases in the fiscal year 1908-09, in 22.5 per cent of its cases in the year 1904-5,
and in the Chicago United Charities in 20 per cent of its cases in the year
New York, Report of Commission on Unemployment, 1911, p. 28;
James Mullenbach, Chicago City Club Bulletin, 5:49; March 11, '12.
See, also, G. Kleene, The Statistical Study of Causes of Destitution,
Pub. of American Statistical Association, 11:273-85, Sept., '08, for a
criticism of the methods of comparing the causes of destitution and
a chart showing the relative importance of unemployment as a cause
The shiftless and irrational methods of expending incomes, to which in
some cases this distress is related, may be attributed in part to the fact that
it is exceedingly difficult to make plans for future expenditures because of the
uncertainty of income and irregularity of employment.
United States, Report on the Conditions of Employment in the
Iron and Steel Industries, Vol. Ill, pp. 21, 205. The effect of unem-
ployment on the family budgets in York is shown by Rowntree and
Lasker, op. cit, pp. 222-58.
The unemployment of the m.en forces their wives and children into
sweated or other labor, the children are left without adequate technical or
moral training, and tend to develop without the acquisition of skill, to enter
REPORT OF THE MAYOR'S COMMISSION ON UNEMPLOYMENT 99
"blind-alley" occupations, and finally to become casual laborers, criminals
New York, Report of Commission on Unemployment, 1911, p. 9;
Rowntree and Lasker, op. cit., pp. 7-16.
The presence of the unemployed in the labor market is an important
factor in the determination of the wages of those who are employed. More-
over labor is a perishable commodity, and a day's unemployment represents
a direct loss of a day's labor; in this way millions of days of labor are
wasted every year in the United States. In short, unemployment is of very
great importance because of the direct loss of labor power and the indirect
loss due to its depreciation, because of the direct physical and psychical
suffering, the loss from crime and vagrancy, the investment in charitable
and correctional institutions, and the neglect of the children and their con-
sequent inefficiency, as well as because of the mental attitudes which are
found' in the unemployed. Therefore, supreme social importance must be
attributed to the attempts to solve the problem of unemployment.
In the past there has been a variety of attitudes toward unemployment',
in the American colonies the unemployed person was frequently classed as
a vagabond and was subject to specified penalties.
See, for example, Henning, Virginia Statutes-at-Large, IV:208-09.
Unemployment has very generally been regarded as an individual mi?
fortune, which should be treated by charity, though in some cases public
assistance in finding employment has been sufficient to disfranchise the rt-<
In England until 1905 the person who registered at the public
employment exchange was disfranchised. In Massachusetts any per-
son other than a veteran of the civil war who receives public aid is
disfranchised. This seems to be a mixture of charity and punishment,
which, except in importance, is not unlike the Virginia Act of 1755,
which ordered that a workhouse be built for the "unemployed poor/'
but decreed that those who received assistance in it wear colored
badges. Henning, op. cit., VI:75-78.
The Wall Street Journal in 1911 referred to unemployment as an in-
evitable and desirable restriction on the cost of production.
This view that unemployment is necessary in order to regulate
wages and population is the classical economic doctrine. See J.
Lipowski, Die Frage der Arbeitslosigkeit in der klassischen National-
oekonomie, Zeitschrif t f iir die gesamte Staatswissenschaft, 68 :583-657.
Heft 4, '12.
And it has been recognized as a source of danger to those in power,
which may, however, be removed by sops. Such attitudes have expressed
themselves in various policies of the state or of particular groups or insti-
tutions within the state, for relieving the distress of the unemployed by
gifts of money, or, in an unorganized way, for finding work for them. Only
recently, however, has unemployment come to be looked upon as a problem
of the industrial organization. This is because, as a continuous and wide-
spread condition of wage-earners, it is essentially modern. Previous to the
industrial revolution wars, crop failures, extortionate taxation and "Acts of
God" frequently, indeed, caused idleness and deprived the serfs, slaves, crafts-
men, merchants and other classes of the population of their opportunities
to make a living; but that was not characteristically an unemployment of
wage-earners, for in that domestic economy, even after the abolition of
serfdom and slavery, wage-earning did not become extensive. This was be-
cause large-scale production had no advantage over small-scale production,
for there was little perceptible difference between capitalistic and domestic