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11 2 Federal Role in Employment Stimulation The ideas that the federal government should engage in employment stimulation and should ensure full employment are rooted in the experiences of the Great Depression. During the Depression, people were searching for solutions to the hard times that were occurring in America and elsewhere. The New Deal set the stage for the debate because it established the precedent for an activist federal government. But whereas many of the ingredients for a federal role in job creation were formulated during the New Deal, confidence in the federal government ’s capacity to achieve full employment grew out of the war mobilization efforts of World War II. Indeed, the performance of the U.S. economy during the war validated the idea of compensatory spending and made full employment a realizable objective. SOCIOECONOMIC TRANSFORMATION The economic and demographic changes that America experienced during the first half of the twentieth century are well known, as the nation became more urban and industrial, better educated, and ethnically more diverse. Scholars have theorized about—and in many cases documented—the social and political consequences of these changes. This socioeconomic transformation did much to shape the debate on the federal role in job creation as America approached midcentury. America was growing. The U.S. economy had grown from a gross national product (GNP) per capita of $1,001 in 1900 to a GNP per capita of $2,342 in 1950. The Great Depression affected economies worldwide , and America’s GNP growth rate exceeded those of other industrialized Western nations such as Germany, England, Italy, and Canada for the same period. Disposable personal income in the United States grew In order to view this proof accurately, the Overprint Preview Option must be checked in Acrobat Professional or Adobe Reader. Please contact your Customer Service Representative if you have questions about finding the option. Job Name: -- /347091t 12 Wasem dramatically, from $71.5 billion in 1920 to $206.9 billion in 1950 (U.S. Census Bureau 1975, p. 224).1 The population was growing as well: in one decade alone, it grew from 76 million in 1900 to 92 million in 1910. Half of the 16-millionperson increase during this decade, an estimated eight million, came from a continuing flow of immigrants. By 1950, the population of the United States had reached 151.7 million people; that is, in 50 years’ time it had doubled (U.S. Census Bureau 1975, p. 11). As the population grew, areas that had once been rural became more densely populated. Towns evolved into midsized cities, and suburbs formed around major cities. Many people left rural areas to live in metropolitan centers, and most of the new immigrants settled in cities as well. The result was that the nation shifted from being predominantly rural in its residential characteristics to being urban. The percentage of people living in urban areas rose from 39.7 percent in 1900 to 59.0 percent in 1950. The pivotal year was 1920, when, for the first time, just over half of Americans were living in urban areas (U.S. Census Bureau 1975, p. 11). During this same period, the educational attainment of Americans was rising. In 1900, only 6.3 percent of the population over 17 years old had graduated from high school. By 1925, this percentage had risen to 24.4 percent, and by 1950, some 57.4 percent of the population over 17 years of age had a high school diploma. The percentage of those aged 5 to 17 years who were enrolled in school, moreover, increased from 78.3 percent in 1900 to 92.3 percent in 1950. Conversely, the percentage of the population that was illiterate dropped from 10.7 percent in 1900 to 3.2 percent in 1950 (U.S. Census Bureau 1975, pp. 380–382). This period also witnessed a steady change in the composition of the workforce, as illustrated in Figure 2.1. This change is most evident in those occupations considered working class. In this instance, “working class” refers generically to those people that are employed in bluecollar or low-paying white-collar occupations, such as clerks, laborers, skilled production workers, and those employed in low-paying service jobs. The manual and service occupations, always a major portion of the labor force, grew from 44.9 percent of the workforce in 1900 to 51.6 percent in 1950. Even more striking than the growth in blue-collar employment was the increase in low-paying white...

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