Work-sharing During the Great Depression: Did the ‘President’s Reemployment Agreement’ Promote Reemployment?

Economica (2011) 78, 133–158
Work-sharing During the Great Depression: Did the‘President’s Reemployment Agreement’ Promote Reemployment?

By JASON E. TAYLOR


Abstract: The President’s Reemployment Agreement (PRA) of 1933 directed firms to reduce workweeks during the Great Depression so existing jobs could be spread into additional employment opportunities. Similar ‘worksharing’ policies have recently been implemented across Europe in hopes of reducing unemployment. I find that, ceteris paribus, the work-sharing aspects of the PRA created nearly 2.5 million new employment opportunities in around four months. However, the programme also required firms to raise hourly wage rates, offsetting close to half of these gains. Furthermore, most of the remaining employment gains were wiped out after cartel-oriented industry-specific codes of fair competition supplanted the PRA.

ADDRESS OF THE PRESIDENT DELIVERED BY RADIO FROM THE WHITE HOUSE
Monday, July 24, 1933, 9:30 PM

The proposition is simply this:

If all employers will act together to shorten hours and raise wages we can put people back to work. No employer will suffer, because the relative level of competitive cost will advance by the same amount for all. But if any considerable group should lag or shirk, this great opportunity will pass us by and we will go into another desperate Winter. This must not happen.

...

The essence of the plan is a universal limitation of hours of work per week for any individual by common consent, and a universal payment of wages above a minimum, also by common consent. I cannot guarantee the success of this nationwide plan, but the people of this country can guarantee its success. I have no faith in "cure-alls" but I believe that we can greatly influence economic forces. I have no sympathy with the professional economists who insist that things must run their course and that human agencies can have no influence on economic ills. One reason is that I happen to know that professional economists have changed their definition of economic laws every five or ten years for a very long time, but I do have faith, and retain faith, in the strength of common purpose, and in the strength of unified action taken by the American people.

That is why I am describing to you the simple purposes and the solid foundations upon which our program of recovery is built. That is why I am asking the employers of the Nation to sign this common covenant with me -- to sign it in the name of patriotism and humanity. That is why I am asking the workers to go along with us in a spirit of understanding and of helpfulness. -- President Franklin D. Roosevelt