Another New Deal?

“In most discussions of the Great Depression, the macroeconomic profile of the subject is portrayed as follows: steep continuous decline from
1929 to 1933, sharp recovery from 1933 to 1937, severe but short “depression” from 1937 to 1938, and renewed rapid recovery from
1938 onward, with the economy having fully recovered by 1940 or, at latest, 1941. With regard to hours worked, the profile looks somewhat different.
Total hours worked fell substantially from 1929 to 1932. Then, unlike the standard depiction of the economy’s course, they hit bottom and stayed put in a virtually flat-bottomed trough for three years, 1932, 1933, and 1934. They then rose substantially until 1937, dropped by 7 percent in 1938, then rose again thereafter. However, even as late as 1940, total hours remained below the 1929 level by 6 percent, and only in 1941, with the population vigorously engaged in mobilization for war, did total hours exceed the 1929 value, by 3 percent. Meanwhile, of course, the population and the potential labor force had grown substantially, the former by 11.6 million persons, so simply getting back to the 1929 level of hours worked represented something less than a complete triumph.

As the table shows, military employment remained quite low and did not vary substantially from 1929 to 1939. Similarly, farm hours worked varied little, although after remaining fairly steady from 1929 to 1933, they dropped in 1934 and never regained their previous level. This abrupt one-shot drop to a lower level probably represents the effects of the New Deal’s agricultural relief programs, some of which created incentives for farmers to reduce the amount of labor, especially sharecroppers’ labor, they used in their operations. [Update: Note comment below challenging this interpretation and attributing drop in farm hours worked in 1934 to the exodus]

(Whatley 1983).

Because neither military nor farm hours varied much between 1929 and 1939, the changes in total hours worked in that period are attributable
almost entirely to changes in civilian government hours and private nonfarm hours…”

Robert Higgs in Libertarian Papers, Volume I, A Revealing Window On the US Economy In Depression and War: Hours Worked, 1929-1950

4 thoughts on “Another New Deal?

  1. No, the 1934 drop was not the result of New Deal policies. 1933-35 was the peak of the Dust Bowl, and that drop was the peak of the great rural exodus of the 1930s.

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