Employment Act of 1946

Employment Act of 1946. This act created the Council of Economic Advisers as part of the White House staff, whose duty was to “formulate and recommend national economic policy” that would further the national goal of “maximum employment, production, and purchasing power.” It reflected the conviction of many liberal policymakers that the greatest economic danger facing the United States after the war was a return to mass unemployment, and that the surest way to avoid such a catastrophe was through economic growth. But the law provided no effective tools for achieving its goals, and its supporters soon became disillusioned.

The idea for the bill emerged from the National Resources Planning Board, the New Deal's official planning agency, which in the early 1940s promoted the idea of “full employment.” It also reflected President Franklin Delano Roosevelt's call in 1944 for an “economic bill of rights,” which included “the right to a useful and remunerative job.” Progressive labor and farm groups were also actively lobbying for legislation to promote government‐guaranteed full employment, as were leading Keynesian economists. When the bill was introduced in Congress in January 1945, it was titled the Full Employment Bill; it called for the president to adopt economic policies that would create jobs for all who wanted them. The government would spend money on job‐creation programs if the private sector appeared unlikely to generate enough employment. President Harry S. Truman supported it after Roosevelt's death, as did most congressional New Dealers.

But by 1946, not enough New Dealers remained in Congress to enact the original bill. After strenuous opposition from employers, who feared that a full employment economy would drive up their labor costs, conservatives in Congress so diluted the legislation that many of its early supporters dismissed it as meaningless rhetoric. The phrase “full employment,” which had resonated so strongly among liberals in the 1940s, disappeared from both the title and the body of the bill, as did all the specific policy requirements that were to have given the phrase meaning. But the Council of Economic Advisers created by the act did at times influence presidents to choose policies that promoted economic growth. While the Employment Act did not guarantee full employment, it did help make fiscal policy an important lever of economic planning in the postwar era.
See also Federal Government, Executive Branch: The Presidency; Keynesianism; New Deal Era, The.

Bibliography

Stephen K. Bailey , Congress Makes a Law: The Story behind the Employment Act of 1946, 1950.

Alan Brinkley