Systems of Unemployment Compensation

November 16, 1932

Report Outline
Roosevelt's Advocacy of Compulsory Unemployment Compensation
Voluntary Unemployment Funds in the Depression
Compulsory Wage Reserves and the Wisconsin Law
Unemployment Compensation Proposals in Congress
Positions of Industry and Labor on Insurance

Roosevelt's Advocacy of Compulsory Unemployment Compensation

Unemployment Benefit Plans in State Legislatures

The first American statute providing for compulsory establishment of unemployment reserve funds by industry was enacted in Wisconsin in January, 1932. In mid-February an interstate commission representing the governors of New York, Ohio, Massachusetts, Pennsylvania, New Jersey, and Connecticut submitted a report favoring a plan of compulsory unemployment compensation similar to that adopted in Wisconsin. President-elect Roosevelt endorsed the report and commended its proposals to the New York legislature. A bill introduced to carry them into effect in that state, however, failed to receive action at the 1932 session. Roosevelt reaffirmed his support of compulsory unemployment compensation under state laws, as advocated by the Democratic national platform, in a radio speech from Albany on October 13 and in an address at Boston on October 31, 1932.

Unemployment compensation or insurance plans received comparatively little consideration in the United States until brought forcibly to public attention by the consequences of the present depression. The question was made the subject of a Senate investigation in 1931, when measures designed to encourage state action were offered in Congress by Senator Wagner (D., N. Y.). Unemployment insurance proposals were presented that year in 17 state legislatures. Although none of them was then accepted, legislative commissions of inquiry were set up in California, Massachusetts, New York, Ohio, Oregon, and Wisconsin. The continuance of widespread unemployment is expected to act as a spur to more active consideration of plans for unemployment reserves and benefits at many of the 1933 state legislative sessions. The American Federation of Labor, heretofore opposed to compulsory unemployment compensation, reversed its position in July, 1932, the executive council then instructing President Green to draw up a compensation bill for submission to state legislatures.

Voluntary vs. Compulsory Unemployment Benefit Plans

In an address at Indianapolis June 15, 1931, President Hoover supported the principle of unemployment insurance but only as initiated “through private enterprise or through cooperation of industry and labor itself.” With regard to compulsory insurance, he averred that “the moment the government enters into this field it invariably degenerates into the dole.” During the last two years a number of new plans for the provision of unemployment benefits have been inaugurated by individual companies or groups of companies, but the total number of workers thus protected is still relatively very small. Systems of voluntary unemployment compensation have not shown sufficient progress to convince most students of the question that they can be relied upon as a substitute for mandatory legislative action. It is to be noted that there has been little sentiment in this country favoring direct financial contributions to unemployment compensation funds by the federal or state governments. With such funds supported by industry, with or without contributions from the workers, and with the state acting merely as custodian of the monies deposited, it is felt that the danger of political pressure for any form of compensation resembling a dole would be reduced to a minimum.

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Economic Crises
Unemployment and Employment Programs