Labor

Scarcity

and

Labor-Market

Policy

Under

an

Armament Program in Germany

and

Great

Britain

CONSTANCE

A.

KIEHEL*

*

Bureau

of Employment Security, Reports and Analysis Division. Tbls

article

is summarized from a longer monograph Issued in February 1942 as

Employment Security Memorandum No. 18. In bringing the material up

to date for tbls article the author was assisted by Samuel Halpern.

Striking

similarities

in the pattern of labor shortages that developed in Germany

and

Great

Britain

as a result of military mobilization and armament production

suggest some

current

problems in the United States. Although, for many reasons,

neither

German nor

British

experience is wholly relevant, analysis of procedures in

these countries reveals factors inherent in the development of labor-market policy

and

administration in wartime.

THE

MECHANIZATION

of modern warfare is re-

sponsible for

basic

similarities

in the pattern of

labor-market

conditions

that

unfolds under a

modern armament program. The numerical

strength

of armies is now

limited

by the

avail-

ability

of

industrial

workers able to

keep

them

equipped not only

with

munitions but

with

the

latest

models of airplanes, tanks, and motorized

transports.

Pressure to

secure

labor for arma-

ment

needs

has

been

greatly augmented.

During

former wars, labor shortages,

primarily

of un-

skilled

labor, eventually

developed

as a result of

the

demand for munitions. Today, the need for

mass

production of mechanized combat

units,

combined

with

the

military

requirements for

mechanical maintenance, has changed the nature

of war-labor demands.

Characteristic

of modern armament programs

is

the early appearance of shortages of skilled

workers.

At

first

such shortages are localized and

limited

to highly skilled occupations, but

inevita-

bly

they

become

geographically and

industrially

more widespread as the reemployment of

multi-

skilled

and

unit-skilled

unemployed workers pro-

gresses.

At length the point is reached when the

available supply of unemployed workers previ-

ously employed in the metal trades is exhausted.

It

then

becomes

necessary

to

utilize

the

services

either

of remaining

reserves

of unemployed work-

ers or of skilled workers employed in related

occu-

pations in other industries.

Finally,

as a result of

increased production demands and

military

drains,

the reemployment

process

may reach the point

where available unemployed

reserves

are

virtually

exhausted and it

becomes

necessary

to

curtail

em-

ployment in nonessential industries and recruit

workers not previously attached to the labor

market.

Employer competition for workers, coin-

cident

with

and even antedating the development

of actual labor shortages,

increases

as the scarcity

of labor

becomes

more acute. More and more,

widespread employer

pirating,

spiraling

wage

rates,

and increasing labor turn-over, in addition

to

military

drains, tend to disorganize and disrupt

armament

production.

The

degree

of labor scarcity

primarily

controls

the

application

of governmental labor-supply

policy. Nevertheless,

institutional

factors are

responsible for essential differences in the

basic

approach to the formulation and enforcement of

labor-supply policy. The Germans began

with

a

blueprint

of a controlled

economy

in which labor,

equally

with

raw materials, was looked upon as a

resource

needed

for armament expansion. The

British,

on the other hand, began

with

a relatively

free

economy

in which the labor market was in-

fluenced by long-established and widespread

worker

organizations which were represented

politically

by actual participation in government.

In

Great

Britain,

for instance,

adherence

to the

democratic principle of discussing labor-supply

legislation

with

labor representatives to obtain

agreement on

basic

policy prior to enactment

characterized the introduction of labor-market

controls. Such practices were absent in Germany,

because

trade-unions in the

traditional

sense

had

ceased

to exist. Political aims and

economic

precedents thus affected the method of introduc-