Contrasts

A neat anomaly was to be found last week in the statistics of 1939's war boom. In October the Federal Reserve production index reached 120, past its 1937 peak of 118. Yet October employment (up 1,250,000 from 1938, according to Madam Secretary Perkins) was down by more than 1,000,000 men from 1937's peak.

In part this contrast may be due to screwy statistics (the production index is heavily weighted by certain industries), but in large part it represents technological improvements. For if improved machinery increases output per man, it is perfectly possible to have bigger production and bigger unemployment at the same time. Two examples of this can be found in two of the U. S.'s biggest employers: motors and steel. In 1937 motormakers bought connecting rod grinders that stepped up production from 250 to 850 units an hour, a machine for bending window-finish strips by which a five-man team producing 50 strips per hour was replaced by one man bending 120 strips. To make the wide, light-gauge, uniform sheet steel for auto bodies, etc., steelmakers came up in 1926 with the continuous strip rolling mill. Costing as high as $20,000,000, operated by as few as 2,000 men, it threw out team upon team of hand mill men who used to flip the steel sheets from one roller to the next.

An equally neat anomaly was to be found between 1939 and 1929's production and employment figures. At 120 the production index virtually duplicated 1929's peak (126), but 1939's unemployment is around 9,000,000. This is largely due to the fact that some 500,000 new workers come into the labor market each year: October's nonagricultural employment (34,649,000) was only 1,492,000 under 1929. For with a growing working population it would be perfectly possible to have employment and unemployment increase at the same time.

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