Labor Markets: Pre-Post 1930s - The Manufacturing Economy

Updated on June 28, 2018

The Manufacturing Industry

Labor market characteristics for wage earners since the 1930s were by in-large the result of seismic economics shifts. In the decades following what’s a predominantly agrarian economy, the transitions toward an industrial sector was introduced to the production of merchandise by means of wage labor in the manufacturing industry. This transition away from the social system upon which agriculture was the sustaining basis of production, set the stage for the incentive to increased levels of productivity. It gave manufactures the advantage of large-scale production. Which was non-more apparent than during the nineteenth century; where workers experienced the transformation from agricultural production towards an industrial economy. As a result of these technological transformation, the decades following this period also saw an increasing demand for a new set of workers in the labor market. The demand for wage earners in manufacturing. In the steel industry; for example, the manufacturing sector soon introduced the need for a new set of semiskilled “blue-collar” workers. This was later accompanied by the development of the “job ladder” which allowed for workers to progress after initially being hired to fill-in “low skilled” level jobs in manufacturing. Higher-level jobs during this period were frequently filled by promotions from within the industrial sector. This new jobs market soon became associated with “good jobs” often at “good wages” for workers; while the changes in the economy had multiple implications for the ways in which labor markets were operating at the time. One such implication was the simplification of complicated tasks so as to make the existing work simple enough by way of using machinery in manufacturing.

The new set of workplace (rules, hierarchies) offered firms a significant degree of oligopolistic power in the market. In essence, a relatively few number of manufactures became the “price makers” and in this respect provided the market with its goods and services. The “price takers” in this sense were smaller sized firms in the economy who were left with very little option but to sell their output at competitive market prices. Many of these firms paid their workers low-wages (frequently below the legal limit) than those in the manufacturing industry. As a result; some workers would became known as “casual” employees, working largely at the convenience of their employers who would so often hire them only sporadically. This led to the workers’ opposition towards the (incentive wage payment system & vulnerability to unilateral decisions) linked to productivity. The concern for workers regarding “layoffs” during slack times such as those experienced throughout most of the Great Depression, encouraged economists to examine the “collective bargaining” rights of workers. Labor economists at the time viewed the workers’ right to the job as comparable in certain respects to the property rights of employers. The focus for this generation of economists was geared towards understanding the techniques to industrial welfare and the impact of legislation on labor market outcomes. Economists concerning themselves with the “labour issues” that’s often identified as this distinctively American approach, leading up to the Second World War later became known as institutionalism.

The Post-1945 Economy
The changes to the common workplace since World War II had significant implications for workers at the time. This post-1945 economy introduced several institutional changes that would essentially alter the ways in which labor economists understood the problems to labor markets during this period. In this sense; there were two fundamental socioeconomic changes that sand-out, the first being the perception that education was the means to higher individual earning for workers. While the second was the understanding that labor-force participation (males, females) was competitive with other uses of time. These changes in focus for much of the subject matter in economics, at least in the United States, are related to the county’s wartime experience which are also not widely appreciated. The choice of returning servicemen having the options to seek additional years of schooling facilitated (market & non-market) outcomes for workers. Historically; schooling beyond the basics required (literacy & good citizenship) which were usually undertaken by post adolescent white males whose economically well-to-do families would educated them to pursue professions in Medicine, Law and the Ministry. These formal arrangements would experience a significant shift following this post-1945 economy. Higher education would soon became introduced as big-business, where an extraordinary large numbers of returning servicemen choose to go to schools as opposed to returning immediately to the peacetime labor market of the 1940s-1950s. This time period was in large-part far from short of economic success for workers. The labor market concerns of returning servicemen also helped raise wages by reducing the supply of workers in the market below what it would have been in the case where the number of returning servicemen reentering the labor market suggests otherwise. This introduced a new subject of inquiry that would come to be known as the economics of “human capital”which was the study of (education & training) as an “asset” capable of earning a flow of income in much the same way as (property & financial assets) as stocks, bonds, land and buildings.

The post-1945 economy also introduced the labor force participation of women to the workforce. Several married women at the time “chose” to take on new jobs in efforts to supplement the government benefits their husbands received as many of them enrolled in approved education programs. In much of the time prior to the Second World War; culture determined women gain employment before marriage, but later dedicate themselves to their family homes. In the decades following this post-war period, women also used the union movement to demand a change to the patriarchal nature of the structure to the workforce. The impacts to these developments had significant economic implications for labor force participation rates of women in the jobs market. As a result, the societal role for women underwent significant transformations following the post-1945 economy. The increasing number of labor force participation rates for women signaled the focus towards a “women’s strength, where the depiction of polished nails, plucked eyebrows and mascaraed lashes essentially emphasized women did not need to surrender their femininity”. While the emergence of women suggests a shift away from the “motherhood mystique” of the home, large numbers of women continued to enter the labor market of the post-war period. The decades following the Second World War proved a “watershed” for entrenching women’s labor force participation.

Economists use conventional economic tools in order to examine the socioeconomic transformations to labor market outcomes. Some of these models include worker’s rate of labor force participation, impacts from years of schooling on labor markets, the effect of job training programs on workers’-individual skills, the circumstances to occupational choice and the impacts on labor productivity from discrimination. While economists are anxious about understanding how workers fare in the world of work, “how workers fair” has constantly changed as a result of these (economic, technological) transformations. The microeconomic decisions made by households about education, labor force participation, occupational choice, and trading are all linked to key macroeconomic indicators as (employment & earnings) opportunities. Socioeconomic changes since the Second World War have redefined the problems labor economists single-out for study in the broader field of economics. The focus in particular; has shifted from an earlier preoccupation with (union movements & collective bargaining) to the rule of human capital as the income producing asset for workers participating in the labor market. This has brought about significant insight into the both the microeconomic implications (household behavior & employer decisions) towards understanding the functioning of labor markets. “The economic features to some labor market behaviors and their economic outcomes reflect the link between microeconomic indicators as (individual households & educational institutions) comprising an economic subsystem. These somewhat smaller type subsystems continuously develop the human capital to be employed as inputs to the production function which also comprise a “production subsystem” performing the dual function of employing workers while perfecting the process of skill production, originally began by microeconomic indicators as individual households and educational institutions”

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