The Employment Act of 1946 aimed for full employment and low inflation. It created the President's Council of Economic Advisors and the Joint Economic Committee. President Harry S. Truman signed it on February 20, 1946, during the transition from wartime production to peacetime.
The United States Congress enacted the Employment Act of 1946 with the aim of achieving two important economic goals: ensuring price stability through low inflation and maintaining a high level of employment. However, economic theory suggests that these objectives are in conflict. The consistent achievement of full employment may lead to demand-pull inflation and subsequent price rises.
Objectives and Outcomes of the Employment Act of 1946
The Employment Act of 1946 was signed by President Truman following World War II, a time when many soldiers were returning home, and the economy was shifting away from wartime production. The Act aimed to achieve economic stability and high employment, learning from the lessons of the Great Depression. Its core objective was to provide jobs to those seeking employment and maximize production and purchasing power.
At its center was the "Declaration of Policy," stating the government's ongoing responsibility to coordinate with industry, agriculture, labor, and state and local governments to promote free and competitive enterprise and the general welfare. The ultimate goal was to create conditions that would foster useful employment for those seeking work and promote maximum employment, production, and purchasing power.
The Act also led to the creation of the Council of Economic Advisors, comprising three economists who advise the president on economic matters. Their responsibilities include assisting with the annual economic report, advising on specific policies, and gathering economic data and reports on the U.S. economy's growth and trends.
Evolution of the Full Employment Bill of 1945
Originally known as the Full Employment Bill of 1945, the act underwent multiple revisions before being signed into law. Initially, the legislation asserted that all able and job-seeking Americans had the right to useful, well-paying, regular, and full-time employment. It aimed to ensure sufficient job opportunities for all Americans who had finished their schooling and did not have full-time housekeeping responsibilities.
However, the final version of the bill removed the claim of a "right" to a job and eliminated the acknowledgment of the importance of maintaining purchasing power and controlling inflation. These changes were made in response to opposition from certain members of the House of Representatives. They considered the original bill too radical and sought a substitute that would eliminate any risky federal commitments while introducing economic planning mechanisms in the Executive and legislative branches, along with a moderate public works program.
The Employment Act of 1946 was a significant piece of legislation that aimed to promote economic stability and high employment after World War II. While its core objectives were to provide jobs to those seeking employment and maximize production and purchasing power, the act also led to the creation of the Council of Economic Advisors and the Joint Economic Committee. Despite facing opposition and undergoing multiple revisions, the act remains a key part of U.S. economic history and continues to have an impact on economic policy today.