Labor Supply and Demand During Great Depression
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Labor Supply and Demand during the Great Depression
When the stock market crashed in 1929, it led into a domino effect all the way into the 1930’s. Many of us know this time of being called the Great Depression. The Great Depression caused many people to lose their jobs, mostly people in the marketing and manufacturing industries (Michelle, 2006). Gene Smiley states, “25 percent of all workers and 37 percent of all nonfarm workers were completely out of work. Some people starved; many others lost their farms and homes” (Smiley, 2008). People got very cautious with their money after the stock market crash. This caused a surplus in goods and services which should lower the price and increase the demand (Michelle, 2006). This was not the case at this time; the demand for employee’s got less because they were not needed. With nobody buying anything there was no demand and the supply of employment got less. Another factor is that President Roosevelt pushed for companies to play Social Security taxes and taxes on their profits. Some companies did pay out the money needed, but some paid it out in other ways (Smiley, 2008). Some steel industries paid out remaining Social Security taxes by giving bonuses and raising the hourly pay rate (Smiley, 2008). “As these three policies came together, real hourly labor costs jumped without corresponding increases in demand or prices, and firms responded by reducing production and laying off employees” (Smiley, 2008). The marketing industry took the biggest hit with the supply and demand of labor during the Great Depression.
Michelle, H. (2006, September). The Laws of Supply and Demand, Classical Economists, and the Great Depression. Retrieved 2010, from Associated Content: http://www.associatedcontent.com/article/57112/the_laws_of_supply_and_demand_classical.html?singlepage=true&cat=3
Smiley, G. (2008). Great Depression. Retrieved September 2010, from Library of Economics and Liberty:...