Great Depression Unemployment

Unemployment levels in the United States during the Great Depression reached as high as 25%. There were essentially two main causes behind this massive unemployment rate. After the Wall Street Crash in October 1929, consumer buying confidence plummeted and factories producing consumer goods had no choice but to cut their production and lay off workers. Ironically because of this, consumer item prices actually dropped, making the actual value of wages higher.

In the early 1920s, interest rates were lowered and this resulted in a housing boom. Construction employment was very high during the 1920s but by the 1930s interest rates rose again. Because of the higher interest rates and general job insecurity, house sales declined and many builders were laid off. The government’s response was to launch a public building, road and airports construction program to keep as many people as possible in work.

Self-employed farmers were also vulnerable during this time. The Great Plains region experienced drought and falling commodity prices throughout the country caused many farmers to lose their farms to foreclosure. Many farmers in the drought-affected Dust Bowl simply abandoned their property and headed west in search of paid work. Farming families were split up as one parent traveled to other states in search of work. A massive subculture of hobos rose. These unemployed people rode on railroad boxcars in search of employment. Across the country shantytowns, or “Hoovervilles”, sprung up to house unemployed in scrap shelters, packing crates and even disused automobiles. Soup kitchens were set up in these shantytowns and the unemployed did anything to keep off starvation like selling apples on sidewalks.

Unethical employment practices soon appeared as the unemployed desperately tried to keep their human dignity. One employer realized that his workers would not work for a low $40 per week as they would lose their dignity bringing back such low wages to their family. Instead he offered $50 a week wages, but charged his employees $10 per week “to keep their job”. Men would still work for him as their dignity was not offended when they were being paid the theoretical $50 per week, even though they took home only $40 per week.