Supply and Demand of Labor during the Great Depression
During nearly the entire decade of the 1930’s, the United States suffered great losses financially. This was in part due to a culmination of things including a cut back in the number of jobs in the industrial section of the labor market without a decrease in pay. In fact according to Lee Ohanian of Forbes Magazine (2009), there was a 20% increase in wages by the end of the 1930’s. He continues to state that the normal path of supply and demand would have dictated lower wages which would have in turn lowered the cost of goods and increased employment. It would appear that the government’s red tape and policies were the culprits for preventing the economy from taking a natural course of action instead of nose diving into a deep pit that had lasting and devastating effects on the people. Ohanian (2009) said that one major event was the passing of the National Industrial Recovery Act (NIRA) in 1933 that led to industry having rights that allowed monopolization and other activities that are now against the law. There were codes passed by many industries that were geared to keep wages high and prices of their products high. The industries that did not come to agreements on fair completion as well as the farming industry were not affected by the depression as severely because their prices and remained low and more people remained employed (Ohanian, 2009).
Ohanian, L. (2009). Revisiting the 1930’s: Why Did the Great Depression Last so Long?. http://www.forbes.com/2009/04/30/1930s-labor-wages-business-ohanian.html
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