Time to Use the D-Word
Union Strength, Unemployment, and the Great Depression

Price Fishback on Labor Policy in the Great Depression

Price Fishback talks sense about labor policy in the Great Depression:

The Role of Labor Policy - Council on Foreign Relations: PRICE V. FISHBACK:  Sure.  So what I've been doing over the last 10 years of my life is collecting all sorts of statistics about what's going on in all sorts of different parts of the country because the experience of the Great Depression varies quite a bit from different parts of the country.  The amount that they spend varies quite a bit in various parts of the country as well.  So we've been trying to use this variation to try to get a sense of how effective these New Deal policies were.... [T]he way that they dealt with unemployment during this period with 25 percent unemployment was to come up with work relief expenditures. And so what they did was they put people back to work, first under the Federal Emergency Relief Act, and that was from 1933 to '35, done under the WTA. And the typical way they did that was that they paid you about half of the normal hourly wage... 50 cents, somewhere in that neighborhood, and they didn't have you working full time... almost like unemployment insurance.

So what's the effect of this?... [I]t doesn't look like that they had any effect on private employment at all... just... government employment increased.... [W]e found... that... you get quite different effects in different time periods during the New Deal.... [U]p to about half way through 1935... for every eight jobs you create in the public sector with the work relief, you get an additional job in private work because you're stimulating demand and things like this.... [I]n the second half of the decade... when you increase the government jobs or increase work relief by one job, you might lose as much as .3 or .5 private jobs....

Now, there were positive effects from the work relief bill as well.  It turns out that in the course of the decade, say you spend $1 on work relief... retail sales in that small town might go up about 50 cents... very positive effects on things like infant mortality... for about every $2 million you spend in modern dollars... they've saved an infant's life... reduced deaths from diarrhea... from infectious disease, and some suicides as well...

And Eugene White talks sense as well:

QUESTIONER: Eugene White, Rutgers University. And one of the ideas I heard floated was that labor market problems cause financial crises. So I thought I'd take an opportunity to throw some cold water on that idea.... For that actually to be true... [t]here can't be any bubbles. If there was a bubble in 1929, and there's... strong evidence that it's the case, then you get an independent shock coming from the decline in values both on consumption and investment spending.... [Again] for labor markets to cause financial crises, what you have to have happen is that higher wages would have to cause... defaults on industrial loans. Well, that's not the source of bank failures in the early 1930s...