Finally, work by Secretary for Labor Frances Perkins in the New Deal saw the birth of unemployment insurance and welfare programs. These worked to reduce inequality.
The entry of the United States in WWII also worked towards the reduction of inequalities. The war mobilization effort saw increased war spending that doubled the country’s GNP with full employment resulting from the military Keynesianism. In fact, unemployment fell from 25% in 1933 to 1% in 1944. Factories hired anyone without regards to skills and trained the workers by simplifying the tasks and payment being made by the federal government. This saw a massive move housewives, students, and farmers to join the country’s labor force.
The economy after the war was also responsible for reduced inequality with social welfare, higher wages, and full employment. The result of the United States winning the war meant that they were the world’s largest economy. In addition, the result of this newfound prosperity was an increase in expenditures by consumers that rose by close to fifty percent and a rise in individual savings that climbed over seven times what it was before the war. In 1935, the National Labor Relations Act that was part of the National Recovery Act guaranteed the rights of employees to bargain collectively via their own unions, as well as seeing the establishment of the NLRB that facilitated agreements on wages to suppress sit down strikes that had began in 1933. This saw mass growth of labor union membership with the mass production sectors being the majority in the American Labor Federation. The increased wages because of collective bargaining saw 30,000 workers’ wages increase with a decrease in working hours.
FDR’s Executive Order 8802 that prohibited racial discrimination in the military was also responsible for decreased inequality. It prohibited employment discrimination and promoted equal opportunity, citing the war