U.S. labor market policy in the context of welfare state development during the New Frontier and Great Society

by Zdeňka Johnson


JEL classification

  • General Welfare; Well-Being
  • Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
  • Unemployment Insurance; Severance Pay; Plant Closings


Great Society, labor market policy, New Frontier, unemployment, USA, welfare state


The paper deals with changes in labor market policies during one of the stages of welfare state expansion in the U.S.A. The federal New Deal policy on the labor market in the course of the Great Depression is briefly discussed; specifically, its emphasis on direct state involvement in the form of work creation programs together with unemployment relief. In contrast to this policy, active labor market policies are analysed under the Presidencies of John F. Kennedy and Lyndon B. Johnson. These policies consisted particularly of extension of availability of job training and retraining for the unemployed, the poor, young people, and members of ethnic and racial minorities. Even the passive role of the state was not left out; the minimum wage and unemployment benefits grew and were more accessible to more people. However, reduction of unemployment cannot be ascribed to government measures, since rapid economic growth could have led to this result as well. The study also addresses the relationship between federal spending on welfare and the Vietnam War. While expenditures on both increased in the first two years of Johnson’s administration, in 1967 and 1968 more money was directed to defense, partially at the expense of growth in welfare spending.