Employment Act of 1946 Gutted, Full Employment Guarantee Abandoned

President Truman signs the Employment Act of 1946 on February 20, a dramatically weakened version of the Full Employment Bill of 1945. The original bill would have guaranteed a federal job to every American seeking work and required the government to maintain full employment. After intensive lobbying by business interests, Congress strips these provisions, replacing a right to work with a vague commitment to “maximum employment.”

The Full Employment Bill of 1945, introduced by Senator James Murray, responds to widespread fear of returning to Depression-era unemployment after wartime spending ends. The bill declares that “all Americans able to work and seeking work have the right to useful, remunerative, regular, and full-time employment.” It would have required the president to submit an annual “National Production and Employment Budget” and authorized federal spending to fill any gap between private employment and full employment.

The National Association of Manufacturers and the U.S. Chamber of Commerce launch a massive lobbying campaign against the bill. They argue that full employment guarantees would lead to socialism, inflate the federal budget, and undermine business prerogatives. Senator Robert Taft leads the opposition, proposing amendments that eviscerate the bill’s core provisions.

The final Employment Act removes the right to employment, replacing it with a declaration that the federal government should use “all practicable means” to promote “maximum employment, production, and purchasing power.” The mandatory employment budget becomes an advisory Economic Report of the President. The bill creates the Council of Economic Advisers but gives it no enforcement powers.

The weakened act represents a decisive moment where business interests block the institutionalization of full employment as national policy. By redefining full employment from a guaranteed right to an aspirational goal, the Employment Act establishes the template for American economic policy that prioritizes inflation control over employment, a framework that would dominate for decades and result in persistently higher unemployment than peer nations with stronger employment protections.