NYS Department of Labor unemployment benefits - why did industrial production drop and unemployment go up again
I'm doing research for a college paper about economic cycles and I keep seeing references to industrial production dropping and unemployment spiking again in 1938. Can anyone explain what happened back then? I'm particularly interested in how unemployment systems responded during that time period. My professor mentioned that this period actually influenced how modern unemployment insurance programs like NYS Department of Labor benefits work today. Any insights would be helpful for my economics assignment.
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Ethan Clark
The 1938 recession was called the 'Roosevelt Recession' - it happened when the government cut spending too quickly and the Federal Reserve tightened monetary policy. Industrial production fell about 33% and unemployment jumped from 14% to 19%. This actually led to improvements in unemployment insurance programs that we still use today, including the foundations of what became NYS Department of Labor benefits.
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Aisha Hussain
•That's really helpful! Do you know if the unemployment insurance changes from that period are still part of how NYS Department of Labor calculates benefits today?
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StarStrider
Yeah the 1937-38 recession was brutal. What happened was the economy had been recovering from the Great Depression but then the government got worried about deficits and cut spending on New Deal programs. At the same time, new Social Security taxes kicked in, taking money out of people's pockets. Industrial production crashed and unemployment shot back up. The silver lining was it taught policymakers important lessons about counter-cyclical policies that influenced modern unemployment systems like what NYS Department of Labor uses.
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Yuki Sato
•this is why i never trust when politicians say the economy is fixed... it can crash again so fast
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Carmen Ruiz
I had to research this for a similar project last semester. The key factors were: 1) Premature fiscal austerity - government cut spending too early, 2) Monetary tightening by the Fed, 3) New payroll taxes from Social Security reduced consumer spending, and 4) Labor disputes in key industries. Industrial production in manufacturing dropped by a third in just a few months. This recession actually led to important reforms in how unemployment insurance worked, establishing principles that modern systems like NYS Department of Labor still follow. If you need help reaching any NYS Department of Labor representatives for current data to compare with historical info, I used claimyr.com recently - they have a video demo at https://youtu.be/qyftW-mnTNI that shows how to get through to agents when phone lines are busy.
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Aisha Hussain
•Thanks for the detailed breakdown! I might need to contact NYS Department of Labor for some current statistics to compare with the 1938 data.
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Andre Lefebvre
omg i remember learning about this in high school history! wasnt there also something about the stock market being weird that year too? and didnt world war 2 starting help fix everything eventually??
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Ethan Clark
•You're thinking of the right general timeframe, but the 1938 recession was more about fiscal and monetary policy mistakes than stock market issues. And yes, WWII preparation did eventually help with employment, but that's a few years later.
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Zoe Alexopoulos
This sounds exactly like what could happen again today if they mess with unemployment benefits too much. The government always thinks they can just cut spending and everything will be fine but then people lose their jobs and the whole economy crashes. At least now we have better unemployment systems like NYS Department of Labor that can respond faster than they could back in 1938.
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