The Schechter Decision and the Lingering Effects of the NIRA
The Schechter Decision and the Lingering Effects of the NIRA
While the implementation of the NIRA wage and hour provisions in the summer of 1933 had dramatic effects upon workweeks and average hourly earnings, the Schechter decision of May 1935 brought no discernable change in either measure. One possibility is that firms followed President Roosevelt’s request to voluntarily abide by their industries’ code even in the absence of a legal requirement to do so. The Robert Committee, which was charged studying the issue, reported a great deal of industry-level heterogeneity with respect to continued compliance with the NIRA codes after Schechter. In the iron and steel industry, 95 percent of firms reported full compliance with the industry code’s labor provisions. On the other hand, in the cotton garment industry only 11 percent of firms reported no departures from that industry code’s labor provisions. In fact, empirical findings suggest that industries with more complex codes of fair competition saw a larger post-Schechter output boom than did those with shorter codes. These findings offer further evidence of the heterogeneous impact that the NIRA—and in this case its demise—had on various industries.
Keywords: Schechter, National Industrial Recovery Act, Franklin Roosevelt
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