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At the other extreme, a number of progressive leaders launched initiatives
well before the federal government proposed the Social Security Act. McNutt
in Indiana managed to pass a gross state income tax to fix his impoverished
state's finances. More importantly, Wisconsin pioneered the development of
unemployment insurance programs thanks to the efforts of La Follete's Pro-
gressive Party (Nelson 1969 ). The Wisconsin Plan consisted of a system of
unemployment reserves. Each company would be taxed to build up reserves,
to be tapped in case some of its workers fell into unemployment. In this plan
employers have an incentive to maximize employment levels and reduce the
amount of tax they would have to pay. This system, tailored to the needs of
Wisconsin's productive structure, did not travel to other states (Amenta et al.
1987 ). Ohio, for instance, considered a proposal, ultimately defeated due in
large part to the objections of business, to introduce “taxes on both employers
and employees and the establishment of a state funded pooled insurance fund”
(Amenta et al. 1987 : 146).
This heterogeneity across states reflects differences in the level of economic
development and geography of economic specialization and undermines the
feasibility of a centralized solution in the United States. The drop in crossstate
mobility patterns during the post-Depression years did not help alter the sit-
uation. At the same time, the objections of business organizations remained
strong and influential. Even in those states, such as Wisconsin, Indiana, or
Minnesota, where regional elites were able to launch new relief and insur-
ance programs, they could only do so after local business associations had
shaped these initiatives so as to minimize their share of the burden. Despite
these pioneering efforts though, by 1934-1935 unemployment insurance was
a privilege available only to a minority of the American labor force. 10 At the
same time, the Depression had just reached its peak: the unemployment rate
was 25%. Much like in Canada, the situation required a proportional policy
response from the federal government (Skocpol and Ikenberry 1983 : 87-148;
Weir 1988: 149-199).
Divergent Approaches to Unemployment Insurance:
The Political Processes
Canada: Preference Homogenization and the Overcoming of Resistance. Ini-
tial responses to the problem of unemployment in Canada soon proved insuf-
ficient. If anything, the relief camp strategy backfired, facilitating the mobiliza-
tion of a large contingent of unskilled workers. By 1934 the failure of this strat-
egy to guarantee prosperity and the achievements of Roosevelt's policies made
Bennett change his approach in a twofold way. He proposed to progressively
abandon relief and substitute it with a program of public works able to generate
10
For instance, according to Department of Labor of the State of New York estimates, “in 1934
trade union plans covered about 100,000 workers; joint unions-management plans covered
about 65,000 and voluntary company plans covered another 70,000” (McGowan 1999 : 5).
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