TABLE 34.-Estimates of average employment in the railroad industry in the postwar years

Deferred maintenance of railroad structures and rolling stock is likely to add to employment in the first postwar year. To allow for this maintenance it was assumed that the forces for maintenance of way and structures, and maintenance of equipment and stores, would be larger by 15 percent than the force necessary for the current traffic load. Adjusting the class I railroad employment figure to include other railroad employees, and allowing for deferred maintenance, the calculations indicate that the average employment for the first postwar year will be approximately 1,375,000. (See table 34.)

Succeeding postwar years

The assumptions concerning the first postwar year include an upward swing toward a highly prosperous level of industrial activity as reconversion approaches completion. No further decline of employment is expected under highly prosperous conditions. In the estimates for conditions of moderate and severe depressions it was assumed that a recession would begin at the beginning of the second postwar fiscal year and run its course. In each case the course of the depression was initially interpreted in terms of industrial production. The decline in production in the second postwar year was estimated by applying to the level of industrial production for highly prosperous conditions the percentage decline in industrial production of the first 12 months of the recessions beginning in 1920 and 1929, respectively. The volumes of traffic, productivity, and railroad employment were estimated in the same manner as for the first postwar year.

Number of beneficiaries

Seasonal, intermittent, and irregular unemployment has heretofore been the basis for payments to railroad unemployment insurance beneficiaries. In preparing estimates for the period covered in this study, due consideration had to be given, as well, to additional beneficiaries resulting from a general decline in employment. A special factor was also taken into account for the adjustment period-the displacement of railroad workers by returning ex-servicemen.

In estimating the number of beneficiaries resulting from a general decline in employment, three components had to be kept in mind. They were the number of beneficiaries whose unemployment will result directly from current changes in employment; the number of beneficiaries whose unemployment will have begun prior to the beginning of the benefit year; and the number of beneficiaries who will apply to the Board for benefits some time after voluntary separation from the railroad industry. The estimate must also take account of the approximately 30,000 to 50,000 railroad employees who die, became annuitants, or become permanently disabled each year.

The number of beneficiaries arising out of a decline in the level of employmnt must of necessity be closely related to that decline. It is frequently taken for granted that a reduction of 100 in the number of employees will result in that group of 100 persons going on to the unemployment-insurance rolls. Actually, the number of individuals involved is the result of a more complex process. The number of persons leaving the railroad pay rolls is always larger than indicated by the net change in employment. For a variety of economic and personal reasons, workers are constantly leaving the industry to which they became attached. This may be illustrated by labor separation rates in manufacturing establishments during years of rapidly declining employment, as in 1930-32. In these years individuals were separating from the pay rolls at the rate of about 50 employees per 100 per year while employment declinéd at the rate of about 12 percent per year. Such changes among the individuals employed also occur in the railroad industry. Thus, the number of persons leaving railroad pay rolls is also much greater than the decline in employment.

Not all workers leaving the pay rolls of the railroad industry, however, appear on the unemployment-insurance rolls. Many workers are not eligible for benefits because of insufficient or no earnings in the base year. Others begin to work in another industry immediately after the end of a railroad job or quickly enough so that they do not become beneficiaries. Some return to family duties. Undoubtedly, some appear on the unemployment-insurance rolls.

The net result of the factors tending to raise or lower the number of beneficiaries from the net decline in employment during an employment recession is a matter yet to be learned. For the purposes of this study it was assumed that

they canceled out, that the number remaining unemployed would be equal to the reduction in employment, and that, further, the number of beneficiaries would be equal to the number unemployed for more than 7 days.

The decline in employment may be taken as the change of average employment from the preceding to the current year or it may be considered as the difference between the high and low employment within the current year. The latter differences were used in this study. The estimated decline in employment from the average for the year after victory in Europe to the average for the lowest year in the immediate postwar period for conditions of a moderate depression is 623,000; the estimated decline from the highest month to the lowest month of employment, 729,000. The divergence between these reductions would be greater if the railroads could obtain a more adequate labor force in the peak period.

In estimating the decline of employment from the beginning to the end of each benefit year, it was necessary to estimate the general pattern of employment changes. The bases for these estimates are the estimates of annual average railroad employment obtained on the basis of the volume of railroad traffic. Using these annual average employment figures, a general cyclical pattern was introduced throughout the period, reflecting as closely as possible the general changes expressed previously under "assumptions concerning economic background." The pattern of changes in employment adopted was modified to check with the annual averages previously estimated. The monthly employment changes for the year after victory in Europe and the first postwar year are presented in table 35, and for the following 4 years under conditions of a 1929-type depression in table 36. These indicate estimated reductions in employment for the year after the victory in Europe and the first, second, third, and fourth postwar years of 126,000, 224,000, 304,800, 267,600, and 118,600, respectively.

Returning ex-servicemen will increase the number of unemployment insurance beneficiaries. The exservicemen are expected to displace employed railroad workers who, in turn, will appear on the unemployment insurance rolls.

Railroad men in the armed service as of June 30, 1943, numbered approximately 240,000. This estimate is based on reports from 29 of the largest class I railroads employing 73 percent of the personnel in the industry. After allowing for additional men entering the armed forces, it is estimated that the number of railroad workers in military service who will return to the industry is 245,000. This allows for those disabled for railroad work and for those who will not return to the railroad industry for other reasons. Workers who leave active service prior to victory in Europe and Asia, respectively, and who are replaced are not included in these figures.

Of the 245,000, it was estimated that approximately 75,000 would return in the year following the defeat of Germany, 100,000 in the first postwar year, and 70,000 in the second postwar year. For the first year after the defeat of Germany, it was assumed that approximately 7,500 would return in each of the last 10 months of the benefit year. For the first and second postwar years, it was assumed that approximately 8,330 would return in each month until the remaining 170,000 have returned to the industry.

As mentioned above, an allowance must be made for deaths, retirements, and disability withdrawals of active employees in order to obtain the estimated numher disemployed in any year. Mortality and disability rates of railroad workers were computed by the actuaries of the Railroad Retirement Board for the second actuarial valuation. Alternate estimates of future annuity retirements were also prepared for the valuation. In table 37 the mortality and disability rates have been used in conjunction with the estimates of postwar average annual employment to obtain estimates of the number of deaths and the number of disability withdrawals other than retirements. To the sum of these two figures in each year was added the average of the two estimates of the number of annuity retirements given in the second actuarial valuation. The resulting figure is the estimated total of withdrawals from active service. Since workers withdrawing from active service reduce the number that must be laid off, the total withdrawals was subtracted from the sum of the employment decline and the number of workers displaced by exservicemen to obtain the estimated number disemployed. (See tables 35 and 36.)

First postwar year

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

Second postwar year

Third postwar year