Of course, the boom in private investment after 1945 employed many men. But that is by no means the only reason.
Before 1945, about 14 million men served in the US armed forces, but by summer 1946 that number had been reduced to just over 2 million, although this decreased further in the course of the 1940s (Adams 1967: 161).
So, first, it can be seen that the creation of a standing army employed some 2 million men.
What about the other 12 million? Were they all just suddenly dropped into the labour market? The answer is no.
What happened is that – because of the G.I. Bill – many G.I.s undertook education and training programs after 1945 and did not seek full-time employment:
“While World War II was still being fought, the Department of Labor estimated that, after the war, 15 million men and women who had been serving in the armed services would be unemployed. To reduce the possibility of postwar depression brought on by widespread unemployment, the National Resources Planning Board, a White House agency, studied postwar manpower needs as early as 1942 and in June 1943 recommended a series of programs for education and training. The American Legion designed the main features of what became the Serviceman’s Readjustment Act and pushed it through Congress. The bill unanimously passed both chambers of Congress in the spring of 1944. President Franklin D. Roosevelt signed it into law on June 22, 1944, just days after the D-day invasion of Normandy.So nearly 6 million returned G.I.s, in the 7 years following the passing of the G.I. Bill, received education in colleges, universities or schools, and this prevented a major supply shock in the labour market. And that means nearly half of returned servicemen (of course, it also inaugurated the era of mass, higher education).
American Legion publicist Jack Cejnar called it ‘the GI Bill of Rights,’ as it offered Federal aid to help veterans adjust to civilian life in the areas of hospitalization, purchase of homes and businesses, and especially, education. This act provided tuition, subsistence, books and supplies, equipment, and counseling services for veterans to continue their education in school or college. Within the following 7 years, approximately 8 million veterans received educational benefits. Under the act, approximately 2,300,000 attended colleges and universities, 3,500,000 received school training, and 3,400,000 received on-the-job training. The number of degrees awarded by U.S. colleges and universities more than doubled between 1940 and 1950, and the percentage of Americans with bachelor degrees, or advanced degrees, rose from 4.6 percent in 1945 to 25 percent a half-century later.”
Instead of some 12 million men looking for work, the figure was reduced to about 6 million, and the investment boom after 1945 was capable of absorbing this level of labour. But would the private economy after 1945 have been able to employ some 12 million men? I doubt it. I suspect there would have been an unemployment problem in the absence of the G.I. Bill.
Furthermore, the welfare provisions of the G.I. Bill had a significant effect on economic activity, not only in terms of placing a floor on the income of returned men, but also by maintaining demand for goods and services while they were undertaking education programs.
Adams, D. K. 1967. America in the Twentieth Century: A Study of the United States Since 1917. Cambridge U.P, London.