Unemployment Uproar

In Washington last week, the calculating machines in the U.S. Bureau of Labor Statistics clanked out a figure that looked big and black: between mid-December and mid-January, nonfarm employment dropped by two million jobs. Examining the statistics from individual cities, the Labor Department promptly listed Detroit and Toledo as "distress" areas, i.e., entitled to special consideration in the placing of Government contracts. Across the U.S., politicians, journalists, labor leaders, economists and businessmen were arguing a pressing question: Just how bad is unemployment in the U.S.?

Far from Critical. After reaching a postwar low in October 1953, the number of unemployed began to rise sharply in

November. The trend was sharp in the farm-equipment industry, which had been stung by three years of declining farm income. Late last year it reached the automobile industry. As U.S. military expenditures began to decline, there were layoffs at plants engaged in defense work. By last month the number of unemployed was officially placed at 2,300,000, compared to 1,200,000 at October's low point.

Every year, after the Christmas rush ends and winter closes down much out door work, there is a seasonal decrease in employment. But this year's change was more than seasonal. There was little new unemployment, however, outside of manufacturing. In nonmanufacturing jobs, the number of workers was the highest in any January on record. In wholesale and retail trade, employment was a full 140,000 above January, 1953.

Behind the new unemployment appeared to be an economic slump much like the one that the economy weathered easily in 1949-50. Up to this point, however, the current downturn is not so serious as that of four years ago. In mid-January of this year, 47.7 million were still working in nonfarm jobs, the highest record ever for that month, except January 1953-The total number of unemployed is still far below the 4,700,000 reached in February 1950. In short, the situation is far from critical.

An Old Label. Despite the favorable comparison to 1949-50, there is much more political talk about the present situation. Chief reason: Democrats hope to use the slump to tie the old "Depression" label on the first Republican Administration in 20 years.

In Detroit, C.I.O. President Walter Reuther, who wants a Democratic Congress elected in November and also wants a guaranteed annual wage written into new labor contracts, has been loudly crying crisis. Last week Guy Nunn, a radio commentator sponsored by Reuther's United Automobile Workers, spoke of "bread lines," "soup kitchens," and "long lines of unemployed" in Detroit. Pressed to point them out, Nunn could find only one--at the Capuchin Charity Guild, where for years the monks have given daily handouts for anyone who shows up.

This week Dave Beck, president of the A.F.L. Teamsters union, declared that "the auto industry is in the worst shape it has been in 30 years." He said anyone with cash in hand can walk into a new-car salesroom and buy an auto at up to 30% off list price, and many dealers are "near bankruptcy." The country, said Beck flatly, is headed for a serious depression. Said he: "I define a recession as when your neighbor loses his job, but a depression is when you lose your own."

The facts of employment in the automobile industry do not bear out the cries of doom. Of a total labor force of 1,510,000 in the Detroit area, 121,000 are out of jobs. This is less than the level accepted as "normal" during the last eight years. Ford and General Motors are both employing more men today than a year ago. Chrysler employment is down (as is Studebaker at South Bend); Packard has been retooling. Auto sales have shown signs of an upward turn.

Barnstorming through Illinois last week, opening his campaign for re-election to the U.S. Senate, Democrat Paul Douglas was raising his voice in chorus with Reuther and Beck. Said he: "The Republicans call it a 'rolling readjustment,' a 'slight contraction.' I don't know who they think they're fooling . . . How well

1 remember the terrible Depression of 1930-32 . . ." Douglas did not mention the fact that, in 1949, President Harry Truman and Truman Economist Leon Keyserling called a worse slump "an inevitable adjustment," "a transition period," "a moderate decline."

"No Reason for Alarm." To the Eisenhower Administration's employment experts, the drop was an expected result of the transition from a wartime to a peacetime economy. They saw "no reason for alarm." Last week they were following closely the changes in the rate at which unemployment is increasing. The rate of rise in new unemployment-insurance claims has been slowed during the last four computed weeks. In the week ending Feb. 6, the total number of claims rose 24,000, only 'one-third to one-fourth as much as it had been rising in earlier weeks. To the economists, this was a good sign that the trend is running out.

This month the Administration econo mists expect to report an unemployment figure considerably above January's 2,300,000, but they expect the figure to level off and to average about 2,600,000 for the first half of 1954. They foresee increased employment before mid-year in nearly all lines now seriously affected, including automobiles.

If the current shift in the economy continues to follow the pattern of 1949-50, the forecasters of an upturn in employment will be right. After that slump the economy turned comfortably upward in early 1950, before the Korean war shot it out of bounds by creating labor shortage and inflation.

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