Continued Unemployment

Of all the recession's problems, the one that has shown the least statistical improvement is unemployment. New figures from the Labor Department last week reported substantial unemployment (6% or more) in 74 cities during March, down from 76 cities in January but worse than January last year. When the overall March unemployment figures are released this week, they will probably show a 300,000 reduction in unemployment, to about 4,400,000. Seasonally adjusted, the figure is still about 6% of the labor force, and it leads economists to wonder if perhaps they should take a new reading on what is "normal" unemployment.

The percentage everyone talks about--and aims at--is no more than 4% unemployed. But now top administration economists say the nation faces a real possibility of 5% to 5 1/2% unemployed as one of the new conditions of the changing economy. They see basic structural changes in the labor picture caused by increased automation, corporate decentralization, labor-force immobility, and the surge of new workers from the postwar baby crop. It is still too early to be certain. Yet the labor market has been relatively stable over the past several months, with only modest improvement, and administration economists do not see much prospect of unemployment dropping below the 5 1/2% line until late fall, or possibly early next year.

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