Needed: More Jobs

The nation's most pressing domestic economic problem--both immediate and long-range--is the rising rate of unemployment. Last week the immediate problem was starkly emphasized when the Labor Department added nine more major industrial areas to those with "substantial" unemployment, bringing the total to 51 of the nation's 150 biggest industrial areas. President Eisenhower was reported "concerned" over the high U.S. unemployment rate, which is now more than 6% of the labor force.

The paradox about unemployment is that it is likely to get worse even when employment continues to hold up well. This week the Labor Department announced that employment declined 300,000 in November to 67.2 million, considerably less than the seasonal November decline of about 700,000 in the previous two years. Despite the decline, employment was at a record high for the month. But unemployment in November rose 450,000 to 4,000,000, because of layoffs in agriculture and construction, more than canceling out the advantage of the less-than-seasonal decline in employment. Prospects are that unemployment may rise to 5,000,000 in the next few months.

Getting the Figure. Partly as a result of the paradox, questions were raised about the accuracy of the statistics. To get them, the Census Bureau makes a monthly sampling of 35,000 households in 330 areas specially selected to conform with national economic and population patterns. Interviewers check 75,000 to 80,000 people, about one-thousandth of the labor force. To everyone over 14 in each household they put several questions. The first: "What did you do most of the week?" If the answer is "worked," the interviewer goes no farther. If it is "nothing," the interviewer presses: "Did you work at all?" If the answer is still no, he asks: "Did you look for work?" He marks down as unemployed those who answer yes. The figures are fed into a Univac computer that, using prepared formulas, estimates the total of unemployment.

Many economists believe that the sample is too small to represent the real situation in unemployment and is subject to error. Samplers themselves concede that the range of their potential error is about 120,000 people. One trouble is that when the husband is laid off, the wife and often a son or daughter start searching for work to help out. Result: where only one has actually lost his job, three are registered as unemployed. Nonetheless, the statistics do show the national trend--and the trend is not encouraging.

Rising Tide. The long-term worry is the fact that after each of the last two recessions the unemployment rate has never returned to its former lower levels. From a low unemployment rate of 2.6% during the Korean war, unemployment stuck at 4% after the 1954 recession, as the labor force rose by almost 1,000,000 more than employment between mid-1953 and mid-1955. During the 1957-58 recession, the labor force rose 700,000 more than employment, and unemployment never again fell to the 4% prerecession level.

The problem will grow worse in the future, unless the economy creates jobs at a faster rate. Unemployment has been held down to some extent by the small rise in the labor force between 1957 and 1959 (due to a lower birth rate during the Depression). But the breathing spell is over: huge numbers of World War II babies are now coming of age and entering the labor force. During the last year, the labor force has risen at an annual rate of about 1,100,000 while employment rose by only some 800,000. In the next twelve months, the number of persons of working age will increase by 3,000,000--and about half of them will seek work.

During the '60s, 26 million new workers are expected to enter the labor force. Just to hold its own against this rising tide, the U.S. will need to create about 3,000,000 new jobs in the next two years.

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