The Hard-Core Million

By most measures, U.S. business last week was good and getting better. Industrial production and personal income were running at alltime highs. From Commerce Department statisticians came news that December had been a record month for the nation's retailers, who rang up more than $20 billion in Christmas sales. Automakers, beaming over three straight months of record business that pushed 1962 car sales to the second highest level in history (see box), were working some plants on six-day overtime schedules in the expectation that 1963 will be very nearly as good as last year.

On Wall Street, where the Dow-Jones industrial average has climbed 25 points to 671.60 since the year began, brokers happily watched small investors returning to the market in sizable numbers for the first time since the crash last spring. In its latest quarterly consumer poll, the University of Michigan reported that 39% of the nation's families are earning more than they were a year ago, and that 20% of them expect to buy new or used cars in 1963. But amidst all these euphoric signs, there is one troubling problem which afflicts a minority--but too big a minority --of Americans. Said the University of Michigan survey: "Worries, especially about unemployment, are widespread."

The 5% Problem. Unemployment in the U.S. has been frozen at 5% or more of the labor force for almost 2 1/2 years, and shows few signs of melting. Last week the Labor Department reported that in December the rate sank from 5.8% to 5.6%--but this is the petty kind of statistical shift that is explained by the cold weather. In absolute terms, the number of Americans at work dropped from 68 million in November to 67.6 million in December.

A good many unionists, and a few of their economists, attribute the persistent phenomenon of unemployment in prosperity to the onrush of automation. Automation does account for dislocations: over the past three years, industrial production in the U.S. has risen by an average of 3.8%, but automation helped increase the productivity of U.S. workers by 2.7% and thus largely removed need for new hiring. But the real trouble seems to be that the U.S. economy is no longer growing very fast. If the U.S. could increase the productivity of U.S. workers by gross national product from 2% to the Common Market average of about 6%, the number of new jobs created would more than offset the effects of automation.

The Big Ifs. Critics often suggest that U.S. Labor Department figures on U.S. unemployment are wrongly calculated. By counting workers on temporary layoffs, people who have quit their jobs in search of higher pay and teen-agers looking for holiday work, the Labor Department arrives at an unemployment rate far higher than it would be if the U.S. switched to the European system of counting only the hard core of long-unemployed adults. But the number of adult U.S. men who have been out of work for 15 weeks or more still stands at 1,000,000. And the figures might be even larger had not so many potentially employable Americans given up looking for jobs in the past few years. More and more, U.S. youngsters stretch their studies into graduate school, oldsters are retiring early, and working mothers are returning to the kitchen.

As a result of such withdrawals from the labor market, the U.S. work force last year expanded by only 700,000, v. an expected 1,000,000. But this slowdown in the growth of the labor force is unlikely to continue. This year, as the World War II babies hit the labor market, the work force will probably swell by 1,200,000. The increase will come in the age group where unemployment is now highest: among workers aged 20 or less. The percentage of jobless in this group--that is, of young people seeking and not finding work--already runs 12.7%.

This file is automatically generated by a robot program, so reader's discretion is required.