The Growing Specter of Unemployment

The U.S. was built on the work ethic, and for all the evolution in lifestyles, the first identification for most Americans remains what they do, the job they hold. There are many monetary cushions, from unemployment insurance to food stamps, to aid the jobless in today's economy, but there is no balm for the sense of anomie and loss felt by an able man or woman whose skills are no longer wanted anywhere. The memory cells of the nation are still etched with the widespread corrosion of self-confidence that occurred in the Great Depression, and last week's startling disclosure that unemployment reached 8.2% of the American work force in January stirred many memories uneasily. Some 7,529,000 Americans who wanted to work were jobless last month, the highest percentage of the work force since 1941. Tens of thousands more will surely be joining them in the months ahead.

No segment of the nation was immune, though some, such as teen-agers (at 20.8% unemployed and nonwhite at 13.4%), were hurt far more than others (see chart next page). For President Gerald Ford, whose ambitious economic program was already in jeopardy, the impact of the new unemployment figures was little short of devastating.

First Concern. Since last August, the month that he took office, the number of people out of work has increased more rapidly than in any other five-month period on record. It seemed hardly credible that only 15 months ago the unemployment rate stood at a reasonably tolerable 4.6%. The news that it had cracked 8%, and added a few points for good measure, was enough to stir yet another political uproar and add fierceness to the battle already being waged over Ford's first budget. Senator Edward Kennedy was quick to call the figures "shocking new evidence of the total bankruptcy of the Ford Administration's economic policy." Senate Minority Leader Hugh Scott shared the clear unease of Republicans when he declared: "We are going to do something about it. That's really the first order of concern."

The unemployment statistics climaxed a week of dismal economic news. In his budget message to Congress (see ECONOMY & BUSINESS), President Ford revealed that high rates of inflation and unemployment would last well into 1976, when he plans to run for election. Prices, he acknowledged, would still be rising more than 7% a year, and the jobless rate would still hover around 7 3/4%. The figures jolted both parties. Senator Hubert Humphrey found it "unbelievable" that Ford could propose record deficits and not "put America back to work." Calling political prospects "pretty scary," G.O.P. Senator Robert Dole, who barely won re-election in Kansas last fall amid the general debacle for the G.O.P., commented wryly: "It may turn out that 1974 was the good year for a Republican to be on the ballot."

In what was probably the first of many labor rallies to come in the nation's capital, some 10,000 unemployed auto workers, mainly from the Midwest, traveled to Washington on chartered buses. In the National Guard armory, they cheered wildly when Leonard Woodcock, president of the United Auto Workers, roared into the microphone: "What the hell is going on?" Unless relief was fast in coming, he promised, he will bring 200,000 unemployed workers into Washington in the spring.

Bad News. The surge of bad news prodded Congress into acting faster on the economy. With little wrangling, the House Ways and Means Committee spent the week preparing a bill that provides for a total tax cut of $20.2 billion --$4.2 billion more than Ford had sought. The House measure gives greater tax breaks to lower-income groups than the President had proposed. While Ford had asked for a 12% rebate on 1974 taxes, with a ceiling of $1,000 per individual, the committee called for a 10% rebate with a maximum return of $200. Ways and Means approved a permanent cut in personal income taxes by increasing the minimum standard deduction, or low-income allowance, from $1,300 to $1,900 for single persons and to $2,500 for couples filing jointly. Along with the $750 personal exemption, the new minimums eliminate federal taxes for almost everybody below the official poverty line of $4,540 for a nonfarm family of four. In addition, the maximum standard deduction was raised to $2,500 for individuals and $3,000 for couples, and a 5% refundable tax credit was provided for low-income individuals.

The committee also approved an increase in the business-investment tax credit, from 4% to 10% for utilities and from 7% to 10% for other industries. The President had requested a hike to 12%. It also lowered the corporate income tax by applying the 22% tax rate to the first $50,000 of profits, instead of only the first $25,000. Intended mainly to give relief to small businesses, this tax cut will return a maximum of $6,500 to a single corporation.

In its concern over unemployment, Congress was prepared to brush aside Ford's objections to an even larger federal deficit. Spending programs began to be cranked up. A bipartisan group of ten Senators, including Hugh Scott, introduced a bill to expand public service employment by 1 million jobs, at an annual cost of about $7.8 billion. In a joint statement, two of the cosponsors, G.O.P. Senator Jacob Javits and Democrat Harrison Williams, declared: "The nation is moving at alarming speed toward Depression-like levels of unemployment in terms of absolute numbers--the truly human measure." By that they mean that given the much larger U.S. population today, the number of individual

Americans out of work could reach the 12,830,000 unemployed at the pit of the Great Depression.

By 374 to 38, the House voted to prevent an increase in the cost of food stamps for the poor--a change in regulations urged by Ford that would have saved the Government $650 million a year. Then the Senate passed the same bill by a lopsided vote of 76 to 8. The cost of the controversial program has zoomed from about half a billion in 1970 to a projected $4 billion in 1975. But neither Democrats nor most Republicans were in a mood to raise the price of food for the underprivileged and unemployed in a recession year.

With the economy in more precarious shape than ever, the urgency of the President's energy policy was receding. Upon reflection, many members of Congress, as well as many economists, considered that it made no sense to contribute to the nation's chronic inflation by prodding up the cost of oil in an effort to reduce consumption. The House made swift work of Ford's first-stage $1-per-bbl. increase in the tariff on imported oil, voting 309 to 114 to suspend the increase for 90 days. The overwhelming yea vote in the House is bound to influence the outcome in the Senate. There are enough votes to pass the bill, but it is less certain whether there are enough to override a presidential veto.

Full Stomach. The President fared little better with the public than he did with Congress. He and top aides spent two days in Atlanta, the first of several scheduled visits to parts of the country to promote the economic and energy programs. There was little personal animosity toward the President but plenty of objections to his policies. His aides tried to reassure an audience ranging from representatives of the Chamber of Commerce to the National Organization for Women. But the Southerners were less interested in macroeconomics than the microeconomics of their own daily lives. Felker Ward Jr., a black lawyer from Atlanta, told Economic Aide L. William Seidman: "I haven't heard anything that reflects an awareness about the impact of your decisions on individuals." A black woman joined the attack: "To be happy, you've got to have a full stomach. You can't enjoy this democracy if you're hungry." With no comfort to offer, Seidman threw up his hands in exasperation.

Reeling from the onslaught of criticism, the White House did its best to prop up its battered policies. Ford announced that he would nominate Harvard Economist and labor expert John T. Dunlop, onetime director of the Cost of Living Council, to succeed the ineffectual Peter Brennan as Secretary of Labor. Staffers revealed that the statistics in Ford's economic projections were perhaps a little gloomier than they need to have been. Alan Greenspan, chairman of the Council of Economic Advisers and renowned for a nubbly candor, is more optimistic than his statistics would suggest; moreover, he insisted that Ford's policies are not "frozen and unalterable." If conditions change, so will the policies.

Ford's own future was shaken by the precipitously declining economy. The latest Harris poll shows a 10% drop in the public approval of Ford. Now 60% of the American people feel that he is not performing well in office. There are ominous rumbles of rebellion in Republican ranks. Lyn Nofziger, a political consultant who has worked for Ronald Reagan, thinks that the former Governor's chances for the G.O.P. presidential nomination will be "vastly improved" if Ford's forecast is "anywhere near right." On the strength of his performance on the televised Watergate hearings, Tennessee Senator Howard Baker has said that he may enter the presidential primaries, no matter what happens to the economy or Ford.

Will Run. But Ford let it be known that he would hardly surrender his office without a fight. In the past he has suggested that his decision to run for election would depend on the condition of the economy. But that condition was waived when Nessen offered a clarification. "Somehow the word has gotten around that if the economy is good, he will run, but if the economy is bad, he won't run. That isn't true." Would he then run regardless of the shape of the economy? "That's exactly right." Confronted like no President before him with the twin demons of inflation and recession, and lacking the support of a popular mandate, Ford has maintained his civility and self-assurance under sustained fire. Those qualities, along with his resourcefulness, will be tested to the utmost in the grim months ahead.

This file is automatically generated by a robot program, so viewer discretion is required.