Back to Work-But Only in Trickles

Apart from inflation, most of the standard indicators of the U.S. economy are showing heartening, and at times surprising strength. For example, July sales of big-ticket appliances were the strongest since last fall, and housing starts during the month surged 14% ahead of June. Government statisticians last week concluded that real output of all goods and services in the second quarter actually rose at an annual rate of 1.6%, rather than falling at a .3% pace as first estimated--an indication that the worst recession in 30 years ended somewhat earlier than had been thought. Superficially, the all-important unemployment rate fits this pattern: it does not start to drop until several months after a recession bottoms out, but it unexpectedly fell from 9.2% in May to 8.4% in July. Most economists, though, do not believe that the back-to-work trend will continue at that speed.

Indeed, the Ford Administration expects the August unemployment rate, which will be reported next week, to show at least a slight rise over July. Production just has not bounced back rapidly enough yet to reduce unemployment as swiftly as the figures have been showing; if the July jobless rate of 8.4% was a true measure, then the May peak of 9.2% probably was too high, a reflection of the difficulty of statistically accounting for students entering the job market. The decline in the unemployment rate after August is expected to be painfully slow and to remain at or near 8% well into next year, as President Ford campaigns for election. Democratic Economist Walter Heller foresees joblessness still around 8.5% even at the end of this year, possibly tapering to 7.5% or 7% by the end of 1976. "I think people are underestimating the unemployment problem, which is that there is a huge underemployment problem," he says. "There is a bad fit between training and jobs."

Even so, the upturn has come; there are definite signs that Americans are going back to work, if not in droves, then at least in trickles. Besides the drop in the jobless rate, the factory work week lengthened in July, and the number of people working rose by 676,000 to 85,078,000. During the last three months, 51% of 172 nonagricultural industries increased payrolls, v. only 14% in December, January and February.

Layoffs Reduced. In the bellwether auto industry, where sales have been showing erratic improvement, Ford Motor Co. President Lee Iacocca said last week that the number of Ford workers on indefinite layoffs had been reduced to 14,800 from a February peak of 35,000. He added: "We hope to get it down to zero as soon as the market recovers. Most will be back by next year." To economists in Michigan, that was industry pep talk. They note that Michigan's slight July improvement in unemployment (down to 14.2% from 15% in June) was due in part to youths who stopped looking for work and thus were not counted among the unemployed.

For those who have not stopped looking, some jobs have opened up around the country. In Georgia, where unemployment is 10.1%, textile mills are running at 90% of capacity and employing 200,000 people. In Chicago, Inland Steel, the nation's fourth largest producer, last week began hiring up to 150 new employees a week to help fill increased September orders. U.S. Steel's wire plant in Joliet has recalled 100 people since June, though 300 are still laid off. California's overall unemployment picture remains bleak (10.1% in July), but there has been improvement in hiring for the auto industry and home building.

Older is Better. What little rehiring there has been has produced some distinctive patterns in executive ranks. In a departure from the 1960s, a few companies appear to be preferring older bosses, thus conservatively opting for experienced heads over younger, and possibly more dazzling tyros. Reports Manhattan Executive Recruiter Thomas Amory: "Companies are not too eager to hire 30-to 37-year-olds, and are now looking for those 35 to 40 and even 50 years old." While demand for all types of executives has been rising slowly since March, that for financial and accounting experts has surged sharply (up 25% since last fall), reflecting many companies' needs for cost-cutting skills.

Recent college graduates with technical degrees are faring better than liberal arts graduates who are qualified for jobs that are not available. Jack Shingleton, placement director at Michigan State, estimates that 15% of that school's June graduating class will be underemployed at summer's end. Women and blacks, among the groups with the highest unemployment, appear to be benefiting. Says a Boston recruiter: "When [clients] hire, they hire a female or a minority-group member. It's astonishing in this economy."

For the lucky workers who are once again receiving paychecks, there is relief and renewed hope. Says William Goodwyn Jr., himself an executive recruiter for TRW Inc. in Los Angeles, who was out of work for a year: "Each morning I still wake up and congratulate myself." Ford Welder Bill Lauer, 19, recalled last month after seven months, spent the equivalent of at least two of his first weekly paychecks on a $522 diamond ring for his fiancee.

But for every happy rehiree, several people remain jobless. "I'm overworked. I've already put an three weeks so far this year," jokes Jim Klein. He was laid off by Continental Can Co. in Bedford Park, Ill., last November after 24 years on the job, and then was recalled in February, July and August--for a week each time, earning a grand total of $745. He sees no use looking for a job elsewhere: "Employers don't even want to talk to you when they hear you have 25 years' seniority somewhere else. They figure you'll quit when you finally get called back." The wait for a new job is getting longer. Of the 7.8 million jobless Americans, 1.4 million have been out of work for at least six months.

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