Can We Lick Unemployment?:

...To begin with, it is questionable whether automation is a new phenomenon or simply an extension of a tendency as old as industrialization to substitute machines first for human muscles and next for human attention...

...At each successive peak unemployment was higher than at the preceding peak...

...Certainly the statistics which are currently available contain little occasion for cheer...

...The full results are far from in, but some of the expected problems have already manifested themselves...

...Afflicted communities crave new firms in new industries...

...It is a general problem...

...The voluntary changes of jobs which define frictional unemployment may even be a sign that there are jobs to change to...

...Is the elusive hard core of unemployment to be at last tracked down among factory workers...

...3) Automation has comparatively little to do with either the size or the composition of unemployment...

...Since 1929, unemployment has dropped below 4 per cent in only nine years out of 30, six of them during World War II and the period of frenetic postwar demand...

...Has unemployment among women, aged workers and manufacturing employes increased more rapidly than it has for other categories of the labor force...

...How fares then the comfortable argument that retraining, relocation of industry, and specialized programs of community aid will best alleviate unemployment...

...The story that these statistics tell is both simple and alarming...

...Finally, some of the unemployed are the victims of what William McChesney Martin, Chairman of the Board of Governors of the Federal Reserve System, has termed structural changes...

...This is less than the average increase for all workers...

...It takes something like a fullscale boom to insure high, stable employment for the members of these groups...

...4) Retraining and other devices which promote reallocations of human and non-human resources in themselves possess little promise of solving unemployment problems in general...

...If technology takes unexpected directions and if consumers substitute some products for others, jobs vanish and skills lose their justification...

...The structural portion of what remains can almost be looked at as the necessary price of economic progress...

...Since such alterations are normal concomitants of economic progress, the only relevant question is whether the pace of technological innovation has been more rapid than usual...

...the loss of passenger traffic by railroads to airlines, and the many places where glass and plastics fill the roles which were once prerogatives of steel...

...From cycle to cycle, rates of unemployment rose...

...Unemployment in manufacturing increased overall by 24 per cent...

...As Professor Hart of Columbia University pointed out in a recent letter to the New York Times, retraining depends upon our ability to identify the skills which are in short supply, and the industries which should be encouraged to expand and relocate...

...Social equity justifies the payment of living and moving allowances to workers who participate in retraining programs...

...The recent history of the American economy does not suggest that the tools of fiscal policy have suddenly lost their efficacy...

...Yet, the problem of unemployment will not really go away quietly...

...In fact, the highest rate of increase in unemployment is to be found where this theory would expect it least: among workers 25-34 years old where the rate was 46 per cent, and among workers 35-44 years with a rate of 36 per cent...

...They finally won the hearts of many respectable economists in Keynesian versions which stressed the likelihood of economic equilibrium at lower levels of activity than full employment required...

...This is to say that the very noticeable reluctance of both the Eisenhower and the Kennedy administrations to employ the fiscal weapons of public spending and tax reduction are based either on conservatism of a rather primitive variety or a misunderstanding of the problem...

...Of 13 men who completed a meat cutting course in January, only four found jobs as meat cutters...

...It is probably a fair statement that a prosperous economy could readily absorb the workers displaced by technology...

...As a part of its work, the committee undertook to retrain 53 of the workers who were displaced by the closing of Armour's plant in Oklahoma City...

...During the 45 months during which the major indicators of business activity continued to move upward, unemployment fell below 5 per cent during 42 months, below 4 per cent during 35 months, and below 3 per cent during 11 months...

...Very badly indeed...

...There is much reassuring nourishment in arguments of this kind...

...During the eight Eisenhower years, unemployment dipped below 4 per cent only in 1953, a year still dominated by the Korean War...

...2) If it is used to explain away high unemployment, emphasis upon the hard core of unemployment—the elderly, the illtrained, and the members of minorities—is decidedly misplaced...

...Employment and unemployment are not homogenous entities...

...In 34 of these months, unemployment dipped below 5 per cent...

...It is true, too, that social rather than economic reasons explain a certain amount of unemployment...

...A convenient way of substantiating the first generalization is a comparison of the behavior of unemployment during the last three upswings in general business activity...

...Insensibly that percentage has edged upward...

...Obviously the problem can be defined out of existence if we continue to raise the percentage of unemployment with which we are willing to live...

...It is possible to read the economic history of the last decade in the light of past speculations about the capacity of industrial societies fully to employ their citizens...

...In the face of the protracted sluggishness of the American economy, the conclusions, if not the reasoning, of the secular stagnationists are beginning to assume a new plausibility...

...Business inventiveness and consumer restlessness have been twin props beneath the American economy in the past...

...Again the answer is no...

...The first concerns the character of unemployment...

...Seasonal unemployment also has comparatively little to do with cyclical or secular events...

...But it never reached 3 per cent as its predecessor did...

...In the middle of February 5.7 million persons were unemployed—the largest total in two decades...

...At the peak of this cycle unemployment was the less satisfactory 4.2 per cent...

...For youths of 14-19, unemployment rose 24 per cent, the same percentage as for men over 65...

...In the past, though probably not in the present, women and the elderly encountered discriminatory layoffs during bad times...

...Equally dubious is the proposition that this tendency has accelerated in the last ten years...

...If the discussion thus far bears conviction, it implies several disquieting conclusions...

...Undoubtedly some portion of this persistent unemployment was unavoidable...

...It is unlikely that retrained workers will find jobs which match the wages or the amenities of the ones from which they were displaced...

...The tendency is unmistakable and the facts are inconsistent with complacency about the performance of the American economy...

...So they remain in the present...

...Even durable goods manufacturing, at 29 per cent, did a little better than the average...

...Two are janitors, one works in a warehouse and six are still unemployed...

...If frictional unemployment were zero, techniques would be fixed, consumer demand stable and the economy stagnant...

...From other standpoints also, retraining is a solution of only limited validity...

...To the credit of all concerned, Armour, the United Packinghouse Workers Union and the Amalgamated Meat Cutters Union agreed last August upon a program of study, investigation and action designed to cushion the shock of mechanical innovation and plant relocation...

...Reluctance to employ the fiscal weapons of public spending and tax reduction is based either on conservatism or a misunderstanding of the problem' One of the unexpected effects of the current recession is a certain amount of public education in the collection, meaning and interpretation of employment statistics...

...During any general contraction in demand, Negroes, Puerto Ricans and the other minorities suffer inordinately...

...If the hands that grasp them put them to use, we shall require fewer disquisitions on the statistical measures of unemployment and the characteristics of the labor market...

...Apparently the secular stagnationists were put to rout by soaring birth rates, rapid innovation and major wars...

...But male unemployment rose by 32 per cent and female unemployment by only 26 per cent, a reversal of the "hardcore" theorist's expectation...

...Why worry...

...So liberal an economist as Walter Heller, Chairman of the President's Council of Economic Advisers, accepts 4 per cent as a reasonable target of economic policy...

...Insofar as unemployment partakes of this character, it is argued, the appropriate remedial action appears to be specific rather than general...

...The circumstances do not reassure, they simply shift the burden from the economic to the political and the social...

...By 1960, it had increased to 5.6 per cent, or about three-tenths...

...Are age and sex valid criteria...

...Immediately after World War II, reputable economists considered 2.5-3 per cent unemployment a reasonable allowance for seasonal and frictional influences...

...Lower pay, inferior status, uncertainty about employment and doubt about the selection of new skill and new job are difficult to avoid...

...By its nature seasonal unemployment is an annual, frequently a natural phenomenon...

...As years which contain cyclical peaks and relatively similar percentages of expansion and contraction in business activity, 1957 and 1960 can be fairly compared...

...Robert Lekachman, associate professor of economics at Barnard College, regularly contributes to these pages...

...Larger rates implied cyclical or "secular" elements in the total...

...Because it is a general problem, a second generalization is inevitable, the best approaches to its solution are general...

...What actually happened destroys this hypothesis...

...The next cycle reached its peak in July 1957 as the culmination of 35 months of economic expansion...

...Yet, there is little to demonstrate that the character of the American economy has altered in such a way since 1946 as to justify these ever more generous allowances for unemployment...

...Martin and others have been emphatic in their judgment that tax cuts and Federal spending programs are likely to inflate prices without increasing employment...

...Even this is a fairly optimistic position...

...This complacency reinforces itself with some statistical shiftiness about the amount of unemployment which is acceptable...

...Our schemes tend to the abstract and the hypothetical when economic activity is slack for the simple reason that shortages cannot be identified when the demand for nearly everything is deficient...

...Thus vigorous workers at the height of their energies lost jobs while the young and untrained, and the elderly and superannuated retained them...

...It cannot properly be argued away as the somewhat fortuitous total of seasonal, structural, frictional and accidental components...

...Some of those unemployed await the changes in American mores and laws which will in time lead to equal treatment of all citizens in employment as well as in schools and housing...

...In three of them, it was below 4 per cent...

...A recent case exemplifies the point...

...No doubt, also, the automatic control devices which today mind the machines men used to tend displace their thousands annually...

...More conservative analysts calmly contemplate 5 per cent...

...The record of the recent past is spotty at best...

...So much unemployment is unavoidably seasonal or Junctional...

...Slack," the "fifth season" made famous by Menasha Skulnik on Broadway, has always characterized the garment trades...

...Was unemployment an affliction of the very young and the very old...

...On the other hand, wholesale and retail trade with an increase of 31 per cent, and finance, insurance and real estate with an increase of 33 per cent all fared worse than manufacturing and slightly worse than the national average...

...But it is also true that during cyclical downturns seasonal layoffs are growing longer and larger, and rehiring more reluctant and limited...

...In only one of these months did unemployment fall below 5 per cent and it never dropped lower than 4 per cent...

...Since the scene of automation—factory employment, has fared no worse than the rest of the economy, the claims of automation are exaggerated...

...As a result of that worry, why initiate large spending programs or substantial tax cuts, especially when their impact will be to promote inflationary wage bargains, justify price increases in the concentrated industries where oligopoly reigns and complicate our balance of payments difficulties...

...Nearly a million of these men and women had been jobless over 15 weeks and 674,000 among them had been out of work for more than six months...

...It is possible that many fact-minded Americans derive a measure of pleasure in the contemplation of masses of facts even when most of them are depressing...

...Which brings us to the convenient doctrine that spectacular advances in automation are at the root of unemployment...

...At the cycle's peak in July of 1953, unemployment had fallen to 2.7 per cent...

...Finally, there is the cycle which reached its peak in May 1960, after 25 months of expansion...

...And who can oppose progress...

...Armour committed itself to an expenditure of $500,000 in support of the committee established to handle the problem...

...If this were the case then factory unemployment should have risen by more than the average of 30 per cent...

...Well, average overall unemployment in 1957 was 4.3 per cent...

...The examples are numerous—the substitution of oil for coal, and now gas for oil...

...In the building trades, weather powerfully influences the distribution of employment...

...Workers urgently need retraining...

...July 1953 is commonly accepted as the peak of a business cycle expansion which began in November 1948...

...The American secular stagnationist version of this doctrine held that the forces of expansion had slowed so much that the outlook for full employment was dim...

...These rates in themselves offer some indication that the American economy can function at rates of unemployment substantially lower than the 4-5 per cent frequently advanced in recent discussions...

...How sound is the argument of Martin and others that unemployment is a hard-core proposition caused by a number of non-cyclieal and non-secular events...

...If this argument is valid, it should pass the tests which the Council of Economic Advisers recently administered to it...

...These began with Malthus's apprehensions of general glut at the outset of the 19th century and continued in various versions in the writings of Sismondi, Marx and Hobson later in that century...

...As a percentage of the labor force, the 6.8 per cent without jobs was higher than at any time since 1958...

...Four general statements sketch its severity: (1) As a recent trend, unemployment is getting worse rather than better...