Congress likely to value the costs and benefits such as to be moved to take the steps needed to reach the goal by 1968 or later?"

Tables 2 and 3 are presented as a small exploratory step toward answering these questions. Table 2 deals with occupational differentials; Table 3 looks at unemployment in terms of age, sex, and color. Both tables are constructed in the same way. Let us look first at table 2.

The table contains four sets of three columns each. Three of the sets present actual data for 1953, 1957, and 1963. The first of these years was probably a year of overfull employment, with an overall unemployment rate of 2.9 percent by current definitions (2.5 percent by the definitions then being used); 1957 was the last year in which unemployment was close to 4 percent-1963 is included to reflect the recent and current picture. The fourth set of columns investigates the effect of one pattern of reduced differentials on the overall unemployment rate.

By weighting the unemployment rate in each occupation (col. (a) for each year) by the fraction of the labor force in the occupation (col. (b)), we obtain the contribution of each occupation to the total unemployment rate (col. (3) for each year).

In laying out our multidimensional full-employment target, we have to ask two questions. First, what does past experience suggest as to the lowest unemployment rate that is likely to prevail for the most favored groups under full-employment conditions. Second, how much (and by what means) can we hope to reduce the unemployment rates for the less favored occupations that have existed in past periods of full employment. The fourth set of columns in table 2 suggests one possible set of answers to these questions.

Let us look at the first three lines of column (a). These are the occupational groups with the lowest unemployment rates. The highest unemployment rate for any of these groups in 1953 and 1957 was 1.2 percent. For my full-employment target, I have taken the unemployment rates as they were in 1957 rather than the somewhat lower rates in 1953. For the remaining occupations I have simply made a guess as to how low we might hope to bring down each unemployment rate under a combination of an adequate level of aggregate demand and an expanded and intensive manpower program.

On the whole, my guesses are perhaps on the conservative side. This is suggested by the fact that my target rates are in most cases higher than the rates which actually prevailed in 1953, though lower than those in 1957." My most radical assumption is in reducing the unemployment rate for laborers from 6.1 percent in 1953 and 9.4 percent in 1957 to 5 percent.

Some perspective on the problem of structural differentials can be gained from looking at the three columns for 1957. Note that all but three groups had unemployment rates below 4 percent. The remaining three occupations, with unemployment rates between 5.1 and 9.4 percent, accounted for a bit more than a third of the labor force and for more than half of total unemployment. It is on these three groups, plus those without previous work experience, that our manpower program obviously needs to be concentrated.

A word about those unemployed without previous work experience, for whom the unemployment rate is always 100 percent, no matter how few or many there are in this group. I have simply assumed that this group would constitute about the same percentage of total unemployment as it did in 1957, despite the current upward trend in the share of the labor force made up of young people."

If we now weight our assumed unemployment rates by the share of each occupational group in the total force in 1963, we get each group's contribution to the total unemployment rate, and the latter turns out to be 3.1 percent-or very close to the goal set by the Clark subcommittee. This, then, is one possible occupational pattern by which a 3-percent overall rate could be substantially

43 When employment goals are suggested, they are almost always expressed in terms of the number of persons seeking employment, not in terms of total man-hours lost through unemployment. În 1963, the percentage of total labor time lost through unemployment was reported as 6.4, whereas in terms of persons the unemployment rate was 5.7 percent. A full-fledged employment goal clearly should take account of involuntary part-time unemployment, as was strongly urged by Thomas K. Hitch over a decade ago in "Meaning and Measurment of Full' or Maximum' Employment." Review of Economics and Statistics, vol. 33 (February 1951), pp. 1-11. A 3-percent goal in Conventional terms might represent, say a 3.5-percent goal in terms of man-hours. This is a question which will be investigated further in the larger study on which the present paper represents a progress report.

In general, for the middle range of occupations, I have taken unemployment rates which are about halfway between the 1953 and 1957 rates, after the former have been adjusted upward by about 10 percent to allow for the change in definitions that occurred in 1957.

45 The percentage of total unemployment with no previous work experience was abnormally low in 1953. See my paper, "Has Structural Unemployment Worsened?" in Industrial Relations, vol. 3 (May 1964).

achieved. The reader is invited to explore the effect of alternative occupational patterns on the overall unemployment rate.

Our hypothetical full-employment target was computed using 1963 weights. Applications of the same unemployment rates to the occupational distribution of the labor force that has been projected for 1970 yields a slightly lower unemployment rate, about 3 percent." (The detailed figures yielding this result are not presented here.) This result arises, of course, because of the expected continued shift away from the relatively unskilled occupations having the highest unemployment rates.

Let us now turn to table 3, the upper part of which presents a breakdown by age and sex and the lower part of which classifies the labor force by color and sex. The four sets of columns are to be interpreted exactly as in table 2. And the hypothetical target unemployment rates in column (a) of the last set of columns were estimated in the same fashion as in table 2. Our targets for the most favored groups (age 25 and over and white workers) represent a compromise between actual experience in 1953 and in 1957. We have then made some guesses as to how much we can hope to reduce unemployment differentials for the younger age groups and nonwhites. The assumptions underlying the nonwhite unemployment rates can be simply put: it is impossible in the foreseeable future to eliminate the nonwhite differential entirely, but it may be possible to bring the nonwhite rate down to 4 percent, a level which was approached in 1953. These assumptions yield a nonwhite-white ratio of unemployment rates of 1.33, compared to about 1.8 in 1953 and about 2 in 1957 (and 2.1 in 1963).

48

The assumptions embodied in table 2 yield overall unemployment rates of 3.2 percent (for the age-sex breakdown) and 3.1 percent (for the set of color-sex unemployment rates). These are virtually the same as the overall rate derived from the occupational distribution. Apparently our assumptions underlying the three sets of calculations are at least mutually consistent.

Let me emphasize that these calculations are not to be taken either as predictions or as recommendations. They are merely intended to help put in perspective what is implied in setting overall employment targets in the United States and to examine some of the implications of raising the employment target. These implications will be investigated further in the larger study on which this paper is no more than a preliminary report.

TABLE 1.-Percent of civilian labor force unemployed in selected European countries and the United States, 1950–62 1

1 Source: Manpower Statistics, 1950-62, Organization for Economic Cooperation and Development (Paris, 1963), except for Swedish data for 1950 to 1959, which are from International Labor Review, Statistical Supplement, vol. LXX, November 1954, p. 98, and Yearbook of Labour Statistics, 1962, International Labour Office (Geneva, 1962), table 10. The horizontal lines in the Swedish column indicate minor changes in the method of compiling the statistics.

The figures in parentheses for these years are unemployment rates revised to correspond to American definitions. They are taken from Robert J. Myers, "Unemployment in Western Europe and the United States," A. M. Ross (ed.), Unemployment in the American Economy, p. 174.

Revised figures not available.

46 The 1970 occupational projection was taken from Manpower Report of the President, March 1964 (Washington, Government Printing Office, 1964), p. 244.

47 It is to be remembered that the 1953 figures are based on an old set of definitions which gave an overall rate of 2.5 percent, whereas present definitions would have yielded a rate of 2.9 percent. Presumably, by current definitions, the nonwhite rate in 1953 (both sexes combined) was of the order of 4.5 percent.

"Weighting our assumed unemployment rates by the projected age-sex distribution of the labor force in 1970 would have raised the 1st of these from 3.2 to 3.3 percent.

TABLE 2.-Unemployment by occupation: Hypothetical full employment target compared with actual data for 1953, 1957, and 1963

As officially reported. The rate for 1953 is based on old definitions. As revised, the rate for 1953 is 2.9 percent.

Source: Actual data are taken or computed from Manpower Report of the President, March 1964.
Explanation of columns:

(a) Unemployment rate for each occupation (percent of labor force in group).

(b) Percentage of total labor force in each occupation.

(c) Product of (a) and (b), or the contribution of each group to the overall unemployment rate (per cent of total labor force).

TABLE 3.-Unemployment by age, sex, and color: Hypothetical full employment target compared with actual data for 1953, 1957, and 1963

1 As officially reported. The rate for 1953 is based on old definitions. As revised, the rate for 1953 is 2.9 percent.

Source: Actual data are taken or computed from Manpower Report of the President, March 1964, or were supplied by the Bureau of Labor Statistics.

Explanation of columns:

(a) Unemployment rate for each group (percent of labor force in group).

(b) Percentage of total labor force in each group.

(c) Product of (a) and (b), or the contribution of each group to the overall unemployment rate (percent of the total labor force).

SEEKING A SOLUTION TO U.S. MANPOWER PROBLEMS

The OECD Manpower and Social Affairs Committee has made a study of the manpower situation in the United States and the policies and practices of the Government in this field. The study has just been published under the title "Manpower Policy and Programs in the United States."

During the last

years, unemployment in the United States has never dipped below a yearly average of 5.5 percent of the labor force. After each of the recessions over the last decade, unemployment has settled at a higher level not only absolutely but in percentage terms. Thus during 1962, 4 million people were unemployed on the average, more than a quarter of them for 15 weeks or more. Another 2.7 million were working part time for economic reasons, e.g., because they could not find a full-time job or because business was slack. This situation has been a matter of great concern to U.S. authorities not only because of the human problem it presents but because it implies the waste of one of the most important economic resources. It has been roughly estimated that with present level of unemployment, there may be a potential loss to gross national product of some $30 to $40 billion a year. Further loss results from the failure to use manpower at its hightest skill and educational potential. In this connection, the Council of Economic Advisers has suggested that gross national product might rise by another $14 billion a year if the educational achievements of Negroes were fully utilized by the removal of discriminatory recruitment and selection processes.

As one aspect of their endeavor to solve the twin problems of unemployment and underemployment, the U.S. authorities have taken an active part in a study on U.S. manpower policies and practices conducted by the OECD Manpower and Social Affairs Committee. The study, which has just been published, is in four parts: The OECD Manpower and Social Affairs Committee's recommendations; a statement by U.S. authorities; a report on the findings of three OECD examiners1 and a series of questions and answers by the examiners and U.S. representatives respectively.

THE SURROUNDING CIRCUMSTANCES

The problem of providing constructive employment in the years ahead will, the report points out, be complicated by the fact that a record number of young people-26 million in all-products of the postwar baby boom, will come of working age during the 1960's. To some extent they will be able to replace older workers who are retiring; but it has been estimated that on balance 13 million new jobs will be needed by 1970 solely to accommodate the newcomers.

At the same time, productivity will be increasing at a rapid rate. As an indication of the magnitude of this increase in the past, the report points to the fact that a 67-percent increase in real national product (excluding general Government expenditures) between 1947 and 1962 entailed a rise in the number of man-hours worked of only 4.5 percent. If productivity continues to increase only as fast as it has in the past, another 2 million jobs per year will be needed for those displaced by technological change. Whether or not the rate of productivity growth will accelerate is an open question, but the report points to the fact that research and development expenditures have increased from $5 billion in 1953-54 to $14 billion in 1960-61.

In any case the new jobs must be provided in a context of constant and rapid change not only in technology but in the kind of industries that will rise and fall and in the type of skill required. Says Examiner W. R. Dymond, "It used to be that a worker could aim for a particular job in which he was able to develop a vested interest and which became his for life. It is clear that the average worker in the U.S. labor force can no longer expect to remain continuously for 40 or 50 years in a single occupation with a given set of unchanging skills. He has constantly to adjust to new employment demands and on occasion even make shifts to completely new occupations, usually at higher levels of education and skill."

The OECD manpower experts agree with other analysts that the failure to achieve full employment in the United States is to an important extent the

1 W. R. Dymond, Assistant Deputy Minister in the Canadian Ministry of Labour; N. Kellgren, Member of Parliament and Special Assistant to the Director-General of the Swedish Labour Market Board; and H. Zoeteweij, Assistant Economic Adviser of the International Labour Office.

result of inadequate demand, and that remedies must include fiscal and monetary measures. They point out that growth in output during the past 5 years has been at an annual rate of only 2.9 percent as against 3.8 percent during the decade from 1947 to 1957. But the Manpower Committee adds that "national full employment and growth policies can be pursued more vigorously, with less risk of inflationary pressures from labor shortages where active labor market policies facilitate the movement and adaptability of the labor force to changes in demand."

THE ROLE OF MOBILITY

How mobile and adaptable is the U.S. labor force? Traditionally, as the Department of Labor Manpower Report to the President noted in March of 1963, "the American people have a characteristic readiness to move." Of the 159 million persons 5 years old and over in the country in 1960, 75 million had changed residence since 1955, one-fifth of them to another State. In 1961 8.1 million workers (one-tenth of those who had jobs) made a change during the course of the year, some to improve their status, about an equal number because they had lost their old jobs. Shifts that involve a change in industry are more common than those involving a change in occupation, but one-half of the switches did involve a change in occupational grouping.

In recent years, however, there have grown up some impediments to mobility. In some cases because of lack of opportunity, the transfers required have been from more highly paid jobs which provide considerable fringe benefits to less productive and less highly paid service jobs. At the same time, certain institutional obstacles to movement have grown up: the increasing prevalence of seniority promotions and other benefits related to seniority tend to make workers reluctant to change jobs; and the growth of pension plans, when these could not be carried from employer to employer may have acted as a bar to movement. The OECD examiners note that "in consequence of these and the many social factors which tie workers to their homes, as well as problems of low education and skill in relation to the employment opportunities, serious pockets of immobile workers have developed in many regions of relatively declining employment," e.g., in West Virginia and Pennsylvania, in the Mesabi Range where the iron mines have been worked out, and in certain parts of the Pacific Northwest where there has been a decline in the production of lumber, not to mention the textile and shoe manufacturing regions of New England.

OTHER OBSTACLES TO THE FULL USE OF MANPOWER

Employment possibilities are limited by another factor to which the OECD report gives considerable prominence: inadequate education. To illustrate : For those who have a college education, the unemployment rate is only 2 percent; the rate is 10 percent for those who have failed to furnish primary school. Among young people, those who have finished secondary school have only half the unemployment rate of those who have not. Even though the educational level of the labor force has been rising steadily, it is estimated that unless some action is taken, almost 30 percent of the young people who will be seeking work during the 1960's will not have finished secondary school; a third of these will not even have finished primary school.

This fact takes on particular importance because many of the unskilled professions in which workers without educational qualification have been employed are on the decline; and the fastest growing opportunities are in those fields which require the longest period of education.

Discrimination would appear to be an important obstacle to full employment: non-white workers, though they comprised only 11 percent of the labor force in 1962 accounted for twice that share of unemployment. Particularly hard hit are the young people: the unemployment rate for the nonwhite teenager stood at 21 percent for boys and 28 percent for girls in 1962. In part this reflects the fact that nonwhite workers tend to be concentrated in low-skilled employment. It has been estimated that if nonwhite workers had the same occupational distribution as white workers, their unemployment rate would be cut in half.

EFFORTS AT THE FEDERAL LEVEL

A significant number of people within the United States are aware of these problems, and a vast number of programs have been proposed or put into practice by private firms and trade unions, together or separately, by voluntary groups