Normally we do get a drop, but we got one somewhat larger than usual at this time of the year.

Chairman PROXMIRE. Å larger than usual drop in employment?

Mr. GOLDSTEIN. Manufacturing employment. We got a drop of 167,000, and we should get a drop of about 50,000.

I'm sorry-we got an increase of 167,000. On a seasonally adjusted basis, it was a drop of 115,000, so this is an increase smaller than expected.

Chairman PROXMIRE. I didn't get that.

Mr. GOLDSTEIN. We got an increase of about 115,000 less than we would expect.

On the other hand, hours of work

Chairman PROXMIRE. You got 115,000 fewer jobs? There was less employment that you would expect in manufacturing?

Mr. GOLDSTEIN. Yes.

Chairman PROXMIRE. Hours of work?

Mr. GOLDSTEIN. Hours of work, on the other hand, were up on a seasonally adjusted basis. They went up by one-tenth. Chairman PROXMIRE. One-tenth of a percent?

Mr. GOLDSTEIN. One-tenth of an hour.
Chairman PROXMIRE. By how much?

Mr. GOLDSTEIN. One-tenth of an hour.

Chairman PROXMIRE. Is that enough to be statistically significant, in your view?

Mr. GOLDSTEIN. We frequently get revisions when we get all our reports in, which may

Chairman PROXMIRE. You would almost say that was unchanged, wouldn't you?

Mr. GOLDSTEIN. Well, it has been moving up slightly.

Chairman PROXMIRE. I see.

Mr. GOLDSTEIN. In the last few months.

And overtime hours in manufacturing went up two-tenths, and overtime in manufacturing is now back to the level of mid-year 1970, so that this is a positive sign in manufacturing.

Some of the less-than-seasonal increase in employment in manufacturing may be a result of the same factor we were talking about earlier, youngsters not yet being out of school, and we really won't. know what the story is until we get another month's figures on that. Chairman PROXMIRE. Now, how about the steel strike? I should say, how about the prospects of a steel strike, and the anticipation of it, which happened because of that.

Mr. GOLDSTEIN. Well, I'm not sure that there's very much that we can say. The employment level in the primary metal industriesthe one figure we have now-has been fairly steady in the last few months. It's now off on a seasonally adjusted basis, by about 1 percent, or about 13,000 from May.

It may be that whatever buildup in inventory has been undertaken by consumers of steel has now worked itself out, and resulted in less strengthening of employment.

Chairman PROXMIRE. Would you anticipate in July this will be even more of a problem?

Mr. GOLDSTEIN. I don't know if it will be more of a problem.

Chairman PROXMIRE. Well, isn't it almost inevitable for such a big industry? They have so many employees, so many, and, of course, there is the multiplier effect.

We know there has been stockpiling by the automobile industry, by the construction industry, and others, in anticipation of this strike. We are all hoping that there won't be; but, if there is not a strike, we have got to work it off that stockpile, that additional inventory of steel. That means less workers; that means less jobs. Isn't that right?

Mr. GOLDSTEIN. That seems reasonable, but

Chairman PROXMIRE. Can you give us any qualification of that? What does that mean in terms of numbers? Could it affect the unemployment by 0.2 percent?

Mr. GOLDSTEIN. I wouldn't think that situation would affect unemployment by that much, Mr. Chairman.

Chairman PROXMIRE. Really? I would think it would be that much or more. In your judgement, it wouldn't be that much?

Mr. GOLDSTEIN. It would not be that much.

Chairman PROXMIRE. Let me ask you-such a startling series of statistics as we have now-and one of the figures that strikes me is the unadjusted unemployment figure, that 5,490,000.

How long since the unadjusted unemployment figures has been as high as 5,490,000 people out of work?

Mr. GOLDSTEIN. Well, Mr. Stambler will look that one up, Mr. Chairman.

Mr. STAMBLER. February 1961.

Chairman PROXMIRE. February 1961? Are you sure? The staff here tells me that it should go back to 1941.

Mr. STAMBLER. Unadjusted, it is 5,654,000 in February of 1961. Chairman PROXMIRE. It goes back 10 years, then?

Mr. STAMBLER. Unadjusted.

Chairman PROXMIRE. Now, how about-it seems to me, for the others, the man in the public, it is awfully hard for him to understand how we have this statistic which all of us accept, because you men are, of course, the most competent that we have in the country in this area. You have studied, and devoted your lives to it, and you tell us that there has been this improvement in unemployment, and yet we have this dramatic high figure of the number of people actually looking for work, the highest in 10 years. Almost five and a half million.

How do we reconcile that?

Mr. GOLDSTEIN. Well, to answer your question directly, your question doesn't refer to the comparison with 1961, but with the the present.

Chairman PROXMIRE. No. It is just the fact that I just want to see what we can do to make this clear to the Members of Congress and to the public, how you can have a record number of people out of work, and yet be able to throw our hats in the air on the basis of a substantial improvement in the percentage, seasonally adjusted.

Mr. MOORE. Let's take the comparison with 1961, Mr. Chairman. It is true that the labor force then was very much smaller than it is now, and, hence, because of a normal growth in the population and

the labor force, a given number of millions of people is of smaller significance from an aggregate point of view.

Furthermore, we are comparing a June figure, unadjusted for seasonal variation, with a February figure, unadjusted for seasonal variation, and one would normally expect some increase in unemployment between February and June for seasonal reasons.

So, I think allowances may be made for both of those factors. Now, on the other hand, it seems to me while 5.6-percent unemployment rate is a drop from May, and is lower than it was earlier this year, it isn't a low rate. It is still roughly 5%1⁄2 percent. That is a farily high unemployment rate.

Chairman PROXMIRE. I think that's a good, honest answer.

Let me ask you this after discounting the effects of the early survey week, and the seasonal adjustment problem Mr. Goldstein developed so well, both in his statement and in answer to the question, does the overall rate end up as close to 6 percent, in the 6-percent neighborhood, the area we have been in since December? Do you conclude, generally, that we are probably close to the same level?

Mr. MOORE. I would conclude, sir, that there has been some improvement in the unemployment rate between last winter and June. I think virtually any method of seasonally adjusting the figures would support that statement.

Chairman PROXMIRE. Well, there is obviously some improvement, but is it still close to the 6 percent, if you allow for these two factors that you gentlemen have so ably explained. There are elements we have to be alert to?

Mr. MOORE. Well, I think we can't really speculate on what the number might have been if we had done this differently. My feeling is that, when the seasonal adjustment factors are revised, as we describe in the press release, as our normal procedure, the June figure may be slightly higher than we now report it. But I can't say that with any certainty, and I don't think it is going to be substantially higher.

So it is now in the neighborhood of, I would say, 5% percent, and it may go a little higher than is now reported, or it may not.

Chairman PROXMIRE. Now, I realize that you gentlemen are nonpolitical, and you are not here on a political mission of any kind; nevertheless, I think it might be helpful if we could clarify a statement which Secretary Connally made, which had, I think, profound implications for our economy.

After all, Secretary Connally has been designated here by the powers of the President as the principal economic spokesman for the administration, and he is an extraordinarily able man, as we all know.

He made the statement that 4 percent unemployment in peacetime is a myth. We've never had it; we can't expect to have it.

Now, I have here the figures on unemployment in this country since 1901, and there have been a lot of years in which we had unemployment below 4 percent-1901, 1902, 1903, 1906, 1919, 1923, 1926, 1946, 1947, 1948, 1953, 1955. None of those years were war years. Of course, in all of the war years, or most of the war years, it was less than 4 percent.

On the basis of your professional knowledge, and your judgment, do you think it is possible to have unemployment at a level of 4 percent or less, without serious inflation and without war?

Mr. MOORE. That is a very tough question to answer, Mr. Chairman, and I think I would like to make this comment.

I don't believe a 4 percent rate of unemployment today means quite the same thing that it did 10 or 15 years ago. The reason is that the labor force, the composition of the labor force, has changed, over the last 10 or 15 years, in a direction that tends to produce, under normal economic conditions, a higher rate of unemployment. Chairman PROXMIRE. A change in what way?

Mr. MOORE. Well, I'm about to explain that.
Chairman PROXMIRE. All right, sir.

Mr. MOORE. The number of women in the labor force has increased very substantially, and the number of teenagers in the labor force has increased substantially, and, as a rule, the unemployment rates for both of those groups in the population are higher than those for the adult males that form, I might say, the backbone of our working population.

So that, when you have a larger number of these people, you tend to experience higher rates of unemployment. That tends to push the average rate of unemployment up. Over the past 15 years, since 1956, according to some calculations that we have made, that shift tended to raise the rate of unemployment about a half a percentage point. Chairman PROXMIRE. One element is particularly clear to me, as was emphasized by Secretary Shultz and by others when they appeared before our committee. We have a different element in our economy now, which should provide for more stability in employment, and perhaps for less unemployment, over the years, and that is the much greater proportion of service jobs, as compared to manufacturing.

The service part of the economy is expanding more rapidly, has expanded over the last 20 years at a very great rate. This is an element both in the stability of employment, and perhaps in the availability of employment to both women and teenagers.

The second element is the fact that we have, in our society now, a far, far greater proportion of people who are staying in high school until they graduate, and a much greater proportion going on to college. When I went to college, I think 3 or 4 percent of college age people went to college.

Now it is 30 percent or more. When I was in high school, a substans tial majority didn't finish. Now a very big majority of our teenagerfinish high school.

By taking that into account, doesn't that compensate for the elements you just discussed.

Mr. MOORE. Well, the teenagers who stay in school are out of the labor force, so they are really not counted in these calculations.

Chairman PROXMIRE. That's right.

Mr. MOORE. And it's true that, nevertheless, despite that, there are more teenagers in. our labor force nowadays than there were 10 or 15 years ago.

On the other point, service industry employment certainly has increased relative to total employment, and I think that has added a

degree of stability to the cyclical situation. That is, the declines in employment in the service industries are certain to be fairly smaller, if there are any declines at all, than in the other industries. It is also true, as you have indicated, the service industries employ a great many women and teenagers. But despite the fact that many of them are employed in service trades, their unemployment rates are typically higher than the adult male population.

There is one other change that I think ought to be brought into the picture, and that is the change in the average length of unemployment, the average period of unemployment that is experienced. There we have had something of a reduction. The average we reported for June is 12.7 weeks, but that is relatively low compared with other periods in similar economic conditions, and that has been true for the past couple of years.

I think the duration of unemployment is almost equally as important as the number of people .who are unemployed.

Chairman PROXMIRE What is the unemployment rate among returning Vietnam veterans? Do you have that figure?

Mr. GOLDSTEIN. We don't have that figure here, Mr. Chairman. We can get it.

(The following information was subsequently supplied for the record :)

Chairman PROXMIRE. You have the total number of unemployed veterans?

Mr. GOLDSTEIN. We have estimated the total number of unemployed veterans who are veterans of the Vietnam era. The figures for the second quarter of this year show that it is up.

Chairman PROXMIRE. How does that figure compare-do you have any idea, roughly, without asking you to give the percentage numberbut how does the unemployment among Vietnam veterans compare with the figure last year?

Mr. GOLDSTEIN. It is well above the figure last year.

Chairman PROXMIRE. About in proportion to the increase in unemployment, or is it above that?

Mr. GOLDSTEIN. Roughly proportionate. For the same age group, that is.

The unemployment of veterans compared to that of nonveterans in the same age, 20 to 29

Chairman PROXMIRE. What is the comparison of veterans to nonveterans in the same group? Is veterans' unemployment higher, lower, or about the same?

Mr. GOLDSTEIN (continuing). Veterans' unemployment is somewhat higher on the order of 20 to 25 percent.

Chairman PROXMIRE. Twenty to twenty-five percent higher?

Mr. GOLDSTEIN. Than that of nonveteran men in the same age group.