The unemployed, the discouraged, and the working
Economists suspect the unemployment rate for October, when announced Friday, will show something of a rise. It was 10.1 percent in September, and some guess it may rise to, say, 10.5 percent.Skip to next paragraph
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Who are the jobless?
An economist at the Federal Reserve Bank of San Francisco, Herbert Runyon, has looked into this question in his bank's Weekly Letter. Here are some of his findings.
First, he notes that the unemployment rate is always several percentage points above zero. That's because there are always a number of people out of work for various reasons: temporary layoffs, leaving one job to look for another , entering the labor force for the first time, or returning to the job market after an extended absence (perhaps a mother returning to work after raising a family).
Economists call this ''frictional'' or ''natural'' unemployment.
At the peak of the latest business expansion, in July 1981, the unemployment rate was 7.2 percent. This was the highest rate for any peak in economic activity since World War II. Most economists would say it was above the natural rate, because of a secular decline in such basic industries as autos, primary metals, and housing.
From July 1981 to September 1982, the number of unemployed people increased to 11.2 million, up 3.4 million. Some 66 percent of the increase consisted of adult males, 23 percent of adult females, and 11 percent of teen-agers. Many of those men came from auto plants, primary metals industries (such as steel and aluminum), and housing.
Some 70 percent of the unemployed in the period since July 1981 were job losers, who began quickly to look for a job. The proportion of these jobless who were new entrants to the labor force, such as high school or university graduates, was only 10 percent. Re-entrants amounted to 22 percent. Because in recession fewer people quit work voluntarily, the proportion of job leavers declined 2 percent.
Blue-collar workers made up 79 percent of the increase in unemployment during this recession. Of these, 36 percent were factory workers and 24 percent were workers in construction or allied crafts. White collar workers had an increase in unemployment amounting to 21 percent of the total jobless increase. That group breaks down to 9 percent clerical, 9 percent professional, and 2 percent ''other.'' White-collar unemployment is higher than usual.
Because of cutbacks in corporate staff at the middle-management level as well as on the production line, Fortune magazine has dubbed this the ''executive recession.''
Teachers and professionals are included in the professional and technical category. It's estimated that some 50,000 teachers have been laid off in the past year.
Service workers and others account for the remaining 20 percent of the jobless.
Mr. Runyon estimates more than 20 percent of the labor force has been without work in the past year. In 1981, the Bureau of Labor Statistics reckons, there were 33 million instances of people being out of work for two weeks or more - although in some cases the same individuals were out of work more than once during the year.
Another measure of joblessness is the quarterly survey of discouraged workers. For the third quarter of this year, the total was 1.6 million. That is up from 1.1 million in the third quarter a year ago. Discouraged workers, Mr. Runyon notes, are defined as those who have not searched for work in the past four weeks or longer before being surveyed. These individuals may have dropped out of the labor force because of personal reasons, perhaps feeling that they are too young or too old, that they have personal handicaps, or that they lack education or training. Or they may just figure there is no suitable job in their line of work or geographical area.
The composition of discouraged workers differs, however, from that of the unemployed still in the labor force, that is, still looking for work. Only about one-tenth of discouraged workers were adult males in their prime working years, 25 to 39 years. Women made up the largest group of discouraged workers - nearly six-tenths. All of the 100,000 increase in the number of discouraged workers in the third quarter of this year was among women.
Unemployment rates vary according to category. Managers have a jobless rate of 3.6 percent. Some 51 percent of black male teen-agers in the labor force are out of work.
During this recession, the labor force has grown from 108.7 million in July 1981 to 111 million this September, for a gain of 2.3 million. At the same time, total employment dropped by 1.1 million to 99.8 million in September.
Also in this period, the percentage of the population working or looking for work has risen from 63.8 percent to 64.3 percent. That meant a net increase of 700,000, divided about evenly between adult males and adult females. There was a decline of about 400,000 among teen-agers.
The percentage of the population actually working has fallen from 58.3 percent in July 1981 to 57 percent in September 1982. But that percentage remains above the rate at the trough of the last recession, in 1975, of 55.1 percent.
So, a higher proportion of the population is working than in the last recession, but more people are unemployed.