Labor questions Reagan economic forecast
Organized labor has ''reasons for doubt'' about the Reagan administration's forecasts of solid economic growth over the next six years and continuing improvement in the employment situation, according to the AFL-CIO. Rather, it warns of a possible new downturn that could begin later this year or in 1985.
To the labor federation, too much is ''iffy'' about prospects for a durable economic upswing and ''certainly about the vitality of the American economy on a longer-range basis.''
Henry B. Schechter, deputy director of AFL-CIO's Department of Economic Research, warns that recent drops in the nation's unemployment rate - to 8.2 percent at year's end - still leaves the jobless level high. This and US Steel Corporation's announcement of drastic production cutbacks and similar moves in a number of other industries are ''crushing blows'' to optimism about major improvement in the unemployment rate over the next few months.
Because this is an election year, and the AFL-CIO is very much involved in national politics, its warnings against ''rosy predictions'' must be considered in part politically motivated. But administration reports and forecasts of economic gains also put economic facts and figures in the best possible light.
The big and politically important difference between labor (strongly oriented toward the Democrats) and the Republican administration is over the effectiveness of present national economic policies.
The White House contends the policies are working: Economic recovery is under way, and unemployment at 8.2 percent at the end of 1983 was the lowest level in more than two years. More than 3 million Americans were back at work.
Just before Christmas, the administration issued a six-year economic forecast that projected growth of 4.5 percent from the end of 1983 to the end of '84, then an annual growth of 4 percent a year through 1988 and 3.7 percent in 1989.
The AFL-CIO envisions inflation running at 5 percent by the end of next year, then a gradual decline to 3.5 percent at the end of 1989. The administration looks for unemployment to drop to 7.8 percent this year and to 5.7 percent by the end of 1989.
The AFL-CIO calls the administration's projections ''wishful, bizarre thinking.''
It takes a position that 9.2 million are still reported jobless. Millions more are underemployed - working part-time rather than at the full-time jobs they want, or have become so frustrated in their job search that they have given up looking. These ''discouraged'' workers are not counted as unemployed.
AFL-CIO's chief economist, Rudy Oswald, calls the December drop in unemployment ''a welcome sign'' but says the country still has ''a long way to go to reduce the rate to the 5.8 percent level of 1979.'' While last year's improvements in the job situation are substantial, he says, there was a big difference in the two labor market surveys conducted by the US Labor Department.
A US Labor Department household survey that showed a pickup of 1 million jobs does not square with an administration report showing a gain of 3 million, Mr. -Oswald says, adding that ''this difference amounts to about a 1 percent variation in the unemployment level.''
The AFL-CIO, which hopes for a voting coalition with blacks, noted that black unemployment was ''particularly bleak'' in December, with a further rise in the jobless rate to 17.8 percent. It also called US Steel's production cutbacks ''devastating news'' that further clouds American industry's economic uncertainty.
The cutbacks, a result of unsuccessful management efforts to win labor cost concessions from workers, will idle another 4,590 steelworkers and result in a permanent loss of jobs for 10,800 workers now on layoffs.
To solve US economic problems, the AFL-CIO is calling for ''a sharp shift in national economic policies,'' which in an election year can be read to mean a shift in parties.
The federation is gambling heavily on a Democratic victory in the presidential contest; it has broken with past policies to endorse a candidate, former Vice-President Walter F. Mondale, before state primaries and the party convention. Its strongest campaign issues so far have been the national economy and high unemployment.
The President's 1984 political success - and labor's potential political weakness - may hinge on what happens to the economy and on a further lowering of the jobless rate. As in 1980, Mr. Reagan can pick up union votes if the economy strengthens and more jobs open up.