Growing Labour Force Strain On U.S. Economy

Press, Volume CIV, Issue 30706, 23 March 1965, Page 7

Growing Labour Force Strain On U.S. Economy

(From FRANK OLIVER, N.Z.P.A. Special Correspondent]

WASHINGTON, March 22.

The annual manpower report sent to Congress by the President has economists and business executives thinking about the future. Everything looks good provided the nation can produce nine million new jobs by 1970. If the nation cannot the increasing population will make the unemployment figures frightening.

The President’s report had a good deal to say about the boom conditions created in the country during 1964 by the tax cut and other stimulants to economic activity. It said these were indicative of what must continue to be done to trim the present unemployment rate.

Unemployment rates are a little lower than a year ago but, some economists think, not low enough. The work force is increasing at a general rate of 1.5 per cent. In February unemployment fell by 300,000 although in that month the work force increased by 1.4 per cent. However, percentages are apt

to cover heart-breaking facts —in this case that 4.2 million people, nearly 5 per cent of the work force, were out of work.

The Administration, business, industry and labour face the problems of keeping the economic growth rate high, finding millions of new jobs over the next few years and at the same time bringing the unemployment rate down to “acceptable levels.” Nine million new jobs over 15 years is considered necessary to take care of additions to the work forces and to bring the unemployment rate down from 5 per cent to 3 per cent, which the Department of Labour considers “acceptable.”

Indicative of the size of the problems is the increase of 4.75 per cent in the gross national product in 1964. The post-war average is only 3.5 per cent. Some economists believe it must maintain the 1964 rate for the next six years at least. Trimming the unemployment rate, many think, will not be easy.

A book-length report prepared by the Labour Department to accompany the President’s manpower message says the productivity rate is growing by 3 per cent compared with the labour force growth of 1.5 per cent. This means reducing the number of workers needed to maintain output. The report also speaks of the special problems of young persons entering the work forces, and Negro and unskilled workers, all of whom “produce severe challenges to the economy.” The influx of workers between the ages of 20 and 24 will be nearly three million between the end of 1964 and the year 1970. The report says half of the 28 billion dollar increase in the G.N.P. during 1964 was required to maintain employment at 1963 levels. The other half generated 1.5 million jobs. It seems certain that the Administration will continue to urge economic stimulants to foster economic growth and suitable tax cuts to give people more spending money and business more money to expand to provide the goods the spending money will buy. It seems certain that congress

will be asked to remove certain excise taxes before summer and then, if the economic effects are good, to cut more before it leaves for home in the autumn.