Why joblessness is expected to rise during Reagan administration
The nation's unemployment rate fell short of the experts' predictions for 1980. But those same experts say the United States is due for higher unemployment in the months ahead, throwing another obstacle in the path of the incoming Reagan administration.
There were 7,785,000 Americans unemployed in December, 7.4 percent of the work force, compared with 6,272,000 a year earlier. Unemployment for the year averaged 7.1 percent (about one of every 14 US workers) against the 5.8 percent average for 1979.
Early in 1980, heavy layoffs in major industries brought grim forecasts of unemployment exceeding 8 percent by year's end. The jobless rate nudged at that level last April and May, but slight improvements in the national economy have eased the index level downward since then. For the last six months, it has moved insignificantly between 7.4 percent and 7.6 percent.
Many economists expect an upturn during the first few months of Ronald Reagan's term in the White House. Once again there are predictions of 8 percent unemployment by the end of March, less as a result of the new administration's policies than because of its inherited problems, particularly the impact high interest rates have had on industrial operations.
Any new rise in unemployment will endanger relations between Mr. Reagan and organized labor. The AFL-CIO and many major unions already are expressing concern about a possible recession in 1981, before the country has had a chance to recover fully from the downturn in 1980.
Reagan will take office with organized labor generally pledged to cooperate with the new administration's efforts to turn the econmy around. The AFL-CIO particularly wants a quick end to "sole reliance on tighter money and ever-higher interest rates to fight inflation." It warns that such policies are "self-defeating" and "bring us closer to a tidal wave of bankruptcies and an economic depression."
Obviously, the AFL-CIO -- which considers high unemployment a top priority problem -- wants shifts in government anti-inflation policies that will relieve rather than increase unemployment figures. Many economist believe that doing this will be difficult in the early months of the new administration.
The slight decline in unemployment in December appears to be due in part to a slowdown in the number of workers entering the labor market, particularly women and teen-agers, and to the rising number of discouraged workers who no longer are actively seeking jobs and are not counted among the unemployed.
Statistically, in December unemployment among adult men stood at 6.2 percent; for women, 6.8 percent; and for teen-agers, 17.8 percent. The rate of whites was 6.6 percent; for blacks, 14 percent; and for Hispanics, 9.8 percent. Total employment in manufacturing rose by 200,000 indicating a rise in industrial operations. However, national employment dipped by 57,000 to 97,282,000. This was 500,000 below the peak of employment last February.
Paul a. Reardon, economist for the US Chamber of Commerce, and other business economists expect that the number entering the labor market will increase again in the next few months. Sandra Shaber, senior staff economist for Chase Econometrics, describes the slight improvements in the employment situation in recent months as "a lull before a storm." Chase is one or thos e predicting 8 percent unemployment by the end of March.