Full text of Business Trends : A Challenge for the 'Sixties

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FRIDAY, JUNE 14, 1963

Prepared

1n

the

Research

Department

of

the

FEUEHJ\L HESEH\/E HJ\NK OF CLE\lELJ\.ND
Serving

the

Fourth

Federal

Reserve

District

A CHALLENGE FOR THE 'SIXTIES

The explosive rise in the birth rate during
the second half of the 1940' s, which has
caused many of our schools to bulge with ever
larger numbers of pupils, is about to bring a
similar overcrowding to the country's labor
force as the products of the baby boom reach
working age. The size of the impending invasion of young people can best be gauged from
the fact that the number of persons becoming
18 years of age, which was 2.6 million in 1960,
will rise to 3. 8 million by 1965, a figure almost
half again as large as the one five years
earlier.
For most young Americans, especially
males, reaching the age of 18 marks the transition from going to school to going to work. A
growing number of young people today are
postponing their first job hunt by continuing
their formal education for several years in
order to be better prepared for the most desirable jobs. Others start hunting for a job
without waiting for their 18th birthday or
completing their high school education.
Of the entire 3. 8-million crop of new 18-year
olds in 1965, not all will be thinking of immediate employment, of course. Some will enroll
in colleges and others, including young women
assuming domestic responsibilities, will stay
out of the labor force for various reasons. Yet
an estimated total of 26 million young people,

or 2.6 million each year on the average, will
join the labor force in the decade from 1960 to
1970, as compared with about 1. 8 million annually during the 1950' s. That large influx of
young workers will considerably rejuvenate the
labor force by raising the proportion of its 14
to 24-year old members from less than 19
percent in 1960 to over 23 percent in 1970, and
will account for almost one-half of the estimated total 10-year growth in the labor force
of close to 13 million.
This almost unprecedented infusion of
young, vigorous workers into our working population will supply the manpower needed for
large economic growth. It will also present
our country with a serious challenge to provide training and, most important, employment
for a larger number of young persons than in
any previous 10-year period in our history.
Seen in this light, the influx of young people not
only permits, but demands a large increase in
the economy lest the country finds itself with
millions of young adults who are ready to take
their places among the working population but
are unable to do so for want of opportunities.
Economic growth in this country has been
less than satisfactory in recent years. The expansion of the labor force has been greater
than the economy's ability to create new jobs.
This deficit in new employment has contributed

Broadcast by Gerhard Krebs, Economist, Federal Reserve Bank of Cleveland, over WGAR,
Cleveland, with Charles Day, News Editor, WGAR, Friday, June 14, at 7:45 p. m.


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to an undesirably high level of total unemployment and to a substantial proportion of people
remaining jobless for prolonged periods of
time.
A continued slow pace of economic growth
would not be encouraging news for young
workers, as it would keep their rate of unemployment at its present high level. Young
people generally have a higher rate of unemployment than older workers. Being less
experienced occupationally and holding less
seniority than their older co-workers, they are
more vulnerable to layoff; they are also more
inclined to quit voluntarily in order to shop
around for the most satisfactory job. In 1962,
on the aver age, 13 percent of the 14 to 19-year
old males in the labor force were unemployed,
and 9 percent of those 20 to 24 years old, while
the unemployment rate for men over 24 years
of age was only about 4 percent. Stated in a
different way, people of both sexes between the
ages of 14 and 24 years contributed one-third
of the 4 million unemployed in 1962 but only
one-fifth of the 72 million persons in the labor
force. Just last week, a record rate of nearly
18 percent unemployment among teenagers in
mid-May was announced by the Secretary of
Labor, with expressions of concern.
On the job supply side, it should be remembered that the proportion of '' entry jobs'' for
young workers will continue to decline as employment opportunities in the lower-skill categories of the blue-collar occupations and in
agriculture are shrinking from year to year.
At the same time, higher actual or potential
skills will be expected of applicants for work
in expanding industries and occupations.
Improvement in Education. As available employment will tend to go to the applicants who
are best prepared, college graduates among
young job seekers can expect to experience the
least amount of difficulty in landing their first
jobs, although some of the top beginners'
salaries might recede to somewhat less glamorous levels than today's . In the search for
nonprofessional jobs, young persons fortified
with a high school diploma will continue to
have an advantage, both in finding and keeping
employment, over competitors who have quit
school before graduation.

It is expected that the trend toward more
and better education will continue and that an
estimated seven out of every ten young labor
force entrants in the 1960' s will possess a
high school graduation certificate. The proportion of young people beginning their working
lives with only eight or even fewer years of
schooling will be half as large as during the
past decade. Yet three out of ten young job
seekers, or 7.5 million out of the 26 million 14
to 24-year olds mentioned earlier, will be looking for employment without the benefit of a completed high school education, perhaps unmindful of the fact that the unemployment rate of
school dropouts of a given year is about twice
as high as that of June high school graduates
of the same year. As today's dropouts stand a
good chance of becoming tomorrow's longterm jobless or relief recipients, efforts to
remove the causes for quitting school should
have high priority.
Meeting the Challenge. The abundance of
manpower with which we are favored in this
decade makes it mandatory to create almost
13 million new jobs over the ten years merely
to keep up with the growth in the labor force,
to say nothing of additional employment needed
to absorb workers who will be displaced by
technological advances. In meeting this challenge, the country will undoubtedly be helped
by spontaneous employment increases stimulated by demands for more goods and services
from a growing population, particularly young
people marrying and establishing their own
families. But few observers believe that such
spontaneous increases in demand will provide
the entire solution. More positive steps will be
needed. Also, it may become necessary to give
serious consideration to proposals for
"sharing" employment through shortening the
work week or work year or curtailing the size
of the labor force by means of delayed entry
and ear lier retirement.
Failure to meet the challenge - which, in
Dr. Conant's words, contains "social dynamite" - could cause large numbers of young
people to become disillusioned and frustrated
in their aspirations for a normal and useful
life.

Additional copies of "Business Trends" are available upon request.

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