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Y O U T H IN A M A T U R IN G E C O N O M Y An A d d re s s to the R o ta ry Club o f A tlanta A tlanta, G e o rg ia January 29, 1973 by M on roe K im b re l, P re sid e n t F e d e r a l R e s e r v e Bank o f A tlanta Y O U T H IN A M A T U R IN G E C O N O M Y The in vitation to speak today was a cco m p a n ie d b y the su g g estion that I d is cu s s youth in a m aturing e co n o m y . S om e o f you, lea rn in g o f m y sch ed u le, have u rg ed m e to com m en t on the b u sin e ss ou tlook . F o r th ose and at the r is k o f d eparting b r ie fly fr o m the su b je ct, h e re a re a few o f the b e s t g u e sse s o f the m o st re s p e c te d f o r e c a s t e r s : The p ace o f b u sin e ss en ters the year b oom in g on a ll fro n ts . The un em ploym ent h eadlin es a re fadin g. spending m o o d . C o n su m e rs a re in a R e ta ile r s have n e v e r pushed so m uch m e rch a n d ise a c r o s s th eir co u n te rs. M a n u fa ctu re rs, with o r d e r b ook s bu lgin g, a re in c r e a s in g ly h a r d -p r e s s e d to m eet d e liv e r y d em a n d s. But the upw ard cra w l o f p r ic e s is on e v e r y b o d y 's m ind. The b la m e fo r in fla tion w ill be w id e ly sp rea d about. fa r m e r w ill be h e a v ily s c o r e d fo r being behind it a ll. The S u perm a rk et o p e r a to r s , who have som e o f the thinnest p r o fit m a rg in s in the cou n try , w ill be p illo r ie d as p r o fit e e r s . w ill be rin g in g ly denounced. B ig b u sin e ss o f a ll kinds And lik e w ise b ig la b o r. Strong a lso w ill be the b u sin e ss in v estm en t c a te g o r y . H e re , plant and equipm ent ou tla y s, en cou ra g ed by a good co n s u m e r ou tlook , re ce n t in c r e a s e s in c o r p o r a te p r o fit s , and g e n e ra l b u sin e ss c o n f i d e n ce , a re sch edu led to r is e a lm o st 13 p e rce n t. T h ese la rg e advan ces in b u sin e ss in v estm en t w ill m o r e than o ffs e t one s e c t o r w hich is slated to slo w down, n a m ely , re s id e n tia l - 2 - co n s tr u ctio n . W hile 1972 w itn e sse d a r e c o r d year in hou sing s t a r t s - - 2 . 4 m i l l i o n - -1973 w ill p ro b a b ly sta rt about 2 m illio n un its. A s th ese sta rts a re co n v e rte d into actu a l d o lla r s spent on re s id e n tia l co n s tr u ctio n , the total le v e l o f m on ey spent w ill tend to sta b iliz e o r d e c r e a s e slig h tly . N o n e th e le ss, housing w ill rem a in at a v e r y high le v e l. A ls o , e x p e ct so m e slow dow n in F e d e r a l e x p e n d itu re s, as the F e d e r a l budget is being su b je cte d to tight scru tin y . H ow ev er, state and lo c a l g o v e rn m e n ts, now in b e tte r fin a n cia l shape than in re c e n t y ea rs and a ls o r e c e iv in g reven u e sh a rin g, w ill be spending at h is t o r ic a lly high le v e ls . F u rth er im p ro v e m e n t w ill a lso be seen in our b a la n ce o f tra d e. W hile s till im p o rtin g m o r e good s than we a re ex p ortin g this y e a r, the m agnitude o f this d iffe r e n c e w ill be le s s , as we w ill be helped by the re c e n t in tern ation al c u r r e n c y rea lig n m en t and our b etter p e r fo r m a n c e on the in fla tio n a ry sid e . Having said a ll th is, in fla tion is , and w ill b e , the r e a lly b ig w o r r y in 1973. And now , I w ill m o v e b a ck to the a ssig n e d su b je c t. I w ould lik e to a p p ra ise the fu tu re e co n o m y in w h ich we and our youth w ill be livin g and w ork in g during the next d e ca d e . P ro b a b ly the m o st im p orta n t thing to re m e m b e r in the next d eca d e is that the e c o n o m ic f o r c e s at w ork in the r e s t o f the nation w ill a lso be at w ork in the Southeast. (H ere, I am r e fe r r in g g e n e ra lly to the s ix states - 3 - se rv e d by the F e d e ra l R e s e r v e Bank o f A tla n ta --th e Sixth F e d e ra l R e s e r v e D is t r ic t --G e o r g ia , F lo r id a , A la ba m a , T e n n e s s e e , M is s is s ip p i, and L o u is ia n a .) In the past tw enty y e a r s , p ro b a b ly the m o st sig n ifica n t change was fr o m an a g ricu ltu ra l e co n o m y to a m o r e d e v e lo p e d , u rb a n ized m anufacturin g e con om y . F a r m em ploym en t shrank to o n e -th ir d the s iz e it was in 1950. N on fa rm em ploym en t m o re than d ou bled. M uch o f this grow th has been in nonm anufacturing as the re g io n has d e v e lo p e d its co n s tru ctio n , s e r v ic e , and fin a n cia l in d u strie s. But co n tra stin g national tre n d s, m anu factu rin g has a ls o been a fa st m ovin g s e c t o r . "B ig g e r and b e tte r " g e n e ra lly d e s c r ib e s the re la tio n sh ip o f our e co n o m y to that o f the nation. The Southeast has grow n fa s te r in population, fa s te r in p e rso n a l in c o m e , fa s te r in n o n fa rm em p loy m en t, fa s te r in w ages o f p rod u ction w o r k e r s , and in m any oth er a r e a s . T h e se in d ica to rs show a d yn a m ic, grow in g e co n o m y w hich has b een p e r fo r m in g w e ll. C onsequently, the le v e l o f per cap ita p e rso n a l in c o m e in th e se six states r o s e fr o m 74 p ercen t o f the nation in I960 to 82 p e rce n t in 1970. We s till have a long way to go but, h op efu lly , we a re m ov in g in the p ro p e r d ir e c tio n . The change fr o m a ru ra l to an in d u stria l e co n o m y is at the stage w h ere our young p eop le have a v irtu a l co rn u co p ia o f new o p p o rtu n itie s. What fu rth er changes m ay be e x p e cte d ? N a tion ally, we can ex p ect a continuation o f e c o n o m ic grow th c h a r a c t e r is t ic o f the past th ree d e ca d e s . R e a l p e rso n a l in c o m e is p r o je c te d to g ro w 141 p e rce n t during the next tw enty y e a rs . F o r the s ix sou th ea stern sta te s, the ra te o f grow th w ill be som ew h at fa s t e r , yield in g an e x p ected in c r e a s e in re a l in c o m e o f 153 p e rce n t. G row th o f this m agnitude w ill p ro d u ce n u m erou s op p ortu n ities fo r young p eop le to em p lo y th eir ta le n ts, a llow in g th em to sh a re in the r e w a r d s . N a tion a lly, em p loym en t in 1980 w ill be about 20 p e rce n t la r g e r than it was in 1970. M uch o f the grow th w ill be co n ce n tra te d in the s e r v ic e -p r o d u c in g in d u s trie s . T his should co m e as no s u r p r is e . A lo n g -t e r m trend in the grow th o f the s e r v ic e in d u strie s has been under w ay fo r so m e tim e . S e r v ic e in d u strie s a re ex p ected to em p lo y n e a rly 70 p e rce n t o f the w o r k e rs in this cou n try by 1980 and to p ro v id e s e r v ic e jo b s at an annual grow th ra te o f ju st o v e r 2 p e rce n t. In d u stries that p ro d u ce co m m o d itie s w ill e x p e r ie n c e slo w e r ra tes o f grow th during the next ten y e a r s . M ining and a g ricu ltu re a re ex p ected to a ctu a lly d e clin e as a p ortion o f national output. O v e r a ll, em ploym en t in c o m m o d ity -p r o d u c in g in d u strie s in the United States is e x p ected to g ro w at a ra te o f on ly th re e -te n th s of one p e rce n t during the 1970's . P a rt o f the re a s o n fo r this tren d is the e x p ected stron g gain in p ro d u ctiv ity . H igher p ro d u ctiv ity should m ean addition al in c o m e fo r th o se em p loy ed and fe w e r w o r k e r s re q u ir e d fo r p rod u ction . E m p loy m en t in the Southeast is e x p ected to o u tstrip the nation in a ll s e c t o r s o f the p riv a te e co n o m y . F in a n cia l m a rk e ts w ill continue to d e v e lo p in the m a jo r c itie s and w ill add to the grow th in s e r v ic e jo b s . Splendid m on ey m a rk ets a re d evelop in g ra p id ly h e r e , and b u s in e s s m e n have le s s need to look fo r financing ou tsid e the Southeast. T his pattern is equ ally tru e fo r m any other c a te g o r ie s o f b u sin e ss s e r v ic e s . G row in g op p ortu n ities fo r em p loy m en t and e n tre p re n e u rsh ip in the s e r v ic e s e c t o r w ill continue. - 5 - The on ly c a te g o r y o f em ploym en t not e x p ected to g ro w as ra p id ly h e re as in the r e s t o f the nation is govern m en t em p loy m en t. A m atu ring e co n o m y m eans grow th in so m e g o o d s -p r o d u c in g in d u strie s. Such m anufacturin g and co n s tru ctio n w ill continue to add new jo b s fo r our w ork ers. T h o se jo b s and new op p ortu n ities a re needed fo r our young p e o p le , sin ce fe w e r p eop le w ill be m aking a liv in g in the a g ricu ltu ra l s e c t o r . R u ra l to urban m ig ra tio n a ccom p a n yin g the d e clin e in a g ricu ltu ra l em p loym en t n ation a lly p rov id ed a la rg e flo w o f w o r k e r s out o f the Southeast. This flow is p r o je c te d to slo w during the S e v e n tie s. The d e clin e in a g r ic u l tu ra l em ploym en t w ill be la r g e r than n a tion a lly fo r a ll states o f the D is tr ic t, e x cep t F lo r id a . F lo r id a 's d e clin e w ill be le s s than national. Som e m ay m ourn the p a ssin g o f a w ay o f life as we m o v e fu rth er fr o m an a g ricu ltu ra l to an in d u stria l e co n o m y . m uch. P e r s o n a lly , I cannot w eep too In a m a rk e t e co n o m y , p eop le resp on d to p r ic e in c e n tiv e s , and m ov in g into an urban , in d u stria l e co n o m y m ay be fo r th em a m ov e to a m o r e p ro d u ctiv e , h ig h e r-p a y in g jo b , and perhaps a m o r e pleasant w ay of earn in g a liv in g . The change f r o m lo w to high p ro d u ctiv ity em ploym en t a ccou n ted fo r m u ch o f the rapid grow th in population and in c o m e during the past twenty y e a r s . G row th in m e tro p o lita n a r e a s , lik e A tlanta, we e x p e ct, w ill continue in the next d e ca d e . P erh ap s the p a ce w ill be s lo w e r than that o f the S ix tie s, as the m ov em en t o f p eop le fr o m fa r m to city slow s som ew hat. M etro p o lita n a re a s w ill e n jo y a h igh er rate o f grow th in p e rso n a l in c o m e during the S even ties than w ill the n o n m e tro p o lita n a r e a s . The gain w ill re su lt fr o m the population m ov em en t into m e tro p o lita n a r e a s , - 6 - and the sh ift to h igh er paying jo b s by w o r k e r s . Such m ov em en ts a re not without p r o b le m s . The e x p e r ie n c e o f so m e o f our n orth ern c itie s su g g ests the p ro b le m s w h ich ste m fr o m ru r a l to urban m ig ra tio n . We have m ade a good sta rt tow ard avoidin g the w o r s t o f th ese p ro b le m s in A tlanta. But the fight to m aintain urban a re a s as d e s ir a b le p la ce s to liv e and w o rk is n e v e r co m p le te ly won. That continual battle is one o f the c o s ts o f grow th and d ev elop m en t. We can keep A tlanta a d e s ir a b le p la ce in w hich to liv e , w o rk , and v is it and s till obtain the grow th in in c o m e and em p loy m en t. To e n jo y such rapid grow th, though, w ill re q u ir e the in v estm en t o f en orm ou s am ounts o f ca p ita l in both the pu blic and p riv a te s e c t o r s . P riv a te in v estm en t w ill flo w w h ere th ere is an op portu n ity fo r p ro fit if pu blic in v estm en t sm ooth s the w ay by p ro v id in g adequate e s s e n tia l s e r v ic e s , such as ed u cation , tra n sp o rta tio n , co m m u n ica tio n s , law e n fo rc e m e n t, and pu b lic health. Investm en ts in ed ucation a re p a r tic u la r ly im p orta n t. To becom e m o r e p ro d u ctiv e , th ere w ill be a need fo r a la b o r f o r c e w hich can a cce p t the changing re q u ire m e n ts o f te ch n o lo g y and adapt to the n eeds o f a fa st changing e co n o m y . To a ch ie v e m o r e p ro d u ctiv ity , we w ill need to strengthen ou r ed u cation al sy ste m s so our young p eop le can fu lly d e v e lo p th eir talents and liv e with change ra th er than r e s is t it. The Southeast can and w ill m e e t the ch a llen g e o f u rb a n iza tion en gen d ered by e c o n o m ic grow th. But population m ov em en ts and new in v estm en ts a r e not the only changes to be fo r e s e e n . Changes in the la b o r f o r c e during the 1970's w ill - 7 - a ffe c t the e co n o m y o f the en tire nation. A slow dow n in the grow th o f the te e n -a g e population should le s s e n co m p e titio n fo r jo b s in that age grou p . T e e n -a g e w o r k e rs had un em p loym en t ra te s m uch h igh er than o ld e r , m o re e x p e rie n ce d w o r k e rs during the 1960's. The slow dow n in new entrants to this group m ay b rin g about so m e im p r o v e m e n t in the o v e r a ll un em ploym ent ra te during the next d e ca d e . On the oth er hand, as the la rg e num ber o f te e n a g e rs who m ov ed into the la b or m a rk et during the late 1960's enter th eir p rim e w ork in g y e a r s , we should have a you n ger, b etter ed u cated, m o r e e x p e r ie n c e d , and m o r e p r o d u ctive la b or supply. T his la rg e n u m ber o f younger w o r k e r s should p rov id e an abundance o f new id ea s to the o rg a n iz a tio n s fo r w hich they w o rk . m ay a ls o b rin g d iffe re n t points o f v ie w . o ld e r c o -w o r k e r s . T hey T h ey w ill not be as d o c ile as their T hey have a lre a d y d em on stra ted the knack fo r co m m u n i cating th eir id ea s in ways w hich m anagem ent m ay not v ie w kindly. In sh o rt, an in fo rm e d and enlightened m anagem ent should be p re p a re d to d eal with this new g en era tion o f w o r k e r s on human t e r m s . W o rk e rs should be co n s id e r e d as m o r e than ju st another fa c to r in the p ro d u ctio n equation. The la rg e in c r e a s e in younger w o r k e r s has oth er im p lica tio n s fo r s o c ie ty . F o r e x a m p le, we w ill find a g row in g co m p le x ity in jo b s w h ich w ill dem and m o r e education on the part o f w o r k e r s and b rin g a m o r e highly educated la b o r f o r c e by 1980. T his change w ill re s u lt f r o m both the h eavy in flu x o f r e la t iv e ly w e ll-e d u c a te d young w o r k e r s into the la b o r f o r c e and the re tire m e n t o f o ld e r w o r k e rs with le s s fo r m a l ed u cation . - 8 - The m a tu re w o r k e r w ill p ro b a b ly be pushed h a rd e r to hold his jo b a gain st the co m p e titio n o f the younger w o rk e r who w ill be b e tte r train ed and b etter ed u cated. T his w ill p ro b a b ly a c c e le r a t e the trend tow ard e a rly r e tir e m e n t a lre a d y evident in our s o c ie ty . E m p lo y e rs m ay be tem pted to r a is e ed u ca tion a l re q u ire m e n ts fo r en try into jo b s . T his cou ld m ake it m o r e d ifficu lt fo r th ose with le s s edu cation to find jo b s , even though they m ay have the a b ility to lea rn n e c e s s a r y jo b s k ills . In our s o c ie ty , the grou p with the lo w e s t edu cation al attainm ent has been the b la ck s . A ny u n n e c e s s a r y upgradin g o f jo b entry re q u irem en ts w ill w o rk to the disadvantage o f this grou p . B la ck s even now a re con cen tra ted in th ose o ccu p a tio n s e x p ected to d e clin e during the next d e ca d e . It is im p e r a tiv e that e m p lo y e r s e sta b lish en try re q u ire m e n ts w hich r e fle c t actu al jo b n e e d s, ra th er than sim p ly the in c r e a s e d a v a ila b ility o f educated la b o r. A ll w o r k e rs should be allow ed the op portu n ity to enter the la b o r m a rk et and en la rg e th eir s k ills to th eir fu ll ca p a b ilitie s . M any o f the jo b s k ills in both m anual and w h ite -c o lla r occu p a tio n s a re lea rn ed on the jo b . T o r e q u ir e fo r m a l ed ucation as a p r e r e q u is ite fo r em p loy m en t m ay s im p ly be an e a sy m eans o f s c r e e n in g e m p lo y e e s . M aintaining u n n e c e s s a r ily high en try standards would not s e r v e b u sin e ss o r s o c ie ty . The h igh er edu cation al le v e ls o f the la b o r supply m ay a ls o p re se n t a p r o b le m fo r m an agem en t. Substantial grow th is fo r e s e e n in m anual occu p a tion s re la te d to in d u stria l a ctiv ity . The m a n u fa ctu rin g in d u strie s o f the Sixth D is tr ic t have been grow in g m uch fa s t e r than th ose o f the nation fo r the past th irty y e a rs . T his trend is e x p ected to contin ue. We w ill, - 9 - t h e r e fo r e , s till need m any w o r k e r s to o p e ra te our f a c t o r ie s . Y et, this w ork could be tediou s and b o rin g as p rod u ction lin es b e c o m e m o r e s p e c ia liz e d . The tren d tow ard autom ation o f p rod u ction p r o c e s s e s is e x p e cte d to continue, w h ich could b rin g an even m o r e m inute d iv is io n o f la b o r than p re se n tly e x ists in our fa c t o r ie s . Even today a sig n ifica n t num ber o f A m e r ic a n w o r k e rs a re not content with the quality o f th eir w ork in g liv e s . D iscon ten t re su lts when jo b s a re fille d w ill dull, re p e titiv e tasks that to the w o rk e r do not s e e m to have a con n ected m eaning. A s you n ger, b e tte r educated w o r k e r s m o v e into the la b or m a rk et, this p ro b le m o f d isco n te n t is lik e ly to in te n s ify . d iscon ten t has c o s ts fo r both b u sin e ss and s o c ie ty . W ork er R e fle c te d a re high a b sen tee r a te s , high tu rn over r a te s , w ild ca t s t r ik e s , and p rod u ction sa b ota g e. B u sin ess le a d e rs cannot be saddled with r e s p o n s ib ility fo r so lv in g a ll o f s o c ie t y 's ills . H ow ev er, re d e sig n in g jo b s w h ich ca u se w o r k e r d iscon ten t m ay w e ll be one a re a in w h ich b u sin e ss could and should take a ffirm a tiv e a ctio n . co m p la in ts. We cannot a ffo rd the lu xu ry o f ig n o rin g w o r k e r s ' Y ounger w o r k e rs a re lik e ly to be m o r e v o c ife r o u s than th eir o ld e r co u n te rp a rts. T hey m ay dem and m o r e f r o m th eir jo b s than a liv in g w age and re a so n a b le w ork in g co n d itio n s. In su m m a ry , fo r young p eop le en terin g the la b o r m a rk e t o f the Southeast in the next d e ca d e , the o p p ortu n ities a re b rig h t, e x citin g , and u n lim ited . F o r th e se sa m e young p eop le and fo r a ll o f u s, attached as a ca rd in a l p rin cip le with any w orth y op portu n ity, th e re w ill a lso be ch allenging r e s p o n s ib ilit ie s .
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