76-06-A1
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Unemployment and Inflation I[edit]
Transcript[edit]The government tells us that seven and a half million people are unemployed. Who are they, and why are they unable to find jobs? To put the problem of unemployment in perspective, let's go back 10 years, to 1966. We were in the middle of the Vietnam War, the economy was booming, the unemployment rate was only 3.8%, and 39% of all Americans were gainfully employed. Compare that with the current situation. We have been at peace for four years, the economy is shaky, the unemployment rate has risen to 7.9%, but now 42% of all Americans have jobs. A higher percentage of Americans are employed today than in 1966, even though the current unemployment rate is more than twice what it was then. If this makes little sense to you, remember that the unemployment rate is not a fact, it is a statistic -- a government statistic. And while it may be valid as a statistic, it tells only part of the story of unemployment. What the unemployment rate tells us is that 7.9% of the people who want jobs can't find them. What it doesn't tell us is who wants jobs, and why. To answer these questions we must look at what the government calls the "labor force" the composite of all those people aged 16 and over who have or want jobs. In the past 10 years the numbers of persons in the labor force has grown by almost 20 million, at a rate twice that of the total population. One reason the labor force is growing so fast is that our population is getting older -- the number of persons under 16 is steadily declining as the birth rate falls. But a more significant reason is that more and more people who have never worked before are joining the labor force. If the percentage of the population counted in the labor force were the same today as 10 years ago, only 2.5 million people would be unemployed, instead of 7.5 million. These 5 million people, representing a part of our population never before counted in the labor force, constitute the bulk of the unemployment problem. Who are they? Mostly women, who are increasing as a part of the labor force at 2.5 times the rate of men. In many cases these women who have never worked before are trying to become second workers in families where the wages of one worker can't keep up with the rising cost of living. Here is evidence of a direct cause and effect relationship between unemployment and inflation, and that's what I'll talk about next time. This is Ronald Reagan. Thanks for listening. |
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