Labor Market Policies and Employment Patterns in the United States by Lois Recascino Wise

Author:Lois Recascino Wise [Wise, Lois Recascino]
Language: eng
Format: epub
Tags: Political Science, General
ISBN: 9780429714085
Google: U85JEAAAQBAJ
Goodreads: 58985263
Publisher: Routledge
Published: 2021-10-28T00:00:00+00:00

5

The Structure and Dynamics of Unemployment

DOI: 10.4324/9780429043277-5

The rate of unemployment in the United States has historically been high in comparison with some other OECD countries, but the duration of unemployment experienced by single individuals has generally been lower. During the mid-1980s the rate of unemployment improved overall in the United States. In 1986, the national unemployment rate equaled 7 per cent of the civilian work force which compares rather favorably to the trends observed in OECD nations.67 During 1987, the rate of unemployment continued to decline, remaining below 6 per cent of the work force during the last quarter of 1987 and through 1988. In 1987, the level of unemployment fell below eight million cases for the first time this decade affecting 7.4 million Americans in 1987 (see Table 5.1).

The current pattern of decline in the rate of unemployment is somewhat puzzling in that it runs counter to Okun's Law, which posits that the rate of growth in the GNP determines the rate of change in unemployment. Okun's original formula specified a 4 per cent rate of growth to reduce the level of unemployment, but later revisions to this estimate allowed that a 2.5 rate of growth in GNP was sufficient to reduce the rate of unemployment. Now, even that revised formula appears to have broken down in that unemployment has declined more rapidly than would be anticipated during a period of weak economic growth.68

At the same time, the declines occurring in the rate of unemployment have not been associated with an increase in the rate of wage inflation. In the current period, there is an apparent decline in the nonaccelerating inflation rate of unemployment (NAIRU), which is discussed in Chapter 4.

Reasons for Unemployment. In recent years, about half of those who are jobless cite involuntary reasons, as the data reported in Table 5.1 indicate. In 1982 and 1983, the number of involuntary separations as a proportion of all unemployment was estimated at almost 60 per cent. The proportion of unemployed workers who lost their jobs due to layoffs was highest in the periods after the 17-month 1973-1975 recession and after the equally long 1981-1982 recession at 21 per cent and 20 per cent respectively. The proportion of lay-offs was also high in 1980, at 19 per cent of all unemployed workers and this marks the end of a shorter recessionary period.

TABLE 5.1 Reasons for Unemployment as a Percentage of Civilian Unemployed, 1970-1987 1970 1975 1980 1981 1982 1983 1984 1985 1986 1987

Job Losers 44 55 52 52 59 58 52 50 49 47

Lay-offs 16 21 19 17 20 17 14 14 13 13

Job Leavers 13 10 12 11 8 8 10 11 12 13

Re-Entrants 30 24 25 25 22 22 26 27 26 27

New Eentrants 12 10 11 12 11 11 13 12 12 12

Civilian Unemployed 1000s 4093 5016 7637 8273 10678 10717 8539 8312 8237 7425

Note: Totals may not add to 100% due to rounding.

Sources: U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics Derived from

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