(The following
passage was written in 1977.)
Changes in the
volume of unemployment are governed by three fundamental forces: the growth of
the labor force, the increase in output per man-hour, and the growth of total
demand for goods and services. Changes in the average hours of work enter in
exactly parallel fashion but have been quantitatively less significant. As productivity
rises, less labor is required per dollar of national product, or more goods and
services can be produced with the same number of man-hours. If output does not
grow, employment will certainly fall; if production increases more rapidly than
productivity (less any decline in average hours worked), employment must rise. But
the labor force grows, too. Unless gross national product (total final
expenditure for goods and services corrected for price changes) rises more
rapidly than the sum of productivity increase and labor force growth (again
modified for any change in hours of work), the increase in employment will be
inadequate to absorb the growth in the labor force. Inevitably the unemployment
rate will increase. Only when total production expands faster than the rate of
labor force growth plus the rate of productivity increase and minus the rate at
which average annual hours fall does the unemployment rate fall. Increases in
productivity were more important than growth of the labor force as sources of
the wide gains in output experienced in the period from the end of World War II
to the mid-sixties. These increases in potential production simply were not
matched by increases in demand adequate to maintain steady full employment.
Except for the
recession years of 1949, 1954, and 1958, the rate of economic growth exceeded
the rate of productivity increase. However, in the late 1950s productivity and
the labor force were increasing more rapidly than usual, while the growth of
output was slower than usual. This accounted for the change in employment
rates.
But if part of
the national purpose is to reduce and contain unemployment, arithmetic is not
enough. We must know which of the basic factors we can control and which we
wish to control. Unemployment would have risen more slowly or fallen more rapidly
if productivity had increased more slowly, or the labor force had increased
more slowly, or the hours of work had fallen more steeply, or total output had
grown more rapidly. These are not independent factors, however, and a change in
any of them might have caused changes in the others.
A society can
choose to reduce the growth of productivity, and it can probably find ways to
frustrate its own creativity. However, while a reduction in the growth of
productivity at the expense of potential output might result in higher
employment in the short run, the long-run effect on the national interest would
be disastrous.
We must also give
consideration to the fact that hidden beneath national averages is continuous
movement into, out of, between, and within labor markets. For example, 15 years
ago, the average number of persons in the labor force was 73.4 million, with
about 66.7 million employed and 3.9 million unemployed. Yet 14 million
experienced some term of unemployment in that year. Some were new entrants to
the labor force; others were laid off temporarily. The remainder were those who
were permanently or indefinitely severed from their jobs. Thus, the average
number unemployed during a year understates the actual volume of involuntary displacement
that occurs.
High unemployment
is not an inevitable result of the pace of technological change but the
consequence of passive public policy. We can anticipate a moderate increase in
the labor force accompanied by a slow and irregular decline in hours of work. It
follows that the output of the economy—and the aggregate demand to buy it—must
grow by more than 4 percent a year just to prevent the unemployment rate from
rising, and by even more if the unemployment rate is to fall further. Yet our
economy has seldom, if ever, grown at a rate greater than 3.5 percent for any
extended length of time. We have no cause of complacency. Positive fiscal,
monetary, and manpower policies will be needed in the future.
7. The passage
contains information that answers all of the following questions EXCEPT:
(A) What is gross national
product?
(B) What effect does a change in
productivity invariably have on gross national product?
(C) Under what conditions might
employment rise in the short run?
(D) What effect does an increase
in output and a decrease in number of hours worked have on productivity?（B）
(E) What was the average number
of people unemployed in 1962?
9. Which of the
following proposals best responds to the author’s concerns?
(A) The government should
manipulate the size of the labor force to prevent future recessions.
(B) The government should
maintain some controls over the economy, but it should allow the employment
rate to rise and fall with the gross national product, as a check on labor
costs.
(C) People should accept that
unemployment is undesirable but unavoidable.
(D) The government should manage
the economy carefully.（D）
(E) The government should not
interfere in the interplay among the three forces affecting unemployment.
10. Which of the following
best summarizes the main idea of the passage?
(A) We can and must take steps
to ensure that the unemployment rate does not continue to rise as our
population and our use of technology increase.
(B) Increases in potential
production must be matched by increases in demand in order to maintain steady
full employment.
(C) High unemployment is not an
inevitable result of the pace of technological change but the consequence of
passive public policy.
(D) If part of the national
purpose is to reduce and contain unemployment, arithmetic is not enough.（A）
(E) Full employment, regardless
of fluctuations in the economy, is within the realm of possibility.
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