A Year of Economic Expansion

As fiscal year 1960 opened, the economy had reached a high point in its recovery from the 1957-58 recession. With the onset of the 4-month steel strike in midJuly 1959, however, economic activity fell off, with further declines occurring as the secondary effects of the strike gradually spread into related industries.

The resumption of steel production in November was followed by a vigorous economic recovery. For the first time in history, gross national product-the sum of the Nation's total output of goods and services-advanced to a seasonally adjusted annual rate of a half trillion dollars. This was in the third quarter of fiscal 1960. By mid-1960, the annual rate had already set a new record, increasing by $17 billion or 31⁄2 percent over the corresponding period a year earlier.

Personal income in June 1960 was also at an alltime high; the annual rate of $406 billion (seasonally adjusted) was $19 billion above the corresponding month of 1959. Farm income, responding to rising prices of farm products, increased from the third to the fourth quarter of fiscal 1960, and was slightly higher than in the like period of the previous year.

Industrial production ended the fiscal year on about the same level as it began, and by June 1960 was 109.3 percent of the 1957 average. Expenditures for new plant and equipment rose to a seasonally adjusted annual rate of $37 billion in the second quarter of 1960 for a new record.

Construction expenditures dropped about 4 percent from an annual rate of $57.8 billion at the start of the fiscal year to $55.6 billion at the year's end. This decline mainly reflected reduced residential construction, which fell 15 percent to 1,334,000 units.

Increase in Both Employment and Unemployment

As fiscal year 1960 ended, the civilian labor force and total employment were at record levels. The civilian labor force, numbering 73.0 million in June 1960, was up by 1.4 million, and nonfarm employment equaled this unusually large increase, totaling 61.8 million workers at the year's end. Farm employment, however, was 400,000 lower than a year earlier. As a result of the sharp increase in the labor force compared with the more moderate increase in total employment, the 4.4 million unemployed workers at the end of the fiscal year exceeded the number a year earlier by 400,000.

The year began with unemployment falling sharply from the recession highs of the year before and approaching but still above prerecession levels. However, the prolonged nationwide steel strike, which began July 15 and ended November 7, 1959, involved 500,000 steelworkers and caused nearly 650,000 in other industries to be laid off. Secondary effects of the strike were mainly in the auto, machinery, railroad, coal, and metals industries.

With the return of steelworkers to their jobs in early November, employment picked up rapidly. Manufacturing employment (seasonally adjusted) rose about 400,000 from its low point in October to 16.4 million in December, but was still

about 150,000 lower than when the strike began. While some further gains were registered in January and February, employment in many durable goods industries, seasonally adjusted, tended to level off or slip back during the balance of the year. Primary metals and transportation equipment lost considerable ground during this period. Despite sharp reductions during the strike months, total manufacturing employment in fiscal year 1960 was above year-earlier levels through May 1960. In June, however, with further cutbacks in primary metals and transportation equipment, factory employment was about 100,000 lower than a year earlier and was nearly 500,000 lower than in June 1957. These losses were largely in the metals and transportation equipment sectors of durable goods industries. Employment in the manufacture of nondurable goods regained its prerecession level by May 1960.

The outstanding over-the-year gains in nonfactory employment occurred in government (315,000), virtually all State and local; trade (250,000); service (120,000); and in finance, insurance, and real estate (50,000). Employment in mining, construction, and public utilities showed little change between June 1959 and June 1960.

Unemployment rose to nearly 4.2 million (seasonally adjusted) in October, or 6.0 percent of the labor force, largely as a result of the strike. Declines in the following months, as the flow of steel to industry was resumed, brought seasonally adjusted unemployment down to 3.4 million in February. A contraseasonal rise, however, occurred in March because of heavy snows and rains which sharply curtailed outdoor work, and unemployment rose more sharply than usual in June when a record number of students and graduates entered the labor force looking for jobs.

At the end of fiscal year 1960, unemployment stood at 4.4 million, or 5.5 percent (seasonally adjusted) of the labor force. This compared with 3.5 million. and a rate of 5.1 percent in June 1959, and with 3.3 million in June 1957, when the rate was 4.4 percent.

State insured unemployment, which averaged 1.3 million per week in July 1959, rose (on a seasonally adjusted basis) through November, largely because of the secondary effects of the steel strike. The average reached a seasonal high of 2.2 million in February, then dropped to 1.6 million by June, compared with 1.3 million in June of fiscal 1959.

Characteristics of the Unemployed

The characteristics of the unemployed at the year's end were similar in most respects to those of jobless workers a year earlier. Changes which did occur reflected the impact of the steel strike, the poststrike pickup in industries affected by steel shortages, weaknesses which developed subsequently in some hard goods industries, and an unprecedented number of students and graduates entering the labor market looking for jobs. In addition, there were shifting characteristics due to normal seasonal variations.

Unemployment among workers in most major industry divisions either showed little change or rose over the year. The only significant change was an increase of

more than 150,000 in the number of jobless in manufacturing industries, all in the durable goods sector; the unemployment rate for factory workers rose from 4.3 to 5.8 percent. The unemployment rates for the mining and construction. industries, at a little over 8 percent (the highest among the industry divisions), and for service, at 4.8 percent, were not significantly different from those a year earlier.

Unemployment was up by about 100,000 over the year among operatives (who account for about 1 out of 5 of all unemployed workers) and among nonfarm laborers. These two groups had the highest unemployment rates as the year ended-7.4 and 10.7 percent, respectively. In March, the rate for nonfarm laborers had reached a high of 16.4 percent. The 6 percent rate for service workers in June 1960 was only slightly above that for all workers. Clerical workers and craftsmen had the lowest unemployment rates (3.9 percent each).

The number of workers unemployed 15 weeks or longer, which had reached a high of 1.2 million in March and April (about 30 percent of all the unemployed), dropped to 800,000 at the close of the year. This was about 100,000 lower than a year earlier, but was still 300,000 above the number in June 1957.

Unemployment was up over the year for workers in all age groups except women 25 years and older, whose unemployment rate edged down slightly to 4.2 percent. The highest rates in June 1960 were among workers 14 to 24 years of age-16 percent for women and 14 percent for men. On the other hand, the rate for men 25 and over at the end of the year was only 3.7 percent, well below the 5.6 percent (unadjusted) for all men and the 6.1 percent rate for all workers.

As in previous years, unemployment was lower among married workers. The unemployment rate for married men was 3.1 percent in June 1960; married women had a rate of 4.6 percent at the end of the year. This should be compared with the 14 percent rate for single men in June 1960, nearly five times as great as that for married men, and the 12.8 percent rate for single women, almost triple that for married women.

Nonwhite workers continued to be the group most severely affected by unemployment. About 1 out of 10 of these workers was jobless in June 1960, compared with 1 out of 20 white workers. Nonwhite workers are heavily concentrated in occupations with the highest unemployment rates-laborers, farm workers, and operatives. About one-fifth of all unemployed workers at the end of the year were nonwhite, about the same proportion as a year earlier.

Data on the characteristics of the insured unemployed, which became available in the latter half of the fiscal year, show that in June 1960, 40 percent of jobless workers were 45 years of age and older. Men accounted for 60 percent of the insured unemployed in June, compared with 68 percent in January.

Area Labor Market Trends

Labor market conditions showed a small net improvement in most of the country's major production and employment centers during fiscal year 1960. Employment increased over the year in roughly three-fourths of the 149 major areas regularly surveyed by the Bureau and affiliated State employment security

agencies. Gains generally were small to moderate in scale, and were centered primarily in nonmanufacturing industries. In the bulk of the major areas, rising employment was not accompanied by a proportionate decline in unemployment, however, as the labor force also increased.

Reflecting the continuing high levels of employment prevailing in most sections of the country at the end of fiscal year 1960, 112 areas-three-fourths of the country's major employment centers-were classified as areas of relatively low or moderate unemployment (groups B and C). This figure represents a small over-the-year improvement as compared with the total of 103 such areas in July 1959. There were only 60 areas in the list of moderate unemployment groups in July 1958 (near the bottom of the recent recession).

The number of major employment centers officially classified by the Bureau as "areas of substantial labor surplus" decreased during the year from 46 in July 1959 to 37 in July 1960. In July 1958, there were 89 areas-nearly 21⁄2 times the present number-in substantial labor surplus groups. Such sizable centers as New York City, Philadelphia, Newark, N.J., and Louisville were among the areas transferred from substantial to moderate labor surplus classifications during the year. Only five very large areas-Detroit, Pittsburgh, Buffalo, Paterson, and Providence-Pawtucket-remained in substantial labor surplus categories as the fiscal year ended.

A complete listing of the year end (July 1960) area classifications showed the 149 areas grouped into the following labor supply categories:

In 21 of the 37 major areas with substantial labor surpluses and in 74 of the 116 smaller areas with substantial labor surplus, unemployment has been a relatively persistent problem over the past few years. The Bureau-in a new listing first released at the end of the fiscal year-has distinguished these labor markets from the old "substantial labor surplus" areas by naming them "areas of susbtantial and persistent labor surplus." These persistent areas are eligible for first preference in the placement of Federal Government contracts in accordance with the provisions of Defense Manpower Policy No. 4, Revised, which became effective shortly after the end of fiscal year 1960.

During the fiscal year, the Bureau provided active assistance in the operation of various Federal Government programs designed to alleviate heavy unemployment in areas of substantial labor surplus. Figures released by the Department of Defense on military procurement indicated that more than $1.4 billion in contracts were placed in labor surplus areas during the first 9 months of the fiscal year. Approximately $16 million of this total was awarded to firms in substantial labor surplus areas through special preference procedures authorized by Defense Manpower Policy No. 4.

Occupational Labor Market Trends

Many of the Nation's principal industrial centers continued to report shortages in certain professional, skilled, and clerical occupational categories during fiscal year 1960. The end of the steel strike brought an upsurge in demand, especially in skilled metalworking occupations, with the employment situation at the turn of the year reflecting the influence of marked advances in durable goods manufacturing. Demand in some chronically short occupational categories has since declined, however, as a result of spring and early summer cutbacks in various factory activities. Workers released from hard goods industries have added to the labor supply in a number of areas. Local labor supplies have also been augmented by an unprecedented number of high school and college graduates and students.

In line with these developments, job openings placed in interarea clearance by local public employment offices-a measure of local occupational shortagesdeclined by some 15 percent over the fiscal year to a total of 17,500 in July 1960. Shortages in all occupational groups except clerical and sales declined, particularly in the skilled, semiskilled, professional, and service categories.

Job vacancies in skilled occupations declined by more than one-fifth over the fiscal year, with fewer needs listed for machinists, welders, carpenters, electronics technicians, auto and other mechanics and repairmen. Vacancies in the semiskilled group, where clearance needs in July 1960 approximated less than onefourth the skilled total, dropped by more than 40 percent in textile, machine shop, and other occupations.

Declines in the key professional and managerial group, while relatively much smaller than in industrial occupations, were nevertheless significant. This category, with about 9,600 job vacancies in July 1960-more than half the clearance total-experienced a drop of over 500 openings during the fiscal year. Reduced needs were sharpest in the engineering category, with other sizable curtailments reported for draftsmen, social and welfare workers, social scientists and authors, and editors and reporters. Openings for aeronautical, electrical, civil, and mechanical engineers declined. However, demands for chemical engineers were nearly twice as large as in July 1959. More openings were also reported for industrial engineers. Also in contrast to the general trend, unfilled openings for both primary and secondary school teachers and for trained nurses increased significantly over the year.

Employment Service

Favorable economic conditions and the absence of major emergency manpower problems made fiscal year 1960 one of "normal" employment service operations. These conditions encouraged emphasis on excellence in operations rather than on total volume of activity.

Accordingly, the national office of the employment service stressed: (1) staff development, (2) employment service research, (3) management and utilization