Two Kinds of Unemployment

Called up to Capitol Hill last week to appear before Congress' Joint Economic Committee, the Administration's top economic-policy officials reported a "consensus'' that the economy would start turning up in April. But a basic disagreement reared up in testimony on the cause and cure of unemployment.

William McChesney Martin Jr.. chairman of the Federal Reserve Board, argued that the current unemployment in the U.S. is largely "structural," resulting from technological shifts rather than from recession, and concentrated among "the semiskilled and the unskilled" in the special areas of "farming, mining, transportation and the blue-collar crafts and trades in manufacturing industries." Dealing with structural unemployment, said Martin, requires programs that "take into account the who, the where and the why of unemployment," such as training unemployed workers to do other kinds of work. "Attempts to reduce structural unemployment by massive monetary and fiscal stimulation of overall demands," he warned, would stir strong currents of inflation in the economy.

The three-member Council of Economic Advisers, headed by Walter W. Heller

(TIME cover, March 3), served up a batch of statistics designed to show that "structural" unemployment is relatively unimportant compared to "cyclical" unemployment resulting from the recession and from the "chronic slack" in the economy.

The "real cause of weakness in 1961's labor market." said the council's prepared statement, "is inadequate demand." As the principal weapon against unemployment, the council called for stimulation of demand through "fiscal, monetary and credit policies for economic recovery." Later in the week. President Kennedy summoned his economic-policy team to a meeting at the White House and set about clearing up the conflict between Martin and the White House advisers.

Under prodding by the President, Heller and Martin decided that the apparent disagreement resulted from a difference of emphasis rather than from any fundamental conflict of views. Both sides agreed that the U.S.'s current unemployment is partly "structural" and partly "cyclical." and that each kind calls for a different set of remedies.

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