Almost Full

Unemployment is an emotional word, and consequently is less understood and more exaggerated than just about any other aspect of the U.S. economy. It conjures up visions of depression, poverty and helplessness for vast numbers of people -- and, indeed, it means that for some. The facts, though, do not really fit the fears. Unemployment is not only dwindling steadily but is con- siderably less acute than some statistics make it out to be.

Many economists predicted only a few months ago that unemployment would stay high simply because the U.S. work force had been expanding as rapidly as the economy. Now they find themselves surprised by how quickly the situation has changed. From a rate of 4.9% in April, unemployment dipped to 4.5% in July, 4.4% in September. Last week the Commerce Department reported that it fell further to an eight-year low of 4.3% in October -- while employment rose to 72.5 million jobs, a record for the month.

Productivity Slips. Unemployment is melting primarily because the economy's growth rate has begun to outpace the increase in the labor force. A growth of 31% to 4% is needed to create jobs for all the youngsters entering the labor force; this year the gross national prod uct will

Available jobs are also on the rise because U.S. industrial productivity is not growing as fast as it did earlier in the 1960s. Productivity has been rising 3.2% annually for the past several years; the 1965 gain will be just below 3%. Why the slowdown? Increased demand has pushed factories into producing at 89% of their capacity, is forcing them to use older, less efficient machinery and less skilled workers. Shortages of skilled labor are continuing to crop up in many industries.

As skills become scarcer, the Government's economic policymakers are beginning to criticize a trend that they once favored. Says Otto Eckstein, a member of the President's Council of Economic Advisers: "It is not in the economy's interest to encourage widespread early retirement." The Administration is thus splitting away from the A.F.L.-C.I.O., which says that it will continue to press the fight for retire-ment-before-65 and higher pensions.

Between Jobs. While Government economists agree with labor that unemployment remains a problem, they believe that it has been overplayed. Half of the unemployed are simply "between jobs"--out of work for less than five weeks--and a quarter of the total are seeking part-time jobs. Less than 3% of the nation's adult men are unemployed. What raises the overall statistics is "class unemployment"--joblessness among nonwhites, women, teenagers and the unskilled (see chart).

A certain amount of unemployment is inevitable. "In an economy in which 10,000 or more newcomers enter the work force every day," says Labor Secretary Willard Wirtz, "and perhaps as many more leave one job to go to another, there is bound to be 'frictional unemployment' amounting to about 2% to 2.5%. There will always be, in addition to this, about one-half of 1% who simply lack what it takes." Adding up those figures, federal policymakers conclude that a jobless rate of 21% to 3% would constitute "full employment." The nation has advanced halfway toward that goal in the past two years, is now only 1,000,000 jobs short of achieving it.

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