Business In I960: Tough Prosperity

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been criticizing for years. As the newly appointed White House staffer charged with drawing up proposals to reform the agencies, Landis plans to draft a whole regiment of legislation to push through his changes. The new Administration has a great opportunity to free business to move faster, make more of its own decisions.

Seed Money. Many of the plans that the Administration hopes to push have long been argued over and discussed—but few of them are clearly antirecession measures. Kennedy wants to raise the minimum wage to $1.25, spend more on education and research, get medical aid for the aged tied to social security. To aid the jobless, the Administration has in the works an aid-to-distressed-areas bill.

Both parties agree that such aid is needed, but the question is: How much? The major need is not for massive spending, but for "seed money" that would give blighted areas the impetus they need to plan their own recovery.

Probably the biggest governmental boost to the economy will be a hefty increase in defense spending; Kennedy may well add $1 billion to the fiscal 1961 defense budget, but even without any Kennedy hikes, the Federal Government is expected to be spending in 1961 at an annual rate of $1.5 billion more than defense expenditures in 1960.

The new Administration will move slowly on major antirecession measures, simply because it wants to wait and see whether the economic downturn is bottoming out or getting worse. As a result, it has no plans for massive Government spending on public works, especially since such spending would not take full effect for many months. Kennedy would like to increase unemployment benefits, and if business gets worse, prefers a temporary tax cut to stimulate the economy.

Uneven Growth. While recession is the new Administration's immediate economic problem, its long-range problem was the subject of the biggest economic argument of 1960: economic growth. After a historic growth rate of about 3% over the last half-century, the U.S. has slipped in the last four years to an annual rate of just over 2%. In 1960 everyone agreed that the U.S. had to grow faster. New York's Governor Rockefeller plumped for 5% or 6%. The Democratic platform came out for 5%. Many businessmen cited 32% as a more realistic goal.

The U.S. has not stopped growing, but the growth is uneven. The burgeoning electronics industry has shot from $2.6 billion in sales in 1950 to $9.8 billion today, now employs 677,000 workers where it employed only 350,700 in 1950. The chemical industry now employs 28% more workers than in 1950, retail stores 20% more, banks and trust companies 55% more. With U.S. total spending on recreation up 66% since 1950, leisure industries from boating to bowling are fast expanding.

But in older industries that were once the employment mainstays of the economy the situation is different. Such industries as coal, autos, steel and oil have not only stopped growing in terms of creating new jobs but, thanks to automation, are actually employing fewer workers. The U.S. economy has shifted from an industrial to a service economy, where 55% of the working force is engaged in performing services instead of turning out products. The need for unskilled labor is disappearing so fast that chronic labor shortages actually exist in some areas where not enough trained men are available. The paradox