The Economy: New & Exuberant

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Unemployment: Price of Automation. It also takes its toll of labor, which is where the real overcapacity in U.S. industry is today. Modernization to economize means replacing men with machines, which cost less than people over the long haul, are more productive and do not take coffee breaks or join labor unions. In the board rooms and at the clubs, today's businessman finds it hard to get his mind—or his conversation—away from topic A: automation. Among automation's side products are 4,000.000 unemployed—5.7% of the labor force. Automated elevators, automated stockroom machinery, automated steel mills and countless other devices are turning the underskilled and the undereducated into unemployables. and sending their more gifted fellows job hunting.

In the past decade, Monroe Rathbone's Jersey Standard has increased its oil production by more than 60%—while cutting employment by 19,000 workers. Though business leaders are struggling to cut costs by reducing payrolls, they realize that high unemployment during a time of prosperity is bound to prevent the U.S. economy from reaching its full potential. "We simply cannot have real prosperity and steady growth at the same time we have a near-recessionary unemployment rate," says Westinghouse's Mark Cresap. "Talking about a solution over the next five years means talking about no solution at all. We cannot live with this thing for five more years."

Time of Testing. Within a year or two, the new economy will face a time of testing: the growing up of all those postwar babies who were born in fecund 1946 and are coming of age to enter the labor force (only 40% will go on to college). "Already our unemployment is concentrated among the 18-and i g-year-olds, and a tidal wave of them will hit us in 1964 and 1965," says Martin Gainsbrugh, chief economist of the National Industrial Conference Board. The number of new workers entering the labor force will soar from 1,200,000 in the last year to 2,500,000 next year.

What will become of them? The business pickup in 1963's first four months created 700,000 new jobs, but 674,000 new workers—not to mention those already unemployed—started looking for jobs. Even the steel mills are hiring only high school graduates, and Government programs for training the unschooled have hardly made a dent. "You just cannot make a shoe clerk out of an unschooled machine shop employee, no matter how hard you try," says Houston Economist Sven Larsen. To many, the only answer lies in broadened vocational training for those of limited talents and expansion of the nation's higher educational system to train more and more students for the increasingly sophisticated requirements of the economy.