Employment and unemployment in the first half of 1981 Employment displayed sluggish growth as auto manufacturing failed to keep pace with other industries and homebuilding remained depressed; unemployment held close to the late 1980 levels DIANE N. WESTCOTT models before the Labor market signals became mixed as 1981 unfolded . rebuilding of inventories of 1981 During the first half of the year, total employment con- close of the model year. It is questionable, though, . auto sales will be tinued to show some signs of improvement from the re- whether this increase in U.S high and the cessionary declines of 1980. However, unemployment sustained; the cost of borrowing remains was reasonably stable, with the overall jobless rate at manufacturers' rebate program has ended. depressed in the first 7 .4 percent in each of the first two quarters of 1981, not The housing industry remained consistently high, and much different from the 7.5-percent rate in the last half half. Mortgage interest rates were lending institutions to of 1980. Although both the household and payroll em- the new forms of financing by reassure buy- ployment series' were moving upward, the pace of the make borrowing more feasible did little to interest rates have payroll series slowed to almost a trickle by the end of ers and home builders . Although only the housing in- the second quarter. climbed to new heights, thus far, Employment in 1980 had been curtailed largely as a dustry seems to have suffered unduly. result of job losses in manufacturing and construction Homebuilding, auto manufacturing still struggling -particularly in two key industries, automobile manu- nonfarm payroll employ- facturing and housing construction . Although total pay- During the first half of 1981 in the second half of roll employment expanded during the first half of the ment continued the gains begun low of 90.2 million, the year, construction and manufacturing did not. The job 1980. From the third quarter by the second count has been at a virtual standstill in these two indus- payroll job count rose to 91 .5 million of growth has slowed tries since the fourth quarter 1980. quarter of 1981 ; however, the rate of the year. (See table Employment in the domestic automobile industry, considerably since the beginning however, was up somewhat by the second quarter. This 1 .) Of the 172 private nonagricultural industries in the only 56 per- can be attributed, in part, to the spurt in auto sales Bureau of Labor Statistics' diffusion index, with which resulted from the rebates offered by U.S. auto cent registered gains in the first quarter, compared manufacturers early in 1981 and from the subsequent 62 percent in the last quarter of 1980. Jobs in the service-producing sector, which have tra- ditionally been relatively immune from recession com- Diane N. Westcott is an economist in the Division of Employment and Unemployment Analysis, Bureau of Labor Statistics . pared with the goods sector, increased throughout 1980 3 MONTHLY LABOR REVIEW August 1981 . Employment and Unemployment and in the first half of 1981, but at a considerably the durable goods sector, bore the brunt of the business slower pace than in the few years immediately preceding reversals in 1980. Nondurables, although not as severely the recession . At midyear, employment totaled 65.8 mil- cut back, experienced no growth over the year. The first lion in this sector, up 1 .3 million from the first quarter half of 1981, however, saw limited job expansion in of 1980. This overall pattern masked some important both the durable and nondurable goods sectors. By differences among the industries that constitute this mid-1981, manufacturing employment totaled 20.4 mil- group. Most of the increase in the first half 1981 was in lion, only 400,000 above its third quarter 1980 low. The services and retail trade; transportation and public utili- manufacturing layoff rate (often used as an advance in- ties and government exhibited almost no growth or ac- dicator of cyclical changes) remained at a relatively high tually declined. level throughout 1980 and 1981, reflecting curtailed job Job expansion in the goods-producing industries was opportunities in this sector . Likewise, the quit rate, rather limited in the first 6 months of the year; conse- which indicates how workers assess the strength of the quently, employment had not yet returned to prereces- demand for labor, fell throughout 1980 and showed no sion levels. Employment in construction not only did improvement during the first 6 months of this year. not pick up during the first half, but actually experi- The economic reversal of 1980 was devastating in the enced further decline. At 4.3 million in the second quar- auto industry, where one-third of the total jobs, or ter, total jobs equaled the third quarter 1980 320,000 workers, were cut between the first quarter of recessionary low. While most of the economy was able 1979 and the third quarter of 1980. Unemployment in to adjust to the high interest rates, the housing market this industry reached a record 24.7 percent in the sec- remained sharply curtailed. The rate of housing starts, ond quarter of 1980, receded to 17.2 percent by for example, had declined steadily and sharply from the yearend, and fell to 11 .6 percent by the second quarter third quarter of 1979, when it averaged 1 .8 million, to 1981, as some of the unemployed auto workers were re- below 1 million by the second quarter 1980. A year lat- called, while others probably found work elsewhere. er housing starts were still low. Construction employ- Employment in the auto industry, spurred by an ex- ment, which had dropped sharply in early 1980, was on tensive rebate program, showed some improvement over the rise by yearend as mortgage interest rates declined the first 6 months of 1981, rising by 30,000. However, temporarily and the Federal Government made funds by the end of the first half, manufacturers' rebates were available for the construction of multifamily dwellings. no longer in effect and interest rates were up again leav- However, the start of 1981 saw a resumption of increas- ing the continued expansion of the auto industry in ing interest rates and a corresponding decline in con- doubt. The following tabulation shows employment struction employment, especially in the residential and (from payroll series) in the auto and related industries office building sectors. This was also reflected in the and the unemployment rate (from the household sur- movement of the unemployment rate for workers in vey) in the auto industry, 19881 quarterly averages construction, which had declined from its high of 16.3 (second quarter 1981 data are preliminary) : percent in the third quarter of 1980 to 13.8 percent in 1980 1981 the first quarter of 1981, only to rise again in the sec- I I/ //I I V 7 II ond quarter. The following tabulation shows employ- Employment (in thousands) : ment (from payroll series) in the construction and Motor vehicles and related industries and the unemployment rate (from the equipment . 851 739 721 739 722 752 Other manufacturing : household series) for the construction industry, 1980-81 Primary metals . 1,217 1,156 1,080 1,123 1,139 1,142 quarterly averages (second quarter 1981 data are pre- Fabricated metals . 1,682 1,612 1,562 1,580 1,579 1,601 liminary): Rubber and mis- cellaneous plastics . 761 731 706 725 732 751 1980 1981 Unemployment rate: 7 /I III /V l !I Auto manufacturing . 16.7 24.7 22.4 17 .2 17 .9 11 .6 Employment (in thousands) : Construction, general Employment changes in both the housing construc- building contractors . 1,261 1,207 1,183 1,208 1,215 1,176 tion and auto manufacturing industries are generally Manufacturing : thought to be key indicators of the general Lumber and wood health and products . 737 672 671 683 691 704 pace of the economy because of their strong ties to oth- Furniture and fixtures . 487 471 455 463 466 483 er industries . With the tightness in the money market, Stone, clay, and glass . 694 663 651 656 653 657 there were sizable cutbacks in industries related to Unemployment rate : home building-such as lumber, furniture, stone, clay Construction . 11 .8 15 .6 16 .3 14 .4 13 .8 15 .8 and glass, and appliances-during 1980, and although they recovered somewhat by yearend, their employment Along with construction, manufacturing, particularly gains were unimpressive during the first half of the year. 4 Table 1 . Highlights of the employment situation, seasonally adjusted quarterly averages, 19801 1979 1980 1981 Selected categories IV 1 11 111 IV 1 11 Civilian labor force 103,741 104,217 104,693 104,982 105,173 105,800 106,768 Employed . 97,572 97 .718 97,040 97,061 97,276 98,012 98 .868 Men, 20 years and over . 52,360 52,310 51,810 51 776 52,005 52,245 52,683 Women, 20 years and over . 37,260 37,549 37,603 37,807 37,828 38,389 38,929 Both sexes, 16 to 19 years 7,952 7,859 7 627 7,477 7,443 7,377 7,256 Unemployed ~ - 6,169 6,499 7.652 7,921 7,897 7,788 7,900 Unemployment rates All workers . 5 9 62 7 3 7 5 7 .5 7 4 7 4 Men, 20 years and over 4 4 4 .8 62 6 .6 6 .3 6 .0 6 .1 Women, 20 years and over . 57 5.8 6.4 6.4 67 6.6 6.6 19 . 1 192 Both sexes, 16 to 19 years .