The Public Interest

The economics of the new unemployment

Martin S. Feldstein

Fall 1973

A HIGH level of unemployment is a persistent problem of the American economy. During the past 20 years, the average rate of unemployment exceeded 4.5 per cent.  In only one post-War year (1953) did unemployment drop below three per cent. Although every segment of society is affected, some groups have unemployment rates that are several times as high as the national average. At the end of the first half of 1972, more than nine per cent of the non-white labor force was unemployed. Among men under 25, the unemployment rate was 11.5 per cent. These high unemployment rates imply substantial personal and aggregate losses. Moreover, as I shall emphasize below, the American pattern of unemployment is a symptom of a more serious failure in the development and use of our nation’s manpower.

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