tively, in December) have declined for 2 consecutive months. The December rate for adult women, 4.1 percent, was about the same as in November, but was well below the nearly 5 percent rates of September and October.

The unemployment rates for both white and nonwhite workers have declined in each of the last 2 months. However, the nonwhite

rate in December, 6.9 percent, remained more than double the white rate, 3.3 percent.

State insured unemployment rose less than seasonally in mid-December and was below year earlier levels for the first time since February. The insured unemployment rate, at 2.2 percent, was down onetenth from last month and down two-tenths from October.

The rate of economic growth tapered off in 1967 from the rapid expansion of 1965-66, giving way to a period of economic adjustment. As 1967 began, the economy was faced with a slackening in consumer spending, cutbacks in business inventory investment, and a slower rate of increase in national defense spending. Together these developments produced the first pause in nearly 6 years of sustained economic growth. By year end, however, the economy had weathered this period of economic adjustment successfully, and many of the indicators which had reflected the slowdown--industrial production, employment, the factory workweek--were pointing to a more virgorous economic pace in 1968.

As a consequence of the 1967 economic developments, some of the Nation's workers found the employment situation somewhat less favorable

* Of the Division of Employment and Unemployment Analysis.

Annual averages for some labor force series in 1967 are not exactly comparable to those prior to 1967. Improvements in the methods of measuring employment and unemployment, which went into effect in January 1967, have clarified and sharpened concepts and definitions and increased the accuracy of the statistics. In terms of comparability of 1967 and earlier data, however, they have tended to: (1) increase the number of workers working 1-34 hours and lower the number working 35 hours or more; (2) alter the distribution of unemployment by sex; (3) increase the number of workers on economic part time; and (4) reduce the number of workers unemployed 15 weeks or longer. A detailed discussion of the conceptual changes and their affect on the various series may be found in the February 1967 Employment and Earnings and Monthly Report on the Labor Force and in Concepts and Methods Used in Manpower Statistics from the Current Population Survey (BLS Report No. 313, June 1967).

by Paul M. Ryscavage and Hazel W. Willacy*

than in the past few years. In particular, manpower needs of employers in the goods-producing sector of the economy leveled off, in contrast to a continued strong employment increase in the service-producing sector. Workers in the Nation's factories worked fewer hours and their jobs were more vulnerable to loss due to layoffs and industrial disputes. For disadvantaged groups competing for jobs--Negroes, teenagers, and the long-term unemployed--there was no improvement in the employment situation. Thus, on the employment front, the year 1967 was quite unlike any in the 1962-66 period.

Significant employment developments in 1967 included:

(1) A weaker demand for labor in 1967 was reflected by the smallest employment gain since 1963. Employment rose by 1.5 million, 300,000 less than in 1966. Because the increase in employment did not keep pace with the growth of the civilian labor force, unemployment rose by 100,000.

(2) The improvement in the unemployment situation that had highlighted the past several years was halted in 1967. The Nation's rate of unemployment, at 3.8 percent in 1967, was unchanged from 1966.

(3) Employment in manufacturing was affected seriously by cutbacks in inventory and capital investment. The increase in manufacturing jobs--150,000--was the smallest since 1963. In addition, average weekly hours declined by nearly one hour to 40.6 hours in 1967. Over half the workweek reduction was due to shorter overtime hours.

(4) Despite the pause in the goods-producing sector, job gains in the service-producing industries continued to be large in 1967. Sizable employment increases in medical services, education, and retail trade con

2.0 million service and government jobs.

(5) The occupational configuration of the employment increase represented a return to the pre-1963 pattern of large gains for the white-collar and service-oriented occupations and small increases for the bluecollar occupations.

Employment Growth

Throughout the first half of 1967, total employment declined as economic activity faltered. During the third quarter, employment advanced moderately in response to more favorable economic conditions, and by the closing months of the year employment was showing even stronger growth. For the year as a whole, total employment averaged 74.4 million. (See annual average tables appearing in statistical section of this magazine.)

The gain in employment in 1967 differed considerably from the strong and more balanced gains in previous years of the expansion. Between 1963 and 1966, the economy generated employment opportunities in both the goods-producing and service-producing industries. In 1967, however, the slowdown in business activity and investment had a major impact on the goods-producing industries, where job opportunities leveled off. As a result, smaller employment gains occurred in the manufacturing and construction industries and among workers in blue-collar occupations and on full-time job schedules. (See later sections for more detail.)

Employment by age and sex. The 1.5 million increase in employment in 1967 occurred entirely among adult workers. Women continued to enter the labor force in large numbers, with 900,000 additional women finding employment in 1967. This increase matched that of 1966. For men, the employment increase amounted to 625,000, about two and one-half times larger than a year earlier. Teenage employment showed little change in 1967 and was influenced by the movement of teenagers into the adult age group and, to some extent, by the military draft during the year.

Full-time and part-time workers. A significant aspect of employment growth between 1964 and

workers. During this period, well over threefourths of the nonagricultural employment increase occurred among workers on full-time job schedules (35 hours or more a week). In 1967, however, this proportion dropped. Although the bulk of the decline can be attributed to an improved measurement of hours worked in 1967, some of the decline may have been the result of the weaker demand for labor in the goodsproducing and related industries, where inventories and production schedules were being adjusted downward in relation to sales. The weaker demand had other important consequences:

(1) The number of nonfarm workers on parttime for economic reasons (such as slack work or inability to find a full-time job), after allowing for the more precise measures of hours worked, was not changed substantially in 1967. This was the first year since 1964 that this level had not been reduced.

(2) Employment gains among blue-collar workers were considerably smaller than in past years of the current expansion and layoffs were more common.

(3) The jobless rate in manufacturing, which declined continually in the 1961-66 period, moved up in 1967, although it was still at one its lowest levels of the decade.

Industry developments. Total nonagricultural payroll employment rose by 2.1 million to 66.1 million in 1967. The increase was only two-thirds of the job gain in 1966 and the smallest since 1964. The service-producing industries provided the vast majority of the new jobs.

The absence of strong employment growth in the goods-producing industries is one of the most significant aspects of the employment situation. in 1967. Toward the close of 1966, investment in business inventories reached an excessive level relative to sales. As a result, throughout the first half of 1967, inventories were reduced through cutbacks in production. During this period, manufacturers assumed conservative hiring policies and reduced the length of the work

brought more into line with sales, and during the third and fourth quarters of the year industrial production and the factory workweek moved upward. Three factors impeded the return to a more vigorous pace, however: (1) industrial disputes in the automobile industry and other critical sectors of the economy; (2) the reluctance of employers to over extend themselves in terms of inventories and capital equipment, after several years of high investment; and (3) the slowdown in the rate of increase in defense spending.

Taken together, the economic developments of 1967 produced a slight weakening in the demand for factory labor. Manufacturing employment rose by 150,000 over the year to 19.3 million, and several times during the year was well below comparable 1966 levels. The jobless rate in manufacturing rose from 3.2 percent in 1966 to 3.7 percent in 1967. Except for 1966, however, the rate was at its lowest point since 1953. Unlike 1966, when the rate held comparatively steady during the year, the manufacturing unemployment rate increased throughout much of 1967.

At 14.2 million in 1967, the number of factory production workers was down 50,000 from 1966; this represented the second largest number of factory production workers employed since World War II. The 1961-66 rise in the number of factory workers had provided the stimulus for a resurgence in blue-collar employment, especially for semiskilled operatives. However, the slowdown in manufacturing activity in 1967 adversely affected blue-collar workers; their jobless rates were somewhat higher in 1967 (especially the semiskilled) than in the previous year, and employment gains were smaller.

The proportion of nonproduction workers to total manufacturing employment reached a new peak in 1967. The proportion had been increasing steadily throughout the post-World War II period, but had leveled off at 26.0 percent in 1961-64 and had dipped to 25.6 percent in 196566. In 1967, however, it climbed to an alltime high of 26.4 percent, continuing the long-term trend and reflecting the greater job stability of nonproduction workers than production workers in periods of economic sluggishness.

registered job pickups in 1967, and 11 of these gains represented fewer than 40,000 employees each. Unlike 1965 and 1966, when almost 80 percent of the manufacturing employment growth was concentrated in the durable goods industries, only 45 percent occurred in this sector in 1967. The decline in job gains can be traced to the overall slowdown in economic growth together with the increased strike activity which occurred mostly in the durable-goods industries.

Metal-working and metal-using industries expanded by only 50,000 in 1967, compared with a gain of 700,000 jobs in the high capital investment year of 1966. Employment in machinery registered the largest gain (60,000) and the sole decline occurred in the primary metals industries (40,000). Jobs in the transportation equípment industry increased by 15,000. Although employment in the automobile industry was 50,000 below year-earlier levels due primarily to the auto strike in the fall, job gains in the aircraft industry more than offset this employment decline. The increase of 80,000 in the nondurable goods sector was led by printing (40,000) and chemicals (35,000).

Employment in contract construction averaged 3.3 million in 1967, down slightly from 1966 but impressive enough to reach its second highest level. Construction activity began to slow down in the last half of 1966. Bad weather, combined with a sluggish spring pickup, high interest rates, and increased strike activity, accounted for declines during most of the first half of 1967. Although housing construction revived during the third and fourth quarters of 1967, employment continued to lag behind year-earlier levels. Throughout much of the year, gains in residential construction were partially offset by reduced activity in commercial and industrial construction.

In contrast to manufacturing and construction, the service-producing industries--transportation and public utilities, trade, government, services, and finance--provided more employment opportunities than ever before. Together, they accounted for almost 2.0 million of the 2.1 million increase in payroll jobs in 1967. Government employment shot up by 750,000 jobs, slightly

less than in 1966 but otherwise the largest increase of the post-World War II era. A breakdown of this increase reveals approximately 600,000 new jobs in State and local government (mainly education) and 150,000 in Federal government (mainly in the defense and postal departments).

Employment in trade increased 450,000 in 1967, although it showed little gain during the first half of the year. Three-fourths of the increase was in retail trade, which recorded very large gains in the third and fourth quarters. Job advances in the service industries totaled half a million. The largest part of the increase was in medical and other health services, brought about in large part by the advent of medicare. Employment in transportation and public utilities rose by 100,000 in 1967, surpassing the cyclical highs of 1951-53 and 1956-57. Mining employment was down slightly from 1966.

Hours and earnings. The average workweek for the Nation's production and nonsupervisory workers declined by 0.5 hour to 38.2 hours in 1967. Production workers in manufacturing contributed heavily to this decline.

The factory production worker's average workweek declined in 1967 for the first time in 7 years. Hours fell by 0.7 hour over the year to an average of 40.6 hours, the lowest level since 1963. A decline from 3.9 to 3.4 overtime hours accounted for most of the drop.

Not surprisingly, average weekly hours were below year-earlier levels in each month of 1967, reflecting the sluggish performance of the manufacturing sector. In contrast, 1966 was characterized by continually expanding production levels which were met by increased overtime and the hiring of additional workers. The new hire, layoff, and quit rates--all indicators of employment adjustments to production changes-also reflected, in varying degrees, the slowdown in manufacturing.

Gross average weekly earnings for the Nation's rank and file workers topped the $100 mark in 1967, averaging $101.99. The increase from 1966, which amounted to $3.30 (or 3.3 percent), was entirely attributable to a 12-cent rise

in average hourly earnings. For factory workers, average weekly earnings were at a record level of $114.90; however, the increase of $2.56 (or 2.3 percent) was the smallest since 1960. Workers in nonmanufacturing industries, on the other hand, had substantially larger increases in average weekly earnings in 1967. Employees in contract construction had the largest increase (5.4 percent), followed by finance (4.7 percent), mining (4.3 percent), and trade (3.9 percent).

Consumer price hikes continued to offset much of the increase in the gross pay of the Nations' rank and file workers in 1967. In terms of 1957-59 dollars, average weekly earnings increased by only 21 cents over the year to $87.54.1/

Occupations. Reflecting the slower pace of manufacturing activity and the inventory adjustment, blue-collar employment rose by only 300,000 in 1967, compared with average increases of 650,000 in the 1961-to-1966 period. Most of the increase occurred among skilled craftsmen, while the employment level of semiskilled workers rose only slightly. Employment of nonfarm laborers was unchanged over the year at 3.5 million.

Employment among semiskilled blue-collar workers increased by a mere 50,000 in 1967, compared with nearly half a million a year earlier. Because manufacturers were intent on reducing inventory levels in the first half of the year, employment opportunities for the semiskilled were reduced dramatically after nearly 5 years of strong labor demand. Demand remained strong for skilled workers, however. Their employment rose by 250,000 to 9.8 million, but even this increase was smaller than in 1966.

White-collar employment advanced 1.2 million, matching the 1966 increase. About half of the gain occurred among professional and technical workers, their largest increase of the

1/ This increase was computed on the basis of 11-month averages for 1966 and 1967 since the Consumer Price Index for December 1967 was not available at the time of this writing.