The economy will create only half as many new jobs in 1988 as it did this year, and nearly half of those jobs will be for part-time or contingent workers, one of the nation's leading business research organizations predicted yesterday.
As a result, the Conference Board predicted that the civilian unemployment rate would rise to 6.3 percent by the end of 1988. The rate currently is 5.9 percent.
"America's great job generating machine -- which created roughly 3 million new jobs last year -- will run out of steam in 1988," said Richard Belous of the Conference Board. "This year, the economy will be lucky if it can generate as many as 1.5 million new jobs."
Belous' forecast appears in the upcoming edition of the Conference Board's monthly publication Across The Board. The analysis was based on the consensus of a panel of experts from management, labor and academia.
The 6.3 percent unemployment rate predicted by the Conference Board is basically in line with the 6.2 percent unemployment rate predicted recently by Blue Chip Economic Indicators, a survey of major corporate, private and academic economists.
The Reagan administration is much more optimistic in its unemployment forecast for 1988. Earlier this month, while sharply reducing its prediction for economic growth next year from 3.5 percent to 2.4 percent, the president's economic advisers said the civilian unemployment rate next year would be essentially unchanged at 5.9 percent.
In estimating its unemployment rate for 1988, the Conference Board panel assumed a 2.2 percent economic growth rate for the year. The Blue Chip survey predicts a 2 percent growth rate.
Henry Schecter, deputy research director of the AFL-CIO, said that while the labor federation makes no official forecasts, he believes unemployment may increase slightly next year. But he said he does not think it would be "significantly higher" than the current level. "I would certainly not look for improvement," he said.
Schecter said that in addition to low economic growth, the slowdown in the rate of increase for defense spending and tighter state and local government budgets next year would reduce the number of new jobs being created.
The Conference Board also predicted that, if there is a recession, unemployment increases will be much quicker and much more serious than most economists expect. "The leading econometric models have not been adjusted to fully reflect the changes in human resource policies," Belous said. "The major models will underestimate the speed and size of unemployment growth in the next recession."
He said that, just as most generals tend to continue fighting the last war after it is over, most econometric models focus on the last recession.
"Corporate America's response to the next business-cycle slump will be quite different from previous sessions," Belous said.
"When storm clouds gathered in the past, companies tended to hold on to workers. Even when sales declined, management often waited to see how serious the storm would be before letting workers go."
In the next downturn, Belous said, "management response will be rapid and decisive. Downsizing, early retirements, staff restructuring and hiring freezes have become standard human-resource management tools at many firms. Managers will not hesitate to use these tools if their companies are in trouble."
He predicted that the speed of the layoffs would be further accelerated because more companies are using contingent workers who can be laid off instantly. The Conference Board described contingent workers as those who hold part-time, temporary, life of project, consulting and subcontracting jobs.
Belous estimated that roughly half of the new jobs created next year will be in this category.
According to the Conference Board, there are now more than 30 million workers in the contingent work force out of a total civilian work force of 120 million workers.