UNEMPLOYMENT keeps rising. But at the same time, for those people who have jobs, incomes are rising. President Reagan's chief of staff, James A. Baker III, noted that paradox last weekend to argue that the political and economic effects of a 10.1 percent unemployment rate will be limited. Mr. Baker exaggerated the improvement in the earnings, after taxes and after inflation, of the fortunate 89.9 percent of the labor force that is employed. But it is correct to say that as far as the present statistics go, into the early summer, they do indeed show earnings staying a little ahead of inflation.
As a matter of social equity, that's the objectionable thing about a recession. The process of slowing down inflation exacts a cost, and that cost is being thrust mainly onto those people whose jobs collapse. In a perfectly rational -- and just -- society, people would react otherwise to the loss of purchasing power that is required to end inflation. Everyone, in that ideal society, would accept his share of the loss. Business would drop prices, profits and dividends. Executives' salaries would decline automatically along with union wages.
Oddly, that's approximately what the Reagan strategy anticipated when it was first put in place nearly two years ago. But, unhappily, that's not the way this country works. People react by trying to keep lifting their own incomes and pushing the consequences off onto someone else. A decade ago, a president experimented with wage and price controls enforced by law, and even that experiment was a costly failure, leaving inflation higher than ever.
Why are wages so slow to adjust to economic decline? The chief reason is, no doubt, that nobody ever expects a recession to last long. Nobody wants to give permanent wage concessions to get through a slump that will only be temporary. That habit of mind gives a peculiarly poignant undertone to the current layoffs in industries such as steel, rubber and autos that do not seem likely to return to the prosperity and production levels of the past decade.
It's a bit early for final judgment, but it looks as though the present unemployment rate is composed of two separate phenomena, one superimposed on the other. There is the cyclical recession, prolonged and bitter, that is largely the result of a conscious national decision to force the inflation rate down. But underneath it, there appears to be the contraction -- slow but perhaps irreversible and certainly unintended -- of several basic industries. Because they are high-wage industries, highly organized by strong unions and highly concentrated geographically, the labor that they lay off is not going to be easily absorbed elsewhere in the economy, even when a recovery eventually gets under way. Massive changes are taking place in the basic structure of American industry. The Reagan administration seems to resist giving any sign that it is aware of them.