JULY'S UNEMPLOYMENT figures are impressive evidence of the strength of the recovery. Over the winter the unemployment rates fell, not because the number of jobs was rising, but because people who couldn't find them were dropping out of the labor force. Since March it's gone the other way. The labor force is growing again, but the number of jobs is growing even faster--up by 2.2 million in four months. True, there are still more than 10 million people looking for work. But the prospect for them is suddenly a great deal more hopeful than it seemed even a couple of months ago.
There's an important difference between the present recovery and the one that began eight years ago. In 1975, the labor force--which means everybody who has a job, and everybody who wants one --was growing with great speed. Women were coming into the job market in greater numbers than ever before. At the same time, because of the high birth rates two decades earlier, young people in unprecedented numbers were looking for their first jobs. The Carter administation designed its economic policy to create the jobs for these newcomers, and, to a notable degree, it succeeded. But the cost was a rapidly rising inflation rate that, by the end of the decade, was interfering with the process of economic growth.
As the government turned policy to combat inflation, the economy no longer reliably generated new jobs. But since about 1980 the labor force has been growing much less rapidly than previously; otherwise the unemployment rate would have been even higher than it was.
One reason for this deceleration was the fall in the birth rates during the 1960s. Another is that the proportion of women who want to work is no longer rising. It's possible to argue that the lack of opportunities has discouraged people, and that more will come into the market as it begins to expand again. But that doesn't seem to be happening yet. It's more likely that the fast growth of the labor force in the 1970s will not be repeated. If that is the case, there will be less risk of inflation--and less reason to take inflationary risks--in this cycle of recovery than there was in the last one.
A particularly welcome sign of improvement this summer is that the number of people unemployed for very long periods began to fall at last in July. In May, more than half of all unemployed people had been out for more than 12 weeks. By last month, more than half had been out for less than 10 weeks. There is still great cause for concern about people who may have been left permanently unemployed by the changes in the economy over the past several years. But these measures of special hardship are also moving in the right direction.