Page images
PDF
EPUB

ample, the Congress passed temporary stimulus measures such as Temporary Employment Assistance, Countercyclical Revenue Sharing, and Accelerated Public Works. Virtually all programs that are intended to improve employability are less sensitive to changes in employment. Spending for programs in the third category, those that provide income for the unemployed, vary directly with changes in employment.

The cost of employment-related programs will vary over the next 5 years according to the speed with which the economy recovers from the current recession. Tables 6 and 7 below demonstrate the impact on costs in the unemployment budget under “slow” and “fast” recovery assumptions. As a comparison of the two tables demonstrates there are substantial savings to be realized from a faster rate of recovery. Cumulative savings realized when the fast growth alternative (Path A) is compared with slow growth (Path B) come to $38.5 billion between 1976 and 1981. The lion's share of these savings result from reductions in unemployment compensation, which is much more sensitive to economic improvements than more stable expenditures for education manpower, social services, and public works programs.

[blocks in formation]

Five-Year Budget Projections, Fiscal 1977-1981, Congressional Budget Office, January 26, 1976, p. 4.

FIGURE 4.—Distribution of the anti-unemployment budget outlays (fiscal year

1977 current service base) 5 percent growth path

[merged small][ocr errors][merged small][merged small][merged small][merged small][merged small]

"ANTI-UNEMPLOYMENT BUDGET" OUTLAYS ($ Billions)

5

$5.2 Billion

Employment
Creating
Programs

Income
Assistance To
The Unemployed

Employability
Increasing
Programs

Table 5.—THE FEDERAL DIRECT RESPONSE TO UNEMPLOYMENT (FISCAL YEAR 1977 CURRENT SERVICES) 1

[Billions of dollars]

[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors]

Expenditure programs:

Temporary employment assist-
Countercyclical revenue sharing 3
Accelerated public works 3.
Older Americans employment
Job opportunities (EDA) 2
Summer youth..
Higher education ---
Elementary, secondary, and voca-

tional education
Comprehensive manpower assist-
Manpower training and services
Veterans education, training, and

5. 4

2

.6

2. 3
1. 5

rehabilitation 2 Vocational rehabilitation.. Unemployment compensation 2

ance

4. 9
. 9

18. 8

Total expenditure program.

5. 2

17. 7

18. 8

Tax policies: 4

Win tax credits...
Tax deduction for child care.
Tax exemption for education.-
Tax exemption for unemployment

compensation.

(*) .4 1.7

2. 8

Total tax policies.

2. 1

2. 8

1 At CBO estimate of economy (Path B).
2 CBO estimate.
3 Included in Second Concurrent Resolution but not enacted.
4 Derived from JCIRT (c).
*Less than $50,000,000.
NA-Not available.
Note: Numbers may not add to totals due to rounding.

Table 6.-"DIRECT RESPONSE” BUDGET (PATH A)

[blocks in formation]
[blocks in formation]

Creating employment directly! 5.1 4. 5 2. 8 2. 2
Increasing the employability
of workers 2

18. 3 17. 8 18. 6 19. 5 Providing income assistance

to unemployed individuals 3. 19. 8 15.3 11. O 9. 5

[blocks in formation]

1 Includes funds from manpower prograins (pt. 504) for all years, and smaller amounts from countercyclical revenue sharing (pt. 450) for fiscal year 1976–77 and from accelerated public works (pt. 450) for fiscal year 1976 and the Transition Quarter as specified in the U.S. Congress Second Concurrent Resolution on the Budget, fiscal year 1976.

2 Includes moneys from education (501, 502), manpower (504), vocational rehabilitation (506), and veterans education, training, and rehabilitation (702).

3 Unemployment compensation (603) consisting of regular and extended benefits, Federal supplemental benefits, and special unemployment assistance.

Table 7.4"DIRECT RESPONSE" BUDGET (PATH B)

(Billions of Dollars]

[blocks in formation]

20. 3

Creating employment directly? 5. 1 5. 2

4. 3 3. 9 3. 6 3. 3 Increasing the employability of workers 2

18. 3 17. 7 18. 3 19. 1 19. 7 20. 3 Providing income assistance

to unemployed individuals19.8 18.8 18.8 18. 2 16.9 15. 3

95. 1

88. O

1 Includes funds from manpower programs (pt. 504) for all years, and smaller amounts from countercyclical revenue sharing (pt. 450) for fiscal year 1976–77 and from accelerated public works (pt. 450) for fiscal year 1976 and the Transition Quarter as specified in the U.S. Congress Second Concurrent Resolution on the Budget, fiscal year 1976.

2 Includes moneys from education (501, 506), manpower (504), vocational rehabilitation (506), and veterans education, training, and rehabilitation (702).

3 Unemployment compensation (603) consisting of regular and extended benefits, Federal supplemental benefits, and special unemployment assistance.

B. ENHANCED EMPLOYABILITY AND INCENTIVES

Many current and proposed responses to unemployment involve creating incentives and making information available to workers and firms. Some create incentives for employers to hire workers while others enhance the incentives of workers to find jobs.

If there is an absolute limit to the number of jobs that can be made available at any given time, then enhancing the employability of one individual may only mean that he or she will replace another individual in a job without producing any net reduction in unemployment. Even in periods of high unemployment, however, some jobs go unfilled. When, for example, some unemployed do not have necessary skills or when qualified unemployed persons are unaware of openings or live a substantial distance from available jobs, unemployment and unfilled openings can coexist.

The matching of openings to skills has become increasingly difficult during the last 10 years because of changes in the composition of the labor force. In particular, the large increase in the number of working wives and teenagers who typically have higher unemployment rates than household heads has made achievement of 4 or even 5 percent unemployment, without creating severe inflationary pressures, more difficult. The demographic change of the last 10 years is shown in Table 8.

By 1980, however, those born at the beginning of the post-World War II baby boom (1947) will be 33 while those born at the end (1957) will be 23 years old. Thus, the teenagers of 1975 will be ready to take full-time career jobs in 1980 if positions are available and if education and training programs have been effective.

Table 8.—DEMOGRAPHIC CHANGES IN THE LABOR FORCE AND

UNEMPLOYMENT ROLLS

[Percent)

[blocks in formation]

59. 4 48. 6 NA 7. 8 31. 3

[ocr errors]

58. 8 46. 5 7. 9 8. 8 34. 2

Share of the labor force:

Household heads--
Married men with wives present.
Female household heads..
Teenagers (16–19)--

57. 6 43. 3 8. 9 9. 5 35. 6

Women 20 and over-
Share of the unemployed:

Household heads --
Married men with wives present..
Female household heads.
Teenagers (16-19) -
Women 20 and over.

36. 4
25. 5

NA
25. 3
30. 6

34. 7
24. 5

6. 9
27. 0
32. 7

39. 1 26. 1

8. O 22. 4 33. 8

NA-Not available.

3 In fact, measured unemployment may increase if training or the availability of day-care facilities increases the labor force without increasing the number of jobs.

72-678-76-4

« PreviousContinue »