Unemployment Rate Rises to 7.4% in January
The nation’s unemployment rate rose to 7.4% in January, the Labor Department reported Friday, but analysts said the underlying strength of the economy was evident in the creation of 350,000 new jobs.
The civilian unemployment rate was up two-tenths of a percentage point as the ranks of the jobless grew by 300,000 to a record 8.5 million, the department’s Bureau of Labor Statistics said.
Many of the 300,000 were laid-off Christmas workers who failed to find new jobs. That was reflected in an increase in the jobless rate for women from 6.4% to 6.8%.
However, the number of Americans holding jobs rose about 120,000 to a record 106.4 million and a separate survey of business establishments showed that there actually were 350,000 new jobs created last month, almost entirely in the service area of the economy.
“The increase in jobs growth was well above what had been expected,” said Allen Sinai, chief economist and managing director of Shearson Lehman-American Express.
More Looking for Work
One reason for the jump in the number of unemployed is that more people are moving into the labor force looking for work because of steady growth in the economy generally, said Robert Gough, senior vice president at Data Resources Inc. “When good news becomes prevalent, people start looking for jobs,” Gough said.
“We know the economy is strong and growing and will continue to create jobs in 1985,” President Reagan’s spokesman, Larry Speakes, said at the White House. Speakes said the January rate “represents end-of-the-year volatility.”
But Sen. William Proxmire (D-Wis.) told a congressional hearing, “We’re starting out (the year) with some very disquieting and disturbing figures.” And a statement issued by the 13.8 million-member AFL-CIO pointed out that January’s rate is the highest since last September and only a tenth of a percentage point below last May’s 7.5%.
“There is little hope for the 8.5 million unemployed unless major efforts are undertaken to provide job opportunities for those who want to work and cannot find a job,” the AFL-CIO said.
The commissioner of labor statistics, Janet L. Norwood, conceded at the same hearing at which Proxmire spoke, before the Joint Economic Committee, that if the labor force expands 3.5% a year, “It’s going to be very difficult to reduce unemployment.”
Of 350,000 jobs created in January, only 23,000 were in manufacturing, and before the figures were adjusted for seasonal variations, employment in manufacturing actually declined by 146,000.
There were smaller-than-usual declines in construction and retail trade in January, and those industries actually showed significant job gains once the figures were adjusted for seasonal variations. Norwood attributed the pattern in construction employment to unseasonably warm weather in much of the country.
Helping to push the jobless rate up in January, said department analyst Deborah Klein, was that more seasonally employed women laid off after the Christmas season decided to look for new jobs last month than had been the case in recent years.
She said the January survey was done unusually early--in the second week of the month. Many of the recently laid-off people looking for work might have given up the search later in the month. Thus, they would not have been counted among the unemployed had the survey been conducted later in January.
There was little change in the jobless rate in many worker groups, after the figures were adjusted for seasonal variations. Jobless rates stayed the same as in December for adult men, 6.3%.
Other rates: Whites, 6.4%, up from 6.2% in December; teen-agers, 18.9%, up from 18.8%; blacks, 14.9%, down from 15.0%; and Latinos, 10.6%, up from 10.4%. The rate for black teen-agers, traditionally the group with the highest unemployment, remained unchanged at 42.1%.
An alternate overall unemployment rate, combining the 114.8 million-member civilian labor force with the roughly 1.7 million members of the armed forces stationed in the United States, rose to 7.3% from 7.1%.
