Economic Report of the President

In each of these industries today, the profitable U.S. producers competein ways very different from their predecessors, whether by manufacturingspecialty fabrics, blue jeans, or canvas shoes.What is new, however, are the widespread pressures for substantialadaptation due to recent changes in energy and capital markets.These pressures are also occurring at a time when the economy isgrowing slowly. In the past, growth has often served as a "shock absorber"to cushion change, but the slow pace of growth has made theproblems of readjustment more painful. Furthermore, some of theindustries experiencing intense change are large and highly visibleregional employers. There is simply no easy way to absorb the closingof an integrated steel facility or an automobile plant that dominatesits local labor market. Lastly, these pressures for job protectionare occurring at a time when the changing composition of the laborforce may be tending to reduce mobility.CHANGING LABOR FORCE COMPOSITIONDuring the past decade, the number of people with jobs grew atrecord rates, and the average age and experience of workers fell.During the coming decade, the growth of the labor force will slowconsiderably, and the average worker will be older and more experienced.Both of these changes result from two related demographic phenomena:the maturing of the baby-boom generation and the rise infemale labor force participation rates. From the end of World War IIuntil the beginning of the 1960s, the Nation experienced a sharp risein the number of births which temporarily reversed the long-term declinein birth rates. This generation began entering the labor marketin the 1960s and the influx of new workers continued during the1970s. The percentage of the population aged 16 to 24 rose from12.1 percent in 1960 to 15.8 percent in 1970 and 17.0 percent in1979.Female participation rates increased gradually during the babyboomyears. An even greater increase in the number of women workershas occurred in more recent years. The rate of participation inthe labor force increased from 34 percent to 39 percent between1950 and 1965; by 1980, more than 51 percent of the country's adultwomen were in the labor market.The maturing of the baby-boom generation and the sharp rise inthe number of working women meant that U.S. labor markets had toabsorb record numbers of new and inexperienced workers. Duringthe 1970s the civilian labor force increased at an average annual rateof 2.5 percent, compared to 1.1 percent during the 1950s and 1.7percent during the 1960s. The influx of young workers, combinedwith an increase in the number of older workers retiring early, pro-124