Economic Report of the President

duced a decline in the median age of the labor force from 39 years in1965 to 34 years in 1980.As discussed in Chapter 1, the economy did remarkably well inproviding jobs for these new workers. In fact, the unemploymentrates for white youths and adult women have not increased relativeto those of prime-age men. Unfortunately this success was not evenlyspread across demographic groups. The high unemployment rate foryoung blacks, which has deteriorated considerably and is currentlywell above 30 percent, indicates serious shortcomings in labor marketsor other social institutions. This unemployment problem haspersisted in spite of substantial Federal efforts to improve the qualityof primary and secondary education for minorities, to expand postsecondarytraining programs, and to provide on-the-job training inpublic sector jobs.During the next decade the number of people reaching adulthoodwill continue to be larger than the number reaching retirement age,but the generation entering the work force will be considerablysmaller than the cohort which began work in the 1960s and 1970s.Even if female labor force participation rates continue their rapidrise, the Bureau of Labor Statistics (BLS) projects that labor forcegrowth will average only 1.3 percent per year during the 1980s.The decrease in entrants into the labor force during the nextdecade should have several effects. First, the increasing average ageof the labor force will tend to lower the aggregate unemploymentrate. The rate was higher during the 1970s at least in part becausethe transition from school or home to a job takes time; young peopleand women entering the labor market may be counted as unemployedduring that search period. In addition, as they try out differentcareer possibilities, new workers tend to change jobs more oftenthan experienced workers, often with spells of unemployment betweenjobs.The transition to an older labor force will probably lead to someincrease in productivity as the average level of experience rises. Oneestimate suggests that shifts in the age-sex composition towardgroups with below-average experience reduced productivity growthby 0.4 percentage point per year between 1966 and 1973. Since then,the reduction has been about 0.2 percentage point per year. Duringthe 1980s, changes in the age-sex ratio should raise productivity by0.1 percentage point annually.Demographic changes will also tend to raise productivity bymaking it easier to increase the capital-labor ratio. Even if the capitalstock only grows at past rates during the 1980s, the amount of capitalper worker will grow as the rate of growth in the number of workersfalls. Moreover, the relative growth in the number of middle-aged125