The Employment Situation during 1986: Job Gains Continue, Unemployment Dips

By Shank, Susan E.; Haugen, Steven E. | Monthly Labor Review, February 1987 | Go to article overview

The Employment Situation during 1986: Job Gains Continue, Unemployment Dips


Shank, Susan E., Haugen, Steven E., Monthly Labor Review


The employment situation during 1986: job gains continue, unemployment dips

Moderate employment gains continued in 1986, as the U.S. economy completed its fourth year of expansion following the deep 1981-82 recession. Unemployment declined slightly during the year, repeating the pattern of slow improvement evident in 1985. For all of 1986, the civilian unemployment rate averaged 7.0 percent--down from 7.2 percent in 1985 and 7.5 percent in 1984.

Nearly all of the 1986 employment increase took place in the service-producing sector, with particularly large gains in services, finance, insurance, and real estate. In contrast, manufacturing employment declined, and the number of mining jobs dropped markedly--reflecting reduced activity in oil and gas extraction because of sharply lower crude oil prices. Construction job growth, which had been very strong during the previous 3 years, moderated in 1986.

Civilian employment

The number of employed persons rose by about 2.1 million during 1986 (after adjustment is made for revisions in the underlying population estimates used in the Current Population Survey1), similar to the gain registered in the prior year. (See table 1.) These increases were more moderate than in the "rebound' years immediately after the 1981-82 recession; civilian employment had jumped by about 3 1/2 million in both 1983 and 1984. This pattern of very sharp job gains in the first 2 years of a recovery followed by slower growth in subsequent years is typical of most of the business cycles since World War II.

Adult women accounted for 1.4 million of the 1986 job increase, compared with 600,000 for adult men and 100,000 for teenagers. For adult men, this employment rise was slightly smaller than that posted in 1985. In contrast, the small employment increase for teenagers was the first recorded since 1979. This development reflected a slight population increase for those ages 16 to 19--reversing the declines that took place from the late 1970's through 1985, when the last of the baby-boom generation moved through the teen years.

Whites, blacks, and Hispanics. The slower rate of employment growth over the past 2 years has been evident among the three major race/ethnic groups, as reflected in the following employment-population ratios. For both blacks and whites, the slowdown in employment growth can be attributed entirely to adult men. Although both men and women posted sharp employment rebounds in the 2 years immediately after the cyclical trough, only women continued to show strong gains in 1985 and 1986.

In addition to those who work part time voluntarily, there is a substantial number of persons who want full-time employment but must settle for part time. The two major reasons for this situation--referred to as employed part time for economic reasons--are slack work (an employer-initiated reduction in hours) and an inability to find a full-time job. At about 5 1/2 million in 1986, the number of workers on part-time schedules for economic reasons showed no improvement from the 1985 level and was relatively high by historical standards.

Industry developments

Nonfarm payroll employment (as measured by the survey of business establishments3) topped 100 million in the summer of 1986 and reached 101 million by the fourth quarter. (See table 2). Practically all of the 2.4-million job increase during 1986 took place in the service-producing sector. (See chart 1.) However, these job gains were smaller than in 1985--particularly in wholesale trade and government. Within the goods sector, construction employment rose over the year, while mining fell sharply. The number of manufacturing jobs also dropped during 1986, even though there was a small rebound in the fourth quarter. Despite the decline in manufacturing employment, however, the factory workweek and overtime hours both remained relatively high.

Service-producing sector. …

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The Employment Situation during 1986: Job Gains Continue, Unemployment Dips
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