The Direct Effects of Federal Manpower Programs in Reducing Unemployment

An estimate of the direct effects of federal manpower programs on the unemployment rate is made quarterly for the years 1965 through 1967. Four manpower programs are included in the estimates: Neighborhood Youth Corps, On-the-Job Training under the Manpower Development and Training Act, Community Action (paid nonprofessionals), and College Work Study. These programs accounted for an average of nearly half a million jobs in 1967. The study indicated that the programs led to a reduction of 0.15 percent in the over-all unemployment rate in 1965, 0.3 percent in 1966, and 0.4 percent in 1967 (from 4.2 to 3.8 percent). The Neighborhood Youth Corps accounted for two-thirds of the total reduction in 1967. The four programs had a far greater impact on the unemployment rate of youth aged 16-21, resulting in a reduction of 2.5 percent (from 13.5 to 11.0 percent). Because the study considers only the effects of four manpower programs, it underestimates the total effect of federal manpower programs in reducing underemployment. Since the study considers only direct effects, it also excludes the reduction in unemployment caused by increasing the skill of the labor force and the multiplier effects of government spending. A rough estimate is also made of the effect of four new manpower programs on employment in the third and fourth quarters in 1967. Because the new programs were just getting under way, the effect was negligible.