THE YEAR'S PROGRESS, PROBLEMS OF UNEMPLOYMENT, AND STEPS FOR OVERCOMING THESE PROBLEMS ARE COVERED IN THIS PRESIDENTIAL REPORT. MAJOR DIVISIONS ARE REVIEW OF MANPOWER DEVELOPMENTS IN 1966, UNUSED MANPOWER, AND OCCUPATIONAL SHORTAGES AND TRAINING NEEDS. DURING 1966 THE NATION'S UNEMPLOYMENT RATE DROPPED BELOW 4 PERCENT, A 13-YEAR LOW. THE TOTAL PRODUCTION OF GOODS AND SERVICES INCREASED MORE THAN $58 BILLION OVER 1965. THE AFTER-TAX, AFTER-PRICE-INCREASES SALARIES OF FAMILIES INCREASED 3.5 PERCENT. BUT IN THIS ERA OF PROSPERITY, THE PROBLEMS OF UNEMPLOYMENT WERE MAJOR, NOT ONLY IN THE AMOUNT, BUT ALSO IN THE KIND. ROUGHLY 2 MILLION POTENTIAL WORKERS CAN BE HELPED. THESE ARE -- (1) DROPOUTS, (2) OLDER WORKERS, (3) NEGROES, MEXICAN AMERICANS, AND PUERTO RICANS, AND (4) THE ILLITERATE, THE HANDICAPPED, AND THE MIGRANTS. TO ASSIST THESE UNEMPLOYED, MANPOWER POLICY MUST BRIDGE THE GAP BETWEEN EDUCATION AND WORK BY BUILDING BROADER CONCEPTS OF APPRENTICESHIP AND WORK EXPERIENCE. IT MUST CONCENTRATE EFFORTS IN CONTINUALLY DEPRESSED AREAS SUCH AS CITY SLUMS WHERE UNEMPLOYMENT IS THREE TIMES THE NATIONAL AVERAGE. PRIVATE INDUSTRY AND MILITARY SERVICE JOB TRAIING MUST BE PROMOTED AND ASSISTED. THE FEDERAL-STATE EMPLOYMENT MUST BE STRENGTHENED AND EFFECTIVE MEASURES INSTITUTED FOR MAINTAINING THE INCOME OF THE WORKER AND HIS FAMILY WHEN WORKING PATTERNS CHANGE. GENERALLY, THE DIRECTIONS OF FUTURE ACTION SHOULD BE DEVELOPING JOBS AND ABILITIES, MATCHING PEOPLE AND JOBS, AND PROVIDING INFORMATION FOR AND ABOUT THE LABOR FORCE. THE STATISTICAL APPENDIX PROVIDES TABULAR DATA ON MANY FACETS OF THE LABOR FORCE. THIS DOCUMENT IS AVAILABLE AS GPO L1.42/2.967 FOR $1.50 FROM SUPERINTENDENT OF DOCUMENTS, U.S. GOVERNMENT PRINTING OFFICE, WASHINGTON, D.C. 20402. (EM)