Riley, legislative representative, and Peter Henle, assistant director of research, to present the views of the AFL and CIO to your committee.

I want to assure you, however, of my personal interest in the proposed legislation. For several years it has been clear that today's prosperity has not been fully shared in many sections of the Nation. While community groups have proved helpful in reducing unemployment in some distressed localities, the problem today is still as serious as it has ever been. Only action by the Federal Government can provide the effective leadership for attracting new industry to these distressed localities.

The AFL-CIO has given this problem long and considered study. We have specific recommendations regarding the type of legislation that we believe would prove most effective to meet this difficult problem.

We are heartened, however, to find that the leading representatives of both political parties are agreed that congressional action is needed at the present time. I sincerely hope that your committee will approve workable and effective legislation as promptly as possible so that the needed Federal program can be authorized at this session of Congress.

Sincerely yours,

GEORGE MEANY, President.

Mr. Chairman, if I may proceed now in order with my own remarks. Mr. Chairman and members of the committee, it is a great pleasure to appear before you today to discuss the several bills before this committee, all of which seek to aid areas suffering from substantial and persistent unemployment.

It is a matter of deep concern to us that so many areas of substantial unemployment persist in spite of the general prosperity which is being enjoyed by the Nation as a whole. Hundreds of thousands of trade union members and their families, not only in textile, coal mining and railroad centers, but in many other places as well, are directly and often tragically affected.

According to the United States Department of Labor, 19 major labor market areas in the United States are still confronted with a substantial labor surplus, that is, unemployment in these communities exceeds 6 percent. In addition, there are also 65 smaller labor market areas which are recorded as suffering a substantial labor surplus. Doubtless, this list would be even longer if regular reports were available from all of the smaller labor market areas throughout the country. For prosperous 1956, the total number of these areas, large and small, is shockingly great. Furthermore, they can be found in more than half of the States throughout the Nation. What is even worse, in many localities unemployment is now chronic.

If the depressed areas were few in number, or if their distress were of short duration and automatically self-liquidating, the problem surely would merit little national concern. Unfortunately, this is not the case.

Sixteen major labor market areas have been on the substantial labor surplus list for 2 years or more and in some of them the jobless total even today exceeds 9 percent and even 12 percent of the entire labor force. Seven major areas have been on the list continually since July 1954, when regular surveys commenced. In addition, perhaps one-half of the smaller substantial labor surplus areas could be labeled as depressed since unemployment has exceeded 6 percent on every occasion that official surveys of them were reported.

In an earlier period of unemployment it was generally associated with the gradual decline of an area in which the depletion of minerals and other resources were occurring. Generally, the community was forewarned of impending unemployment by the visible exhaustion of

these resources. Besides, the affected populations were generally small and transient.

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In modern times, however, technological innovations, shifting product demands and markets, and the blatant pirating of plants, as well as raw material depletion, often lead to sudden shutdowns or drastic reductions in operations on which an entire community had depended for its livelihood.

I shall not burden this record with the story of human distress and of economic loss which follows. The grim picture has already been portrayed to this subcommittee by witnesses from a score of blighted communities.

Today's chronically distressed area is generally no jerry-built, frontier-type outpost. It is an established city of homes, churches, schools, hospitals, commercial structures and all of the other private and public facilities essential to urban living. For years, and sometimes generations, families have lived and worked there and invested their savings to create a modern community.

The continuous surplus labor problem of Lawrence, Terre Haute, Scranton, Charleston, Duluth, Wilkes-Barre, and Providence, and of substantially smaller communities, just can't be solved by telling the jobless to "pack up and move on." Not only the displaced wage earners, but doctors, schoolteachers, and storekeepers, as well, have roots. that run deep in their home environments. A mass exodus is surely not a feasible answer.

Even apart from the problem of human misery which must touch the heart and conscience of every American who visits these distressed communities, there are attendant economic and social costs which the Nation can ill afford.

There is the loss to America of hundreds of millions of dollars of goods and services which these idle people and idle communities could create, but do not.

There is the tremendous social cost of maintaining entire areas in semijoblessness.

There is the loss to our national security, which surely requires the preservation and dispersal of all our production resources, in deteriorating communities and the wasting away of the work skills of the people who inhabit them.

Surely, the task of restoring our depressed areas to a state of economic health is not alone a local problem or a responsibility. All of us have a stake in the outcome. The cooperation and teamwork of the entire Nation are essential if this malignant growth is to be eradicated.

In the face of the magnitude and persistency of the area distress problem, few leaders in public life now declare that nothing should be done, although in earlier times it may have been fashionable for the callous and comfortably situated to support the doctrine that the jobless should move or starve.

In 1956, however, our more public relations conscious exponents of laissez-faire often admit that a problem does, indeed, exist. But, then they hastily add, and you have certainly heard them or you will, that the hometown folks, if energetic, are perfectly able to cope with the problem themselves.

This is the recurring theme of a recent Chamber of Commerce document called Getting and Holding Good Employers, which abhors all

aid from Washington, with a few exceptions. It is reiterated again and again in newspapers and magazine articles that glorify these so-called local bootstrap operations which are launched in the stricken areas in an effort to restore employment. According to these enthusiastic accounts, these efforts are always successful and, therefore, the

panacea.

All of these valiant local undertakings are good and must be encouraged; the drive for economic recovery must always begin at home. Too often, though, closer scrutiny has revealed that the results are far from adequate. Expert testimony before this subcommittee and the Joint Committee on the Economic Report, in the course of its recent hearings on low-income families, have dramatically demonstrated this fact. Generally, the new jobs are far fewer than are needed. Too often the displaced workers, particularly those middleaged or older, are unhappily not the ones selected for the new jobs. And, in too many cases, wage rates paid by the new employers are shockingly below those that originally prevailed.

The local redevelopment efforts of Lowell, Lawrence, Scranton, and Wilkes-Barre, for example, are among the ones most fulsomely praised and publicized. Certainly, these local undertakings are commendable, and organized labor is proud of its participation in them. Nevertheless, in every successive survey, year after year, they still show up on the substantial labor surplus list.

This sad fact suggests and it is becoming more widely recognized, that more than a local effort is required.

Back in 1952, Candidate Eisenhower seemed to voice an awareness of the need for Federal aid when he promised assistance to the hardpressed people of Lawrence. In the years since then, nonetheless, no adequate Federal program has been undertaken.

Although even as recently as a year ago the President's Economic Report gave particular emphasis to the local citizens' responsibility to meet the distressed area problem, his 1956 report more realistically states that "the fate of distressed communities is a matter of national as well as local concern." We welcome and applaud this new and broader view; we are, moreover, pleased that an administration measure reflecting this broader view and entitled "The Area Assistance Act of 1956" has now been introduced.

While an awareness of the need for help is constructive to our cause, knowledge of the specific kinds of Federal help needed now has been crystallized. The hearings of the subcommittee have helped tremendously in this respect.

In the first place, it must be recognized that while most local governments face difficult financial problems, the situation is particularly dif ficult in areas of persistent unemployment. With payrolls reduced and property values deteriorating local tax revenue and local credit are severely strained. Yet, it is precisely in these areas that money is most urgently needed, to feed the jobless, to maintain public services, and to initiate community rehabilitation.

It is also important to bear in mind that most States, and particularly those burdened with many distressed areas, likewise face grave financial difficulties. Since World War II the expenditures of State governments have more than doubled and their indebtedness has increased even faster.

Clearly, Federal financial aid in the form of grants and loans is needed; but, this alone is not the answer. Adequate technical assistance to help distressed areas evaluate their local resources and economic potentialities, aid in retraining displaced workers, Federal tax incentives to attract new industry, and a greater effort to direct Government procurement to the plants already located in these communities; all of these are constructive and indispensable aspects of a concerted overall attack on the problem of local blight.

An effective Federal program, therefore, must be broadly conceived, fully coordinated, and must provide a diversity of special, yet interrelated aids.

The jobless must be provided decent family assistance. Often they must be retrained if they are to obtain new employment. Help must also be provided for those who voluntarily seek to outmigrate when jobs elsewhere are available.

The local government must have help in planning and financing essential public facilities, like roads, water, and sewerage systems, and industrial parks, if new private enterprises are to be attracted and existing ones are to be held and expanded.

Finally, construction loans, tax amortization benefits, and Government procurement priorities are also vital in order to attract sufficient qualified employers to areas of prolonged distress. Many of these types of aid to business, to local governments, and to needy individuals, are already provided by existing Federal programs. Now, specific responsibility must be assigned to one Federal agency to coordinate usable parts of all these programs which, with the addition of a few special aids, will create an overall and integrated Federal program to assist the chronically distressed communities.

Is this not, indeed, the Federal commitment which the Congress declared must be fulfilled when it said in the Employment Act of 1946: It is the continuing policy and responsibility of the Federal Government with the assistane and cooperation of industry, agriulture, labor, and State and local governments, to coordinate and utilize all of its plans, functions, and resoures for the purpose of creating and maintaining * ** maximum employment. It is our view that this commitment applies to the misfortune of local unemployment quite as fully as it does to unemployment which is nationwide in scope.

We are heartened to find that the President as well as important congressional leaders agree with this general analysis, for they have endorsed a program of providing Federal assistance to these depressed

areas.

As the executive council of the AFL-CIO noted in a special statement on this problem.

It is enouraging to find the leadership of both the Republican and the Demoratic Parties pledged to an effort in this session of the Congress to aid the many areas throughout the United States which still suffer from chronic unemployment.

A large number of Members of Congress from all parts of the country have introduced legislation dealing with this problem. One group of bills, exemplified by H. R. 8555, present the program endorsed by the executive departments. Also before this committee is H. R. 10172, introduced by Congressman Gray and H. R. 10443, introduced by Congressman Thompson. These two bills include two unfortunately conflicting titles. Title I represents the administration bill, while title II represents practically all the features of the bill

that was introduced by Senator Douglas and on which hearings have been held by the Senate Committee on Labor and Public Welfare. Omitted from title II are the sections concerning tax legislation which if they were included would have required the bill to be referred to the House Ways and Means Committee.

For the sake of completeness in our presentation, we wish to discuss all the issues raised by these bills, including various aspects of the tax problem, even though the tax features of this legislation are not before this committee. It would be our hope, however, that tax features could be incorporated at some phase of the legislative process. The general position we wish to bring before this committee is one of support for the purposes of the administration bill, H. R. 8555, but to emphasize in our opinion that title II of the Gray bill holds forth greater promise of an effective, practical program of Federal assistance. We would hope, however, that this committee would take action that would incorporate the best features of both types of bills in one piece of legislation.

The following are a few of the major issues that arise in any consideration of the administration bill and title II of the Gray-Thompson bills (for convenience we shall refer only to the Gray bill, meaning title II of both the Thompson and Gray bills).

1. CONSTRUCTION LOANS

Whereas the Gray bill would authorize $100 million in Federal funds for this purpose, only $50 million is provided in the administration bill. But, why only $50 million?

The contsruction loan proposal of the Gray bill is not only twice the size of that suggested in the administration bill, but it is also more flexible since it would lend up to two-thirds of construction costs for as long as 40 years. The administration bill, on the other hand, would restrict Federal loans to a maximum of 20 years and provide a maximum of 25 percent of costs, which we deem is far too low in the face of the urgency of the need and the special and complex financial problems of many areas that need help. Furthermore, the restrictive provision in the administration bill that 15 percent of the cost must be supplied by the State or a local development organization is dangerously and discouragingly inflexible.

2. AID TO IMPROVE PUBLIC FACILITIES

The Gray bill would also authorize $100 million in Federal loans or grants for the construction of urgently needed public facilities. No similar aid is provided in the administration bill. The latter would simply give these areas a priority in the use of urban renewal funds now authorized under programs of the Housing and Home Finance Agency. While it is desirable that the activities of this Agency be fully geared to the needs of depressed areas, there is some question whether this source of aid is sufficient to provide many of the immediately needed public facilities that must supplement plant construction if industry is to be attracted to distressed areas.

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