It is a national problem and it seems to me requires a national solution.

Of the two proposals that have been made to Congress, the so-called Douglas bill and the administration bill, I think there are many proposals in both bills that will be of value. If I had to choose, I think the Douglas bill would probably give you more weapons to fight this with.

It is certainly the first recognition by Congress of this area unemployment problem. It seems to me, Mr. Chairman, that this attack plugs an important loophole in the Employment Act of 1946. It recognizes that when you are talking overall prosperity, your overall statistics obscure some of the areas locally. The top-down approach is not enough. You have also got to take what I call the worm's-eye view and work at this thing from the bottom up.

The local efforts to solve this problem have been enormously impressive. I have been very close to many of them. They have been very exciting. Towns like Herrin, Ill., with a population of 10,000 people, raising $800,000, bringing in new plants, employing 5,000 people it is enormous what these communities have been able to do for themselves, but I think the argument for a national approach to it is that despite these enormous efforts, the problem is still with us and it has been with us even in times of very tight labor markets nationally; the time of the Korean war or even World War II.

The Government's problem perhaps breaks down into two:

1. The fact that there are roughly 66 labor market areas in 23 States, which illustrates the national aspect of the problem, with this chronic unemployment. The last time I looked at it there were 17 large areas and 48 small areas with unemployment ranging from 6 to 22 percent of their labor force.

Now, in addition to that national economic problem, it seems to me the Government has an administrative problem, and that is this drain on unemployment insurance funds. I noticed that this was mentioned in Under Secretary Larson's testimony on Friday, but we are not getting away free. As nearly as I can estimate, it is now costing us about $200 million per year in excess unemployment insurance benefits to subsidize this unemployment.

If the unemployment in these chronic areas could be reduced to the national average, we would save $200 million in unemployment insurance funds.

This becomes critical in States with heavy concentrations of unemployment, particularly Massachusetts and Rhode Island, who have had to come to the Federal Government in years past and ask for increased unemployment insurance and supplementary benefits.

Mr. NICHOLSON. You say Massachusetts and Rhode Island came to the Federal Government to get money?

Mr. BATT. Yes, sir.

Mr. NICHOLSON. Didn't they have some money down here in Washington? Don't they send so much every quarter to Washington for this fund?

Mr. BATT. Well, sir, as I understand it, the State, under the unemployment insurance law-and I am not an expert on this—the State funds are administered by the States, and when you get a very serious drain on the State funds, their reserves were getting dangerously low.

Mr. NICHOLSON. But the employer has to set so much aside every week, and as I understand it, we had something like $2 billion down in Washington in that fund.

Mr. BATT. That is right, sir.

Mr. NICHOLSON. The money goes to Washington, but it is administered by us, and the only thing we came down here for was to get an increase in the money that was needed, but money had been deposited there by the people in Massachusetts.

Mr. BATT. Well, as I understand

Mr. NICHOLSON. It wasn't a deficit.

Mr. BATT. No.

Mr. MUMMA. When the fund gets below a certain amount, it is critical. Pennsylvania's fund got below $200 million some months ago, and the Secretary of Labor called upon the payroll people, the employers, and they had to pay an extra percent, which wasn't added, but which had been taken off a couple of years before. They put that back on.

Mr. BATT. I am not surprised it is Pennsylvania, sir.

Mr. MUMMA. Pennsylvania sends out 30,000 checks a day, so you can get an idea of what it is.

Mr. BATT. You get, of course, too, this phenomena, that in a State like Massachusetts, you have got in effect the employers of the entire State underwriting the unemployment in Lawrence, Lowell, New Bedford and Fall River, a large proportion-I don't remember the exact percentage, but a large percentage of the entire unemployment payments in the entire State of Massachusetts went into Lawrence, Lowell, and New Bedford and Fall River, which was an unbalanced situation.

Mr. MUMMA. I think the State has the money itself. I didn't bring that out.

Mr. BATT. The State has the money itself.

Mr. MUMMA. The State handles the money itself.

Mr. NICHOLSON. Money is sent to Washington and they charge so much for holding the money for them.

Mr. MUMMA. I may be wrong. They had $200 million, the minimum balance allowed, and they called for funds to be put back in. The CHAIRMAN. You may proceed.

Mr. BATT. The goal, it seems to me, as near as I can estimate, sir, the goal is to create 145,000 new manufacturing jobs in these areas, requiring an estimated $540 million in new capital investment, of course primarily private investment in modern plants.

The bases on which I have arrived at these estimates over the past few years, Mr. Chairman, are included in these charts, which might be of interest to members of the committee.

(The charts referred to are as follows:)

Col. 1-Bureau of the Census.

Col. 2 through 5-BES ES-219 Reports.

EXPLANATION AND SOURCE OF DATA ON 17 AREAS

Col. 6-Col. 5 times maximum weekly benefit payments in State.

Col. 7-Col. 6 times 52 weeks.

Col. 8-Col. 3 minus 3 percent of col. 2.

Col. 9-Col. 8 times 50 percent.

Col. 10-Col. 9 times $15,000.

Col. 13-Col. 11 times 33.3 percent.

Col. 14-Col. 13 divided by col. 1.

Col. 15-Department of Defense. Contracts awarded to the textile industry are excluded.

Cols. 16 and 17-Office of Defense Mobilization.

Source: U. S. Department of Labor, Bureau of Employment Security, Office of Program Review and Analysis, Washington, D. C., July 29, 1955; Ohio State Employment Service, Toledo, Ohio, Oct. 31, 1955.

Mr. BATT. I would like to express the opinion, Mr. Chairman, that it seems to me this committee faces an enormous opportunity, really unprecedented in the history of the country, in making an all-out attack on this problem of area unemployment.

I sincerely hope, in view of the support that the idea has received from both the administration and the Democratic leadership that we will get out of this Congress a first attack on this problem of area unemployment that we have ever had in the United States, except for some executive department efforts in the past.

Now, to comment on specific proposals of the bill, Mr. Chairman, starting with section 101-and here I am assuming that the numbering is the same in the Senate and House proposals-I was asked to concentrate primarily on the proposals of the administration bill.

I would like to comment, if I might, at the same time on the proposal in the so-called Douglas bill, because I understand that is also before your committee for consideration. They parallel each other pretty well, right down the road.

The CHAIRMAN. We are looking for a solution to the whole problem. We are not confined to the two bills.

Mr. BATT. Thank you, sir. I think a lot of planning has gone into these, and they represent a lot of effort.

Section 101 provides that the administration will be under the Secretary of Commerce, with some functions given to the Labor Department, the Health, Education, and Welfare Department, the Housing and Home Finance Administration, and elsewhere. I think the Secretary of the Treasury has certain functions.

I would like to suggest that, although from the administrative point of view this has certain advantages, that it is not very well suited to tackle this particular problem because the Commerce Department is by its own assertion the voice of the business community.

I think it lacks the confidence of labor, just as by the same token the Labor Department lacks the confidence of the business community. I think if the 2 Departments were 1, as they were before 1913, Mr. Chairman, then you wouldn't have this problem, but we find at the community level, we find at the State level and I think you would find at the national level, that to make one of these programs succeed, you have got to have labor in the act. You have got to have their wholehearted cooperation.

In our town, as it happens, we have labor participation on our board of trustees, we have got labor contributing money to the promotional effort.

This is true also in Scranton, it is true in Wilkes-Barre, it is true in Hazleton, it is true in Pottsville, and I think it is basically sound, because without the cooperation of organized labor, you don't have the entire community backing that you need.

I think from Congress' point of view, too, there is some advantage in centralizing the responsibility in one agency, as distinct from diffusing it all around the lot, and under the Douglas proposals, you do centralize it in 1 agency, and it is 1 person whom you could hold responsible.

It would seem to me that an area assistance administrator, with the rank of Assistant Secretary of the Commerce Department, would not swing the weight required to accomplish the things that you will have to do to make this program a success.