it cannot be stored. If men are able and are willing to work, but are forced to be idle by lack of jobs or capacity to perform in a decent job, the community has wasted the valuable resources of manpower, and because of idleness, the individuals are likely to suffer a loss of skill and a breakdown of morale. The Nation is poorer both by the goods that could have been produced and by the frustration and loss of morale of the unemployed individual.

Without the satisfaction of useful activity, without the sense of security in a job well done, most men lose some of their self-reliance and some of their ability to be productive. This waste of human resources is a great challenge. It is a surprising comment on a nation that prides itself on its skill in organization, in administration, and in management, that such a tremendous waste of resources can occur. Mr. Chairman, and gentlemen of the committee, I should like to point out also that I think this bill is a very important step in connection with the proper defense of our country. I think it has very definite national defense aspects, and I say that for this reason: I think all of us feel that this cold war is liable to continue on for a considerable length of time. An important part of it is the ability of the East and the West to produce. We cannot continue to win the cold war unless our productive capacity continues to be larger and better than that of the Soviet and its satellite countries. Most of us who had the opportunity of visiting the Soviet Union this summer or fall, I think, felt that the industrial output and future potential of the Soviet has been underestimated. A large percentage of the 225 million people in the Soviet Union itself, are working long and hard. It is true they do not have the organizational ability.

They do not have the individual initiative. Up to this point, they do not have the training or the skill that American workers have, but we cannot overlook the fact that in their heavy industry factories they are working 6 days a week, 8 hours a day; sometimes very frequently at no overpay.

If there is some special job to be done, those people have literally been worked very, very hard. It is true it is a kind of slave labor, but by propaganda and other methods, they are getting a lot of useful work out of these Russian workers.

I think we have been underestimating what their potential is in the years to come. So it seems to me that if we are going to continue to win the cold war economically, we have got to make the fullest utilization of our manpower all over the Nation, and we cannot afford in the interest of the defense of the country to have substantial unemployment; we cannot afford to have areas distressed where there is idleness and not full production, and I hope that this bill will be considered as one of the musts in this session of Congress. I think it is tremendously important from that angle, also.

In conclusion, Mr. Chairman, S. 2663 presents us with an opportunity to make more effective use of the human resources we have available in this Nation. I commend it to your attention and to the attention of our colleagues in the Senate, and I urge that you put your full influence behind its passage in the Senate.

Thank you very much.

Senator DOUGLAS. Thank you.

We are very happy to have with us Congressman Lane, who represents the Seventh District of Massachusetts.

Out of the 132 areas identified as suffering a substantial labor surplus in July 1955, 67 localities-almost exactly one-half-are classified by the Department of Labor as areas with a chronic labor surplus. Eighteen major labor-market areas and forty-nine smaller ones are now in this category. (See table, p. 3, for May figures.)

According to the Secretary of Labor many of these areas not only have been suffering from chronic heavy unemployment-in some cases for a decade and longer; in addition, "for the next 1- or 2-year periods, known employment expansions by firms now in the area are not of sufficient size to use fully the area's present labor surplus." 1

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Thus, in 67 major and smaller areas-located in 25 States and in Puerto Ricopersistent and substantial unemployment is not only chronic and continues today, even in the midst of unparalleled national prosperity; but in addition, there is no foreseeable end to the depression in these communities.

The tragedy of chronic area unemployment has many causes: the exhaustion of a natural resource or a falling demand for it; the decline in an entire industry; lack of industrial diversification and the seasonal nature of existing employment; the closing of ordnance, shipyard, aircraft, or other defense facilities: the shutdown, in fact, of any dominant enterprise on which the community has depended as a major source of jobs.

"GHOST TOWNS"-NOT NEW

Years ago natural-resource depletion was the major factor causing community decline. The West is still dotted with ghost towns which once thrived on the mining of gold, silver, copper, zinc, and iron ore, and on the exploitation of forests which now have disappeared. In more recent times, however, it is more often the dynamic pace of technological change which directly or indirectly causes economic dislocation in modern American communities.

For example, the development of new fabrics and production methods has made older textile mills unprofitable and obsolete; in recent years they have closed by the score, and new ones have generally been built in the South, where manufacturers have been promised that wages and other production costs will be lower.

In areas in which textiles have been the mainstay, particularly in New England, the result has often been tragic. Despite valiant community efforts to bring in new industries, Lawrence and Lowell, Mass., are still suffering from chronic unemployment, at the rate of 22.6 percent and 10.3 percent, respectively. According to the July 1955 report, in Providence, R. I., another depressed textile area, between 6 and 9 percent of the work force remains jobless.

Substitutes for coal-like gas and oil-have cut sharply into sales, while at the same time increased mechanization has been reducing jobs in the mines. As a consequence, persistent distress has overtaken Scranton, Wilkes-Barre, and Johnstown, Pa. (unemployment 14.8, 13.7, and 20.7 percent, respectively) and dozens of other communities in Pennsylvania, West Virginia, Kentucky, and Southern Illinois.

Employment in railroading has in turn been reduced as coal haulage has declined, the diesel has supplanted the steam engine, freight yards have become more mechanized, and competition from other forms of transport has increased. Terre Haute, Ind. (unemployment 13.6 percent) and Altoona, Pa. (16.3 percent) owe their distressed status to the double impact of the decline in railroading and the related decline in coal.

The 13.5 percent unemployment rate in Charleston, W. Va., reflects the loss of many jobs because of the closing of a naval ordnance plant, in addition to the effect of reduced output of coal.

In Cumberland, Md.-an example of a smaller depressed area-almost 1 of every 5 workers was jobless in January 1955. In this locality the combined decline in coal mining, railroading, and textiles has hit the community with tragic force. Its largest workplace, the plant of the Celanese Corp., gave jobs to more than 11,000 during World War II; in January, fewer than one-third of that number were on the payroll.

The plight of former textile, shoe, railroad, and coal-mining centers where chronic distress is now extreme is beginning to arouse wider concern. However, plant closings or drastic output reductions occur from time to time in almost every industry, and the result is just as catastrophic.

1 Methods, Criteria, and Procedure Used in Classification of Labor Market Areas, U. S. Department of Labor, July 19, 1954.

FUND-RAISING ONLY A PARTIAL ANSWER

Although all of these local bootstrap operations-and a score of others—have succeeded in raising some funds from the citizens of the afflicted areas, few of the community-development projects have come close to achieving their employment

goals.

In addition to the formidable task of fund raising in order to finance the effort to entice new employers into the community, there is a host of other problems which must be surmounted.

In the first place, a substantial period of time usually elapses between the onset of unemployment and the creation of new and permanent jobs. Therefore, a major problem is to provide either temporary work for those who have been displaced or support for jobless families, particularly after they have exhausted their unemployment-compensation benefits.

Furthermore, the problem of attracting new enterprises into a community is far more difficult and complex than is often visualized.

The mere fact that a substantial labor surplus is available and that a cooperative group of citizens is willing to help finance new enterprises generally is not enough to attract them. There are many additional factors which interest prospective employers:

Does the area meet the needs of a particular enterprise with respect to the proximity of raw materials? Is a market for its products close at hand? Are adequate railroads and railroad sidings, truck routes, or waterways available to transport goods in and out of the area? Are power resources abundant and reasonably priced? Does the locality provide sufficient water and sewerage facilities to meet industrial needs? Is the community an attractive place in which to live?

These are only some of the more important considerations-in addition to the availability of labor and the financial aids which may be volunteered by the community-which affect the decisions of businessmen when they weigh

plant-location alternatives.

Finally, when substitute sources of employment are ultimately drawn into the area, a further question arises: Do the newly created jobs fit the qualifications and employment needs of the originally displaced workers with respect to age. sex, rates of pay, and the utilization of existing skills? Or do the new employment opportunities largely pass them by?

OUTSIDE AID—LIMITED

Clearly, even though an industrial development corporation may be able to accumulate a substantial sum to help finance new plants-and this is by no means easy in a distressed area—the community has many other problems to solve and obstacles to hurdle.

If transportation, power, and other industrial facilities are inadequate, it is hardly within the means of the local development group to improve them unaided. Furthermore, local citizens generally haven't enough experience to accumulate all the necessary technical information about area resources, about market potentialities, and about industries and companies throughout the country that are currently expanding and might be persuaded to locate in the vicinity.

While outside aid to assist depressed areas to meet these needs is clearly required, it has been far too slow in developing.

In a few States the Department of Commerce or another State agency provides liimted technical assistance. At the Federal level a small unit of the United States Department of Commerce called the Area Development Division, gives some aid to local depressed areas through the distribution of informational bulletins and by making occasional field investigations.

The Office of Defense Mobilization of the Federal Government, on the other hand, has initiated two important forms of aid which, if substantially broadened, can do much to help chronically distressed areas.

The first encourages defense industries to build or expand their plants in substantial labor surplus areas by granting special fast tax-writeoff allowances on capital invested in these communities. The second directs the Defense Department to place military procurement contracts in areas of substantial labor surplus areas, provided the cost is comparable to that of Federal contracts which are placed elsewhere for siimlar items.

Finally, the Federal Government, as we have seen, has recently begun to distribute Government-owned surplus food to the unemployed in chronically distressed areas when a local request is made. While this assistance is often critically needed, it is far from adequate to meet the basic needs of hundreds of thousands of Americans in distressed areas who have exhausted their unemployment compensation or for whom local relief is now insufficient or nonexistent..

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BALLYHO0-NO ANSWER

Eighteen months ago Barron's, a business magazine, took a quick look at several of the industrial-development corporations located primarily in New England and concluded that there just needn't be any depressed areas "if men take action for themselves." The magazine went on to reveal its prejudice against Federal aid by claiming-totally without justification-that "when the Federal Government has intervened, it has just messed things up."

Between 1952 and 1954 Time magazine also gave its readers several cheerful reports on the Yankee renaissance in Nashua, in Lawrence, and elsewhere in New England. When challenged about some of its facts and conclusions, Time answered that its research had been completely confirmed by the Lawrence Chamber of Commerce, an organization that would naturally tend to view the local scene through rose-colored glasses.

It is obviously desirable that the citizens in distressed areas make even more intense efforts themselves toward reviving their economies: the drive for community rehabilitation surely must begin at home. But the national programs which are necessary to supplement local ones are not likely to gain public understanding or support when newspapers or magazines or overzealous local boostersno matter how well intentioned-lead the public to believe that the chronic unemployment problem has practically been solved.

Official statistics and impartial studies show that this problem is far from being solved.

Despite the nationwide industrial expansion of the last 15 years, and notwithstanding valiant local efforts to stage a comeback, Lawrence, Lowell, Scranton, Pottsville, Wilkes-Barre, and Altoona, all continue to suffer extreme unemployment, ranging from 13.7 to 22.6 percent. Even in the midst of America's greatest production boom, these distressed areas and 60 others are failing to attract enough new enterprises-with or without whatever State and Federal aid is currently available-to alleviate their chronic unemployment.

Too often, even when a substantial number of new jobs are created, they are still too few and do not necessarily fulfill the job needs of the displaced workers. Recently a comprehensive study of unemployed textile workers in New England-primarily in the Lawrence, Lowell, Fall River, and New Bedford areascame up with some startling findings.3

While an intense local campaign has brought new jobs into all of these communities and various growth industries have helped broaden the industrial base, the study concludes that:

"Fewer than half of the displaced [textile] workers were reemployed. And two-thirds of those who found jobs were earning less; in some cases the decline in wages was substantial."

The plight of the older workers-whose earlier displacement has already brought on the irretrievable loss of valuable seniority, vacation, and pension rights-is particularly tragic. According to the study:

"Although not all the younger workers had found jobs, those under 40 were relatively more successful than those past this age. Many of those between the ages of 40 and 65 felt they were being prematurely forced out of the labormarket."

Many displaced textile workers contacted in the survey "had been continuously unemployed since their initial layoff, and in some cases this took place 2 years or more before our survey. Instead of employing displaced textile workers in large numbers, it appears that growth industries are employing new entrants into the labor force."

January 11, 1954.

Inter-Industry Labor Mobility, by William Miernyk, published by Northeastern University, Boston, Mass.