STATEMENT REGARDING PENNSYLVANIA'S UNEMPLOYMENT PROBLEM

PENNSYLVANIA'S ECONOMY BASICALLY SOUND

Pennsylvania is the third largest State in the Nation in terms of population, labor force, income payments to individuals, value added by manufacture and value of mineral production. Although the Pennsylvania economy has achieved relative maturity as compared with the United States generally, its standing is good and it is clearly capable of further substantial growth and expansion.

PENNSYLVANIA'S UNEMPLOYMENT PROBLEM

During 1956 total unemployment in Pennsylvania averaged 251,000 or 5.5 percent of all the workers in Pennsylvania's civilian labor force. The national average unemployment rate was 3.7 percent during this period.

While Pennsylvania's 1956 average unemployment, in keeping with national trends, was substantially lower than the 1954 and 1955 averages of 402,200 and 322,500, respectively, it was still 63,000 higher than the 1953 average of 188,000. Pennsylvania's unemployment rate was 7.1 percent in 1955, 8.7 percent in 1954, and 4.1 percent in 1953, whereas nationally the rate was 4.0 percent in 1955, 4.5 percent in 1954, and 2.5 percent in 1953.

Pennsylvania has had to face serious economic and unemployment problems for decades; and Pennsylvania's unemployment rate has consistently run higher than other States and the Nation for many years. Substantially all of these problems derive from the fact that the State's unemployment has always been very heavily concentrated in certain distressed areas of the State. These areas have been faced with serious, chronic unemployment problems dating back to the depression days of the thirties and continuing ever since even through the booming production days of World War II and the Korean conflict despite extensive and sustained efforts on the part of the affected communities to improve their lot. As a consequence, Pennsylvania has continuously had far more than its share of areas of substantial labor surplus, or so-called "depressed area."

PENNSYLVANIA'S EXCESSIVE SHARE OF DEPRESSED AREAS

Pennsylvania currently has 11 areas classified as areas of substantial labor surplus on the official area classification list of the United States Department of Labor. Four of these are major metropolitan areas which are regularly inIcluded in the clasification system and 7 are smaller areas which are classified because they have substantial labor surpluses. All 11 of these areas have been continuously classified as surplus areas for 2 years or longer, and all would qualify as industrial redevelopment areas under Senate bill S. 964.

Exhibit A, attached, shows the classification, name, and geographic coverage and location of each classified labor market area in Pennsylvania, as well as the area classification criteria and the number of areas in each classification category in Pennsylvania and the Nation.

In the United States as a whole, only 19 major areas are currently listed as areas of substantial labor surplus. Thus the four major areas in Pennsylvania alone account for more than one-fifth of the total in the entire country. The remaining 15 major areas of substantial labor surplus currently existing in the United States are distributed as follows: Massachusetts has 3; 2 States have 2 areas each; 5 States have 1 each; Puerto Rico accounts for the final 3. Likewise, Pennsylvania's seven smaller areas of substantial labor surplus represent one-eighth of the United States total of that type.

A review of the situation over the past 4 years points up the fact that Pennsylvania has constantly accounted for more than its share of labor surplus areas. Through most of 1954 and 1955, Pennsylvania had eight major areas of substantial labor surplus, representing one-sixth to one-fourth of the national total. In the year 1953-a good year employmentwise-Pennsylvania accounted for about one-fourth of the major areas of substantial labor surplus. In respect to the smaller areas, Pennsylvania's share has also been sizable. The number has ranged from 4 throughout 1953 to a high of 15 from May through

September of 1955 and has represented 12 to 22 percent of the United States total. Even in 1956, when unemployment in Pennsylvania was considerably lower than it had been in 1954 and 1955 both in number and in percentage of the labor force, Pennsylvania still had about one-fourth of the Nation's major labor surplus areas and about one-eighth of the smaller areas.

Exhibit B shows the average and percentage of unemployment and usual area classification for each of Pennsylvania's 11 areas of substantial labor surplus during the last 4 years (1953-56).

BASIC CAUSE OF UNEMPLOYMENT PROBLEM

The basic cause of Pennsylvania's unemployment problem arises out of the fact that the State and its depressed areas have a heavy preponderance of basic national industries in which severe and sustained long-term employment declines have been occurring due to the toll of progress and technological advancements. Anthracite and bituminous coal mining, railroad transportation, railroad equipment manufacturing, textile manufacturing, and metals manufacturing are notable examples of such problem industries.

PRODUCTIVITY AS A FACTOR

One of the important factors contributing to the employment declines in the industries named above, as well as many others, is the increase in productivity that has been realized as a result of extensive, industrywide modernization, automation, and mechanization programs that were effectuated by numerous major industries during and since World War II.

PROBLEM INDUSTRIES

The employment decline in the anthracite and bituminous coal mining industries, which started nearly 30 years ago constitutes by far the most important single factor in the development of Pennsylvania's chronically depressed areas. This fact is graphically indicated when the State's areas of substantial labor surplus are outlined on a map of the State, as illustrated on the attached area classification map (exhibit A). In this exhibit, the map showing the major and smaller areas of substantial labor surplus is, for all practical purposes, a map of Pennsylvania's coalfields. The black cross-hatched section extending to the northeast from the center of the State represents the anthracite coalfields; to the west, the bituminous fields. These two sections embrace all of Pennsylvania's long-term labor surplus areas.

For many years northeastern Pennsylvania prospered because here alone was located the Nation's supply of anthracite coal which was by far the most popular household heating fuel. The ever-increasing population in this area depended primarily on the coal mines for their support. For several decades, however, mining employment has been declining steadily. Many of the mines have been worked out, oil and gas have been rapidly supplanting coal for household heating, and technological improvements over a long period of years have reduced the manpower required in mining coal. Joblessness long since became a major problem. The bituminous coalfields of midwestern and southwestern Pennsylvania have experienced a similar decline for much the same reasons, with the added factor that competition of low-grade fuel oil for industrial and transportation use has contributed in large measure to the declining demand for soft coal. Furthermore, the beehive coke industry, companion to the soft-coal industry of southwestern Pennsylvania, has been gradually supplanted through the more economical production of byproduct coke.

In December of 1956, only 78,000 men were on the payroll of the State's coal mines as compared to the 360,000-more than 4 times as many-that were employed in the industry in the 1920's. In the past 9 years alone, almost 110,000 jobs have been eliminated in the hard and soft coal industry-for the most part in those areas now classified as areas of substantial labor surplus. (See exhibit C, which shows employment trends in selected Pennsylvania industries from 1947 to 1956.)

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The decline in the State's textiles manufacturing industry has also seriously aggravated the problem of chronically depressed areas in the anthracite region, where a number of textile mills have permanently shut down or curtailed operations. Since 1947, employment in this industry dropped by more than 50,000, chiefly as the result of changing styles and customs, the greater durability of new fabrics, increased mechanization and automation, the competition of more modern mills in other States and the relocation of some plants in Southern States.

Developments in the State's metal industries have adversely affected Pennsylvania's problem areas, particularly in the southwestern soft-coal region. Traditionally, these industries have provided many jobs which have offset losses in the mining industry. Despite capacity production and the expansion of output to new alltime highs, however, employment in the State's metals industries during 1956 averaged almost 100,000 below the level in 1953. The reduction in manpower requirements of these industries is attributable to increased mechanization and modernization.

Employment declines in the railroad transportation industry, arising chiefly from reduced coal shipments and the increasing competition of other types of transportation have also resulted in the loss of many badly needed jobs in the State's chronic labor-surplus areas. Since 1947 employment in the State's railroad transportation services has dropped by about 43,000.

The manufacture of railroad transportation equipment has been affected by the shift from steam to diesel locomotive power and the drop in railroad transportation activities. The Altoona area, in particular, has suffered from curtailment in its railroad locomotive and carbuilding and repairing activities.

It should be noted that many sections of Pennsylvania not covered under the United States Department of labor area classification program because of their sparse population, nevertheless have unemployment problems comparable on a relative basis to those of the classified substantial labor-surplus areas.

IMPACT OF UNEMPLOYMENT PROBLEM ON UNEMPLOYMENT COMPENSATION

The persisting heavy volume of unemployment has, of course, contributed very substantially to the large volume of unemployment compensation activity in Pennsylvania. During the past 7 years (1950-56), inclusive) over 56 million claims for State unemployment compensation were filed in Pennsylvania. In that time, Pennsylvania alone paid out over $990 million-almost $1 billionin State unemployment compensation benefits. The high year in this period was 1954, which also was the highest year on record. In that year nearly 13% million claims were filed and almost $251 million in benefits was paid. The year 1955 was the second highest of the last 7, with over 9 million claims being filed and more than $180 million being paid in benefits. In 1956, the third highest of the 7-year period, more than 82 million claims were filed and over $160 million in benefits was paid. Even in 1951, which was the 7-year low, over 5 million claims were filed and in excess of $66 million was paid in benefits. The banner prosperity year of 1953 was next to the lowest of the past 7. Despite the high level of economic activity in the year, nearly 62 million claims were filed and well over $102 million in benefits was paid.

As would be expected, the areas of substantial labor-surplus account for a large part of unemployment compensation claims and payments. The 11 such areas which now exist in Pennsylvania have only about one-seventh of the State's covered labor force, but, in the past 4 years, have accounted for almost onethird of all claims and payments. In the average week of 1954, for example, the percentage of the covered labor force which filed claims amounted to 22 percent in the Uniontown-Connellsville area, 19 percent in Pottsville, and 17 percent in Sunbury-Shamokin-Mount Carmel. In the remainder of the State, outside the areas of substantial labor surplus, the number of claimants in 1954 was less than 6 percent of the covered labor force. The percentage of the covered labor force which filed claims in each of these 3 example areas in 1956 was about half the 1954 figure. The remaining labor-surplus areas also showed considerable improvement since 1954. However, the average weekly number of contiued unemployment compensation claims of the 11 areas as a whole in 1956 was 8.5 percent of the unemployment compensation covered labor force of the

11 areas; for the remainder of the State, taken as a whole, average weekly claims in the same year were only 3.7 percent of the covered labor force. (See exhibits D-1 and D-2 which show, for each of the last 4 years for each area of substantial labor surplus, the average weekly number of unemployment compensation continued claims filed, the percentage each such number is of the area's unemployment compensation covered labor force, and the total amount of unemployment compensation benefits paid.)

The industries which have been the major sources of unemployment: compensation recipients in Pennsylvania labor-surplus areas are anthracite mining, bituminous mining, construction, textiles, and apparel. These 5 industries have been among the State leaders in the number of unemployment-compensation payments made to their workers in each of the last 4 years, with the exception that unemployment-compensation payments in anthracite mining in 1956 dropped sharply in number to rank 10th, but, on the other hand, still ranked 1st on a relative basis. (See attached exhibit E, which shows the average weekly number of unemployment-compensation payments made during each of the last 4 years to workers in those industries which were responsible for the largest number of payments.) These same 5 industries, on a statewide basis, have also been in the forefront for the last 4 years in the percentage of their work force which has received unemployment-compensation benefits. (See attached exhibit F, which expresses the data shown in exhibit E as a percentage of each industry's covered employment.)

How employment decreases in these five industries account for the large number of unemployment-compensation claims in a labor-surplus area is well illustrated by the Wilkes-Barre-Hazelton area. In this major area, unemployment, which is largely due to declines in the nonmanufacturing mining industry, is frequently augmented by large and continued layoffs in the textiles and apparel industries. This occurs because, taken together, employment in these 2 manufacturing industries alone accounts for about 55 percent of the total number of persons employed in manufacturing industries of the Wilkes-Barre-Hazelton

area.

In the past 6 years almost 700,000 of Pennsylvania's unemployment-compensation claimants exhausted all of the unemployment benefits to which they were entitled. Approximately 80,000 claimants exhausted their benefits in 1956; about 160,000 did likewise in 1955, and about 200,000 in 1954. Even in the good years of 1951 and 1953 there were around 70,000 such exhaustions in each year. Almost one-third of the persons who exhausted benefits during the last 4 years filed their claims in the State's 11 areas of substantial labor surplus. Judging from the size of the total covered labor force of the 11 surplus-labor areas, the number of continued claims or of exhaustions in these areas may be said to have been more than twice as great as the smaller number that would have been likely to occur had employment conditions in these areas been as favorable as in the remaining classified areas of the State. The number of exhaustees in each of the 11 areas was high in 1955 despite an amendment to the unemploymentcompensation law, effective May 1, 1955, which raised duration to 30 weeks from the previous variable duration of 13 to 26 weeks. In 1956, the number of exhaustees in each of the 11-areas was about half the 1955 number, but exhaustions last year still ran about twice as high as the size of the covered labor force would seem to suggest if employment conditions had been in better balance. (See attached exhibit G, which shows the number of exhaustions in each area of substantial labor surplus during each of the last 4 years.)

IMPACT OF UNEMPLOYMENT PROBLEM ON PUBLIC ASSISTANCE

Public-assistance costs in Pennsylvania have been swollen as a result of the continuing high levels of unemployment. In the years 1950 to 1956, inclusive, Pennsylvania spent over $732 million in direct public-assistance payments to people in need. In 1950 alone the payments totaled $136 million. As employment for Korean war production increased, public-assistance payments decreased. In 1953, the banner employment year of the period, assistance payments dropped to about $88 million. Since that time the need has again increased so that 1955 payments approximated $105 million and 1956 payments, $109 million

Attached exhibit J presents the total amount of public assistance paid in Pennsylvania's 11 surplus-labor areas in the years 1953 to 1956.

Attached exhibit H presents anual average dependency ratios (percent of total population dependent on public assistance) for Pennsylvania's 11 substantial labor-surplus areas for each of the years from 1953 to 1956. The table indicates that all labor-surplus areas except the Berwick-Bloomsburg area show public dependency ratios consistently above the State average.

Attached exhibit I presents the annual average number of public-assistance beneficiaries in the 11 areas of substantial labor surplus in the years 1953 to 1956.

STATE AND LOCAL EFFORTS TO OVERCOME DEPRESSED-AREA PROBLEMS

Extensive efforts have been undertaken by the State government and by local communities to increase employment in the depressed areas. Scores of local community groups have been extremely active for many years in extensive selfhelp activities and programs of local industrial development, expansion, and diversification. These activities have covered everything from organizing and conducting community action committees and promotional campaigns to carrying out comprehensive economic self-appraisal surveys and substantial fundraising and plant-building programs.

The State government has assisted the community efforts by stimulating, encouraging, guiding, and assisting local activity, making economic and labormarket surveys, disseminating information regarding the industrial assets of various areas, attempting to steer new industries and contracts into such areas, trying to procure substantial Government installations and defense facilities for such areas, and stepping up State programs of roadbuilding, hospital construction, stream clearance, slum clearance, and public housing.

These efforts have produced creditable results, but the gains have not been sufficient to stem the rising tide of unemployment flowing from continued job losses in problem industries and from the continued normal growth of local labor forces.

The Scranton area has probably been more aggressive and successful in its efforts to promote new industry than any other community in Pennsylvania. Its efforts have been publicized nationally as "The Scranton Plan."

Several million dollars were raised locally through public contributions and the sale of mortgage and debenture bonds in order to provide substantial funds for acquiring plant sites, constructing or purchasing facilities, and otherwise financing industrial-development activities. Approximately two dozen new communityfinanced plants were built and leased to new industries on a long-term, rentalpurchase basis. In addition, more than that number of privately financed new plants have been built, and expansion has taken place in scores of existing, establishments.

In addition to the efforts put forth in the Scranton area by local organizations, the Pennsylvania Industrial Development Authority has granted the Scranton Lackawanna Industrial Development Co., a local community development organization, the sum of $275,000 for the purpose of completing an industrial building now under construction.

However, in spite of the diligent efforts of the local community and State government to stem the tide of continued unemployment, and in spite of many thousands of new jobs which resulted from these activities, there are today in this area nearly 10,000 workers, chiefly men, currently unemployed in the area, representing nearly 10 percent of the total civilian labor force in the Scranton area. Continued employment declines in the anthracite mining, textile manufacturing, and railroad transportation industries have virtually canceled out all of the new-employment gain in spite of a sizable gain in metals manufacturing employment in the past year.

The Scranton story is typical in varying degrees of many other areas of substantial labor surplus in the State.

STATE ECONOMIC RECOVERY PROGRAM

The present administration in the Commonwealth of Pennsylvania has launched a broad and comprehensive program aimed at bringing about economic recovery in the State and, most particularly, in its depressed areas.

Many of