have been listed under the old counting technique. We have every reason to believe that when the Census Bureau makes further revisions in its technique, national unemployment figures will more nearly approximate unemployment figures in Michigan.

The purpose of emphasizing these facts is merely to illustrate that distressed areas in Michigan are at least matched, and undoubtedly more than matched in many areas, by distressed areas throughout the Nation. I make this point for the purpose of demonstrating the importance of adequate criteria for assistance under Senate bill 964, which we are here discussing.

A moment ago I reviewed the bill's definition of the alternatives under which assistance to distressed areas would be given. It is not clear whether these are the only criteria to be applied.

The wording of the section as it now stands is "there shall be included among the areas so designated any industrial area in which there has existed unemployment of not less than ***" etc. In another subsection, it is provided that, in making the determination, the Administrator "shall be guided, but not conclusively governed, by pertinent studies made and information and data collected and compiled ***", which would appear to give the Administrator some discretion.

In section 15, titled "Termination of Eligibility for Further Assistance," it is provided that no further assistance shall be granted when the Administrator determines that employment conditions "have changed to such an extent that such area is no longer eligible for such designation under section 5.”

This wording would apparently restrict eligibility for assistance to those areas qualifying under the single criterion of extent and duration of employment. The Administrator may also designate "rural development areas" and no specific criteria are provided for such determination. The Administrator is einpowered to designate as rural development areas those rural areas within the United States in which he determines "that there exists the largest number and percentage of low income families and a condition of substantial and persistent unemployment or underemployment."

This is as it should be. But special note should be made, I think, that the term "underemployment" is not used in the subsection providing for the designation of industrial redevelopment areas. The term "underdevelopment," it seems to me, might have some useful connotations in connection with industrial redevelopment.

In making designations of rural redevelopment areas, the Administrator is also directed to consider, "among other relevant factors," the number of low income farm families, the proportion of such low-income families to the total farm families of each area, income levels as measured against the general levels of income in the United States, the current and prospective employment opportunities in the area, and the availability of man power for supplemental employment.

In the designation of rural had a good deal of discretion. other area designations as well. In short, the bill's undertakings are proper and laudable. However, the criteria set up for designation as industrial redevelopment areas seem too restrictive.

redevelopment areas the Administrator clearly Perhaps he should also have such discretion in

Twelve percent unemployment for 1 year period, I should think, would be a very rare situation. In any event, a community meeting this criterion would border, indeed, on the nature of a ghost community. Moreover, it seems to me, 8 percent for 15 out of 18 months, and 6 percent for 8 months in each of 2 preceding years are also extraordinarily bad situations.

We have made an analysis of unemployment in each of our labor market areas from January 1955 through February 1957, and although a number of Michigan labor market areas have fallen into the lower groups of the area classification system for one or more months during this period, none of the major areas and only four minor areas in the Upper Peninsula would meet any of the main criteria of this bill.

Muskegon, in which more than 8 percent of the labor force was unemployed last February, has been over 6 percent for the last 9 months.

Assuming that unemployment were to remain about the same from now on, Muskegon would not become eligible for designation as an industrial redevelopment area until March 1958.

The Port Huron area has had unemployment in excess of 6 percent of the labor force for 14 consecutive months beginning with January of 1956. This

area would be close to meeting the requirements, if employment conditions continue bad there within the next 2 months.

The Monroe area, similarly, would be eligible in another 3 months for designation as an industrial redevelopment area.

But I do not like to think that this otherwise very laudable bill would exclude from assistance any of the areas I have just mentioned, pending their further dissolution as going and prosperous members of our Michigan community.

The only areas which could immediately be designated as industrial redevelopment areas in my own State of Michigan are L'Anse, Munising, Newberry, and Sault Ste. Marie.

Munising meets one criterion, having had 16 months of unemployment in excess of 6 percent out of the last 18 months. So does Sault Ste. Marie, which has had 17 consecutive months of unemployment in excess of 6 percent.

The other 2 areas meet the requirement of unemployment in excess of 8 percent for at least 15 months out of the last 18.

These are all labor market area figures. Some communities, which are smaller than labor market areas and which would not be eligible on the basis of labor market data, might be eligible if the data were provided on a county or municipality basis as is permitted in the bill.

But I do think the criteria themselves should be made less restrictive. I feel also that the Administrator should be given a good deal of discretion in determining whether areas are to be designated as redevelopment areas or not. Certainly, any areas which already meet the criteria set up in the bill should have a mandatory redevelopment area designation.

To me, however, it is overcautious to insist that an area of substantial unemployment, in which there is no immediate prospect of improvement, should be ineligible for immediate designation and should be required to wait for an extended period to meet one or more of the criteria.

By the time that these criteria have been met, there will have been a good deal of needless suffering on the part of the local labor force and local business. A great many workers will have exhausted their benefits under these conditions, and many of them will have been employed for so long that their morale and skill will have deteriorated substantially. Furthermore, the virus of unemployment will have become so deep rooted that it will be that more difficult to eradicate.

This is true of such areas as those in Michigan's Upper Peninsula, in which there may be some temporary seasonal amelioration of unemployment from year to year, sufficient, in some instances, to preclude designation as a redevelopment area. This goes also for such communities as Monroe and Port Huron, in our Lower Peninsula.

The Administrator should be given discretion to recognize the existence of problems resulting from a situation in which we may have very large numbers of unemployed, who nevertheless do not constitute a sufficiently large percentage of the labor force to meet the criteria of the bill.

For example, the Detroit area has been one of labor surplus for some time. In January, the unemployed in the Detroit area totaled 91,000. On March 15, the unemployed in Detroit were estimated at 96.000.

The average for the period is slightly less than 6 percent of the area's labor force, the minimum percentage to qualify as a redevelopment area. Yet I think there is no doubt in the mind of anyone at all conversant with the situation that a pool of unemployed workers as large as Detroit's would constitute a difficult problem in any labor market.

Furthermore, the special circumstances under which Detroit's labor-surplus pool has developed (and here I refer to plant shutdowns displacing large numbers of high-seniority workers) and the other characteristics of the unemployed constitute significant factors which might well justify the kind of assistance contemplated under the bill quite apart from the relative sizes of the unemployed group when measured against the total labor force.

One very important consideration in an area such as Detroit, where the percentage of the unemployed may not quite reach the level specified in this bill, is the average duration of unemployment represented by the surplus-labor pool. When the criteria set up in the bill were developed, a certain level of so-called frictional unemployment undoubtedly was assumed. Under this concept, unemployment of perhaps 4 or 5 percent (although I personally consider this unduly high) may be considered normal, even under conditions of so-called full employment, the unemployed being considered largely as workers who are between jobs, with a relatively small percentage suffering prolonged unemployment.

But it should be pointed out that developments during the last few years have been generally on the side of increasing the stability of employment. Pension plans, seniority provisions, supplemental unemployment benefits, the existence of the unemployment-insurance system itself, all have operated to freeze workers into their jobs.

Stability of employment is, of course, something which is much to be desired. As a consequence of such freezing, however, we find that the stability of unemployment has been increased also. Frictional unemployment, which makes for constant turnover in the surplus-labor pool, has been reduced substantially. This means that the number of employment opportunities opened to the unemployed through occasional employment bulges also has been reduced and that the average duration of unemployment has been lengthened substantially.

Therefore, it seems to me that now certainly we no longer can regard a pool of unemployed workers amounting to 4 or 5 percent of the labor force as just between jobs. Many of these are suffering real depression-type hard-core unemployment, with only depression-type prospects of reemployment.

For all of the reasons I here have touched upon rather briefly, I think perhaps I should repeat and reemphasize my feeling that the criteria should be revised to more realistic levels.

And now, if I may be permitted to do so, I should like briefly to go back to a matter I referred to a few moments ago. My question is as to why underemployment should not be considered in industrial areas as well as in rural areas. It seems to me, also, that we sorely need a good definition of underemployment.

A possible definition might be "work of less than a specified number of hours per week, where the individual was available for full-time work, or where either weekly or annual earnings fall below a specified figure."

The necessity for taking account of annual earnings arises from the possibility that, in areas such as some of our Upper Peninsula labor markets, workers may obtain seasonal employment for a sufficient length of time to prevent certification of the area under any of the criteria of the bill, and yet have very low total earnings for the year.

There are two other suggestions which I should like to make.

With respect to retraining subsistence payments, I wonder exactly what is meant by "training for a new job" in the limitations to "persons certified as undergoing training for a new job." It seems to me that it might be advisable to make such payments to all who are undergoing such training as would enhance their opportunities for reemployment, whereas the bill's language might be interpreted more restrictively.

As a final point, I wonder if it might also be advisable to include in the bill something along the line of a proposal which I have made to the current session of the Michigan Legislature.

This is a proposal under which the employment security commission in our State would provide moving expenses from areas designated by the Employment Security Commission as being in distress. We would move these people, or rather I should say those who wish to be moved, out of our substantial labor surplus areas into areas certified as being in short labor supply. I wonder whether some such provision should not be included in this bill, providing moving expenses from areas designated as redevelopment areas into other areas certified as job-available.

There is one other point which I must take this opportunity to make. Even though it does not pertain directly to the bill we are discussing, it nevertheless is germane to the subject of unemployment and it is national unemployment, after all, with which we are concerned.

It is the reductions in the Labor Department budget to which I refer. The House last week took a meat ax to the budget, cutting out the $12 million contingency fund entirely from the Department's budget of grants to the States.

None of us, Mr. Chairman, is opposed to necessary economy in Government as well as out. The curtailment of essential services, however, is something else again, particularly when such curtailment appears to result from a kind of carefully whipped up hysteria rather than from any sound motivation.

The matter soon will come before the proper Senate committee and eventually, of course, to the Senate itself; I should like to say to you, therefore, that the cuts, as they now stand, would cripple another of Government's essential services to the people.

In the last 4 years, Michigan on 3 occasions has had to use the contingency fund. In fiscal 1957, we had to call upon the fund for $1 million as a consequence of layoffs in our auto plants.

2

It is important to note that the elimination of the contingency fund is no tax saving as all. It comes out of earmarked funds, whose collection will continue under the employment security law. If its elimination means anything, taxwise, is means only that large employers, whose rather curious production schedules are themselves responsible for large-scale unemployment, eventually, and as a consequence of what amounts to no more than a gigantic kick-back, will be spared a large part of the legitimate cost of employment security.

It is my hope that you may be able to use your good offices and great talents to spare the people of this Nation what could be a very serious blow.

Mr. Chairman, I wish to thank you and the members of your committee once again for the privilege of testifying before you on so important a matter, and once again to congratulate you on your conception of a very real problem which confronts the people of this Nation, and on your determination to do something about it. Thank you very much.

Senator CLARK. Congressman Denton.

STATEMENT OF HON. WINFIELD K. DENTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA

Mr. DENTON. Senator, my statement will be rather short. Senator CLARK. Will you proceed in you own way, please? Mr DENTON. As I say, this statement is rather brief and I would appreciate it if I could simply read it.

Senator CLARK. You certainly may.

Mr. DENTON. Mr Chairman, I am Winfield K. Denton, Representative from the Eighth District of Indiana. I appreciate very much the opportunity of appearing here today, to testify in behalf of the area redevelopment bill, S. 964.

I wish to lend my fullest support to this bill, and to express the hope that either this bill or very similar legislation will be favorably reported in both Houses of Congress and passed before the end of this session. Since previous witnesses have already discussed the various sections of the bill, I will not devote my testimony to those matters in any detail.

However, I would like to mention that I introduced an area redevelopment bill in the House of Representatives, H. R. 5407, on February 27. My bill is very similar to S. 964, except that in section 5 (a) (3) my bill would require an area to be designated for industrial redevelopment if it had experienced 6 percent unemployment during 16 of the preceding 24 months; whereas S. 964 would so designate such an area if 6 percent unemployment existed there during 8 months in each of the 2 preceding years. Possibly my bill would afford somewhat more flexibility in making such a determination.

My interest in the area redevelopment bill arises because of economic conditions which have existed for many months in the district I represent-mainly in my own home city of Evansville, Ind.

The population of Evansville and Vanderburgh County, whose boundaries extend only a few miles beyond the city proper, is currently estimated to be about 180,000. Within the last year, the Evansville metropolitan area has been defined as also including Henderson County, Ky., just across the Ohio River to the south, so that the metropolitan area population now reaches about 212,000. The total labor force of the Evansville area including some 10,000 persons in the Henderson County, Ky., labor force, is approximately 90,000. It was estimated in 1953 that some 20,000 people employed in Evansville

there commuted to work from homes located outside the metropolitan

area.

Manufacturing of various kinds in the Evansville area employs about 32,000 persons. More than 8,000 of these employees work in refrigerator factories, more than 6,000 in automobile body and assembly plants, and some 4,000 or more are employed in food processing. Metal products and furniture industries account for another 5,000 or more employees.

But, in February 1957, some 6,200 people in the area were unemployed. Of the February labor force of 89,300 people who were ready, willing, and able to work, 6.9 percent had no jobs. In view of the fact that national average employment conditions are considerably better than that, the United States Department of Labor regards a community as having a "substantial labor surplus" if unemployment in the area exceeds 6 percent. Among 149 major industrial areas in the country, Evansville ranks within the group of 19 areas where unemployment is greatest.

Unemployment in the Evansville area has been greater than 6 percent for 32 of the last 38 months, greater than 9 percent in 10 of those 38 months, and near 12 percent in 5 of the last 38 months. Only in 2 months of that period did it drop below 5 percent.

If the committee will permit, I should like to include for the record as part of my testimony a sheet which I have prepared showing in brief summary the labor market situation in the Evansville area since January 1, 1953. I believe that will demonstrate a good case study of the problem in a community where we really need area redevelopment legislation.

Senator CLARK. Without objection it will be made a part of the record at this point.

(The document referred to follows:)

1

Labor market situation, Evansville, Ind., area, 1 since Jan. 1, 1953

Month

1953

1954

1955

1955

1957

Labor Percent Labor Percent Labor Percent Laber Percent Labor Percent force unem- force unem- force unem- force unem. force unem(000) ployed (000) ployed (000) ployed (000) ployed (0:0) ployed

1 Comprises Vanderburgh County, Ind., through February 1956; reporting area was extended to include Henderson County, Ky., thereafter."

2 Including Henderson County, Ky.

NOTE.-Figures shown above are derived from official reports and estimates issued by the State of Indiana Employment Security Division and the Bureau of Employment Security, U. S. Department of Labor.