manufacturing plants that the Government has been operating. It would be exactly parallel with the situation that exists when the Government places a contract with a private company on a cost-plusfixed-fee or a fixed-price basis. The private employer includes his pay roll and his pay roll tax in making his price to the Government. From the viewpoint of the individual employee, it will place him in a position so that he will be eligible for the same benefits as an employee in his neighborhood who is working and living side by side with him.

Mr. GROSS. Mr. Chairman, I would like to ask the witness whether that would extend only to production employees of the Federal Government, that is, those engaged in arsenals and shipyards or would it also extend into other branches of Federal employment?

Mr. CLIFFE. My immediate suggestion is that it would serve only for employees who are in manufacturing establishments and not to the usual, normal peacetime employment of civil-service employees. The reason for making that distinction is, in part, the reason why civil-service employees were not included under the original law, namely, that they have a degree of tenure and a probability of continued employment that is much higher than the manufacturing employee. Therefore, I addressed my suggestion to solving the hardest part of the problem and the most critical one.

Senator VANDENBERG. You mean we are going to keep the swollen Federal pay roll forever?

Mr. CLIFFE. As a taxpayer, Senator, I hope not. As a person who worked in Washington for 2 years for the War Production Board and from the viewpoint of the individuals who are working here, I hope not.

Senator O'MAHONEY. BUT!

Mr. CLIFFE. I hope that "but" is in the record just as emphatically as the Senator said it. The problem is there, of course.

Senator VANDENBERG. Is that the only supplemental Federal action you think is necessary in contemplating this reconversion problem? Mr. CLIFFE. That I believe is the only Federal action necessary at this time to meet the unemployment problem of Federal demobilization of the war industries of the country as a whole. I say that in the light of having studied the provisions of the State laws, the amounts that they have on hand and the probable degree of unemployment. I say that in the light, further, of having watched at rather close range the gradual demobilization and reconversion that is already under way, as war contracts are either terminated or canceled by the Government.

If we were completely on a war basis and then overnight canceled all war production, there would be a greater problem than we are actually going to face. The transition from war production to civilian production will be a gradual one. How gradual depends upon how long it takes our Army and Navy to finish their two big jobs. The CHAIRMAN. Is there anything else you wish to say, Mr. Cliffe? Mr. CLIFFE. That covers what I had on my mind.

The CHAIRMAN. Are there any further questions?

(No response.)

Thank you very much, Mr. Cliffe.

Mr. Haber, would you please be seated? Mr. Haber, we have at last reached you.

STATEMENT OF WILLIAM HABER, ASSISTANT EXECUTIVE DIRECTOR FOR PROGRAM DEVELOPMENT, WAR MANPOWER COMMISSION

Mr. HABER. It is better late than never.

The CHAIRMAN. You have been very kind about coming up and waiting until a later day. We are very glad to have you here to discuss the United States Employment Service and any other matters related to this inquiry.

Mr. HABER. Mr. Chairman, the committee asked me, quite properly, to confine my discussion to the role of the United States Employment Service during the reconversion period and particularly to comments upon its capacity to handle the task which it will have to face.

I have prepared a formal statement which I would like to put into the record, since it is somewhat technical and deals with details. I would like to take 10 or 15 minutes merely to summarize and expand upon any questions you and your colleagues would like to ask. The CHAIRMAN. It may be placed in the record. (The statement referred to follows:)

THE ROLE OF THE PUBLIC EMPLOYMENT SERVICE IN SHIFTING FROM WAR TO PEACE

Mobilization to meet wartime labor needs has created the largest labor force this country has ever known. The effectiveness of our wartime working population in producing combat materials has exceeded anyone's expectations. Despite the withdrawal of more than 11,000,000 civilians to the armed services, the Nation has been able to increase munitions output in a most spectacular fashion and to do so without appreciably disrupting normal civilian life.

The growth of the munitions industries has been characterized by concentration of production facilities. Most of the aircraft, ships, ordnance, and other prime war materials are made in a relatively small number of States. As a result, the manning of these industries has involved the transfer of workers from one community to another, frequently across State lines. No one can determine the number of workers who have migrated for war jobs, but the figure may be close to 5,000,000.

The peacetime reemployment of these workers as well as of the millions of men and women now in uniform is a task of national scope requiring national leadership.

In contemplating the future task of reconverting the war economy to a peacetime basis, it is important to remember that demobilization will not take place overnight. It will be a gradual process. In a very small way, it is already occurring. More than 1,000,000 men already have been released from the armed forces and the rate of military discharges per month runs into the thousands. The necessity of assuring the successful placement of these men in civilian jobs is a testing ground for the huge military demobilization to come. Similarly, production adjustments requiring the transfer and relocation of war workers are already occurring. Their volume is insignificant compared to the continued high volume of war production. But the

need for developing adequate public machinery to prevent unemployment and wastage of manpower displaced by such adjustments is with

us now.

A strong and effective public employment service is a necessity if the gradual demobilization and reconversion of the war economy is to be accomplished with minimum dislocation and suffering. A Nation-wide public employment office system will have to carry the load in providing job information for veterans and war workers, in preventing the development of stranded areas, and in contributing to the enormous training and retraining programs required for transferring veterans and war workers to useful peacetime occupations.

THE UNITED STATES EMPLOYMENT SERVICE

The basic organization for a post-war system of public labor exchanges already exists in the United States Employment Service. The U. S. E. S. was created by the Wagner-Peyser Act in 1933 to cope with the problem of placing men in jobs during a period of depression and unemployment. The U. S. E. S. handled the selection and referral of millions of workers for public works projects in the decade of the depression. Beginning in 1938, it has handled the registration of jobless workers for unemployment compensation under the provisions of the Social Security Act. In the period immediately preceding the war, the employment service was already on the way to becoming a clearing house for employers and workers. In 1941, the service made approximately 71⁄2 million placements in private industry.

Prior to Pearl Harbor the U. S. E. S. was gearing itself to meet the labor demands arising out of defense production. In January 1942, following our entry into the war, the employment service, which previously operated on a Federal-State basis, was placed on a Federal basis to expedite Nation-wide mobilization of workers for expanding war industries.

The United States Employment Service now has 1,429 local offices and 2,038 itinerant points serving the entire United States. The local offices are staffed by approximately 19,000 employees.

WARTIME EXPERIENCE

The United States Employment Service has played a vital role in the recruitment and transfer of millions of workers to meet the labor needs of the war production program. Placements per month have nearly doubled since 1941. Moreover, placements made by the employment service now represent a sizable proportion of the total number of workers hired by war industry. In many communities at least 50 percent of the new workers hired by essential employers are referred by the employment service; in some communities the proportion is as high as 80 percent.

This dependence of industry upon local office recruitment and referral, while partly the result of War Manpower Commission regulations, has developed a relationship and understanding between employers and local employment offices considerably beyond that previously existing. It has won for the Employment Service a greatly increased community acceptance.

91183-44-pt. 3--13

The growing importance of the Employment Service in manning war industries and maintaining essential civilian activities is indicated in the following table:

These placements include many made through the interarea and interregional clearance system developed by the Employment Service to facilitate the migration of workers from surplus areas to areas where additional labor was needed. At the present time, the Employment Service recruits nearly 50,000 workers monthly through the interarea clearance system. In 1943 the number of workers recruited to fill so-called clearance orders was almost twice that large.

Among the wartime functions of the Employment Service are: Recruiting, interviewing, and referring workers to job openings for which they are qualified in accordance with the relative importance of such jobs to the war effort;

Arranging for the transfer of workers from less essential to essential jobs;

Assuring that the movement of workers from one job to another is in accordance with the provisions of the employment stabilization plan in effect in the locality;

Assuring so far as possible that workers are employed and utilized in keeping with war needs and without regard to restrictive or discriminatory hiring specifications;

Gathering and interpreting information on the labor requirements of employers and on available labor supply for use in planning manpower programs and guiding the recruitment, placement, and counseling activities of local offices;

Assisting employers to obtain the fullest possible use of their labor so as to minimize the demand for scarce labor where possible; Transferring workers from labor surplus areas to areas of critical labor shortage.

THE TASK IN DEMOBILIZATION

All of the experience which the Employment Service has developed over the past decade, including much of its wartime experience, has prepared it to make a nationally important contribution as the war mobilization process is reversed. In addition to obtaining employer orders for workers and recruiting, interviewing, and referring workers to fill job openings, the Employment Service must be called upon to perform a variety of functions aimed at meeting national reemployment problems.

Providing a local labor exchange.

Even in normal times employers cannot know the number, location, or skills of available workers, and workers through their own efforts

cannot always learn of available job opportunities. In a period when a large volume of job transfers must be made it is imperative that there be a central point in the community where the employer's need for labor and the worker's need for a job can be brought together. It will be the function of the Employment Service to serve as such a clearing house or labor exchange. Since the use of the Employment Service by employers and workers is voluntary, the performance of this function requires that the local offices be adequately staffed with well-trained personnel so as to offer effective service to both employers and workers.

Collecting and using labor market information.

The Employment Service now has a comprehensive reporting system by which local offices get information from employers on their current and future labor requirements. Through this reporting program, it is possible to anticipate changes in labor demand and to plan recruitment and interarea transfer of workers. Continuation of such a program for securing information on where and when needs for workers will develop and the skills required will be essential in facilitating the relocation of veterans and war workers to peacetime jobs.

Labor market information of the type just mentioned is most needed by operating local offices, but some information of this sort must also be assembled on a State and National basis.

In addition to data which employment offices require locally, there must be a continual flow of advance information on production adjustments from the procurement agencies to the public employment service. With such information, a national network of public employment offices can negotiate worker transfers successfully, both inside the area involved and to other areas. Without it they will be, at a serious disadvantage in fulfilling their function as a labor exchange. Comprehensive labor market information is needed by the procurement production agencies for their use in planning adjustments in war production and expansions in civilian production. The experience of the Employment Service in handling situations created by production adjustments thus far clearly justifies a policy, wherever possible, of undertaking these adjustments first in areas where there is the greatest likelihood that displaced workers will be reabsorbed quickly. Similarly, the expansion of civilian production should, insofar as this is possible, be so planned that continued war production is not deprived of necessary labor.

Operating a clearance machinery for interarea worker transfers.

To meet war needs it has been necessary for the Employment Service to develop a comprehensive clearance machinery to facilitate the orderly recruitment and transfer of workers from areas of adequate labor supply to fill jobs in critical war plants. Much the same type of clearance machinery will have to be continued in the transition period, although it may operate in reverse, the effort being to find jobs for workers rather than workers for jobs.

Collecting and using occupational information.

The first comprehensive system for classifying jobs developed in this country was that prepared by the United States Employment Service. The Dictionary of Occupational Titles, published in 1939,