the nature and severity of their unemployment, and the characteristics of the unemployed. This survey will provide the basis for identifying the kinds of workers who are seldom unemployed; those more-or-less chronically unemployed the seasonal workers; and casual or fringe members of the labor force whose unemployment may result from frequent movements into and out of the labor

force.

For the coming year, we are requesting additional funds to do more work in this field. We propose to conduct four studies which will provide a greater understanding of the dynamics of the labor force. We plan to study the employment and unemployment problems of young workers to understand what should be done to minimize their unemployment, and to increase their potential productive contribution. This is particularly important because of the rapidly increasing number of young people. We propose to obtain more information on the location and characteristics of long-term unemployed in order to provide guidelines for programs designed to hasten their reemployment. We plan to study the factors associated with the movement of women into and out of the labor force, and the pattern of labor force withdrawal of older men, in order to understand the relationship of these shifts to labor force growth and to unemployment. Finally, information will be obtained on the extent and nature of job mobility and its relationship to unemployment.

Another of the projects we are proposing is needed in developing long-range programs to reduce unemployment. As this committee knows, our surveys have shown that much of our unemployment is associated with lack of skill; there are actually shortages of workers in some highly skilled and professional occupations at the same time that we have high rates of unemployment in unskilled and semiskilled occupations. Planning our education and training programs in line with future manpower needs can contribute to reducing structural unemploy. ment. The opportunities are great in the next few years, because of the rapidly rising enrollments in schools and colleges and because we will have to depend on young workers under 25 years of age for one-half of the labor force growth in the 1960's.

Our preliminary studies show that an increasing percentage of workers will have to be skilled or highly trained. We must spell this out in terms of specific occupations and estimate by how much we should expand the training for each field. We propose to develop such estimates for the use of industry, school and college administrators, and officials in charge of apprenticeship and other training programs. This work will build on what we have already learned in our occupational outlook research program. It will be publicized through the Occupational Outlook Handbook and related publications which, as this committee knows, reach a wide audience.

We are proposing another project to fill a serious gap in our current information on the hours and earnings of workers in the United States. The committee is aware of the growing importance of white-collar workers in our economy. There are now more white-collar than blue-collar workers, yet our current statistics on hours and earnings are confined to manual or production workers only. The time has come to begin the collection and regular publication of hours and earnings data on nonproduction workers, and we propose to begin with the 4 million nonproduction workers in manufacturing industries. This would be an annual survey. The data are needed not only to determine the status of these workers, but also to contribute to more broadly based productivity indexes. Price statistics

I also propose important improvements in our statistics of prices and the cost of living, looking forward to completion of the revision program. The statistics needed for this purpose and the procedures to be followed have also been under critical review. A committee (Price Statistics Review Committee) was appointed last year by the National Bureau of Economic Research under contract with the Bureau of the Budget to review the price indexes of the Federal Government, and they have made a number of recommendations relating to both our Consumer Price Index and Wholesale Price Index.

No one has suggested that our Consumer Price Index is declining in quality. Even our critics agree that it is better today than it has been in the past. However, its uses are constantly expanding and there is ever greater need for increased precision. This index will surely continue to be one of the key statistics in guiding public policy in coming years.

In our operation of the index we face increasingly complicated problems of keeping the index truly representative of price changes in our economy. New

items, new models, wider ranges of quality, decentralization of stores-all these make it necessary to obtain more price quotations in the future than we have obtained in the post.

The revision program will not pay off in full unless we obtain for our operations from year to year the funds which are necessary to keep the index as good as it ought to be. It is in pursuit of this objective that we have requested additional funds for the coming fiscal year.

These funds are largely to provide for increasing the number of items on which price quotations are obtained, and for obtaining prices in suburban shopping centers. Our present coverage is limited mostly to downtown stores. Our analytical work has shown that variations in price movements between items and between retail outlets are important sources of sampling errors which can be reduced by increasing the number and distribution of price quotations.

We are proposing also to update our standard budgets, which provide the best present measure of changes in living costs and of intercity differences in such costs. First, however, we need to examine our concepts, definitions, and techniques, and this we will do in fiscal 1963, preparatory to reconstituting the standard budgets in the following fiscal year.

I should also mention a request for additional funds to improve our Wholesale Price Index by preparing the groundwork for separate price indexes by industry. This will make it possible to compare price trends with wage, productivity, and other trends for individual industries. Our present wholesale price indexes are available only by commodity groups.

Wages and industrial relations

Wages and salaries constitute another area of critical importance for the economy. Interest centers not only on wages and wage determination in relation to the problem of price stability, but also as factors in industry location, technological change, and structural unemployment. Moreover, knowledge of wages and salaries in private industry is of very direct concern to the Federal Government as the Nation's largest employer.

Employer expenditures on fringe benefits have become increasingly significant as an element of payroll expense. The compilation of authoritative information on this important and technically difficult area began in fiscal 1960 on a limited basis. To strengthen this work, which has many applications for both Federal and private decisionmaking, the Bureau is requesting additional funds to develop information on employer expenditures for white-collar as well as production workers in manufacturing, and to permit more frequent study of nonmanufacturing industries. Funds are also requested for a study of the design and administration of salary structures in private industry. This study was requested by the Bureau of the Budget and the Civil Service Commission to supplement the basic statistical work already being done by the Bureau on salary levels by occupation in private industry for use in appraising the Federal white-collar salary structure.

The problem of employee working rules in industry has begun to attract wide attention, particularly in view of the human impact of adjustments required by the dynamics of industrial development. Significant strikes have occurred recently over working rules, such as those relating to workload. The President's Railroad Commission is primarily concerned with issues of this nature. The Bureau now makes comprehensive studies of the provisions of major collective bargaining agreements, the analysis being based on the agreements themselves. Funds are requested for a small program of studies at the plant level of the actual application of formal rules, especially those relating to work assignments, ratesetting, grievance procedures, and adjustment to technological and other changes that affect the stability of the employer-employee relationship.

The importance of unionism as an institution has led to increasing public concern with internal union affairs, as reflected notably in the passage of the Labor-Management Reporting and Disclosure Act of 1959. Effective appraisal of Federal legislation in this area rests, in considerable measure, upon comprehensive studies of how unions are administered and governed, the nature and sources of authority exercised by union officials, union revenues and expenditures, and related matters. Funds are requested for a continuous program of such studies, and for the creation of a small staff to provide technical assistance to the Secretary of Labor and Federal agencies concerned with the maintenance of industrial peace and the resolution of labor-management disputes.

Productivity and automation

The persistence of widespread and continuing unemployment of workers in the mass production industries has highlighted the need for additional research in the fields of productivity and automation; that is, studies of the effects of technological change upon employment, not only for the Nation as a whole, but also for important industries. For several years in the past the Bureau has made surveys of specific cases of automation, with a detailed analysis of the entire process from the preparatory steps looking toward the introduction of the machine clear through to the effect upon the work force in the department or the company. We are now planning to extend this type of analysis in the direction of obtaining a preview of future developments. We have a carefully planned, practical program for analyzing significant technological developments which cast their shadows far into the future. The studies we propose to make should enable other bureaus of the Department, State agencies, and business and labor organizations to deal more effectively with some of the consequences of the new technology.

We propose to conduct these studies along two broad paths. One will embrace a series of important technological innovations which may have major impact in various parts of the economy. They include, for example, the electronic computer, numerical control of machine tools, materials handling, instrumentation, new materials, and others which will emerge as technological innovation produces new ideas. The other will be along industry lines we will study major industries, or industry groups, to examine the nature of various technological changes which are taking place. Our primary purpose is to determine the prospective impact of technological change on labor requirements.

Through these intensive efforts we hope to develop a series of continuing studies which will form the basis for the Department's early warning system for preventing or mitigating some of the problems of automation.

Industrial hazards

The Bureau also proposes a two-phase program of Federal-State cooperation in the development of detailed and reliable information on industrial injuries. There is general agreement that such information is essential to identifying the areas in which accidents are most prevalent and providing technical guidance, and that is a tool of great usefulness in programs of accident prevention and workmen's compensation.

One phase of our proposal would permit the Bureau to provide more adequate technical and consulting services to the States in planning and developing their work injury statistics programs. Twelve States currently cooperate with the Bureau in an efficient, coordinated program which meets both State and Federal needs without duplication and without undue burden on cooperating employers. Our current resources do not permit us to service this program adequately, let alone meet the requests of other States which have shown an interest in joining the cooperative program.

A second phase of our proposed new program would provide technical assistance to the State agencies administering State workmen's compensation laws. These agencies are quire distinct from the agencies which collect official statistics on industrial injuries (usually State labor departments), but they depend on reliable administrative statistics in the administration of their programs.

Under this proposal the Bureau would initiate, on a limited scale, a program for compiling the statistics of State workmen's compensation agencies and summarizing them in such a manner as to permit comparisons of the operations of the different State systems. The program would undertake to promote comparability in the statistics of the various States. The Bureau has long been urged to assume leadership in such an undertaking by officials in the various States and by the International Association of Industrial Accident Boards and Commissions. Foreign labor conditions

The requests for information on foreign labor conditions have increased enormously, and the Bureau proposes a modest expansion of its work in this area. Recent work in the field of international comparisons has resulted in the development of a conceptual framework for international comparisons of labor cost, and in the initiation of a pilot study in the iron and steel industry. Such studies can contribute substantially to an understanding of international trade, and are of great interest to business and labor groups. Additional basic information is required, however. Moreover, there is much demand for other types of international comparisons, including comparisons of unemployment, of wages and incomes, of productivity, and of consumer price levels.

Another part of this program is designed to yield reports on labor conditions, such as labor law, industrial relations, wages, hours of work, fringe benefits, degree of unionization, etc.-in other countries of the free world. Such information is frequently requested by businessmen, labor unions, and Members of Congress. It can provide valuable background for carrying out U.S. policy, in raising standards of living in countries receiving U.S. economic aid, and in promoting world peace.

The Bureau has had earlier experience in such work, under contract with other agencies administering foreign programs. This work has sometimes been limited to only a few aspects of the field of labor conditions and has left many countries completely uncovered. Where still continuing, however, it will permit certain economies of operation, which have been taken into account.

Defense mobilization

Finally, the Bureau's request includes funds to finance a small program of research essential to an effective program of manpower utilization in case of large scale military attack. A program of this type has been carried on in the past, but it previously has been financed by allocation from the Office of Civil and Defense Mobilization (now the Office of Emergency Planning).

STATEMENT OF EWAN CLAGUE, COMMISSIONER OF LABOR STATISTICS ON REVISION OF THE CONSUMER PRICE INDEX

Fiscal 1963 is the fourth of the 5-year program for revision of the Consumer Price Index. We are requesting for fiscal 1963 $1,333,000, which is a reduction of $767,000 from funds appropriated for fiscal 1962.

Each year your committee has provided us with funds for this important project. I can report to you that we are on schedule, although at times our resources and our ingenuity have been strained to keep abreast of problems. The revision will be completed and the revised index issued in January 1964. During 1963 we will complete field surveys for housing and consumer expenditures, complete the development of the weighting diagram, and initiate the pricing of new outlet and item samples for test indexes. We will also tabulate and summarize expenditure data for rural farm and nonfarm families.

GENERAL STATEMENT

Mr. CLAGUE. We have two budgets before you. One is our regular budget request for $15,297,000. That is an increase of $2,630,000. We have a second budget for the revision of the Consumer Price Index which is now in its third year. That budget for next year is $1,333,000, which is a reduction of $767,000.

Mr. Chairman, our budget is really based upon the demand for our statistics which, as you know, have become of ever-increasing importance for policy purposes to the Congress and to the country.

UNEMPLOYMENT STATISTICS

For example, in the discussion of employment and unemployment which is going to come up before the Congress this spring, and which may be before the Nation for some years to come, we are the source of the basic data on that subject. During the past year there has been intense debate, discussion, and controversy about the unemployment statistics. For the first time since I have been Commissioner the integrity of our statistics has been questioned by critics.

I can report that the Joint Economic Committee, under the chairmanship of Senator Proxmire, held hearings in December, at which I testified, together with other members of the Government and many private economists. Senator Proxmire's report has come out recently. I may say that it gives us a clean bill of health and indicates that there is no basis whatsoever for questioning the soundness

and the accuracy of our data. This was a very happy event to those of us who are engaged in this work.

I might point out also that President Kennedy appointed a special committee of experts to appraise the employment and unemployment statistics. That Committee is now at work and is engaged in reviewing all of the activities we carry on in this field. They will report by June 30 to the President.

Our statistics in this field serve many general purposes. They serve to indicate what the problem of unemployment is; and we have asked for funds to get more information concerning the unemployed and the reasons for their unemployment. They also point up what measures may be needed to deal with the problem. They are useful in the planning of programs to handle unemployment and they can be used in appraising the results of those programs.

A second area, of course, is prices and the cost of living. Our revision is proceeding on schedule. We have had some difficulties. We are in the third year. The program is designed to be completed in 1964.

REVISION OF CONSUMER PRICE INDEX

We are now requesting in our regular budget the operating funds to set up the new, revised index which we shall publish for the first time in January 1964. In the meantime, in fiscal 1963, we must make the selection of stores, specify the items to be priced, check our pricing methods, and so on. Those are the operating funds that we are requesting in the budget in the coming year.

Our problems in price work are increasing. The indexmaking is becoming more complicated. I might use automobiles as an example. At one time we priced just the standard Ford, Chevrolet, and Plymouth models, the three popular cars. The coming of the compacts has multipled our problems, since we feel we must price both sets in order to get fair statistics.

Some critics have been questioning quality changes. They argue that quality is improving in such a way that we are getting price increases in the index which should really be offset by allowances for higher quality. I think we are dealing fairly adequately with that problem; we doubt that the index is seriously off, but we need more funds to examine into that and make sure we are doing right.

Discounting and price shaving is taking place in all kinds of stores. At retail we try to get the discounts and price shavings which represent the real prices to the consumer.

In the third field of wages and industrial relations, I hardly need remind you that this is a crucial period. The collective bargaining is already underway in some major industries. Our wage data and salary data are essential for those negotiations. We have also expanded our work recently into the white-collar field. There has been a decline in blue-collar employment and a rise in white-collar employWe need as much information on white-collar workers as we have had on blue-collar workers in the past.

The factor of productivity, output per man-hour, is entering into the negotiations. This was emphasized by Secretary Goldberg in his testimony.