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As a matter of fact, a study of the first 50,000 families disclosed that there was an average of 4.2 substandard conditions in each of the former dwellings-4.2 of these 9 factors we have illustrated here. So it is completely practical to make the kind of study this bill proposes, and we certainly believe it adds to its efficacy to have it written into the law now.

Are there any questions with respect to that?

(See charts 8a and 8b which follow Mr. Klutznick's statement.) Senator BUCK. What disturbs me is that as soon as you get those people fixed, somebody else moves into that same home.

Mr. KLUTZNICK. There is a provision in the act which requires that substandard housing be eliminated, one for one, one for every new unit that is provided. Now, when you reach a stage that there is an ample housing supply in this country, the normal operations of that provision will be such, Senator Buck, as to eliminate this type of unit. Senator BUCK. That will be a long time.

Mr. KLUTZNICK. I agree with you, at the rate we are going it will be a long time.

Senator BUCK. Has it been the practice so far to eliminate these

Mr. KLUTZNICK. Yes; I will come to that and show you the experience we have in regard to eliminating substandard housing.

Senator CARVILLE. Where were those pictures taken? What part of the country?

Mr. KLUTZNICK. Those pictures were taken in various parts of the country. They came from our photographic library. I don't want to make the statement here that the particular family which lived in this slum housing got into the new housing, but I will make the statement that conditions as bad or worse existed in the case of the families that were taken into the low-rent housing.

There is one final provision in this section 701-adding a new subsection section 15 of the United States Housing Act-which requires with respect to any future projects that the local public agency shall make periodic reexaminations of the incomes of the families living in the projects. When they have reached a stage in their income levels where they can afford adequate private housing, these families would be required to move from the public housing and given an inducement to seek private housing elsewhere. Now, that is not new either. We have been practicing just exactly that provision as a matter of regulation, and again I say I think it is a very good thing to have it in the law. It gives it greater weight and greater credence, and except for wartime conditions it has been completely practicable.

We believe it is of the utmost importance that occupancy of lowrent public housing be rigorously restricted to families who cannot afford to obtain adequate housing from private enterprise. It is essential that public housing avoid any competition with private enterprise.

Under the USHA program, admission of tenants has always been limited to families of low income unable otherwise to secure adequate housing.

I would like to call your attention to some of the studies we have made. Charts 9, 10, and 11 will indicate what has happened to some of the low-income families as a result of the war. Chart 9 covers a study of incomes at admission and in 1944, of families who became tenants of public housing in the various years since 1940. The

general rise in income levels after the commencement of the war was reflected in somewhat increased incomes of families admitted to public housing in subsequent years. And in addition, as was to be expected, chart 9 shows that for families admitted in all years, incomes subsequent to admission have increased. You will note that the bar on the extreme left represents families that were admitted in 1940 who were still in the housing in 1944. At the time of admission their weekly income was $14.92. This included the entire income of all members of the family. By 1944 the weekly income of those families had risen to $30.31. Families admitted in 1941 had a weekly income of $16.79 at that time, and by 1944 their incomes had risen to $30.71. In 1942 average incomes on admission were $17.89; in 1944 they had risen to $27.65. In 1943 incomes at admission averaged $21.25; by 1944 they had risen to $26.19. In 1944 the average weekly income on admission was $23.83.

Now, the fact that families admitted in recent years had higher incomes than those admitted earlier, is attributable primarily to three factors:

(1) There has been a general increase in incomes during the war years. The incomes, even of families in the lowest income groups who are living in substandard housing and are unable to pay the costs of adequate housing have risen over the levels of 4 or 5 years ago. This increase in dollar income has, however, been accompanied by an increase in the cost of living. The weekly income of $14.92 in 1940 did not purchase a great deal less than $23.83 did in 1944-or the reverse- an income of $23.83 in 1944 did not purchase much more than an income of $14.92 in 1940. Thus, the dollar rise in incomes at the time of admission does not represent a corresponding betterment in the economic status of the families admitted, in contrast to those who were admitted in the earlier years of the program. The increased cost of living has probably been greater for low-income families than for the general population.

(2) The local authorities have admitted servicemen's families when they had children; in fact, many have granted preferences to them. Interestingly enough the serviceman's family, because of allotments, if there were two or three or four children, had a higher weekly average income than the average low-income family before the war. The allowances received by such families of servicemen are $18.50 a week for families with one child; $23.10 a week for a wife and two children; $27.70 a week for a wife and three children; and $30 a week for a wife and four children. Such families of servicemen will tend to raise the average income of families at admission, but in the localities where these families were admitted, it was demonstrably impossible for them to obtain adequate private housing within their means. The local authorities have also admitted veterans who in many cases were in the same condition.

(3) During the war almost all local authorities gave preference to war workers in order to help the war industries, and generally they had a little higher income level than the ordinary run of low-income families.

But most important, during the war, the failure to provide a sufficient supply of private housing has made it almost impossible in some communities to remove some of these families from the projects. Consequently the local authorities have been forced to keep them on

sufferance until such time as private enterprise can get going again and provide an adequate supply of housing.

(See charts 9, 10, and 11 which follow Mr. Klutznick's statement.) Senator BUTLER. That is a question I was going to ask you, Mr. Klutznick. Can you tell us at all definitely the percentage of families that have moved from the low-rent-housing projects into something better?

Mr. KLUTZNICK. Approximately 13 percent of the families living in low-rent projects moved into privately owned housing in the 12month period ending last June. This was an abnormally high figure due to unsettled war conditions. Our records show that of the families

who moved out, 14 percent purchased homes of their own. Senator BUTLER. Do you find a tendency to be pretty well satisfied where they are?

Mr. KLUTZNICK. Well, sir, there are exceptions to this general statement. The tendency to be satisfied where they are is emphasized where they cannot get anything else, and that has been our predicament during the last few years. Immediately before the war, in our home community of Omaha you will find this was true, Senator Butler. In 1939, 1940, and 1941, we had no difficulty in moving out families, but in 1942 and 1943 the real-estate board had a list of 60 or 70 families and was trying to find them any sort of housing, and was unable to find even 5 houses, let alone 60 or 70. Of course, this bill gets at that whole problem through other means. I am trying to point out that we need a large building program of private housing to make this program fully operative.

Senator BUTLER. Along with the building program as planned here, do you make any suggestions at all anywhere for procuring building materials?

Mr. KLUTZNICK. Well, Senator, I am not making any suggestions. Temporarily it is the crux of the problem. I don't envision, if this bill were to become law in 2 or 3 months, that by the time it became operative and all the planning was done to provide housing that is contemplated under this bill, we will be confronted with a material shortage to any great extent by that time. I think the ingenuity of our American industry is a great deal more than what some of us are inclined to give it credit for being. There are evidences now that many of the materials are beginning to become available in larger supply. The demands are great.

Senator BUTLER. The real endeavor in the territory I know anything about is to become the owner of one of these decrepit, almost worthless shacks now in order to make them livable. That is true in the little towns out in the country.

Mr. KLUTZNICK. That will be understandable so long as we do not have an adequate supply of housing in this country, so long as we do not undertake to supply adequate housing.

Coming back to chart 9, the increases in income subsequent to admission of tenants in low-rent housing projects are attributable to a number of factors:

(1) Earnings of all families have tended to rise due to wartime. increases in general price levels and earnings.

(2) Many of the members of these families-and this was in the national interest-have taken jobs in war industries, which jobs are, in general, higher paid than their former jobs.

(3) Overtime work, which was paid at time and one-half or double time, was general in many industries and resulted in substantial increases in incomes.

(4) Additional members of the family, including wives who did not work before and probably will not work in normal times, have taken war jobs.

(5) Families left behind by men who have gone into the services received allotments, which in some cases were more than the dollar income of the family at the time of admission.

Admittedly, however, the incomes now prevailing in low-rent projects are substantially higher than they would be in normal times. In normal times it is the fixed policy of the local housing authorities and the FPHA that whenever the income of a family in public housing increases to a point where the family can afford decent privately owned housing, such family is required to move out of public housing. In peacetime this was the consistent practice of the local authorities.

At the present time it is true that there are many tenants now in public housing who do have incomes above the level allowable for continued occupancy in the projects. However, where there are housing shortages so acute that families cannot find decent private housing within their means, it is impossible for the local authorities to turn them out. As a matter of fact, under Office of Price Administration regulations these tenants cannot be forced to move unless other adequate housing in the locality is available to them at rents within their financial reach.

Nonetheless, even under present conditions, many local authorities have put such tenants on notice that they must leave when they can find suitable quarters. Many authorities go further and supply local realtors with lists of families with incomes beyond the income limit for continued occupancy and request cooperation in finding dwellings for such families. However, until they do find such dwellings they must be allowed to remain in the project.

Both the FPHA and the local authorities are fully conscious of the necessity for restricting occupancy of public housing to the families who are actually in need of subsidy and cannot afford decent privately owned housing. They will continue their efforts to move out such families as rapidly as other homes can be found for them in accordance with Office of Price Administration regulations.

Charts 10 and 11 are merely further information on the same point. Chart 10 breaks down the income of families by type of locality. The incomes of families in low-rent housing naturally vary with the geographic area and the size of the cities in which they live. Chart 10 shows the income for various types of localities, both at the time of admission and in 1944. For all localities, the income at the time of admission for present tenants averaged $17.21 per week. In larger metropolitan areas, this figure was $20.15, while at the other extreme the average family income at admission was only $13.40 for Negro families in the South. As was just pointed out, the incomes in 1944 were substantially above those at which the families were admitted. This is uniformly true for all types of localities. For example, the average income per week at the time of admission in all localities rose from $17.21 to $29.46 in 1944.

Later on I will demonstrate that keeping families with somewhat higher incomes in the projects is not a total loss, because under the

graded rent system the extent to which higher income families stay in this housing diminishes the amount of subsidy that the Government provides. I will call attention to that as we go along later on.

Chart 11 discloses that the gross rents rise in accordance with the rise in income. It shows the average gross rents charged in low-rent housing. These gross rents include shelter rent, plus the cost of heat and all other utilities. Shelter rents are approximately $5 less than the gross rents shown. For all types of localities, the average rent per month at admission was $19.11. This rent at admission ranged from $22.34, including all utilities, in the larger cities, to $14.55 for Negro families in the South.

Whenever the incomes of families in public housing go up, the rents are proportionately increased. When family income increases sufficiently, they are charged the maximum rent permitted by the Office of Price Administration, being the rent prevailing in the locality for quarters comparable to the public housing unit occupied by the families. As a result of these increases in rents, chart 11 shows that the average rent for all families in 1944, including all utilities, was $27.08, in contrast to the $19.11 charged the same families at the time they were admitted to low-rent housing. There have been -proportionate increases in the rents in all types of localities.

The effect of the increases in rent is, of course, to decrease the subsidy paid by the Federal Government. Families whose incomes are high enough to permit them to pay economic rents receive the benefit of no Federal subsidy, pending the time when private housing becomes available to them, and they are required to vacate their public housing accommodations.

So much for section 701. All the provisions in this section of the bill emphasize the objective that public housing is to serve only those families whom private enterprise is unable adequately to serve, and that aid should be extended for public housing only to those localities which assume the responsibility for determining their own requirements. I should like to endorse this section with the one reservation I have made about the gap theory, namely, that the gap theory is only workable so long as you provide for an expanded private enterprise program in the middle market, or whatever market you wish to call it. Without it, it is indefensible. I should like also to state that, by and large, these measures have been a matter of regulation of the Federal Public Housing Authority, but we welcome their being introduced into the law, because of the greater dignity and weight they will then have.

The CHAIRMAN. Of course, you do examine occasionally the wages of the people that are paying rent in these substandard houses, or the new houses?

Mr. KLUTZNICK. Yes, sir.

The CHAIRMAN. How often is that done?

Mr. KLUTZNICK. It varies with localities. During the war, because of the sudden shift, some localities found it necessary to do it monthly. Others do it semiannually, but most do it annually, because of the sheer weight of the problem. Any extraordinary changes that take place in any interval are called to the attention of the management. The CHAIRMAN. Of course they always have to have some place to go.

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