or whatever, that you are doing this because of the relationship of costs to income, and it would seem to me that though some of these matters do not fall under the direct purview of the committee, that when you are dealing with housing problems you have to deal with these other matters affecting cost, and some methodology, whatever that may be, for doing this might be useful.

The tone of the report of the Governor's housing commission and of my testimony here has been that the fundamental initiator and provider of housing in this country should and will be private industry. For reasons beyond its control, private industry has not been able to meet the needs of vast numbers of Americans whose overriding characteristic is low income.

Through market and technological research, changes in tax laws and direct aids to the consumer, like low interest rate loans and subsidies, the Government must induce and encourage private industry to meet these needs; and this can only be done if the rules governing the administration of such aids take into account the true nature of the industry and the fact that nothing will be done unless there is a reasonable prospect of a decent profit with a minimum of time-consuming redtape.

I do not wish to imply that Government should not take reasonable precautions to prevent profiteering or excess gain. It is, I think, not unfair though to say that many Federal programs, born in a spirit of aid and cooperation, have died of strangulation by unwarranted regulatory and statutory provisions.

Despite its infancy, the building industry has begun to develop a degree of professionalism and to see that in large measure its interest is not different from the public interest-to broaden opportunities and to increase housing production. Federal programs should be drafted to encourage this idea of partnership and this trend toward profes

sionalization.

And let me add, on the problem you were talking about earlier about the FHA stepping in and fixing up houses, to the degree to which you can encourage professionalization in the industry, builders who will operate under a brand name, who will stay in a community, I think that will be the degree to which you will obviate such problems, because they will be interested enough in their own reputation not to want that sort of thing to happen.

In this regard, I suggest that this committee select a few of its members and staff to meet with representatives of the Housing and Home Finance Agency, the building industry, and the academic community to try and work out specific statutory and regulatory provisions for Federal programs which will accomplish this.

Much has been said recently about the need to create additional employment, particularly for workers of low or little skill. Housing is an intense user of labor. Our report cited, for instance, that 2.6 times as many men are used per dollar spent for housing as for heavy construction. It is my belief that training of men for most trades in housing can be done with relatively little expense and in a relatively short time.

As much of American industry automates and vast numbers of young people come into the labor market, it may well be a blessing that we have such vast needs for new and rehabilitated housing.

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First, we need the programs to expand the market, and then we need the combined efforts of Government, labor, and industry to train the men to do the job. There is no question that we have the capacity to meet this challenge; the real question is whether we have the will. Thank you, Mr. Chairman.

Senator SPARKMAN. Thank you, Mr. Eichler. A very good state

ment.

Senator Williams.

Senator WILLIAMS. Mr. Eichler, in the State of California, by constitutional action, as I understand it, there is a prohibition against public housing unless agreed to by municipal referendum. Is that right?

Mr. EICHLER. That is correct. And my commission recommended that that constitutional prohibition be abolished. I must say I doubt very much that this will happen.

California is a State in which, for a variety of reasons, the idea of home rule has been very heavily ingrained, and I rather doubt that that constitutional prohibition will be eliminated, at least in the near future.

It is one of the reasons I put so much emphasis on the use of low interest rate loans and subsidies through private industry, because as a practical matter public housing is not going to go ahead very much in that State.

Senator WILLIAMS. I just wondered how broad the prohibition is. Does it affect any of the new programs in this bill?

Mr. EICHLER. Well, it certainly would affect public housing. I do not think it would affect any other program in the bill.

Senator WILLIAMS. How about the lease program? Is that the way to describe one of the program, Senator Sparkman?

Senator SPARKMAN. Yes, but I think that would come under the category of public housing.

Mr. EICHLER. I think so. I think the question would be whether or not there would be public ownership.

Senator WILLIAMS. Well, if California prohibits it there would be a lot more of the resources of this bill available to the other 49 States. Mr. EICHLER. That will be the fault of the California constitution I am afraid.

Senator WILLIAMS. You are going to have to take care of that.

I was out there, and, you know, California with its growth has all of the problems of growth, and with all of these Federal programs and with that, the displacement and relocation, it would seem to me, and maybe I should not volunteer, that it is very shortsighted that they would keep from themselves some of the best that is in this housing program.

Mr. EICHLER. I would agree with that, Senator.

Senator SPARKMAN. Thank you very much, Mr. Eichler. We appreciate your testimony.

Mr. Boris Shishkin, secretary of the Housing Committee of the AFL-CIO.

Mr. Shishkin, we have had the pleasure of hearing from you down through the years. We welcome you back. For the benefit of the record, will you introduce your associate? We would appreciate it.

STATEMENT OF BORIS SHISHKIN, SECRETARY, HOUSING COMMITTEE, AFL-CIO; ACCOMPANIED BY KENNETH A. MEIKLEJOHN, LEGISLATIVE REPRESENTATIVE

Mr. SHISHKIN. Thank you, Mr. Chairman. I am Boris Shishkin, secretary of the Housing Committee of the AFL-CIO. I have with me here this morning Mr. Kenneth Meiklejohn, legislative representative of the AFL-CIO.

I would like at the outset, Mr. Chairman, to ask permission in the interest of time to have my statement appear on the record in full and for me to summarize the highlights.

Senator SPARKMAN. Very well. That will be done.

Mr. SHISHKIN. First of all, I would like to say we commend President Lyndon Johnson for his initiative and leadership in submitting his message to Congress on housing and community development on January 27.

For one thing, it emphasized the urgency and the importance and the magnitude of the task before us.

I also would like to commend our good chairman, Senator Sparkman, for his ready response to the Presidential message in introducing the legislation to embody these recommendations that were made by the President of the United States in the bill that is now before this committee.

I am referring, of course, to S. 2468 and also to the accompanying related legislation that is considered in that connection.

I would like to say that Senator Sparkman has established a record of monumental contribution to good housing in the United States. I think the record shows that in the past legislative enactments his initiative, leadership, and understanding of the housing problem have been of immeasurable value in serving the public interest.

As to the legislation now before us, I think that the enactment of the housing and community development program legislation will not only meet the mounting need of America for housing and orderly development and growth of our cities, but it also will be one of the most important actions to generate the kind of activity that will bring us toward or put us on the road to full employment and prosperity. The potential there is enormous, and I think for these two reasons the priority that should be given this legislation is certainly top.

I think that the contribution I can make here best is to spell out very briefly the factual basis for our affirmation here that in shaping this program your committee in a very real sense is forging a most powerful instrument for launching America on the road to full employment, prosperity, and stable growth.

The great thrust that will be given by this legislation is related to the fact that housing plays a strategic part in the American economy. Housing construction represents about 40 percent of all the new construction, and housing outlays represent about one-sixth of the total gross national product.

But construction of new housing, in addition, serves as a most powerful generator of other economic activity by creating expanding markets for a wide range of manufactured products, ranging from building materials, furniture, furnishings, consumer durables, refrig

erators, air conditioners, to vacuum cleaners. All of those lines of production, of course, are stimulated by the construction of new homes. And, of course, new construction along with the related urban renewal activity generates corresponding activity across the entire industrial scene.

It is, therefore, a prime weapon to combat unemployment.

And it is equally important to recognize that housing in the economy is a major generator of dynamic flow of private investment into vital employment and income-producing economic activity.

I have with my statement here, Mr. Chairman, a table that indicates the quantities of some of the materials and equipment used in the construction of 10,000 homes, and, although not complete, it is a representative kind of tabulation to show the magnitude of industrial production generated by the provision of this new housing construction.

I would like your permission, Mr. Chairman, to have that table appear in the record at the conclusion of my testimony.

Senator SPARKMAN. That will be done. I had already noted that table. It is very interesting. It is page 11 of your statement.

By the way, in that connection, a few years ago the National Association of Home Builders submitted to us a somewhat similar table and also gave us some statistics on the amount of man-years used in building houses. I known in the past we have used from 12 to 2 man-years per house. Is that about right?

Mr. SHISHKIN. Well, the study to which you refer, Mr. Chairman, is the study made by the National Association of Home Builders in May 1961 or published at that time.

Senator SPARKMAN. Yes.

Mr. SHISHKIN. And that estimate was that the construction of 10,000 houses represents roughly 20,000 man-years of employment. Senator SPARKMAN. That is 2, then, 2 man-years per house.

Mr. SHISHKIN. That is right. And they also in that study indicated that 10,000 new homes generate a market for material producers and suppliers of between $50 and $66 million.

Senator SPARKMAN. The construction industry generally is about as good a producer of jobs as any activity that we have in this country. Mr. SHISHKIN. Yes. And the homebuilding industry is really the prime producer. There are so many elements that go into it, manufacturing elements. That in itself, of course, can be important. But also I think it should be emphasized when a new home is built and a family moves into that, that, in addition, generates consumer expenditures for the kind of equipment that is needed to furnish a new residence.

The Bureau of Labor Statistics has made some studies of that which I have in my testimony here, and I call your attention to it.

Senator SPARKMAN. Very good.

Mr. SHISHKIN. I would like to refer now to this in relation to the need for housing.

The deficiencies of our housing supply are very great. There is no doubt that a large proportion of American families are badly housed.

In this connection I must point out that the Kennedy housing program of 1961, which was implemented by the legislation which was sponsored by Senator Sparkman in the Senate and Albert Rains in the House, did a good deal to generate these advances.

But it is, unfortunately, an understatement now to say that one-fifth of the Nation is still ill housed.

It is a little more than one-fifth of the Nation that is still ill housed, despite this progress made.

I think it is important to recognize these deficiencies are not easy to measure. The 1960 census is the only basis we have of an actual count of what the housing situation is. Here we are today in 1964.

The 1960 census designated 9.3 million housing units, out of a total of 58.3 million units, or about 16 percent, as "seriously deficient." That is the census classification. Our own estimates and those of other recognized students of the problem agree that this census total of seriously deficient units represents 5 million units requiring replacement and 4.3 million units in need of substantial rehabilitation.

Our own careful analysis of these census figures and studies independently made by others agree in the conclusion that, even apart from this failure to give due weight to such key factors as doubling up and overcrowding, the census figures considerably underestimate the real housing need.

But, in addition, in this connection, Mr. Chairman, I would like to note that here we are relying on a decennial census. And, as we are moving ahead and are facing great need today and will be facing further need, new requirements in the years to come, it might be very useful for us to do the kind of thing that was done back in 1956, and that is to conduct a national housing inventory, which was done at that time. If that is done in middecade, in 1965, when we get around to it in 1967 we will not be compelled to rely still on the obsolete figures of the 1960 census, because we will not have anything further, unless that is done, in the way of new information before 1970.

So I strongly urge that this be considered and recommended to the executive branch of the Government.

Our highest performance during this recent period since 1960 was last year, about 1.6 million units of new nonfarm housing starts recorded. But that fell nearly a million units short of the minimum requirements we have estimated and submitted to this committee in previous years.

We estimate that 2.5 million units a year must be produced over the next 12 years, including current construction, if the housing need is to be met by 1975.

So we are actually adding to our deficit currently by failing to measure up to the known needs for additional housing that must be provided if the housing need is to be met.

And I would like to say that in view of these facts that we submit here that an expanded, revitalized public housing program would be particularly important, because that is the area in which the imbalance in the production of housing today must be corrected.

The production of new homes that goes on the market is, to a very large extent, at the high-income level and upper middle-income level, but very little of it is going into the lower middle-income category and the low-income housing proportionately. So the need is concentrated in that area, and that is the reason it is so important to pay special heed to the titles dealing with those programs.

I would like to briefly summarize our recommendations on the specific provisions of the proposed legislation here, Mr. Chairman.