York City, what difference, if any, will you make in the budgets o two families, that are of the same number?

Mr. HINRICHS. The range of the difference of costs is very much narrower than it is ordinarily believed to be, Senator Ellender. I ca identify the figures, as I shall in a moment in my testimony, as range of $1,500 to $1,800 between the lowest cost city and highes cost cities of which we had any knowledge in 1943.

Senator ELLENDER. What population of cities do you have in mind Mr. HINRICHS. The $1,500 was Mobile; the $1,800 was related t New York City, Washington, D. C., and San Francisco.

Senator ELLENDER. Have you made any studies as to urban locali ties where the population is, say, 1,500?

Mr. HINRICHS. We worked back in 1935 and 1936 in a group of small towns both in the North and in the South. That study showed that the size of community may make at the most something like 10-percent difference in the cost of the budget as against living in large city.

Senator ELLENDER. When you say size of community, do you mean progressively? For instance, 1,500 persons, 5,000 here, 10,000 yonder and 7,000,000 in New York? What do you mean by that? 10 percent of what?

Mr. HINRICHS. That budget costing, let us say, $1,500 in a city of more than 100,000 population might be expected to cost about 10 possibly 15, percent less in communities of 2,500. The break is by no manner of means as sharp as you would believe it to be. As a matter of scientific accuracy we were forced to note in our study that differences in costs in communities of the same size were so much greater than average differences for communities of different size considered as groups, that the latter differences could not be regarded as proved by the data. The most conspicuous difference in cost is the difference in rents in large and small communities. You also have some lower cost in the smaller town due to the possibility of using homegrown food. On the other hand, certain kinds of commodities are likely to cost more, not less, in the small community. Would I be correct, Dr. Brady, if I said furniture is an example of that sort of thing?

Dr. BRADY. Yes.

Mr. HINRICHS. You purchase that in a small community either at relatively high cost because of the low rate of turn-over in the store or else it is a substantial inconvenience to purchase it by going to the city, or else you have the alternative that is also open to the city family of purchasing at the same price from a mail-order house.

Senator ELLENDER. Do I understand the testimony you will give now is based on costs in Mobile and Washington?

Mr. HINRICHS. Among other evidence that I am offering, we have figures for Mobile and Washington. There are also figures for some 32 other large cities. All that I wanted to say here was that at the time that the WPA was developing this emergency budget, it also developed what was called a maintenance budget. At the time that the maintenance budget was developed it was perhaps a reasonably adequate standard to apply in answering the question of whether a given wage for common labor was adequate to maintain a family.

It is significant to note that in 1941, before prices began to rise substantially, that budget cost about $1,500. I am going back here to the period of 1941, in a discussion of the cost of that budget, because up to that time the dislocation of the market had been so slight that there was no question in anybody's mind of the ability of the Bureau of Labor Statistics to measure changes in the cost of living. The pricing of that particular budget was discontinued by the Bureau after June 1943, because we knew that under wartime conditions our figures for that budget were too low, and we could not safely estimate the cost of a maintenance budget without going out and doing a completely new pricing job from the ground up. At that time, namely in 1943, the cost of that budget, which we knew to be too low, was at least $1,500 in the city with the lowest cost, namely Mobile, and more than $1,800 in the highest cost city, which was New York City. The general average would have fallen somewhere in between, in the neighborhood of $1,700.

Now, I think much more significant than those figures which I have given are the results of a special analysis which we have just completed to serve the needs of this committee. We have studied at various times the expenditures and savings of urban wage-earning families, and we found that the average break-even point for urban families with two or more persons was about $1,425 in 1935-36, and about $1.475 in 1941, and $1,950, after income taxes, in 1944. We do not think that any drastic shift has occurred between 1944 and 1945.

Senator AIKEN. Mr. Hinrichs, do you include in these costs such things as dentists' bills and education?

Mr. HINRICHS. In that maintenance budget there was a small allowance for medical costs and for the costs of dental care. There was nothing for education. It was assumed that there were public schools, that all books and school supplies were free. If a family happened to have a talented child and wanted to give it music lessons they either arranged that through a settlement house or they took it out of their food budget, as some of them did.

Senator AIKEN. You assume children under 18?

Mr. HINRICHS. Yes.

Senator AIKEN. There was no allowance for sending them to business school or college?

Mr. HINRICHS. No. Now, these figures on the break-even point I think are extremely significant. Those figures mean that even in 1941 any large group of families with incomes of less than $1,475, which just about the amount that would be permitted by the 75-cent minimum, that any large group of such families in the aggregate spent for goods and services more money than they received. Some families of course broke even and in some years they saved money, but, by and large, the pressure of living costs at those levels is so great that the group as a whole has gone into debt.

Now, I have not lived as factory worker, but I have lived among factory workers. I know something of the way in which the factory worker and his wife apportion their funds and I can assure you that insofar as my knowledge extends they are the most careful managers that I know anything about. Your farm families are also ex

tremely careful managers. The low-income families of the United States are not wastrels. This business of running continuously into debt is one of the things which constitutes the major bugaboo for the wife of any wage earner. I know of no more significant test of the burden of a minimum standard of living than the point at which families go into debt and stay in debt on the average year-in and yearout because they are unable to get down to the point where they bal ance their budget. I tell you at the present time that the break-even point is running in the neighborhood of $1,950.

Now, I am talking about information derived from a small sample. I will not fight with you whether the break-even point is $1,900 or $2,000, or $1,800 even, if you like. I do tell you that the break-even point for families in the United States at present is substantially above the highest level fixed by the highest minimum wage proposed in this bill.

Senator ELLENDER. How did you go about sampling the families in these various cities?

Mr. HINRICHS. It was a very carefully selected sample. It is small, but drawn in a random fashion, which experts would agree would give you results which should be accurate within a comparatively small percentage. When I say that I do not want to insist that the break-even point is $1,950 rather than $1,800, I have gone far beyond the errors of sampling.

Senator ELLENDER. As to those that were in debt, as you say, or are still in debt, what was the cause of that? Did you find out what they were purchasing or what they were contracting to purchase?

Mr. HINRICHS. There were a large variety of factors that contributed to that. In a major emergency any large doctor's bill in a single year is very likely to throw the family over the borderline.

Senator ELLENDER. Was that the chief factor that caused it?

Mr. HINRICHS. May I ask Dr. Brady, who has great familiarity with the details, to continue with that?

Dr. BRADY. These figures, in the first place, apply to families of different sizes, and in addition to the group that would have large medical bills during the year and not be able to pay the doctor out of income of less than $1,500, at least to pay him completely, you have all of the families with large numbers of children spending more than their income at these low-income levels. In fact, if you were to take families of five you would find that the break-even point comes at an even higher level than this average of all sizes, families of two or more persons in the family. I think perhaps those are the two principal things. You will also find in the group of families below this breakeven point, large numbers who actually are attempting to help their less fortunate relatives, such as parents who live in some other community, or sending home money to the family on the farm, and that type of thing. You will also find some of them doing what Mr. Hinrichs suggested a minute ago, attempting to help a child through business school or college. So, all of these things that are not provided for in our notion of what a minimum standard is in terms of budget

for a family of four help to throw families into the class that accumulates certain amount of debts during the year.

Senator TUNNELL. There is not a family that does not have some extraordinary expense, where a child breaks an arm, or eyes have to be examined, or sicknesses of some sort occur.

Dr. BRADY. And those things come almost at the rate of one extraordinary expense a year we find on examining these schedules, so you have to assume something is likely to happen each year.

Mr. HINRICHS. There is one final test that I think can be applied to the current adequacy of a $1,500 budget, which I am suggesting only because it is the top limit provided for in the bill. That test is the proportion of urban families now living on less than this amount. Nineteen urban wage-earner families out of 20 had more than this amount in 1941.

Senator ELLENDER. Nineteen out of 20?

Mr. HINRICHS. Nineteen out of twenty. That does not prove that present wages are adequate, for only about three out of five families with incomes of $1,500 to $2,000 achieved this level through the earnings of one worker. The other families had two or more persons working to earn less than a living wage between them. However, it seems to me that this figure of 19 out of 20 does mean if you consider the way families are living as any guide to the determination of adequacy, that $1,500 for a family is a very low standard to aim for. Senator TUNNELL. Dr. Hinrichs, I hate to interrupt you. You can be back tomorrow, can you not?

Mr. HINRICHS. Yes, sir; at your convenience.

Senator TUNNELL. It is now 12 o'clock, and we all feel we should be back in the Senate at the convening of the session.

Mr. HINRICHS. May I insert the tables in the record, which bear on my last statement?

Senator TUNNELL. They may be inserted.

(The tables referred to are as follows:)

TABLE 1.-Total money income-Urban wage and salary families of two or more persons: Percent with less than specified amounts of income (prewar and war)

Source: U. S. Department of Labor, Bureau of Labor Statistics, Washington, D. C., Sept. 24, 1945.

TABLE 2.-Income, savings, and expenditures: Average amounts reported by urban families of 2 or more persons, by annual money income after personal taxes-1944 (preliminary)

1 Data for families with incomes under $500 and more than $5,CC0 not yet available. Personal taxes have been deducted from the income figures shown in column 2. Total money income may be obtained by combining the amounts shown in the two columns.

Source: U. S. Department of Labor, Bureau of Labor Statistics.

TABLE 3.-Earners per family Urban families of 2 or more persons, by number of earners, by annual moncy income-1941

Source: U. S. Department of Labor, Bureau of Labor Statistics.

Senator TUNNELL. We will meet again tomorrow at 10 o'clock. (Whereupon, at 12:01 p. m., an adjournment was taken until 10 a. m. Wednesday, September 26, 1945.)