us a committee had been appointed by the top company of the system which would undertake among other things, to study the question of guaranteed wages. He indicated an interest in making a study of his own company to ascertain the feasibility of a guaranty of wages for a complete year. He said, "Will you help us?"

I said that if the arrangements were on a quid pro quo basis we would be glad to assist him. That is, if we could have the benefit of the results, which would be useful to us in our studies, we would feel repaid for any help which our analysis might afford the company.

We have almost completed the arrangements, and it looks as if we would be able to get an agreement with the top company of that organization. We have given them a list of the data we think they would need for a complete analysis. It is a fairly long list; but they tell us that as soon as they make up the reports for 1945 to the publicutilities commission and to the Federal Power Commission which are now in process, they will be able within a relatively short time to get all the necessary information in proper form.

This is the case of a company that came to us voluntarily and said "You tell us what you think you should have and we will get it for you."

Mr. WIGGLESWORTH. Is there any similar work going on in any particular State?

Mr. LATIMER. Not precisely of this character. In the State of New York, the materials have been collected for a study of experience rating in connection with unemployment insurance. These data may be of use in determining the extent of fluctuations in the various industries. There will be made available to us such records as we may be able to use, upon appropriate reimbursement from us, of course, for any labor involved. Those records are in very good shape. For example, a transcript of the month-by-month record of employment, pay rolls, and man-hours from 1935 through 1938 for 100 establishments will cost less than $100. That is a rather cheap price for which to get a month-by-month record for 4 years for 100 different establishments.

COST OF OVERHEAD AND DIRECT STUDIES MADE

Mr. TABER. I would like to have somebody tell me and there does not seem to be that kind of a break-down in this statement so we can follow it-I would like to have a break-down showing the amount of money that will be retained by the overhead organization of this set-up. That means, I suppose, that the unit would retain direct supervision over the accounting of that.

This is not labeled in any way so we can follow it.

Mr. LATIMER. I am sorry for that.

Mr. TABER. This is all put up as a part, just a part of that, and it is all in a state of confusion.

Mr. LATIMER. The amount which would be retained by the guaranty wage study directly-

Mr. TABER. That is the overhead.

Mr. LATIMER. It is not overhead entirely.

Mr. TABER. Overhead and

Mr. LATIMER. And direct studies made; that amount will be $184,570 out of $250,000.

Mr. TABER. How much of that comes out of the proposed appropriation and how much out of the allotment?

Mr. LATIMER. Out of the proposed appropriation, $156,070, and $28,500 out of the allotment. That is calculated in this way: $21,500 has been transferred to the Bureau of Labor Statistics and the Social Security Board. That leaves a balance of $28,500 out of the $50,000 for the main study. The total for the main study is $184,570; $28,500 is covered by the allotment, leaving $156,070 to come out of the appropriation.

NUMBER OF PERSONNEL

Mr. TABER. How many people are involved?
Mr. LATIMER. In the study directly?
Mr. TABER. In this whole unit set-up.
Mr. LATIMER. There are 79 persons.
Mr. TABER. Presently, or expected?
Mr. LATIMER. That is expected.

Mr. TABER. How many are there presently?

Mr. LATIMER. There are 13 now and there will be 14 next Monday. Mr. TABER. And you want

Mr. LATIMER. A total of 79.

Mr. TABER. That includes the 13?

Mr. LATIMER. Yes, sir. Of course, that is not man-years.

Mr. TABER. Those are positions. I do not want man-years, because that is the scheme the Budget has gotten up to confuse the committee and the Department and everybody else. It is a violation of law the way the set up the Budget, and they know it, and it is designed primarily to confuse this committee and the Congress and the public. Mr. LATIMER. We want to have it understood that the 79 people are not being hired for a year.

Mr. TABER. I understand that means positions, and that is what I asked for.

The next set-up is what?

Mr. LATIMER. There are two others. There is the Bureau of Labor Statistics

Mr. TABER. How much is that over-all?

Mr. LATIMER. That is $45,000.

Mr. TABER. That involves how much out of the appropriated item and how much out of the allotment?

Mr. LATIMER. The amount of $17,500 has been transferred from the allotment, and $27,500 is out of the appropriation.

Mr. TABER. It involves how many people?

Mr. LATIMER. A total number of personnel of about 18.

Mr. TABER. At the present time?

Mr. LATIMER. I think Mr. Arnow will have to answer that question because he is in charge of it.

Mr. ARNOW. I would say about 14 or 15 at the present time.

Mr. TABER. How many are you aiming to have?

Mr. ARNOW. We expect to have about 18 professional personnel,

and that would take about 15 or 20 clerical personnel.

Mr. TABER. That means a total of 33?

Mr. ARNOW. That is right.

Mr. TABER. What about the Social Security Board?

Mr. MANDEL. We have now about four people on that.

Mr. TABER. You are aiming at how many?

Mr. MANDEL. Somewhere around 15. If we are to finish the work within this fiscal year we might have to put on some more.

Mr. TABER. How much out of the allotment that you have?
Mr. MANDEL. We have been allowed $4,000 right now.

Mr. TABER. You are aiming to have how much out of the appropriation?

Mr. MANDEL. The difference between that and $20,430, which is $16,430.

Mr. TABER. A total of $20,430?

Mr. MANDEL. Yes, sir.

Mr. TABER. That covers the whole block of proposed funds?
Mr. LATIMER. That should add up to $250,000.

Mr. TABER. This thing has been going on since when?

Mr. LATIMER. I was engaged in the latter part of July last year. I did not devote a great amount of time to it until January 15 of

this year.

STATUS OF STUDY TO DATE AND DISCUSSION OF FUTURE PROGRAM

Mr. TABER. I would like to have you give us a picture of what has so far been in the overhead and the directed study set-up, and then when you get through that I want to ask the labor group to tell us what has been done in their set-up. Then I want to ask the Social Security Board bunch what they have so far done. Then I want to ask you what you propose to do, and I want to ask each of them what they propose to do, so we can have a complete picture of this thing. Then I am going to try to get what you are getting at, as far as I I would like to ask you to answer as to what has been done. Then let them go on and tell us what they have done, and then I would like to come back to you again to tell us what you propose to do from this time on, and let them tell us what they propose to do.

Mr. LATIMER. The studies are closely interrelated because part of what we have done has been work with the Bureau of Labor Statistics on the plans for examining specific experience with guaranteed wage plans; and we have also worked with the Social Security Board.

That part of our work which has been involved with these two agencies has accounted for a little over one-third of the total activity of the guaranteed wage study to date.

I will merely refer to that, since Mr. Arnow and Mr. Mandel will take care of the details. As regards the other two-thirds, which was done directly, most of the time has been spent on the analysis of methods and possibilities of regularizing production and stabilizing employment.

The approach has been this: First we pick out a few industries for intensive study. We know that the amounts available in the appropriation will be sufficient to study a very limited number of industries.

We are formulating some tests to determine what particular industries to select. One test, of course, involves the willingness of the people in a given industry to cooperate with us. But before that test is applicable, we must decide what particular industries we wish to study. We wanted, at least in part, to select some industries that have

a continuity of demand for their products, which seems to make possible a relatively high degree of stabilization. Generally speaking, the industries which have a relatively high degree of continuity of demand are those whose product is a necessity, fairly close to the immediate needs of the public. Examples of that are food and clothing. Food normally is a seasonal product. Most of our food is produced in late spring, summer, and early fall-about 4 months. Canning activities and processing are tied closely to the harvest period. In the case of Mr. Hormel, who was mentioned by Mr. Johnston this morning, the seasonality of supply of raw materials is the major problem. In the clothing industry there are certain seasons in which clothing is made, and those seasons are connected with changes in demand. On the side of raw material supply, there is no reason for seasonality of operation.

The major tests to be applied in the selection of industries for this initial study have to do with the degree of fluctuations-for these first analyses we want to concentrate, in considerable measure, on those areas where economic factors induce a degree of stabilization without any conscious effort to that end. The industries that we expect to analyze with a view of selecting four for intensive analysis are eight: food, clothing, petroleum products, paper, construction, boots and shoes, automobiles, and communications and utilities.

We had the factor in mind in connection with these industries that they are suppliers of goods and services which are essential to our civilization. Therefore, there is presumably a fairly constant demand for them. In some cases, like construction, the product lasts a long time; replacement and even maintenance can be deferred. The industry is therefore marked by violent fluctuations in activity. It is obvious that construction will be a key industry in the reconversion period. Because of its great importance a study of the possibilities of stabilization may be desirable, although the achievement of stability will involve many difficult problems.

We have not had the facilities with which to complete the investigation. The only decision made so far is that, so far as we are concerned, we would like to make a study of the men's clothing industry. Today one of our staff is visiting a large clothing manufacturer in Chicago to discuss the possibilities; I have talked to the representatives of labor in the industry.

We want to confer later with the president of the trade association of the men's clothing industry, which is the American Clothing Manufacturers' Association. We will attempt to make a study of that industry, if both industry and labor representatives agree.

We are now working on the problem of selecting a sample of establishments in each particular industry. We should like to make the selection on the basis of the relative record in the achievement of stability of employment in the 5-year period from 1937 to 1941; we would leave out of account the war years, which would be abnormal for that purpose.

Mr. TABER. You tell us what you want to do, and then you shift to the other fellows and let them tell us what they want to do.

Mr. LATIMER. I think it is easier to understand if we give you the whole picture and tell you how much is done.

To return to the plan for the selection of establishments for a sample study. First we will omit some establishments because of small size. In the men's clothing industry we will take no establishment with less than 150 employees; our resources do not permit us to make the studies necessary to pick and choose among the small employers. The size limit may not be the same for all industries. But in any event, we are interested in looking at the record of each employer in the size group selected in those five years, with respect to employment stability. We want to pick out those employers in the size group selected for each industry which have had unemployment records least affected by depression, by seasonal influences, or by other factors producing reductions in employment. This is a relative matter; undoubtedly there will be few if any establishments in most industries which will have been unaffected by or have overcome the problems of depression and seasonality. What is being sought is not absolute perfection, but performance which is outstanding in relation to other establishments in the industry.

Having discovered who the outstanding employers are, we want to find out the characteristics of those particular employers; in order to identify these characteristics, we shall look at the characteristics of the product, raw materials, processes, demand, sales methods, buying methods, advertising, industrial-relations policies, and so on. Our question is, What were the factors which produced the outstanding

record?

And having found out what the factors in the record were, and what particular devices were used-whether in the field of purchasing, production, storage, sales, finance, credit, industrial relations, wage payment, or what have you-how did those devices achieve that outstanding record? If we can find out the relative importance of specific factors to which to attribute that record, we shall be in good position to find an answer to the question as to whether the records achieved by the outstanding employers can be utilized in the other establishments in the industry. Was the record based on a unique set of circumstances? Are trade secrets involved? Is a rare kind of management ability necessary? Or are the factors of a sort which are within the reach of the great bulk of well-managed enterprises?

We implicitly assume an affirmative answer to this last question; for otherwise it would be futile to try to find out what are the methods by which these outstanding records are achieved and how they can be transferred. And we want to put down the records and the reasons so that anybody else who is interested in the subject can, by studying those records, determine for himself whether or not the situation and devices employed to achieve such records are susceptible of application to other places and under other circumstances, and in other times. Mr. TABER. Now, you are talking about the men's clothing industry at a time when they have been through at least three solid years of full, continuous production; that is, insofar as they were able to obtain the materials.

Mr. LATIMER. It is more than that; it is four or four and a half

years.