this because I think it affects your transient problem, since it provides a labor supply without calling for transients. The Division of Defense Training in our agency, which is not under me but under Governor McNutt and headed by Colonel McSherry, has been working on the defense-training aspect of the program and has recently worked out relationships with the Labor Division of the O. P. M.

EMPLOYMENT OF MINORITY GROUPS

It has a staff and is working especially on the problem of inducing industrial organizations to employ what one might call minority groups. There are three in particular that are of importance—perhaps I ought to say four.

I don't know that we can do anything about the first one. There is great reluctance on the part of many employers to employ citizens of the Axis countries. As I said, I don't know how much can be done about that. However, something certainly can be done about the other three groups, and Colonel McSherry is meeting with considerable success in that connection.

I wouldn't put women in the minority group, but they have been discriminated against in employment. The defense training program includes the training of women and making them available for a great many types of operations in which they can become quite skilled and do a thoroughly adequate job. This is proceeding even in advance of securing from companies their consent to try women out. In a few cases they are beginning to meet success in getting industry to employ women.

NEGROES AND MEXICANS

In the case of Negroes and Mexicans, there has been a great reluctance on the part of some employers to use them, although they live in the community and in many cases are on relief.

The problem of placing Mexicans has been greatly improved in the last few months, and in southern California they are beginning to employ Mexicans.

In the case of Negroes, a number of forward steps have been made in connection with several new plants. The consent of the employer to use Negroes has been secured in advance and the training program has then started to fit them for the jobs which will be available.

If you do that, then you eliminate the necessity of bringing in so many people from the outside.

The CHAIRMAN. Mr. Taft, we appreciate your coming here, and I want to say on behalf of the committee that we have heard about your work and the splendid public service you are rendering. I especially appreciate your views because they are along the lines of my own.

EXPRESSES SATISFACTION IN DEVELOPMENT OF REGIONAL COORDINATION

Mr. TAFT. May I add just one word on something about which we really feel a great deal of satisfaction? It is the development of a real coordination among the regions of the various efforts in these fields. We have just met in Chicago with 12 regional coordinators of the Social Security Board, and they report that the regional advisory councils which bring together representatives of all Federal

agencies in any of these fields-there are some 15 or 20 outside of our own agency-have increased their effectiveness in the interests of the meetings and in the importance of the accomplishments.

In practically every region, instead of sending in field people from Washington or from some regional headquarters to secure information, they go first to the regional office and, through getting a list of the travel plans of other field representatives, are in many cases able to get them together. They get the information they require, when they go to the particular locality from which it is needed. The Budget Bureau has recently visited all of these regions, and both they and we feel that not only has a substantial amount of travel. money been saved, but far greater integration and effective service has been achieved.

The CHAIRMAN. You see, Mr. Taft, all during the last session of Congress we investigated the migration problem and traveled throughout the United States on that general subject.

We were then focusing our attention on the migration of destitute citizens between States and now we are concerned with this defense migration. So far as I know this is the first congressional committee that ever investigated human interstate commerce. We have spent billions for the iron and coal and steel going through the States, but we have neglected the human beings.

We thank you very much Mr. Taft.

Mr. Reporter, this is Mr. Arthur J. Altmeyer, Chairman of the Social Security Board.

TESTIMONY OF ARTHUR J. ALTMEYER, CHAIRMAN OF THE SOCIAL SECURITY BOARD, FEDERAL SECURITY AGENCY, WASHINGTON, D. C.

The CHAIRMAN. Mr. Altmeyer, we are pleased to have you with us this morning. Congressman Arnold has some questions he wishes to ask you.

Mr. ALTMEYER. I appreciate very much the opportunity to appear before your committee. I have already filed a rather lengthy manuscript.

The CHAIRMAN. Yes; and that will be included in our record. (The material referred to above is as follows:)

STATEMENT BY ARTHUR J. ALTMEYER, CHAIRMAN OF THE SOCIAL SECURITY BOARD, FEDERAL SECURITY AGENCY, WASHINGTON, D. C.

THE SOCIAL SECURITY PROGRAM IN RELATION TO DEFENSE MIGRATION During the past year the national-defense program has stimulated an expansion of employment to the highest levels in the Nation's history. This increase has affected, not only the principal urban manufacturing centers, but also many of the smaller, predominantly nonindustrial communities as well. The rise in employment and the corresponding decline in unemployment have alleviated many of the problems of insecurity characteristic of the depression period. On the other hand, the increased mobility and migration, in response to expanding employment opportunities, are bringing in their wake many new problems of insecurity. People moving from one employment to another, or from one community to another, are exposed to hazards of social and economic readjustment. It can be confidentially predicted that some of these hazards will be met by the

traditional adaptability and resourcefulness of the American worker. Others will require new ways of meeting new social responsibilities in order to insure a continued progress of the United States toward the goals of social security.

EFFECTS OF THE DEFENSE PROGRAM ON THE INDUSTRIAL LABOR MARKET

It is estimated by the Bureau of Labor Statistics that nonagricultural employment in May 1941 reached 38.3 millions, the highest point in the Nation's history. This represents an increase in employment of 3.1 million over May 1940. Almost all of this increase is due, directly or indirectly, to the defense program. More that half of it occurred in manufacturing industries alone. In the aircraft industry, for example, employment increased by nearly one and one-third times. Employment in shipbuilding nearly doubled. Substantial increases occurred in such basic industries as machinery, iron and steel, nonferrous metals, chemicals, and rubber. The increase in the machine-tool industry, in which employment rose by nearly one-half during the year, is especially noteworthy since it was superimposed upon substantial gains in the preceding years.

In addition to the increases in manufacturing employment, every other branch of nonagricultural employment recorded higher employment in 1941 than in 1940. Increases were particularly great in construction, trade, and public employment.

As a consequence of expanding employment, there has been a material decrease in the number of persons unemployed and immediately available for employment. Unemployment at the time of the Census of Population in April 1940 stood at about 8 million. It is variously estimated that this figure has shrunk since then by at least 3 and perhaps by as much as 4.5 million. The volume of unemployment, that is, of persons in the labor market and seeking work at a given time, does not, by any means, measure the entire reserve of labor that may be available for defense employment. The file of applicants actively seeking work through public employment offices, which stood at 5.7 million in May 1940, was still above 5 million a year later. The rapid expan

sion of employment opportunities in certain areas has attracted into the market for wage employment many thousands of people not normally available for such work. In some areas of heavy demand, while employment was rising rapidly, registrations at the employment offices have actually increased in response to job opportunities or the prospect of job opportunities. It is likely that there are some millions of people who will become available in this way to meet the demand for labor as it arises.

Uneven effects of the defense program.—The effects of the defense program have not been felt equally in all parts of the country nor among all groups in the labor market. While nonagricultural employment for the country as a whole increased by less than 10 percent between May 1940 and May 1941, employment in New England and in the Great Lakes and South Atlantic regions increased by substantially more. On the other hand, in the West Central, and Rocky Mountain regions, the increases were much less. Spectacular gains were reported in Rhode Island, Connecticut, Indiana, Maryland, and Virginia, in all of which nonagricultural employment, as estimated by the Bureau of Labor Statistics, increased by more than 20 percent during the year. The smallest increases occurred in typically nonindustrial States, such as Iowa, Minnesota, Oklahoma, West Virginia, and the Rocky Mountain States. It is noteworthy, however, that employment in New York State increased by only 6 percent.

The uneven expansion of employment reflects roughly the concentration of defense contracts in the highly industrialized areas suitable for the production of aircraft, ordnance, and ships. More than half of all defense contracts allocated through April 30, 1941, were concentrated in 6 States containing one-third of the Nation's population. Exactly 80 percent of defense contracts were concentrated in 13 States containing exactly half of the total population.

Aircraft production up to the present has been concentrated in Los Angeles, San Diego, and Seattle on the west coast, and in Connecticut, Long Island, northern New Jersey, Buffalo, and Baltimore in the East. New concentrations are projected in Michigan, Ohio, Indiana, Illinois, and in a midcontinent belt from Dallas to Omaha. Shipbuilding activities center in San Francisco and Seattle in the West, in Boston, New York, New Jersey, Baltimore, and Norfolk in the East, and new yards are being located on the Gulf coast from Mobile to the east Texas ports. Production of heavy ordnance, and of machinery and

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machine tools is concentrated in the metal-working centers of the Northeast and North Central States. The greatest dispersion of contracts has occurred in the location of huge new plants for the manufacture of explosives and ammunition, which have typically been built in rural areas in the interior where their requirements of space, water, transportation, and labor could be met.

On the other hand, many parts of the country have been relatively unaffected by the defense program. The Nation's two largest cities, New York and Chicago, have as yet been far underexploited as producers of defense materials; and the flow of orders in significant amounts to many sections of the Middle West and the South have only begun to use the labor supply in those areas. Moreover, even in places where the demand has been brisk not all groups in the working population have benefited equally. In general, the demand has been heaviest for men, for skilled workmen regardless of age, and for semiskilled and unskilled men in the younger and middle working ages (21 to 35), suitable for training. In most areas, women have not been used in defense production until the supply of men available locally or within recruiting range was exhausted, and only then in a few occupations and in limited numbers. Negroes have until recently been almost universally excluded from most defense industries; notably, aircraft, ordnance, tank construction, and powder plants. In the the past 2 or 3 months a greater willingness to employ Negroes in these plants has been noticed. On the other hand, the insistence on citizenship has become a widespread restriction in the past year. Although the statutory restrictions on the employment of aliens in defense industries is limited entirely to the manufacture of aircraft and parts, and secret armaments, many employers in defense industries not included under the law have tended to exclude from employment aliens and, in some cases, naturalized citizens, or even native Americans of foreign parentage, particularly those of German or Italian descent. The employment of the supplies of available labor in certain areas has been further limited by the use of aptitude and personality tests and by physical examinations that sometimes impose more exacting standards than the jobs themselves would seem to require. As a consequence of these selective factors in reemployment, the available reserves are becoming increasingly concentrated in those areas where employment has not yet expanded greatly, and in those classes of workers immediately less acceptable to employers. These circumstances in part account for the persistence of problems of insecurity and dependency, in spite of the increase of employment opportunities.

Labor shortages.-The sudden and unprecedented demand for labor for defense industries, particularly aircraft, shipbuilding, machinery, and machine tools, has led to shortages in certain crucial skilled and higher grade semiskilled occupations. According to latest reports to the Bureau of Employment Security of the Social Security Board, shortages are evident in 78 of 394 defense occupations selected for continuous observations because shortages were feared. Most of the shortages are in skilled or highly specialized metalworking and metalforming occupations, in many of which the supply has been so depleted by the demands of the past year that the market affords virtually no available qualified workers.

Perhaps the most difficult situations are occurring in aircraft and shipbuilding. In shipbuilding, old yards have been expanded and new yards are being established in areas where the industry did not previously exist or where the yards have been idle for many years. Because of increased employment in established shipbuilding centers, most shipyard workers in these communities, if there were any prior to the defense program, have found employment elsewhere. The new yards can in most instances train the bulk of the needed workers, but there remains an absolute minimum number of key skilled and supervisory workers who must be found if the yard is to get into production. Likewise, the aircraft industry, particularly that portion of the industry producing airframes, is, with the help of the defense training program, training huge numbers of workers. The training program can meet the requirements for semiskilled workers, but competent supervisors and a minimum nucleus of skilled craftsmen must be available to staff new plants.

In some areas where defense production got under way in the early stages of the program, the demand quickly exhausted the supplies of experienced workers and general area-wide shortages of acceptable factory labor are now threatened. Notably in the industrialized cities of Connecticut and in the aircraftmanufacturing centers of southern California, it has been necessary to recruit workers from the neighboring rural States in order to avert a general shortage.

In other communities, while no such widespread shortages have yet appeared, it is expected that the local labor supply will not suffice to meet the demands of the next 12 to 18 months. In such areas the most intensive recruitment, training, and placement programs will be required to prevent delays in defense production.

ROLE OF THE UNITED STATES EMPLOYMENT SERVICE

In response to the demands of defense industries, the United States Employment Service, under the guidance of the Bureau of Employment Security, has greatly intensified its recruiting and placement program. Placements for the year ending May 31, 1941, were 4.5 million, an increase of nearly 1,000,000 from the corresponding 12 months of the preceding year. The increases were particularly noteworthy in manufacturing and construction, the 2 industries most immediately affected by the defense program. Placements in manufacturing industries in April 1941 numbered nearly 100,000, an increase of almost 120 percent from the preceding April. More than 70,000 placements were made in construction in the same month, an increase of nearly 75 percent. The volume of placements of all kinds made through public employment offices currently is now at the rate of about a half a million a month, the highest in the history of the Employment Service.

The fact that the volume of placements continues to increase, while visible reserves of labor decline in itself suggests the extent to which new sources of labor are being tapped. During the spring of 1941 the Employment Service conducted an intensive campaign to list on its registers all available workers, especially those in the metal-working occupations in which shortages were apparent. This Nation-wide effort, together with the day-to-day activities of employment services in recruiting new sources of labor for job openings, explains why the registers of the employment offices have declined by only half a million in a year in which the decline in unemployment was six or eight times as great. In addition to intensive use of local sources of labor, the Employment Service, through the machinery for clearance placements, has filled thousands of jobs, particularly in construction, in areas where the local labor supply was insufficient to meet the demand. Through the clearance-placement system the Employment Service is able to circulate information about job openings that cannot be filled locally and to recruit, on short notice, workers who are willing to move to the job site. More than 10,000 such placements have been made in every month of 1941, and in one month the number reached nearly 25,000. Most of these placements have been made in response to demands for construction workers in rural areas where large defense contracts have required many more workers than the area could supply.

More recently, in its attempts to deal with the problem of shortage through the Employment Service, the Bureau of Employment Security has designated a regional labor supply officer in each of the 12 Social Security Board regions. This officer is charged with the responsibility for guiding and coordinating the activities of State employment services in the recruitment of labor for defense employment. Through State and regional committees designated by the Office of Production Management, the Employment Service is collaborating with the vocational defense training program, the National Youth Administration, and the training-within-industry services of the Office of Production Management in order that training needs may be anticipated and trainees recruited, trained, and placed in defense employment. The program of job analysis and testing of the Bureau of Employment Security has been expanded to provide assistance to employers in selecting new workers, in training, and in breaking down complex jobs to permit the use of workers with limited specialized skills. At the same time, the Employment Service has undertaken to gather, through the local and State employment offices, current information on the extent and character of the anticipated demand in defense industries, the supply of workers available, and the emergence of labor shortages.

A NATIONAL SYSTEM OF PUBLIC EMPLOYMENT OFFICES

The fast-moving events that have been taking place and which will take place even faster during this period of national emergency have a profound effect on the public employment office system of this country. If we are to meet successfully the supreme test which confronts us today there must exist a really national system of public employment offices, in accordance with the mandate contained