return the excess amount collected. But the trouble with that, Mr. Sargent, is that England may be broke after the war is over. This country is making a survey with the thought of inaugurating public-works programs to take up the slack after the war, but we, too, may have to retrench at that time. So what gives us deep concern now is the future status of the worker. If he is getting these good wages, we want to ascertain whether some system can be introduced by which he would have six or seven hundred or a thousand dollars after this emergency, as a sort of a cushion for him to fall upon until the Nation can get back on its feet. Mr. SARGENT. I wouldn't have you get the impression that because I referred to it as one possibility I was endorsing the English plan. I have doubts about it, as you do-doubts of various kinds. The British may be broke, or it may be necessary for them to resort to a capital levy to pay for the war, or they may never pay off. They may be just kidding the people with the idea they are going to be paid off. All those factors are involved. WOULD CONSERVE WORKS PROGRAMS FOR LATER The CHAIRMAN. I did not assume you were advocating the British scheme. I was just bringing out what appears to me to be the weakness of it. Mr. SARGENT. I agree with you. It is one of the weaknesses, of course. In planning public-works programs, at least during the defense period-and I have heard to some extent in nondefense periods-many governments do not seem to worry about fiscal situations, or to pause to ask themselves whether they are theoretically "broke"; they feel able to go ahead and spend money on projects of various kinds. I do think, with reference to the public-works program, it certainly in theory represents great possibilities, particularly if, during a period like the present, you have conserved all nondefense public works so they can be used later. If you go ahead with your nondefense public works in a period such as the present, then you are reducing the possibility of utilizing public works subsequently to any great advantage, in my opinion. Now, the difficulty, of course, comes from attitudes of the local communities-people who want public work done-the difficulty of resisting the pressure, and so forth. PROBLEM OF THE NONDEFENSE INDUSTRIES The CHAIRMAN. I understand the production of automobiles has been reduced some 20 percent, hasn't it? Mr. SARGENT. Yes, sir. The CHAIRMAN. And probably will be reduced further. Now, to explore the problem, as I see it, let us accept hypothetically the general statement that automobiles are all made of steel. Now, they are scraping the bottom of the barrel for steel. Under the national-defense program, automobile production would have to be decreased greatly, wouldn't it? Mr. SARGENT. Yes, sir. The CHAIRMAN. They take the steel for ships and for airplanes, and such, and that is indicative of the fact, Mr. Sargent, that as sure as we are here in this room today, the non-defense-industrial problem probably is going to come at us head-on. Don't you think so? FRICTIONAL UNEMPLOYMENT IN ENGLAND AND GERMANY Mr. SARGENT. I think so. I made a study of the manner in which Germany and England and France had conducted their operations a year ago, and circulated it among some people who were particularly interested in the subject, and pointed out at that time that both Germany and England, when the war broke out, had had several months during which unemployment had actually increased, because of that very situation. In other words, if you wish to avoid that, you must have the most careful planning and the most careful adjustment between both defense and nondefense industries, and among the several nondefense industries. I question whether we have yet engaged in that kind of planning here, on a sufficient scale to overcome and the situation you describe. prevent The CHAIRMAN. Do you have any questions, Dr. Lamb? Dr. LAMB. In that connection, Mr. Sargent, would you agree that delay in coming to a conclusion about those transfers can have serious effects, both for the industry which may be asked to shift from one type of activity to another and the communities in which those industries are located? Mr. SARGENT. Yes, sir. TIME A FACTOR IN MAKING ADJUSTMENTS Dr. LAMB. For example, at the present time we understand that projects for defense housing are being held up in Detroit because of uncertainty as to the effect that curtailment of the automobile industry is going to have on activity on civilian production. That is the type of uncertainty that you would envisage? Mr. SARGENT. Yes. Dr. LAMB. So that you would favor an early decision as to these shift-overs, and a recognition on the part of the country that such sacrifices are necessary? Mr. SARGENT. I would favor an early decision provided consideration is given to all the factors and elements and inter-relationships involved. As you indicate, an early decision does not necessarily mean that things will have to be done early, but rather gives an opportunity for orderly adjustment over a subsequent period. Dr. LAMB. Yes; but it abates the uncertainties you have mentioned? Dr. LAMB. Which in themselves set up new complications? NATIONAL ASSOCIATION OF MANUFACTURERS SURVEY OF SUBCONTRACTING Dr. LAMB. I would like to ask you whether you have anything further to say with respect to subcontracting. Is it not true that the National Association of Manufacturers has been corresponding with its membership and with the affiliated associations on this subject? Mr. SARGENT. Yes, sir; we undertook a survey of the available productive facilities throughout the United States and gave the in formation to the O. P. M. We found that several million man-hours or machine-hours which were available for defense work were not being used, and gave that information to the O. P. M. We also made our findings available in one or more places in every State in the United States. In addition to that, we have endeavored to obtain information from our members as to the extent of subcontracting and the extent to which it has increased. MORE DEFENSE BUSINESS NOW IN SUBCONTRACTS We are now undertaking a survey of companies with defense contracts, which has not been completed. The preliminary results indicate a substantial increase in the proportion of total output which is being subcontracted now as compared with the period before July 1940. Dr. LAMB. Is that subcontracting of the sort which goes into plants already having prime contracts, or is it the kind that is spreading to a larger number of firms? Mr. SARGENT. I don't know that there would be any way of determining that, because when we ask a manufacturer whether he is subletting his work, he knows that, but he doesn't know whether the people to whom he sublets also may have prime contracts of their own. I don't know of any way you could find that out unless you made a very complicated survey. Dr. LAMB. That is all. GEOGRAPHICAL SCOPE OF THE NATIONAL ASSOCIATION OF MANUFACTURERS The CHAIRMAN. Mr. Sargent, does your association reach into every State in the Union? Mr. SARGENT. No. I suppose we have memberships in perhaps 40 States. There are a few States in which there are almost no manufacturers, and where we have no members. The CHAIRMAN. What is the total membership of your association? The CHAIRMAN. We thank you very much and appreciate your coming here, Mr. Sargent. Mr. SARGENT. And I am very glad to have had the privilege of appearing before the committee. The CHAIRMAN. If you will send the other data to us, we will appreciate it very much. Our next witness is Mr. Carey. TESTIMONY OF JAMES CAREY, SECRETARY, CONGRESS OF The CHAIRMAN. Mr. Carey, will you give your full name and state the capacity in which you are appearing before the committee today? Mr. CAREY. My name is James Carey. I am national secretary of the C. I. O. and president of the United Electrical, Radio and Machine Workers of America. The CHAIRMAN. Do you have a statement that you want to read? Mr. CAREY. I have just a brief summary. I shall not read the entire statement. [Reading.] NO GENERAL LABOR SHORTAGE The general view of the C. I. O. relating to labor market conditions and migration is as follows: There is no general shortage of labor. Actually there is a real and continuing problem of unemployment. The present defense program will not wipe out unemployment. There are no shortages of a special nature which cannot be met over a reasonable period of time by a sound program, particularly on the part of Government and industry. There is absolutely no need for labor priorities or any coercive measures for the shifting of labor. All necessary shifts of labor can be accomplished through the cooperation of organized labor and through providing proper wage rates, housing, transportation, and so forth. The failure to make adequate use of the labor supply will result in freezing the national income and production far below its maximum, and greatly impairing the defense effort. So far there has been failure. CONGRESS OF INDUSTRIAL ORGANIZATIONS OPPOSED TO FORCED SAVINGS The C. I. O. is fundamentally opposed to forced savings for wage earners or wage taxation as long as there is continued unemployment. In the face of an ever-increasing defense program, such measures mean freezing unemployment and intensifying the attack on the standard of living. Only by thorough-going planning of industry in the defense effort can the real labor needs be determined and met. This, in labor's view, can best be accomplished through the immediate institution of the industry council plan. The greatest economic problem in the Nation's history will be faced when the post-war period of slump and unemployment sets in. Only by adequate planning of the defense effort now and by preparation for the peace-time future, can a national economic catastrophe be avoided. (Reading ends.) The CHAIRMAN: Then you feel, Mr. Carey, that at the present time there is still considerable unemployment. Mr. CAREY. Yes, sir. The CHAIRMAN. The testimony presented here indicates that there are several million people registered with the various employment agencies, Federal and State, at this particular time. Mr. CAREY. Yes, sir; and we find that their rolls are not complete. The CHAIRMAN. You have a written statement to file with the committee, haven't you? Mr. CAREY. Yes, sir. The CHAIRMAN. That will be inserted in the record. (The statement referred to above is as follows:) STATEMENT BY PHILIP MURRAY, PRESIDENT, CONGRESS OF INDUSTRIAL ORGANIZATIONS NO LABOR SHORTAGE During the past 3 years there have been continuous loud outcries that there was a shortage of labor either at hand or immediately impending. All during this period the Congress of Industrial Organizations has continuously taken the position that in no case was a shortage of labor impending and that now there is no foreseeable shortage in the labor supply which would in any way interfere with production. At times during the past 3 years our voice has almost been a lone one. Now most of the experts on employment have come to agree with us. There are still a few who, either through ignorance of the real situation or for other purposes, continue to cry aloud about labor shortage. Too often the cry of labor shortage is used to lay the blame upon labor for the lack of a more effective production job. The blame does not rest upon labor. Or it is used to advocate the establishment of some kind of compulsion in the labor market, compulsion unjustified either by the need or by sound public policy. The fact is there is a serious and continuing problem of unemployment facing the country. The cry of labor shortage has been one of the excuses for a growing refusal to face that problem. According to the Congress of Industrial Organizations' last estimate there were, in May, 7,184,000 unemployed. Additional employment during the coming year at best can provide only two and one-half million jobs. If the total Army is increased another million this will make a possible gross increase in employment of three and one-half million. This would be strongly off set by an unusual growth in the available labor force coming in particularly from farms, from women not heretofore actively seeking jobs, and from many self-employed. If, for example, the same percentage of workers in the working age group were employed now as were employed in 1918 we would have an actual working population at least 15,000,000 larger than it is now. I submit that a very substantial portion of this 15,000,000 is available for work under proper conditions. Furthermore, the productivity of individual workers is growing apace, so that employment is increasing much less rapidly than production. For example, industry production in the first 6 months of 1941 was 34 percent higher than industry production in 1929. Manufacturing employment, however, in 1941 was only 12 percent above 1929 and total employment barely 1 percent. USE OF THE LABOR SUPPLY Thus, we submit that there is no warrant whatever for fears about general labor shortage. The country does, however, face the necessity for making the fullest possible use of the great reserve labor force. It is true, of course, that the United States Employment Service in particular has reported specific shortages of labor in a number of particular skilled occupations. I think, however, that such figures should be treated with great wariness. In the first place they represent only a partial survey of the labor market since the coverage of the public employment offices is still incomplete. In the second place, they represent the general attitude on the part of employers that, if they need a skilled worker of a certain occupation, they can expect to get him immediately available in the labor market. This last practice is exceedingly important in the evaluation of the situation in the labor market. It might be called "depression-minded hiring." The great majority of employers still think in terms of depression-hiring conditions. This means that they expect to be able to open the doors of their employment offices at any time and get any kind of qualified labor they expect. This kind of hiring practice has grown up, of course, during the past 10 years of enormous unemployment. It contains a large number of operating methods wholly unsuitable to a period of increasing or full employment. Many industries which still spend months or even years laying out their floor space, preparing equipment and buying supplies, still expect to get the most important part of their manufacturing process, that is the workers, simply by whistling at the factory gate. They still also cling to discriminations on the basis of age, color, birth place, and qualifications which strain out a large majority of available competent labor. It is here submitted that the effective use of our labor supply can be made by American industry only if they adopt the attitude and practice of a full employment economy. Such an attitude involves the understanding that no longer can skilled and experienced workers be found available on the market at any time. Such workers must be trained within the plant through apprentice and upgrading systems. Most of the new labor must be employed at the bottom, unskilled and inexperienced. When new plant expansions are laid out, it must be expected to plan for the procurement and training of labor |