materials cost is 36 percent of the price of a private home and 38 percent of an apartment unit.

According to the Kaiser Committee's report, debt retirement-on principal and interest-is only 53 percent of the monthly occupancy cost of a single-family home and merely 42 percent of the monthly rent of an elevator apartment unit. Other costs include such factors as taxes, utilities and maintenance.

According to these Kaiser Committee estimates, the price of the mortgage, and the interest payments on that price, amount to only about one-half of the monthly occupancy cost of a home or rent on an apartment. The on-site labor cost is approximately one-fifth of that amount, or only about 9 percent to 11 percent of these monthly occupancy costs to the home owner or renter, including the interest payments on the labor cost:

Source: McGraw-Hill Information Systems Technical Report. President's Committee on Urban Housing, December 1968.

On the basis of these cost figures, a 20 percent cut in construction workers' wages or a 20 percent increase in productivity-would reduce the monthly occupancy cost to the homeowner or renter by only about 2 percent. The Kaiser Committee says, "All on-site labor costs represent such a small percentage of monthly rents that a general reduction of 20 percent for all workmen would mean only a reduction in rent from $100 a month to $98 in a typical unit."

Average 1969 House: $20,534

And that includes the cost of the interest payments on the on-site labor cost.

While debt retirement of principal and interest is approximately only half of the monthly costs of a house or rent on an apartment, over one-half of the debt-retirement portion of those monthly payments is for interest charges, at recent interest rates. The price of the property, therefore, accounts for only about 20 to 25 percent of the monthly occupancy costs to the home owner or renter and, in turn, the on-site labor cost accounts for only about one-fifth of that amount.

Therefore, the actual on-site labor cost component of monthly occupancy costs-excluding interest payments on the labor cost-comes to only approximately 4 to 5 percent of those monthly costs of a homeowner or renter. A 20 percent increase in the wages of all on-site workers-or a 20 percent reduction of on-site labor through increased use of pre-fab-therefore directly involves only about $1 of each $100 of monthly rent or occupancy costs of a single-family home, when interest charges are excluded.

All of this adds up to some very clear facts: The major part of housing costs to the renter or homeowner is interest charges-the price of borrowed money to the developer, builder, landlord and homeowner. The on-site labor cost accounts for only a small part of the price of the property and a much smaller portion of monthly occupancy costs to the

owner.

The on-site labor cost component of housing has been the victim of gross distortion, ignorance and anti-labor myths. The sole focus of public attention on on-site labor costs and labor-saving technology is largely based on a hoax. If the costs of housing are to be reduced-or if such rising costs to the consumer are to be slowed down-interest rates and land prices, as well as labor and materials costs, have to be reduced or curbed and managerial efficiency has to be improved.

Anyone who focuses sole or major attention on the labor-cost component of housing costs--whether

it be an Administration spokesman or college professor-is dodging the key issues of financing costs and land prices. Unless those costs are cut or curbed, it will be impossible to bring the consumer's housing costs under some manageable control-regardless of the progress in pre-fab.

The building trade unions are cooperating with employers in the increased use of pre-fab and modules in residential construction. But substantial advances along those lines can do only little to curb the consumer's housing costs if soaring land prices and financing charges are not curtailed. And unless land and financing costs are curbed or reduced, it is unlikely that America can soon achieve the expanding volume of residential construction the country needs and which, in itself, would produce some cost saving.

Some people ask whether America has the material resources and manpower to attain the 10-year housing goal of 26 million dwelling units. The answer is decidedly yes. However, the needed national commitment, backed by effective government policies, has not been made.

In 1955, private and public new housing activities accounted for about 4.5 percent of the total national production. But in recent years, the dollar outlays for new residential construction have been not much greater than in 1955-despite increased prices-and such activities have declined to about 2.5 percent of the much greater gross national product.

In the coming years, total national production should rise by 4 to 4.5 percent per year, excluding price changes, if high levels of production and employment are to be maintained-and probably about 5.5 to 7 percent per year in current dollars. If home building activities rise as fast in the 1970s as total national production-in contrast to the sharp cyclical swings and relative stagnation since the mid-1950sthe volume of residential construction will increase, but not enough to attain 26 million additional dwelling units in 10 years.

To attain the 10-year housing goal, private and public outlays for residential construction will have to increase at a somewhat faster pace than the gross national product-to rise from about 2.5 percent of the GNP in recent years toward about 4.5 percent of a growing GNP in the seventh or eighth year.

This is not an unreasonable goal in terms of feasibility. Such proportion of national economic activities for residential construction was attained in the past, as in 1955, and it can be attained during the course of the 1970s. But its achievement requires changes in government policy.

One major needed change is for the federal government to shift from providing inducements and subsidies for business investment in plant and equipment to an emphasis on housing. Federal policy will have to substantially curb its variety of devices to encourage an increased share of total national production for business investment in plant and equipment, which

has cut into the flow of available private savings for investment in home building-and which has also tended to increase the cost of borrowed money.

Rates of increase and levels of business outlays for plant and equipment have been unsustainable in recent years. If such rates of increase and levels of business investment are brought down to more moderate and sustainable levels, more private savings would be available for investment in new residential construction, which is the tailend of the money market.

It would ease the residential construction industry's losing competition for available funds with businessinvestment loans, which are considered the top choice in the money market. It would also eliminate or considerably reduce the sharp cyclical swings in home building, since it would provide a steadier flow of private savings into residential construction.

In addition, positive government encouragement of home building is needed. Pooled mortgage bonds, authorized by the 1968 Act, would be of assistance in attracting funds into housing. Additional encouragement is probably necessary-such as a federal requirement that a modest portion of pension and similar trust funds be invested in government-guaranteed residential mortgages for Internal Revenue Service approval.

Such measures should be accompanied by a general reduction of interest rates, an ample growth of the money supply and, if monetary restraint is necessary, a sheltering of residential construction from the ravages of tight money. The combination of such government policies is needed to provide a greater supply of private funds for home building and to reduce the costs of borrowed money.

However, sole reliance on the private market, even with government encouragement, will not increase residential construction sufficiently-particularly dwelling units for low- and moderate-income families. The direct role of government will have to be increased.

Direct public outlays for new residential construction, in recent years, have amounted to only about $700 million-about one-tenth of one percent of total national production. These sums will have to be increased to meet the 10-year housing goal.

Such increase in direct government outlays would require some small changes in the composition of federal expenditures during the course of the next 10 years. with greater emphasis on housing. The expected $15 billion annual increase in federal revenues as well as the leveling off of defense expenditures since mid-1968 and the hoped-for end of the Viet Nam war-will make it feasible to increase substantially the flow of direct government outlays for residential construction, particularly for lower-income housing. In combination with government efforts to strengthen the position of the private housing market. such increases in direct public expenditures should enable America to meet the goal of 26 million dwelling units in a decade.

As for the availability of land, anyone who has traveled across this country knows that the potential land supply is tremendous. Even in and near the cities and towns, a potential supply of land is available that could be used for residential neighborhoods -if transportation and public facilities are provided.

The immediate problem is not the supply of land, but soaring land prices. The price of land for housing has been rising about 10 to 20 percent per year. Land costs are now about 21 percent of the price of a single-family house and approximately 13 percent of the price of an elevator apartment unit. The Kaiser Committee reported the average site of a new, FHA-insured, one-family house rose from $1,035 in 1950 to $3,766 in 1967, a rise of 264 percent in 17 years. The committee also reported that in the vicinity of Washington, D.C., the price per acre paid by builders "increased from $3,400 in 1960 to $5,800 in 1964, a jump of over 70 percent in a four-year period."

A government land policy is needed. The taxing and zoning of land require review and revision by the federal, state and local governments-to curb the skyrocketing rise of land prices and excessive land speculation. We also need something like land banks -with government advanced-acquisition of rights or ownership to large blocks of land for future development, specifically including low- and moderate-income housing. Effective government policies are needed to

This 77-unit project in New Haven, Conn., was sponsored by the Greater New Haven Central Labor Council. No resident pays more than 25 percent of his income for housing.

curtail the sharp rise of land prices if the nation's housing goal is to be met.

In addition, the use of land in outlying metropolitan areas for residential construction requires the availability of mass transportation as well as educational and other public facilities for the creation of decent neighborhoods.

The potential manpower supply for construction generally must be considered since it is impossible to isolate residential from non-housing construction employment. Several experts have examined this complex issue. The Bureau of Labor Statistics estimates

that total employment in contract construction of all types-residential and non-housing-will rise from nearly 3.3 million in 1966 to 4.2 million in 1975, a rise of about 90,000 a year.

In their work as consultants to the Kaiser Committee, John Dunlop and Quinn Mills estimated that about one million additional man-years of employment in residential and non-housing construction will be in demand by 1975. Since few construction workers are employed year-round, the Dunlop-Mills estimate comes to somewhat over 100,000 additional employes per year.

In addition, the number of construction workers is a slowly declining percentage of total employment in contract construction, with a rising percentage of and architects, draftsmen, engineers, technicians clerical employes. Therefore, on the basis of these estimates, the net increase in the number of construction workers that will be needed if the 10-year housing goal is to be achieved-while non-housing construction continues to increase-will be in the neighborhood of 90,000 to 100.000 per year above the 2.7 to 2.8 million construction workers employed on the average in the past four years.

The number of deaths and retirements of construction workers, in the period ahead, probably will also be close to that order of magnitude. So we are talking about replacements within a range of 90,000 to 100,000 per year and net increases in employment of approximately a similar number.

If the 10-year housing goal is to be met, increasing employment of construction workers will be requiredwith the increases gradually accelerating during the course of the decade. However, the actual number of workers needed by the industry will depend on the actual volume of construction, rather than long-run forecasts and government promises.

The major sources of potential manpower supply can be roughly identified and there may be others as well.

One major source is the present supply of workers with some construction experience and skills. As a result of the sharp cyclical and seasonal swings in construction employment-and the casual nature of the labor market-Dunlop and Mills estimated that it takes 1.8 workers to fill one average year of construction employment, a higher ratio than in any other industry.

Much work-time is lost in unemployment, in time between projects and in seasonal fluctuations. For example, unemployment in the industry is usually about twice the national unemployment rate. In addition, many "full-time" construction workers are employed 1,400 hours or less per year in the industry.

We now have detailed information on employment from the Social Security records of 1964. In that year, average total employment in contract construction was 3.1 million, according to the Bureau of Labor Statistics. But the Social Security records reveal that 6.7 million people had some earnings in contract construction in 1964 and 4.1 million earned the major

proportion of their earnings in that industry. A large number of workers were in and out of the industry during the course of the year.

These figures also indicate why the annual earnings in this industry are relatively low, by comparison with high hourly wages. In 1964, according to the Social Security records, the median annual earnings of workers with four quarters of employment in the industry were only about $6,200, despite high wage rates. Sharp cyclical and seasonal swings in construction employment generally-with impacts on annual earnings are particularly pronounced in home building.

A steadily expanding volume of construction and concerted efforts to reduce sharp seasonal changes could cut the excessive fluctuation of employment in the industry. It would reduce the insecurity of employment, increase annual earnings and enable the industry to achieve a labor force of a more stable size. In addition, the extension of union organization in residential construction- which is now only about 20 percent union-organized or less-would provide greater cohesion and rationality to the particularly volatile employment pattern in home building.

Another potential source of manpower is apprenticeship, particularly for the skilled trades. Apprenticeship is crucial to the training of the highlyskilled key cadre of the industry-the full-fledged journeymen with the best employment prospects in a casual labor market, the foremen, supervisors and contractors.

The number of government-registered apprentices has been increasing during most of the 1960s. Although most apprentices are in construction, some of them are in other industries, such as the metal trades and printing. In addition, some apprenticeship programs are not registered with the government. From 172,000 in 1960, the total number registered apprentices has risen to about 250,000 at present. The yearly rate of completions of construction apprentices at present, is probably about 20,000 to 30,000. Based on present registrations, the number will rise in the next few years, probably to about 30,000 to 40,000.

An aspect of the expanding apprenticeship programs of recent years is Outreach. Started in New York City by the Workers Defense League and A. Philip Randolph Institute, in cooperation with the building trades unions, Outreach provides remedial education, counseling and encouragement to young people, particularly Negro and other minority youth, to help them pass the tests for entry into apprenticeship. Similar programs-involving the U.S. Department of Labor and the Urban League, as well as the Workers Defense League-Randolph Institute-are in existence in over 50 major cities.

Spurred by these developments. the number of apprentices from minority groups has been increasingfrom about 2.5 percent in 1960 to approximately 7 percent at present. Even more important is the rise in the number of minority-group youth among newlyenrolled apprentices, which is now about 9 percent.

Apprentice-training programs should be expanded and Outreach-type programs should be expanded considerably. But such expansion of apprenticeship can be expected to occur only if the volume of construction activities increases to justify the training of large numbers of new, full-fledged journeymen.

Still another potential manpower source is to be found in training and upgrading programs. Training programs are to be found in several of the crafts. For example, nationwide networks of training programs, with emphasis on Negro and other minority-group youth, are run by the Operating Engineers, Laborers and Carpenters unions.

Skill upgrading programs to assist non-journeymen to achieve journeyman status now exist, in cooperation with building trades councils and communitybased organizations, in several cities. Such efforts, too, can and should be expanded, if an accelerating volume of construction actually occurs.

The major source of potential manpower is the net growth of the nation's civilian labor force. In the period ahead, the anticipated net expansion of the civilian labor force is 1.5 million per year-surely enough to provide an annual net increase of about 90,000 to 100,000 construction workers. Equal employment opportunities, regardless of race or color, would enable the industry to fully utilize this anticipated net growth of the labor force.

This expected sharp expansion of the civilian labor force would provide an ample supply of potential manpower for the construction industry, if the rising demand for building trades manpower materializes and if this potential manpower supply is adequately trained in the necessary skills.

However, on the basis of present experience and past history. there is reason for some skepticism about the timing and actual size of federal housing programs. Yet the timing and size of these programs are key determinants of the required manpower.

Moreover, construction is a local market industry and construction employment on any building site is composed of different workers, with different skills, at the varying stages of the building process. Decisions about construction manpower are made in terms of each craft and these decisions are made in each separate community.

The nature and extent of such decisions have to be worked out in each local area-not on the basis of talk and promises, but on the sound foundation of actual construction plans and estimated timetables, backed by commitments and ready to go. Under such conditions, differences of viewpoints can be worked out and an adequate supply of manpower in each of the crafts can be made available for an increasing volume of construction.

The urgent need for a vast increase in residential construction is clear. Potential resources are available. The major question is whether the federal government will change its policies sufficiently to assure the expanding volume of residential construction to meet America's housing needs.