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public employment offices in order to facilitate recruitment and placement, and to creating management-labor committees for effective cooperation, together with defense procurement agencies, in the local communities.

Perhaps the most difficult aspect of the manpower problem is that of shortages in particular skills. Accordingly, the Department is placing major emphasis on the promotion of increased and effective worker training. Fifty-eight occupations and related jobs requiring 2 years or more of training, for which there are immediate or foreseeable shortages, have been placed on the critical occupations list. Great as the need for additional workers will be in the coming year, I am confident that the manpower needs for defense can be met. This task of mobilizing manpower for defense can be made more difficult or more manageable by the degree of success of the defense production and stabilization programs. For this reason and the other vital reasons I have already discussed with you, I cannot urge too strongly the importance of the adoption of the amendments to the Defense Production Act recommended by the President.

The CHAIRMAN. Mr. Secretary, on page 4 you state that in the 8 months following the Korean outbreak wages had gone up 8 percent. Secretary TOBIN. No; the cost of living.

The CHAIRMAN. No; you said wages rose 8 percent, and wholesale prices, which are more sensitive to changes in the prices of basic commodities, rose 15 percent.

Secretary TOBIN. Yes.

The CHAIRMAN. The 8 percent, of course, was the cost of living? Secretary TOBIN. Yes; at the retail level.

The CHAIRMAN. Rents and everything else, I presume, so the 15 percent would naturally be, as you say here, wholesale prices.

How much did wages go up? Do you have any record of that? Secretary TOBIN. I do not have a study of it with me but I am certain that the wages are behind the cost of living for that period of time. I could get the accurate figure for you, but I think it is in the vicinity of 6 percent over all.

The CHAIRMAN. I was just curious to know for the record.

Secretary TOBIN. I can assure you that it is behind the cost of living for that period.

The CHAIRMAN. Well, I do not doubt that, but I just inquired if we could have that figure, roughly. Could it be obtained? I would just like to see what would have happened if we had put controls on in October. If you will provide that for the record.

(The information referred to follows:)

Consumers' prices increased by 8 percent in the period from the beginning of the war in Korea to the imposition of price controls-as measured by comparing the BLS Consumers' Price Index for June 15, shortly before Korea, and February 15, shortly after the General Ceiling Price Regulation. Generally, wages rose less than consumers' prices during this period, especially in the nonmanufacturing industries.

There is no single figure available for measuring the changes in wages of all American workers. The following tables show the variations in wages for major groups of workers for which data are available, for the period June 1950 to February 1951. Table 1 indicates that the increase in hourly earnings, including overtime premium pay, in manufacturing as a whole averaged 7.3 percent over this period. Estimated wage rates, obtained by adjusting average hourly earnings to exclude overtime and to allow for the effect that increased

employment in higher paying industries have upon the all-manufacturing average, rose about 7 percent.

Table 2 shows changes in average hourly earnings, including overtime premium pay, for a broad group of nonmanufacturing industries. With few exceptions, the changes in earnings in these nonmanufacturing industries were less than in manufacturing, and considerably less than the rise in consumers' prices. TABLE 1.-Percentage changes in earnings and estimated wage rates of production workers in manufacturing, June 1950 to February 1951

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2 Gross average hourly earnings excluding overtime and interindustry employment shifts. Source: U. S. Department of Labor, Bureau of Labor Statistics.

TABLE 2.-Percentage changes in average hourly earnings, specified nonmanufacturing industries, June 1950 to February 1951

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Secretary TOBIN. I have had a spot check made on it, and I have not looked at it for about 6 weeks, but I think it was someplace in the vicinity of 5 or 6 percent.

The CHAIRMAN. I thought if there was any record in the Department, it would be of interest to the Senators, and it would certainly be of interest to me.

The other thing you recommend quite a lot of your statement here is devoted to rent control, and I can understand that you would support the so-called rent control amendment that the President has recommended.

Have you given any thought to any rent control in defense areas? You state that so clearly, where you say on page 12:

In-migration of workers, where needed, will be difficult where housing is short. Has the Department given any study to that type of rent control? I am of the opinion certainly we have to have some sort of rent control and I wondered if you had given any consideration to some specific type other than just a blanket over-all control.

Secretary TOBIN. Yes. Under the bill, Mr. Chairman, rent controls would be imposed wherever the rent-control director determined that they were necessary, and then, once the controls were imposed, the local director would be able to raise those rents in the event there was an increase in taxes and an increase in maintenance costs and the like. The CHAIRMAN. Those are the recommendations of the President's amendment, but I wondered if any thought had been given to the defense areas and to places as you suggest: "In-migration of workers, where needed, will be difficult where housing is short."

Secretary TOBIN. I cited cities in the main war defense areas where we have decontrols-I mean, where the local authorities, either the State or the local government, decontrolled them.

The CHAIRMAN. I noticed those figures that you have, and it is up as high as 70 percent, you say.

Secretary TOBIN. You see, under the law as it now exists once even the most important defense area has been decontrolled, either by local State action or local community action, the Federal rent-control director cannot bring that community back under rent control.

The CHAIRMAN. That is correct; but they can bring it back themselves.

Secretary TOBIN. They could bring it back themselves.

The CHAIRMAN. Why do they not do it?

Secretary TOBIN. Well, I do not know why.

The CHAIRMAN. It seems to me in some instances they have not tried to control it more, because we have looked to the States and the cities to try and control it. They are on the spot and they know more of what is going on.

Secretary TOBIN. Senator, I was old enough in the First World War to watch what happened. We had to operate in that war without rent controls, and I was telling them in the Department of Labor recently that rents increased approximately 180 percent in my area and the statisticians and economists thought that I was wrong until they looked up the figures. That was the increase that occurred in the city of Boston in the First World War because there were no controls at that time.

Any area in which you have defense production, inevitably it is going to have an increase in population, and once the demand for houses becomes greater than the supply rents are bound to be established by the ability to bid, then you are going to have your rents going clean through the roof.

So I feel the power to recontrol all areas that have been decontrolled should be placed in the hands of the Federal Government and that then, where recontrol is necessary, the director should place rent control into effect.

The CHAIRMAN. I can understand that there will have to be some form of rent control, because it would be manifestly unfair to control manufacturers' products and raises in prices and everything else and leave rents wide open. I was hopeful that you might have given some study to the areas where the defense plants and the in-migration of workers will be so heavy.

Secretary TOBIN. You could not spell out that law much better than it is spelled out here, because a place that is not defense today may be defense 6 or 9 months from now.

83762-51-pt. 1—11

I think that when you take a look at Birmingham and in a period of 9 months the increases on low-income units were 50 percent, and in Houston over a period of 16 months the increase was over 50 percent, I think that is a perfect example of what happens when you permit the law of supply and demand to go uncontrolled.

The CHAIRMAN. I do not have any further questions.

Senator BRICKER. I have one or two I would like to ask, Mr. Secretary.

On page 3 you mention that

The most spectacular advances were in those commodities which came from the Orient or Pacific areas.

What do you have in mind there, particularly, outside of tin and rubber?

Secretary TOBIN. Tin and rubber, and you would not say that wool came from the Orient, but it comes from Australia, just south.

Senator BRICKER. Áre those increases weighted in your estimates of increase on the next page, the prices of basic commodities rose 15 percent in the same period?

Secretary TOBIN. Yes. They would be reflected in wholesale prices and in spot prices on the commodity exchanges, which have the biggest increase, the 50 percent. Tin is on the commodity exchange, wool is on the commodity exchange, and rubber is on the commodity exchange. They would be reflected both ways.

Senator BRICKER. That brings me to the next question, as to whether or not the commodity exchange prices affect the retail prices substantially in the long run?

Secretary TOBIN. In the long run, inevitably they do, because your commodity exchange prices then become your market prices, and those are the prices that the producers of consumer goods have to pay, and eventually that would come through the pipeline and the consumer has pay it at retail levels, so they definitely do have a direct bearing. Senator BRICKER. You think there is a direct relationship between the commodity exchanges and the retail prices?

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Secretary TOBIN. Yes.

Senator BRICKER. The reason I asked that was that the Joint Committee on the Economic Report inferred that they could not determine there was a relationship or what it was in the long run. I am really just trying to find out the fact.

Secretary TOBIN. You take a woolen suit. If the cost of wool has gone up 100 percent, naturally that is going to be reflected in the cost of yard goods, which in turn is going to be reflected in the cost of the woman's or the man's or the child's suit.

Senator BRICKER. How do you account for suits going down?

Secretary TOBIN. They are going down from the higher level. It happens there was such heavy purchasing of hard goods, like refrigerators and automobiles, on a time-payment basis last fall that I think the purchasing power of the people for soft goods decreased. Probably the clothing manufacturers overestimated the prospective market and the retailers overestimated the prospective market and, as a result, price reductions for some commodities are taking place in great many areas of the country.

Senator BRICKER. It is an inventory situation more than anything else?

Secretary TOBIN. I would say it is in the main an inventory situation. Senator BRICKER. But there is not a basic supply increase that would justify it?

Secretary TOBIN. No, and that inventory situation will be cleared up, and the moment that the inventory situation is cleared up, then you will have all these inflationary pressures again.

I pointed out in the statement that we are down to 1,700,000 unemployed. That is practically full employment. Our people feel it would be almost an impossibility to get below 1,500,000, unemployed. We have 60,000,000 more people working than in World War II when the figures show around 600,000 unemployed at one time. We feel that if we could get to 1,500,000 with 63 or 64 million people working— that is just about as low as we can possibly get.

Senator BRICKER. You will furnish, then, for the committee the increase in wages in the 8 months between Korea and the imposition of controls?

Secretary TOBIN. Yes, we will.

Senator BRICKER. And could you furnish us, also, the increase in prices and wages since the imposition of the general price regulations? Secretary TOBIN. Yes.

Senator BRICKER. Up to your latest date.

Secretary TOBIN. We will try and work out a table that will parallel the two progressively.

Senator BRICKER. I think we would like to have that.

Senator FREAR. Why not give a comparative basis with pre-Korea too?

Secretary TOBIN. I think it would be a good idea to go back about a year and carry you up as near as we can to date.

Senator BRICKER. I think that would help us tremendously. (The information referred to follows:)

Percent changes in earnings in manufacturing and for specified nonmanufacturing industries, January 1950 to February 19511

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1 Data refer to pay periods ending nearest the 15th of the month.

2.5

7.3

9.9

2.5

7.6

10.2

1.6

6.8

8.6

.5

10.6

11.1

6.8

10.6

18.1

4. 2

10.1

14.8

-2.6

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are taken to represent, respectively, the pre-Korea situation, and the beginning of wage and price controls. Includes effect of overtime premium pay.

Not available.

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

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