And gentlemen, 7.8 or 7.3 or 6.7 percent is of little real significance. Unemployment in the years ahead is a moral tragedy. I do not think our country needs to afford this kind of a hardship on so many millions of people. You have, within your hands, the possibility of introducing legislation which I think is politically possible. Perhaps it will not do the full job, but at least would stimulate the economy and prevent it from worsening and very possibly going back into a recessionary spiral that threatens us unless you stimulate the economy and unless you look into the problems of these people who are unemployed and for whom unemployment compensation will run out. We look to you for some measure of understanding of the great moral problem of our time, of the great test of our society; can this free society of ours provide jobs for every man and woman who seeks a job? And if we do not meet that test, gentlemen, we will fail in the great yardstick upon which we must be measured. I thank you. Chairman HUMPHREY. Mr. Finley, we thank you very much. There were certain parts of your prepared statement relating to the resolutions and the policies recommended by the executive council of the AFL-CIO. We will include all of that as a part of our record, because some of those recommendations are very important to us. [The prepared statement of Mr. Finley follows:] PREPARED STATEMENT OF MURRAY H. FINLEY Chairman Humphrey and members of the Committee: I am pleased to have this opportunity to appear before you to comment on the crucial economic problems and policies we are currently facing. We have just passed the 30th anniversary date (on February 20th) of the signing into law of the Employment Act of 1946. That act contained a mandate that our economic policies "promote maximum employment, production, and purchasing power." This has been the labor movement's goal almost from its inception. But the Economic Report of the President, his proposed budget, and the policies prescribed by his Council of Economic Advisors seem determined to frustrate these objectives. It is true we are now seeing some modest improvements in the economic indicators from the very dismal figures of last year. But the fact is the American economy remains in a weakened condition, with a vast amount of slack, after the longest and deepest recessionary decline in 40 years. The central situation facing the Nation-and what is of course the focus of this Committee's report and actions-is the blithe acceptance by this administration of high levels of human and capital waste. This is not a problem that will be resolved by the modest economic recovery now underway, but is a long-term problem that will remain with us for many years as long as we delay implementing a policy of genuine full employment and reordered economic priorities. The officially reported unemployment rate is 7.8 percent, representing 7.3 million jobless people. The Administration cites this decline from the 9.2 percent level of last May with great fanfare. Like a person who kills his parents and then pleads mercy because he is an orphan. A truer measure of unemployment would place the figure for January at about 10.6 percent. This is because the official number ignores the million discouraged people who no longer are seeking employment, the statistical fluke that exaggerated the decline that resulted from revising the standard for seasonal adjustment, and ignoring a rise of 240,000 in the number of workers compelled to work part-time because full-time work was not available. To attain perspective on what these numbers represent we should note that even the officially reported unemployment count for January was higher than in any earlier period since 1941, when the economy was coming out of the great depression. Moreover, the Labor Department also reported that 131 of the 150 major labor markets still suffer substantial unemployment, as do 1,046 of the smaller job market areas. This means that nearly four-fifths of the Nation's labor market areas are still in bad shape. While statistics don't portray the human hardships, a truer statement of the fact is that some 60 to 70 million people, workers and their families, were directly hit by unemployment in 1975. The labor movement knows all too well that unemployment is a burden on everyone, not just on those who suffer its effects directly. No employed person can be secure in his or her work knowing unemployed people are walking the streets looking to take their jobs. No possibility of real improvements in living standards for employed people is attainable unless there is work enough for all. At the same time the Federal Reserve Board reports that in the fourth quarter of 1975 29 percent of industrial capacity was unused. This idleness of plants and machinery represents a loss of $221 billion on an annual basis-or $1,000 for every man, woman and child in America. To continue this great cost of billions of lost Gross National Product and shattered personal lives is a tragic commentary on our nation. To gain further insight into the economic situation and trends we see, let me discuss for a moment the sector I know best. The apparel, textile and fibers industry is the nation's largest manufacturing employment complex. It provides jobs for over 2 million people. For this sector the "recession" has been of depression level dimensions. For example, employment in the men's and boy's suit and coat industry declined from a pre-recession high in April 1973 of 101,700 production workers to a low in July 1975 to 71,800, a decline of 29.4 percent. In the separate trousers industry, employment fell from 83,400 in April 1973 to a low of 65,900 in April 1975, a decline of 21 percent. In the shirt and nightwear industry, employment went from 111,300 in June 1973 to 92,900 in March 1975, a decline of 16.5 percent. In work clothes 84,500 were employed in March 1973, while only 63,900 were employed in March 1975, a drop of 24.4 percent. In addition, for those who did retain their jobs, the average weekly hours of work declined from 36.9 hours in December 1973 to 31.9 hours in April 1975, which is a 13.6 percent decrease in less than 18 months. The domestic recession has been primarily responsible for these depressing figures. But an additional force has contributed to them-that of clothing imports. The President has rightly pointed out the dangers to our economy of being dependent upon foreign supply sources, especially in energy. But he contradictorily pushes for a so-called freer, unrestrained trade policy that does similar economic and employment damage. While clothing manufacturers in the United States struggled through the difficulties of 1975, clothing imports enjoyed a boom year. The persistent growth of imports stands in sharp contrast to the declining domestic production as can be seen from the following tables: 1 Projection for 1975 U.S. production is based on a compilation of January-November, 1975 monthly cuttings reports for men's tailored clothing, obtained from the U.S. Department of Commerce. These figures show how imports have eroded employment in the clothing sector, and the pace is accelerating. The U.S. has tried to control this trend somewhat by negotiating a number of bilateral agreements under the terms of the Agreement Regarding International Trade in Textiles. Unless imports are restrained quickly and in a more effective manner, jobs in our sector and in many other manufacturing industries won't exist, irrespective of the prosperity of our domestic economy. While the import problem is becoming greater, there has been some improvement in employment and hours of work within the apparel industry. From the low points of Spring and Summer 1975, employment in men's and boys' suits and coats has increased 4.7 percent, shirt and nightwear employment 9.5 percent, work clothes employment 18.3 percent and trouser employment 13.6 percent. But these percentages are deceiving because they are figured from a lower base than pre-recession employment. Thus, for example, for the suit and coat industry, the percentage increase in employment has to be an additional 18 percent added to the moderate increase stated above to reach the employment level of April 1973. Still more is needed to cover the lost hours of work-of about 13 percent so that the total increase needed is 30 percent. Retailers are now placing their order for the Fall selling season. Reports thus far show a continuing reluctance to show confidence in improving sales and, in fact, inventories are being kept to a bare minimum. Yesterday's New York Times confirms most retailers are operating on smaller inventories and are limiting their array of merchandise to minimize risks. The psychology of caution and pessimism pervades very strongly. Thus it is imperative that the Congress recognize how fragile and unstable the so-called "recovery" is. The President's proposal and budgetary framework ducks responsibility for the nation's continuing economic problems, offers no proposal for solving them, and would worsen the economic situation in fiscal 1977. The President proposes a very definite shift to economic restraint, including a $29 billion cut in federal programs below this year's level of services, for the fiscal year beginning October 1, 1976 with spreading adverse impact-by the way-after the November elections. If the President's program were adopted, there would be cuts in federal programs, concentrated in employment, education, health care, income security and grants-in-aid to state and local governments. It will certainly result in rising unemployment during the latter part of 1977 and increase the possibility of a deeper recession. For seven years, the Nixon and Ford Administrations have given the nation the exact economic medicine once again being proposed by the President. The record is one of failure, recession, unemployment, inflation and high budget deficits. My differences with the Administration's economic policies can be enumerated at length. More constructive would be to outline the direction this Committee should report to the Congress and help seek its ultimate implementation. The AFL-CIO Executive Council just recently concluded its Mid-Winter meeting. At that meeting the Economic Policy Committee, of which I am a member, offered a series of recommendations to create jobs and generate greater income. The labor movement strongly urges the following actions: 1. The Congress should have overridden the President's veto of the accelerated public works bill which would create jobs and provide aid for those states and local governments, hard-pressed by unemployment. Perhaps it is not too late to introduce another such bill. 2. The Senate should join with the majority of the House to support an expanded public service employment program for the unemployed. 3. Congress must act to prevent a rise of withholding tax rates on paychecks-now scheduled for July 1, 1976. 4. The government's housing programs need to be fully implemented, with sufficient funds, to boost residential construction and prevent the further spread of today's housing shortage. 5. Congress must direct the Federal Reserve system to provide sufficient growth of the supply of money and credit at reasonable interest rates to promote rapid expansion of the economy and job opportunities. Lower interest rates are absolutely essential to revival of the depressed housing industry in particular and construction in general. Congress should also direct the Federal Reserve to allocate available credit for such high-priority purposes as housing, state and local government needs and business investment in essential plant and equipment, while curbing the flow of credit for land speculation, inventoryhousing and foreign subsidiaries. 6. Congress should increase the federal minimum wage to $3.00 an hour and provide an automatic escalator for the future. A minimum wage increase, along with a higher penalty for overtime work, would provide a needed boost in the purchasing power of the lowest-paid workers and generate new job opportunities. 7. Job programs especially designed for unemployed youth, minorities and women are essential. 8. America needs a comprehensive energy policy and program to rapidly reduce the nation's dependence on imported oil and to establish U.S. energy independence. 9. A new government agency, along the lines of the Reconstruction Finance Corporation, should be established to provide long-term, low-interest loans in the private sector, as well as to assist state and local governments. 10. Federal funds must be provided for the restoration of railroad track and roadbeds. 11. The outmoded unemployment insurance system badly needs basic improvements. 12. Major loopholes in the federal tax structure must be closed-to raise as much as $20 billion annually of additional federal revenue and to take a giant step towards achieving tax justice. Many of these actions will serve the immediate need. But in the long run a more comprehensive and permanent system must be established to prevent our continuing to operate from crisis to crisis. As the President noted, "Inflation and unemployment are not opposites but are related symptoms of an unhealthy economy." We need a program to achieve a stable, full employment economy with balanced growth, clearly set forth goals, and responsibilities to implement them. Such a measure is the soon-to-be introduced Full Employment and Balanced Growth Act of 1976. Senator Humphrey, Senator Javits, Representative Hawkins and Representative Reuss are to be commended for their initiative and creativity in sponsoring this legislation. This proposed legislaton would be the approach I advocate in solving our major economic problems. At long last, we must attain universal recognition that a person is entitled to a job at a decent wage as a matter of right, and the total community must assume this responsibility and must guarantee its fulfillment. A statement issued by the Catholic bishops of the United States 45 years ago said it best: "This unemployment returning again to plague us after so many repetitions during the century past is a sign of deep failure in our country. Unemployment is the great peacetime tragedy of the nineteenth and twentieth centuries and both in its cause and in the imprint it leaves on those who inflict it, those who permit it. and those who are its victims, it is one of the great moral tragedies of our time." (The Bishops of the United States, Unemployment 1930, as quoted in Statement of the Catholic Bishops of the United States, United States Catholic Conference, Washington, D.C., November 20, 1975). Chairman HUMPHREY. We will proceed next with Mr. Robert Georgine, and after the two of you have completed your testmiony, we will take the opportunity to ask questions. Senator JAVITS. I am going to have to go, Mr. Georgine. I will have to leave shortly. You know why. This is a workmen's compensation bill that we have hearings on in the Labor Committee, and I am the ranking minority member. Chairman HUMPHREY. Would you like to ask him questions now? Senator JAVITS. No; fine. Just go right ahead. And we will ask you what we want to about housing, Mr. Georgine, in writing. I thank Murray Finley so much for his testimony. And I will join with Senator Humphrey and Representative Hawkins. Senator Humphrey and Representative Hawkins and I are working very closely together on this bill. Chairman HUMPHREY. Thank you very much. STATEMENT OF ROBERT A. GEORGINE, PRESIDENT, BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AFL-CIO, ACCOMPANIED BY VICTOR KAMBER, DIRECTOR OF RESEARCH Mr. GEORGINE. Thank you, Mr. Chairman. It is an honor to be here this morning to appear before you and Senator Javits and Senator Taft, and it is good to be with my teammate, Murray Finley. With your permission, I would like to submit for the record a detailed statement on the "Profile of the Construction Industry in America in 1976." Chairman HUMPHREY. Surely. We appreciate having it. It will be included in the record. [The "Profile of the Construction Industry in America in 1976" follows:] PROFILE OF THE CONSTRUCTION INDUSTRY IN AMERICA IN 1976 THE ECONOMY-1976 The recession which began in 1973, the deepest and most prolonged since the 1930's, has resulted in the highest unemployment of the post-World War II period and an economy that is weak and vulnerable to the adverse effects of events both at home and abroad. The Administration's focus on the size of the federal budget deficit, rather than on creating employment and stimulating the economy, has produced a long series of presidential vetoes of urgently-needed measures to create jobs. In the first half of 1975, Presidential vetoes cost the American worker an estimated 638,500 jobs. As a result of Administration negativism, the public's confidence in the economy remains low. Consequently consumer buying power is still below the level required to bring real per capita after-tax income back to where it was two years ago, before the recession started. The vast number of unemployed and under-employed workers has been accompanied by idle plants and machines. Industry is operating only about twothirds of its productive capacity. Under these conditions, the real volume of business investment in plant and equipment, which started to decline after mid1974, has fallen about 10 percent in 1975. Home-building remains in a depression, under the impact of continuing high interest rates. The Administration's 1976 budget predicts a continuation of high joblessness through the remainder of the decade. Unemployment, under the President's budget, will average 7.7 during 1976 and decline to the unacceptably high rate of 5.6 by 1980. These predictions are a clear abandonment of our nation's commitment to full employment. They, more than any other fact or argument, demonstrate the need for a bold fiscal policy. Yet the President has managed to produce a budget which will create neither private nor public jobs and which, by his own forecast, will not reduce inflation in 1977. Instead of a comprehensive national manpower program to confront the employment crisis head on, the President proposes nothing but retrenchment and retreat in this crucial area. Faced with a long period of recession level unemployment, one would have hoped to see adequate provision in the budget for unemployment compensation and job creating programs. Yet these are the areas that this administration has chosen to cut most severely. More than 450,000 unemployed workers will lose unemployment insurance benefits in 1977. Of this number 110,000 will be Building Tradesmen. The Social Security and Unemployment Insurance tax increase proposed by the President would discourage employment growth and be inflationary. Both proposals increase costs to employers and make it more expensive to hire new workers. These proposed tax increases would eat up more than half of the new income tax cuts. |