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Mr. Bow. I hope we will not follow Area Redevelopment too closely on this. How are you going to spend that $50,000? What are you going to do with it?

Mr. WILLIAMS. Presumably we will make a contract
Mr. Bow. A former employee?

Mr. WILLIAMS. No, sir; I do not think so.
done with a university's economic experts.
Mr. Bow. Do you have any idea who you

works contract of $50,000 to?

Mr. WILLIAMS. No, sir.

Those will probably be

would give this public

Mr. Bow. Let us break down this $725,000. You have two of them now in public works of $50,000 each; is that right?

Mr. WILLIAMS. That is correct.

Mr. Bow. What is the rest of it?

Mr. WILLIAMS. Another problem would be Davis-Bacon data analysis. As you know, the method of estimating employment under the old Accelerated Public Works Act came under severe criticism from the General Accounting Office. One of the bases for those criticisms was the fact that the records kept by the contractors to support their compliance with the Davis-Bacon Act were inadequate. So we intend to at least consider a project to see if we can't improve the analysis of Davis-Bacon data to give us more accurate figures.

Mr. Bow. How much are you going to spend on that?

Mr. WILLIAMS. We estimate $150,000.

Mr. Bow. Didn't the General Accounting Office give you some idea how that could be done?

Mr. WILLIAMS. No, sir; they did not.

Mr. Bow. Who would you put that contract out to?

Mr. WILLIAMS. Most of these contracts will be done by university

researchers.

Mr. Bow. It is going to cost $150,000 to determine how somebody should keep records on Davis-Bacon.

Mr. WILLIAMS. No, sir.

Mr. Bow. Then what is it?

Mr. WILLIAMS. That $150,000 is to determine what those records mean by way of employment. In any statistical project when you try to figure out what raw data means, you have to go behind the raw data and do enough extension of it in terms of going and finding out what it actually does mean in order to be able to give you guidelines for drawing inferences from what is apparent. This would involve the use of a great many researchers to go out and actually see how many people were actually on the job and compare that to what the DavisBacon record showed. We may use Bureau of Census people. We may use Bureau of Labor Statistics people to do it.

Mr. Bow. That gives you $250,000.

Mr. WILLIAMS. You can see that there would be two projects at $50,000 in the commercial and industrial loan field.

Mr. Bow. What would be the purpose of that study?

Mr. WILLIAMS. That would be similar to the ones mentioned above on public works.

The two on public works would estimate the direct and indirect new jobs resulting from public works, and this would estimate the direct and indirect new jobs resulting from commercial and industrial loans. Mr. Bow. Would that also be made by some university?

Mr. WILLIAMS. Yes, almost certainly.

Mr. Bow. Then you have one for technical assistance, $159,000. What is the purpose of that?

Mr. WILLIAMS. That would be to estimate the direct and indirect new jobs resulting from technical assistance projects. That would be a much more complicated type of research because the effects of a technical assistance project are more long range than those of a commercial industrial loan.

Mr. Bow. I wonder if we could put these in the record to save time, Mr. Chairman.

OVERALL RESEARCH PROGRAM

Mr. ROONEY. Yes, we shall insert these four pages.
(The information follows:)

Types of projects within the overall research program
1. Develop program impact yardsticks for project selection_____
A. Measurement of direct and indirect new jobs resulting from
EDA financed projects (committee request):

1. Public works, 2 projects at $50,000.

(a) Davis-Bacon data analysis (from Govern-
ment-supported projects), $150,000.

2. Commercial and industrial loan, 2 projects, at $50,000.
3. Technical assistance, 1 project, $150,000.

B. Determination of tax savings due to new job development
(committee request), 2 projects, at $75,000.

C. Measurement of effect of development programs on GNP
(committee request), $75,000.

2. Improvement of designation system and improve measurement of
relative area change_-

A. County income series and adjustments for area economic dif-
ferences (IRS-Census), $125,000.

B. Small area unemployment data and breakouts for parts of
areas (Department of Labor), $400,000.

C. Special tabulations (Census) and other data development
for recovering region gains and losses, $125,000.

3. Program evaluation:

A. Causes and effects of current unemployment in redevelop-
ment areas:

1. Continuation of labor mobility research, 1 project,
$100,000.

2. Availability of capital, 2 projects, at $100,000.

3. Early-warning indicators, 2 projects, at $50,000.

B. Description of successful development techniques:
1. Overseas evaluation, 1 projects, $50,000.

2. Successful community and manpower programs,
2 projects, at $50,000.

3. Private development programs description, 1 proj-
ect, $50,000.

C. Definition of growth pattern:

1. Evaluation of effect of district development programs
on district employment and migration, 1 project,
$75,000.

D. Effectiveness of Community Development Organization:
1. Technical assistance, 1 project, $100,000.

2. Voluntary programs, 1 project, $75,000.

3. State and other programs, 1 project, $50,000. 4. Training development personnel (development institute) _

5. Publication of technical material...

Technical guides, bookshelf of "how-to-do it" publications for
local communities, statistical printouts, research study pub-
lication.

$725,000

650,000

400,000 175,000

Mr. Bow. This is the $725,000. Then there is one for $650,000. We Should have this breakdown on all of them, and Mr. Chairman, if it could be done to save time, before they come before the committee tomorrow, that they could have a brief statement on each one of these, how they expect to deal with them and what the purpose is.

Mr. ROONEY. That might be a good idea, as well as an indication why Small Business Administration would not be presently and fully aware of the situation of the commercial and industrial loans for which they want to spend $100,000 on research.

Mr. Bow. I have some further questions, Mr. Chairman, but I will yield to my colleagues and take this up tomorrow. (The information requested follows:)

JUSTIFICATION FOR THE ESTIMATE OF THE OVERALL RESEARCH PROGRAM

1. DEVELOP PROGRAM IMPACT YARDSTICKS FOR PROJECT SELECTION

A. Measurement of direct and indirect jobs resulting from EDA-financed projects 1. Job impact of public works projects.—It is difficult to measure the precise job impact of a public works project in a local area because we have so little information on how such projects affect the investment or expansion plans of businesses. Therefore, we expect to commit about $100,000 either with private research firms or university researchers to follow through on projects we have approved and which have been completed, to attempt to develop a method for determining the job impact of these projects.

a. Davis-Bacon data analysis. In addition to jobs in private industry resulting from public works projects, many jobs are developed directly on the site or in the supply of materials for the project. We estimate that it may take about $150,000, using other Government agencies, private research firms or university researchers to analyze the various data available on construction projects such as the Davis-Bacon wage records to secure satisfactory estimates of this job impact.

2. Commercial and industrial loan job impact.-Determination of the job creation of commercial and industrial loans has always been imprecise and has led to disputes between the GAO and the former ARA. We should try to determine how jobs are related to the actual number of people employed in a new or expanding facility. An attempt should be made to determine how many such jobs are "new." This could take the form of two projects of $50,000 each, using either private research firms or university researchers. It would not be possible for SBA to furnish this information because SBA's employment records would only relate to the number of people who are actually employed on the job, and SBA would not be able to investigate the related jobs in firms which supply materials or services to the assisted facility.

3. Technical assistance job impact.-Since we are proposing a large expansion in the use of technical assistance funds, it is important to try to evaluate the job impact of such expenditures so that we can be sure that funds are being used to the greatest possible effect under the act. We propose to use either private research firms or university researchers.

B. Determination of tax savings due to new job development

Most members of the public believe that the investment of funds under programs of this type involve a net expenditure of tax dollars. They do not take into account increased tax receipts resulting from taxes paid by the businesses assisted under the program and savings in welfare payments to people who become fully employed as a result of it. It is important that Congress have more precise information on the net tax result, including savings on welfare costs. Private research firms or university researchers will be used on these projects.

C. Measurement of effect of development programs on gross national product (GNP)

There is some controversy over whether development programs of the type contained in the new act increases the gross national product. Some maintai that programs of this type have no favorable impact on GNP. Others maintain that there is a favorable impact. It is hoped that some estimate of the effect

on GNP could be obtained by a properly designed project either with a private research firm or a university researcher. This is a major problem of economi interest to the Council of Economic Advisers.

2. IMPROVEMENT OF DESIGNATION SYSTEM AND IMPROVE MEASUREMENT OF RELATIVE AREA CHANGE

A. Measurement of changes in county income

The income figures on which designations are based are available only in 10-year intervals, and it is vitally necessary that we develop a system for measuring changes in county income on a more frequent basis. We are DT working with the Internal Revenue Service and the Bureau of the Census and propose to use additional staff researchers to attain this objective.

B. Refinement of labor area data

Many municipalities and/or counties which are part of existing labor areas believe that their need for economic help is not adequately described in the existing labor area data. It is proposed that the Department of Labor devote considerable study and research into the development of ways by which it might be possible, to measure accurately, the degree of economic distress in parts of a labor area.

C. Development of other data useful for designation

Many interested parties have expressed concern that the present unemploy ment data as provided by the Department of Labor do not adequately reflect economic distress. It is proposed that the staff researchers and the Bureau of Census work on securing special tabulations from census data to enable a differentiation between regions and areas using data other than unemployment and income, such as changes in manufacturing industries, diversification, and so forth.

3. PROGRAM EVALUATION

A. Causes and effects of current unemployment in redevelopment areas

1. Labor mobility research.—One of the principal causes of heavy unemploy ment in some areas and the lack of heavy unemployment in other areas is the fact that in some places, people leave to seek jobs and in other areas, they stay. If we knew more about this phenomenon, we could develop better programs for alleviating economic distress. Projects already underway with university researchers would be continued.

2. Availability of capital.-One of the basic deficiencies faced by redevelopment areas is the lack of capital to finance economic development projects in these areas. We need to attempt to understand how capital becomes available for economic development through private and public channels, and propose to continue and possibly expand the initial studies presently underway in this field with the university researchers.

3. Early-warning indicators.-The best way to help areas of economic distress may well be to learn how to forecast impending trouble and take adequate measures before the trouble gets too severe. Community leaders can follow such indicators and take effective steps to prevent economic distress before it takes hold. It is expected that projects will be developed either with private research firms or university researchers, Census Bureau or with certain State agencies doing work in this field.

B. Description of successful development techniques

1. Evaluation of successful overseas development techniques.-The European countries have had considerably more experience in economic development assisted by Government programs. An evaluation of European programs has already been completed. This information has been very helpful in developing new techniques in this country. This roundup needs to be amplified now by a study and evaluation of programs in additional countries such as Canada, Japan, and Australia.

2. Successful community and manpower programs. It is always essential to learn from experience and to make available the experience of successful and unsuccessful local programs in the United States to those who are working on similar programs in other areas. It is expected that it will be possible to contract with private research firms or university departments and make the analysis available to other private and public development groups.

3. Private development programs description.-Many successful development programs have been supported and organized by banks, utilities, railroads, and other private groups. We need to analyze the ingredients of their experience through contracts with private firms or university departments and make the results available to all interested private and public development groups.

C. Definition of growth pattern

1. Evaluation of district development.-A new feature of the act is the encouragement of counties to work together in multicounty district programs which are broader than the traditional local program. There are a few such programs already in existence and it is essential that we analyze the experience of the existing multicounty programs so that we can learn from what has been done so far and make the experience available to the many new multicounty groups which will be forming under the impetus of the new act. A combination of private and Government researchers will be used for this study.

D. Effectiveness of community development organization

1. Effectiveness of technical assistance in helping organize community development programs.-Many communities seek assistance from the Federal Government for the expenditure of technical assistance funds to help them organize their economic development programs. Under the new act they will be authorized to receive grants-in-aid for local development staffs. Since this will involve the expenditure of a great deal of Federal funds it is essential that an immediate beginning be made on evaluating the effectiveness of such expeditures so that we can be reasonably sure that, in terms of the purposes of the act, we will get the most for our money. The research is to be undertaken with private and institutional researchers under contract.

2. Use of voluntary organizations in community development programs.Many local economic development organizations know very little about how to mobilize the resources of local voluntary organizations behind economic development community efforts. Either community researchers or staff personnel will be used to evaluate effective methods for using voluntary programs in cooperative economic development efforts at the local level.

3. Information on State and other programs. Many Governors and other State officials look to the Federal Government for information about State development programs. It is important to keep up to date on how these programs are being organized, which ones are considered most effective, and latest changes in organization of State programs. It is expected that staff will be assigned

to this function.

4. Training of development personnel.-There is a shortage of people who are trained and experienced in economic development work. It is planned that there will be established an economic development institute to which community development employees, graduate students, economic developers, and those in related fields seeking to enter the economic development field might come for formal instruction. It is essential that this type of instruction be made available so that personnel can be found to provide the staff for the expanding economic development organizations at the local, district, State, and regional levels.

5. Publication of technical material.—It is important that the fruits of planned research described above be made widely available for use in the thousands of local and area organizations now working on economic development problems. Mr. LIPSCOMB. Mr. Chairman, may I ask a question on this $2,850,000?

Mr. ROONEY. Certainly, Mr. Lipscomb.

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