B. FAMILIES ADMITTED IN 1944

Under $500.

$500-$999..

$1,000-$1,499.

$1,500-$1,999.

$2,000-$2,499.

$2,500-$2,999.

$3,000-$3,499.

$3,500-$3,999.

$4,000-$4,499.

$4,500-$4,999.

$5,000 and over.

Median income.

1 Estimated total number; distribution based on information concerning income at admission reported at time of 1944 reexamination.

? Eligibility for this accepted as reported without checking and some families reported as eligible should undoubtedly be ineligible. Also some projects in war use did not have maximum income limits set for eligible continued occupancy.

AFTERNOON SESSION

Senator SPARKMAN. The committee will please come to order. This is Dr. Caroline F. Ware. She has a prepared statement. Dr. Ware, if you will proceed in your own way, I will ask Congressman Huber to preside while I am necessarily absent for a few minutes.

STATEMENT OF DR. CAROLINE F. WARE

Dr. WARE. I am Caroline Ware, a professor at the Howard University School of Social Work. I notice on the hearing notice that I was listed in connection with the Consumer Clearing House.

I want to make it clear that I was asked to come here as an individual and I am speaking as an individual and not for any organization. Mr. RICH. You are with Howard University?

Dr. WARE. I am a professor at the Howard University School of Social Work; yes. I am also connected with the Consumer Clearing House, but I am not speaking for anybody except myself.

Mr. HUBER. Dr. Ware, before you start, inasmuch as you do have a connection, tell us just in a few words what the Consumer Clearing House is.

Dr. WARE. It is a very informal clearing house, as the name implies, of national organizations which have consumer programs. It is a means by which national organizations exchange information, secure information, and plan together around problems relating to

consumers.

Mr. HUBER. Proceed, please.

Dr. WARE. I have been asked to discuss the low-income problem from the point of view of its importance to the national economy. This is a very large subject which I could not possibly discuss in detail this afternoon. I can only attempt to sketch in the broad outlines, raise certain questions, and indicate some of the directions in which answers may be sought. I will try to consider, first, the factors in the economy which produce the low-income problem; secondly, the impact on the economy of the existence of low-income families; and, lastly, the vicious circle which makes the situation of some low-income families selfperpetuating.

1. FACTORS IN THE ECONOMY WHICH PRODUCE THE LOW-INCOME PROBLEM

The low-income problem is first and foremost a question of the general level of the real national income and the general level of employment. It is, secondarily, a question of the distribution of the national income: i. e., the share reaching the lowest segment.

In every economy there is, of course, a lowest fifth. The problem is not its existence, but how low its income is. In 1933, when our per capita real national income was less than half what it is today, the lowest fifth was receiving a very much lower real income than at present. The $2,000 income for urban families which constitutes the present top of the lowest fifth, if cut in half to allow for doubling of the cost of living, would be close to the average for all families in 1933. The low-income problem is conditioned by the over-all level of national production; i. e., by how much there is to go around and by the closely related fact of full, or less than full, employment.

I wish to emphasize this point because the committee's document, Materials on the Problem of Low-Income Families, appears to overlook the general level of economic activity and employment in discussing specific problems and measures directed to specific ends. The study points to low-income farm families, but fails to remind us that in the great depression of the 1930's a very large proportion of the entire farm population was pressed down to ruinous poverty. It cites the problem of impoverished old age, but fails to note that the general level of economic activity determines whether there are jobs for older people, or whether "old age" begins at 40 on the labor scrap heap.

The committee's study mentions "the unskilled and the semiskilled service workers, laborers and operatives" who constitute the "hard core" of the urban low-income group, and it suggests increase in productivity, the opportunity to learn skilled trades, and compensation for weak bargaining positions as possible remedies. It fails to note that whether unskilled and semiskilled workers are receiving adequate or inadequate incomes is chiefly a matter of whether their labor is in demand because of high-level employment. We have seen domestic service, for instance, cease to be an occupation paying very substandard wages since the labor of domestic workers is no longer a drug on the market under conditions of full employment and high-level production.

The committee's study also mentions the large proportion of lowincome families who are nonwhite and points to lack of equal educational and vocational opportunities; i. e., to discrimination. But it fails to note that the periods when new vocational opportunities have opened up for Negroes have been periods of economic expansion and full employment. It was, basically, the demand for workers in 1918, and again during World War II, that brought Negroes into new jobs and industries from which they had been barred. While the FEPC and wartime emergency training programs contributed to the great enlargement of economic opportunity during World War II, it was the desperate need for workers that led employer after employer to lower traditional barriers, and which enabled college-trained Ñegroes, who had been forced to work as janitors and elevator operators in the economically slack years before the war, to function at the level of their training.

The same applies to disabled or handicapped persons, whom the report also notes as constituting a substantial segment of the lowincome population. If jobs are scarce, the able individual has a strong competitive advantage over the handicapped. But if workers are needed, it becomes worth while for industry to use the less able and even to make adjustments in work arrangements which permit their use, adjustments which were frequently made during the war.

Women, too, who head a substantial portion of the low-income families, are marginal workers, often to be classed along with Negroes and the handicapped as last hired and first fired, and often subject, like them, to a wage differential reflecting not lower production but a less favorable employment status. Under wartime conditions of labor shortage, we have seen hiring practices change and wage differentials disappear. In these conditions, we even found employers overcoming, perforce, their aversion to part-time workers in order to utilize the labor of women prevented by family burdens from working full time.

The committee's study lays great stress on the relatively low educational level of low-income family heads, and looks to broadening educational opportunities as "a most promising long-range attack on the low-income problem." But let us not forget the doctors of philosophy and the engineers who depended on relief, and worked on WPA in the 1930's and were not protected by their education from sharing the common lot when depression struck.

In short, we have, in the record of the depressed 1930's and the wartime demand of the 1940's clear evidence that the low-income problem is first and foremost a reflection of the level of the whole economy. In the absence of a high national income and full employment, no specific measure addressed to the needs of any low-income group can be anything but a palliative, mitigating extremes of hardship but in no way solving the problem. Every problem which the committee's study notes is intensified by low economic activity. And there is scarcely any low-income problem for which full employment does not provide at least half of the solution.

The first step in dealing with the low-income problem must, therefore, lie in measures to secure and maintain full employment in an expanding economy, that is, to carry out the mandate of the Employment Act of 1946. This involves policies to which other subcommittees of this committee are giving attention-fiscal and monetary policy, and policies relating to monopoly, investment, and price-wage-profit relationships. At the same time, we need to recognize that if we should fail to maintain full employment we would require strong measures, such as public works and unemployment relief, which would not be part of the techniques for dealing with low-income problems under conditions of full employment.

Let us, therefore, assume full employment, and then ask what our economy can currently afford to its lowest fifth. According to the data in the committee's study and the reports of the Council of Economic Advisers, our national economy is currently yielding an average income to families and single persons of $4,235 per year before deducting taxes. The prospect for the future, provided full employment is maintained, is an increase in real national income approaching 3 percent per year. By 1960, we could look to an average family income about a third larger, or in the vicinity of $5,600 before taxes, assuming the present value of the dollar, and taking account of population growth, as well as improvements in productivity.

The present average of $4,235 is nearly a third more than the amount estimated for the city worker's family budget for a family of four prepared by the Department of Labor in 1947. That is the budget which the Secretary of Labor discussed with you.

While such an average cannot provide a guide to the income level which it would be feasible to secure for the lowest fifth in the near future, it does indicate that substandard living for a segment of the population is not a necessary condition. We can afford to maintain our entire population above the poverty level. Our economy is already so productive that we can enjoy what you might call the luxury of assuring that nobody shall suffer from economic want.

What this potentiality means for the lowest fifth depends, of course, on the proportion of the total going to that segment. For a high national income does not necessarily mean that all share in the Nation's