LOW-INCOME FAMILIES WEDNESDAY, DECEMBER 14, 1949 CONGRESS OF THE UNITED STATES, Washington, D. C. The subcommittee met, pursuant to adjournment, at 10 a. m., in room 224, Senate Office Building, Senator John Sparkman (chairman) presiding. Present: Senators Sparkman and Flanders, and Representatives Huber, Buchanan, and Rich. Also present: Grover W. Ensley, associate staff director, Joint Committee on the Economic Report; Samuel L. Brown, economist, Subcommittee on Low-Income Families; and Mrs. Elizabeth G. Magill, research assistant, Subcommittee on Low-Income Families. Senator SPARKMAN. Let the committee come to order. We are glad to have Congressman Buchanan, a member of this subcommittee, with us this morning. We have with us this morning Mr. Raymond M. Foley, Administrator of the Housing and Home Finance Agency, and Mr. John T. Egan, Commissioner of the Public Housing Administration. I understand Mr. Foley has a relatively brief statement to present, and then Mr. Egan will go into more detail. Mr. Foley, you may proceed in your own way. STATEMENT OF RAYMOND M. FOLEY, ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, ACCOMPANIED BY E. EVERETT ASHLEY, ECONOMIST Mr. FOLEY. Thank you, Senator. If you do not mind, I will read this statement. I might suggest that in general if the questions are withheld until Mr. Egan has presented the rest of the picture it will save time. I am happy to have this opportunity to appear before this committee as it continues its explorations into the problem of low-income families and the steps which might be taken to improve their economic circumstances. It is my understanding that your committee is particularly anxious at this stage in its investigation to get a better understanding of low-income families from people who have had day-to-day contacts with such families in terms of who they are, what they do, and how and where they live. Consequently, I shall keep my remarks brief in order that the greater share of the allotted time may be devoted by Commissioner Egan to bringing you a picture of what we know about low-income families on the basis of the PHA's experience gained in administering a low-rent housing program. The economic plight of families of low income has long been a matter of grave concern to those of us in the housing field, since in the main low incomes and bad housing tend to go hand in hand. A supply of adequate housing sufficient to meet the needs of all families, poor and rich alike, is essential to a sound and stable democracy. The character of the home is a major factor in determining the character of family life, the conditions under which children grow up and assume the obligations of citizenship, and the general attitudes of people toward their community and their Government. As the members of this committee well know, consideration of the appropriate Federal aids for carrying out a broad-gage attack upon this housing problem has been an important issue before the country and before the Congress for the past 5 years. During that time my predecessors in office and myself have been privileged many times to appear before committees of the Congress which were studying the problem to present our recommendations for a course of legislative action which in our opinion could lead to the ultimate resolution of our housing problem. Out of these years of debate and study has come the Housing Act of 1949. In my judgment this Housing Act of 1949 represents a major milestone in housing history. With the resources which it makes available it should be possible to make significant strides toward the solution of the housing problem especially as it relates to families of low income. This is not to say, of course, that there are not aspects of the problem which can only be covered by additional legislation. In due course I expect to come before the appropriate committees of the Congress with specific recommendations for legislative proposals to round out the program of Federal aids in the field of housing. The purpose of the Housing Act of 1949, as stated in the declaration of national housing policy, is to seek the realization as soon as feasible of the goal of a decent home and a suitable living environment for every American family * ** * To accomplish this end, it was only natural therefore that the major emphasis is placed upon meeting the needs of low- and moderateincome families. It is in this area that the need is most acute and where the task of meeting it is most challenging. Hence it is that the major provisions of the bill are directed toward an entirely new program of Federal aid for slum clearance and urban redevelopment; toward a public-housing program of 810,000 units for low-income families; toward an entirely new broad research authority the objective of which is to lower the cost of housing without sacrificing sound standards of design, livability, and size for adequate family life; and toward a new program of housing aids to low-income farm families. I should like to discuss briefly with you my understanding of the declaration of national housing policy especially as it relates to families of low incomes, and may I hasten to say that when I refer to families of low income I refer to all those families whose incomes will not support a decent standard of living in the community in which they live and not merely to those whose incomes fall below some arbitrary dollar figure. As I read it, the declaration of national housing policy says very plainly that decent housing is of— such importance in modern life that its adequacy or inadequacy is a matter of national.concern and cannot be ignored by the Government. It says further that our goal is a decent home in a suitable environment for every American family regardless of race, creed, or economic status and that the major responsibility for reaching this goal rests with private enterprise. It says that the major task of Government is to encourage and assist private enterprise in broadening the sphere of its effectiveness and that public aid will be extended only in those areas of need where private enterprise is unable to provide decent housing. It further states-and to me this is very basic-that, underlying this entire policy is the purpose of contributing to a more stable and more prosperous economy with greater opportunity for all. In other words, the efforts to salvage the human values that are wasted and undermined as a result of inadequate housing must not be divorced from measures to strengthen our economy generally and to raise the standards of living of our people. There are people who, probably in all sincerity, have maintained and still maintain that providing housing for families of low income is merely another form of charity and should be treated as such. I cannot subscribe to such a point of view either as an individual or as the Administrator of the Housing and Home Finance Agency attempting to carry out the intent of the Congress as set forth in the declaration of national housing policy. To treat low-income families essentially as relief clients would ignore completely the importance of using the Government's housing aids, not merely as palliatives for the problems incident to low incomes, but rather as major levers for improving the general economic well-being of the Nation, thereby making a frontal attack on poverty. There is evidence that the opportunity of obtaining decent quarters at rents within their ability to pay can be an important factor in the physical and mental well-being of the breadwinner in low-income families which in turn is reflected in improved earnings. Public housing can and does, therefore, play an important role not only in the housing but also the economic rehabilitiation of families of low income. Public housing should serve as a reservoir of housing accommodations to care for an ever-changing group of families who cannot otherwise be adequately housed. As their incomes improve there should be a constant outflow of families who have been helped by public housing to become potential owners and renters of privately produced shelter. As I visualize the place of public housing in the over-all program, however, it is only a part of the solution to the problem. A major share of the job of housing low- and moderate-income families must be assumed by private enterprise. As we are able to attain a high and stabilized level of home building with the aids provided by the Housing Act of 1949, the benefits should be reflected all the way across the board. In the past the volume of housing production has fluctuated more violently than any other major segment of economic activity. This instability of housing has contributed significantly to the instability of the economy as a whole which in turn has surely been an important factor contributing to the low level of incomes of many of our American families. A high and stable volume of new home production would be a powerful factor in helping to stabilize the general economy. It would play an important part in enabling private home builders to make significant strides toward providing decent housing for more and more American families at costs commensurate with their incomes. Equally important, it would mean more and better job opportunities and more stable employment, which in turn should tend to produce an increase in earnings and a decrease in the number of families with insufficient incomes. The extent to which private enterprise succeeds in gearing its production to the needs of American families lower and lower on the income scale, the speed with which this objective is attained, and the degree to which the general level of family incomes are raised in the process will in large measure determine the ultimate size of the public low-rent housing program which will be required. On the basis of the facts we have available today it would be as unwarranted to conclude that public assistance will be required to house all of the 10,000,000 families with incomes of less than $2,000 as it would be to conclude that all the 2.3 million families with incomes of less than $2,000 who own their own homes are adequately housed and need no further assistance. It is an all-too-common fallacy to believe that home ownership is, in and of itself, an infallible measure of economic security. There can be no denying the fact that among those low-income families who hold title to their own homes there are some to whom home ownership is a boon and who as a result enjoy a degree of economic security far in excess of what their income status would otherwise suggest. On the other hand, there are those for whom the costs involved are an added millstone around their necks. Still others so listed live in homes that are mere shacks or such miserable hovels as scarcely to warrant being considered as houses. This problem of home ownership among low-income families is just one of the many factors which must be carefully studied in arriving at an appraisal of the ultimate magnitude of the problem and its solution. It is important to bear in mind, however, that there can be no final word on the size of the problem or its most effective solution. The housing situation is a dynamic, ever-changing one which calls for a continuing reassessment both of the magnitude and character of the problem and of our available resources for solving it. The Congress recognized that fact when it included as one of the major facets of the research provisions of the Housing Act of 1949 the requirement that the Administrator shall: Prepare and submit to the President and to the Congress, estimates of national urban and rural nonfarm housing needs and reports with respect to the progress being made toward meeting such needs and correlate and recommend proposals for such Executive action or legislation as may be necessary or desirable for furtherance of the national housing objective. * * * In carrying out these responsibilities it will be necessary to take into account changes in the underlying economic situation and in the character and functioning of the housing industry in all its ramification. It will also be necessary to develop a comprehensive understanding of the interplay of economic and social forces which affect the number, the character, and the needs of families of low and moderate incomes. In this connection, we are hopeful that the deliberation of this committee and its staff will uncover much which will broaden our understanding of the problem of families at the lower end of the economic scale. If I have made the job ahead seem formidable and in some respects ill-defined, I have not in any way understated the case. It is a very real challenge and one in which we must not fail. As a nation, we can no longer afford to deny families of low income their aspirations for decent homes and a better way of life. Starting with the means provided in the Housing Act of 1949 and augmenting them with other necessary aids, I am confident that we can achieve not only our goal of a decent home in a suitable environment for every American family but that we can in addition make a significant contribution toward improving the economic well-being of the Nation, and especially of those families at the lower end of the income scale. Thank you, Mr. Chairman. Mr. Egan, as I indicated, has a much more detailed discussion of the situation as it relates to the particular subject you are pursuing. If you please, I am sure Mr. Egan is prepared to go ahead. Senator SPARKMAN. Go right ahead, Mr. Egan, as you wish. STATEMENT OF JOHN TAYLOR EGAN, COMMISSIONER, PUBLIC HOUSING ADMINISTRATION, ACCOMPANIED BY LAWRENCE BLOOMBERG, CHIEF ECONOMIST, PUBLIC HOUSING ADMINISTRATION Mr. EGAN. Thank you, Mr. Chairman. May I complete my statement before answering questions? Senator SPARKMAN. If you wish. Mr. EGAN. Thank you. An inquiry into the nature and characteristics of low-income families is directed at one of the most serious economic and social problems in our national life. We appreciate the opportunity to appear before you and to give what aid we can in your search for solutions to this problem which so deeply concerns all of us. As we understand the purpose for which we have been called, it is not so much to discuss. the public-housing program as it is to give you information about some of our experiences with low-income families. We think that we may best contribute to your study by testimony on the actual incomes and the types of families who are tenants in public-housing projects. It is also possible, in some measure, to throw light on why these are low-income families through examples of their characteristics and the occupations of wage earners. Finally, we should like to discuss the contribution which public housing has made in aiding these families to raise their economic status. As the committee knows, the public-housing program is a local undertaking, with the Federal Government giving assistance through loans and annual contributions. The actual contact with low-income families, therefore, is by the various local housing authorities throughout the country. The few over-all statistics which I shall use are based upon periodic administrative reports made to us by local authorities. In order to obtain case studies, upon which our presentation is largely based, it has been necessary to send staff members out into |