Senator MURRAY. The Government has invested something in the neighborhood of $15,000,000,000 in war plants. Have you got any separate figures regarding the number of workers employed in those Government-owned and privately operated plants?

Mr. HINRICHS. Yes. Those Government-owned and privately operated plants represent a total investment of about $8,000,000,000 of the $15,000,000,000 that you indicated. Four hundred such establishments scattered all over the country at present employ slightly more than 2,000,000 people.

Senator MURRAY. There will be a very difficult problem there of continuing the operation of those plants in the post-war period. Have you any idea with reference to the possibility of the utilization of those war plants for civilian production?

Mr. HINRICHS. I am sorry, I cannot speak as an expert on the subject. I would call attention to the fact that among those plants that are Government owned and Government operated, or Government owned and privately operated, the end product is ordinarily a product with special wartime uses. The privately financed expansion has been in those areas where there is an expectation of normal peacetime activities, but aircraft, ships, and ordnance items take a very high proportion of the funds.invested.

(Chart VII, referred to by witness, appears on p. 54.)

The limitations on the operations of those plants are two. In some instances, the technical equipment of the plant is such that ia cannot be used for anything else. I am not sure that a powder plant can be used for anything except the manufacture of powder.

In other instances, it is a limitation on the volume of work to be done in a specialized industry as, for example, shipbuilding, where there has been an increase in employment from less than 100,000 at the outbreak of the war, to 134 million at the present time.

Senator MURRAY. Do you wish to ask any questions?

Mr. GROSS. Mr. Hinrichs, in making any estimates of the probable amount of unemployment after the war, many assumptions have to be considered, the rate of demobilization of soldiers from the armed forces, the extent to which women and under-age and over-age workers stay in the labor market, and so forth.

Suppose we assume that the war in Europe should stretch out somewhat longer than we expect and the war in Asia should end sooner, so there would be an entire end of the entire war and no substantial demobilizations between the two phases.

Assume also that the boys overseas will be brought home as rapidly as ships and planes could bring them home.

Let's assume that a substantial portion of the older people and younger people and women who have entered the labor market stay

there.

On those assumptions, do you think the number of people trying to find jobs in that particular period of demobilization might run as high as 12 to 15 million?

Mr. HINRICHS. There are quite a number of hypotheses there. I will throw in one other, if I may, before I answer your question. Is public policy going to be pointed primarily to the creation of conditions of full employment, or are we going to do nothing in particular about it and drift?

98534-44-pt. 2- 3

The range that is introduced by that last hypothesis is so large that my answer is that I honestly cannot make an intelligent guess, but under all of the conditions that you have outlined a figure of 12,000,000 is not unreasonable.

I can illustrate, I think, a little more concretely, if I may, not with a series of hypothetical figures, but rather by contrasting the situation of the labor force as we know it, and as it is likely to be 2 or 3 years from now, with employment as it existed in 1941, which was a rather high level of employment at that time.

With employment totaling slightly more than 50,000,000 people, with a normal labor force of about 58,500,000, if you make assumptions with reference to the armed forces and say about 2,500,000 in the armed forces and that is a purely hypothetical figure, so far as I am concerned-you are left with something like 5,000,000 people who would be unemployed if all of the extra workers that I have been talking about retired from the labor market.

Mr. GROSS. That is an optimistic assumption in many respects, is

it not?

Mr. HINRICHS. That all of them will retire from the labor market? Mr. GROSS. Yes.

Mr. HINRICHS. Yes; there ought to be some residue in any event. The amount of withdrawal is going to depend on a number of policy decisions.

First of all, how quickly are we going to be able to get the normal numbers of the population back into schools and colleges?

Secondly, are the women who are presently in the labor market going to assume that there is going to be severe unemployment ahead of them? If so, larger numbers would stay in the labor market than otherwise would. That is, if they are anticipating that their husbands are going to become unemployed, they will hang onto a job themselves, to the last day they possibly can. If, on the other hand, they have reason to believe that there is going to be opportunity for full employment, a large percentage of the women will retire.

In the third place, there has been discussion of liberalization of oldage retirement provisions, not as a war measure particularly, but as a general social measure. If that is timed to encourage withdrawal from the labor force, you would have larger withdrawals than otherwise would be the case.

I don't think, however, we can count on cutting back to a labor force of 58,500,000 people in 1947. If I had to guess, I would say there is likely to be a residue of about 1,000,000, or perhaps a million and a half workers staying in.

We have to think in terms of 58 to 60 million people who are going to be looking for employment.

Mr. GROSS. Other witnesses have suggested that if, after the war, we return to the 1940 level of national income, we would have an unemployed group of at least 19,000,000 people.

Do you have any comment on that figure, which has been presented to us?

Mr. HINRICHS. It takes into account, first of all, a greatly lower level of employment and armed forces than the one I have indicated here. It also makes allowance for large increases in productivity that

have occurred.

I can't give you a sensible confirmation of the figure. All that I am prepared to say is that we will have a serious unemployment problem unless we have a much larger number of people employed than were employed in 1940 and an even greater increase in national income. We cannot possibly be satisfied to set as a goal the 1940 national income.

Bear in mind that in the first chart that I showed we started in 1940 with 8,000,000 unemployed. Since that time we have had at least 3,000,000 growth in size of the normal labor force-I think I said 234 million up to the present, but you need to consider also a continuing normal increase of nearly half a million every year. So that when you talk of a post-war labor force, you are talking of three to four million more people than were in the labor force in 1940.

On top of all that, there has been an increase of productivity. It is a perfectly normal phenomenon. It means we ought naturally, year by year, to produce more goods and use them to raise the standard of living of the people of the United States or for productive investment here or abroad. If we do not use that increased productivity to increase the production and consumption of goods, but use it as a substitute for work hours, we should reduce hours of work or you will increase your unemployment past the 8,000,000, plus the growth of the labor force. The time that would need to be spent to make an exact estimate is hardly justified. You know that the basic problem is there, even without being able to establish the fact in terms of a single figure.

Senator MURRAY. Mr. Hinrichs, in the early part of your statement, you mentioned a slight decrease in employment between 1943 and 1944. Have you got the exact figures of the extent of that decrease?

Mr HINRICHS. Yes; I would like to submit the figures for the record on a monthly basis. I am sorry that I do not have those with me. The decrease over this period was from 51.2 million to 50.5 million in March of 1944, 700,000 in that period.

(The figures referred to are as follows:)

Esimated civilian employment,' March 1943 to March 1944

1 Preliminary.

Source: U. S. Department of Commerce, Burea uof the Census.

Actually there was some further rise after March of 1943, so that the decline is timed a little bit later than I show here.

Senator MURRAY. That decrease was due to cut-backs in war production, was it not?

Mr. HINRICHS. It is due in part to cut-backs in war production. It is due in part to the disappearance from the labor force of a certain. number of individuals, or to nonreplacement of individuals taken into the armed forces.

There has been a decline in employment, for example, in the textile industries, since 1943. That is not a cut-back. Cut-backs have come particularly since October, and more particularly November of 1943, as a significant phenomenon.

We have always been having cut-backs, but scattered and on a smaller scale than we have known them in the last few months.

Senator MURRAY. The committee has had some testimony to the effect that there was an improper or inefficient utilization of labor in many of the plants in the country, especially plants that were operated on the cost-plus-fixed-fee system. Do you know whether or not there has been an effort to reduce the number employed in those types of plants as a result of the criticisms that were made against them?

Mr. HINRICHS. I can't assign the cause, sir. Perhaps the Manpower Commission could.

There has been a reduction of employment in many lines where the physical volume of production is still increasing, as in the case of aircraft. The reduction of employment has come about not so much through lay-off or discharge, although there has been some of that, as by the nonreplacement of workers when they quit. Aircraft and shipbuilding have both shown declines in employment that I think in part reflect the situation which you describe.

Senator MURRAY. Have you any idea as to the extent of cut-backs that will take place in the coming months that would tend to increase the unemployment of workers in this plant?

Mr. HINRICHS. We anticipate some further decreases, but relatively moderate, up to the termination of hostilities with Germany. Following the termination of hostilities with Germany, we except cut-backs to increase.

In the meantime, they are localized phenomena, smaller in their total volume than the month-to-month changes in the size of the labor force. There has been no evidence, despite the cut-backs that have occurred so far, of any increase in the total number of people who are unemployed. There has rather been a disappearance from the labor market of at least as many people as have been laid off if you are talking in terms of national aggregates.

Senator MURRAY. Have you concluded your statement with reference to these charts that you have?

Mr. HINRICHS. Yes, sir.

Senator MURRAY. Have you any suggestions to make to the committee with reference to the basic post-war problems that should be considered by this committee?

Mr. HINRICHS. Well, in the first instance, I think I have already indicated in my testimony the extreme importance which I would attach to the development of public policy with reference to the need for full employment. It should be so firmly grounded that the policies of all agencies would automatically be geared to the job of creating conditions that are conducive to full employment in the post-war period, precisely as the agencies today are geared to the job of mobilizing for war.

If there is any doubt in anybody's mind with respect to what the task of the post-war period is, I think it might have very serious consequences. Whether an agency is primarily responsible for dealing with problem of fiscal policy, or of monopoly, or with any of a whole