6. In the interests of labor mobility and facilitating the shifts involved in automation, the subcommittee recommends that consideration be given by the executive departments and, if need be, by the Congress to measures which will make for greater effectiveness and increased usefulness of the United States Employment Service, especially in dealing with the problem of the middle-aged worker and the placement of those of higher skills and degree of specialization.

7. From its own experience with such data, this subcommittee joins in what is certain to be a primary interest of the Statistics Subcommittee of the Joint Economic Committee; namely, the improvement of economic statistics, especially those relating to productivity and occupational shifts, and an increased alertness on the part of the executive agencies to the responsibility of providing statistics for policymaking in business as well as in Government.

8. The subcommittee recommends that industry, and management for its part, must be prepared to accept the human costs of displacement and retraining as charges against the savings from the introduction of automation. In saying this, the subcommittee is not unmindful of-and was, indeed, gratified by-the extent to which enlightened management is already aware of and accepting responsibility in this respect. Nevertheless, by careful planning and scheduling, the adjustments of workers and the stoppage of employment can be minimized and due recognition should be given to the timing of investment and technological changes with an eye on the state of general business and the needs for increased employment.

status quo.

9. Organized labor should continue to recognize that an improved level of living for all cannot be achieved by a blind defense of the The education of its members, of management, community leaders, and Government officials, such as has been provided by these hearings, is an important function of union responsibility. 10. Throughout these hearings many witnesses have presented thoughtful and thought-provoking recommendations upon which the subcommittee has not had an opportunity to formulate definitive conclusions. In addition to the above recommendations, we commend to industry, labor, Government agencies, and State legislatures alike the study of this record and these individual suggestions, in order that the benefits of automation may be maximized and its hardships minimized. 11. Finally, the subcommittee's investigation convinced it that the problems of automation are by no means negligible nor settled. This prompts the subcommittee to the view and the urgent recommendation that all interested parties should make this a subject of continuing or siders it to be its responsibility and intends to review regularly the recurrent study. The Subcommittee on Economic Stabilization conprogress of technological change and the statistical evidence of occupational shifts. This is being done for the purpose of keeping informed and of being in a position to recommend further legislation

if it should be needed.

[From "Effects of Automation," Impact of Automation and Technological Change on Em ployment and Unemployment (Washington, D.C.: U.S. Government Printing Office 1961)]

EFFECTS OF AUTOMATION

(U.S. Department of Labor)

The rising level and rate of unemployment in this country during the postwar years have resulted in the fear that the proportion of workers unemployed will not decline substantially ***. This apparent trend has roused interest in the effects of automation and technological change not only on the levels of employment and unemployment, but also on the changing occupational structure of the labor force. There are divergent viewpoints, however, as to whether automation is one of the causes of structural unemployment. The purpose of this section is to discuss briefly some developments in the field of automation and technology, to identify the effects of automation and technological change on employment, to present some of the conflicting viewpoints on the effects of automation and technological change upon employment, and to identify some of the areas in which additional data are needed.

DEFINITION

Automation refers to the use of machinery-computers, transfer devices, and automatic mechanisms-to control and regulate industrial processes and to speed up compilation of data in offices. Technological change includes not only automatic devices but also all other types of equipment and procedures which tend to increase and speed up the production and distribution of goods, materials, and services and to reduce manpower requirements per unit of output.

DEVELOPMENTS IN AUTOMATION AND TECHNOLOGICAL CHANGE

Substantial increases in expenditures on new plant and equipment and on scientific research in the post-World War II period resulted in an acceleration in the rate of technological advance. Automatic machinery requiring little human intervention was developed to produce, control, inspect, and test products. More recently, integrated materials-handling systems have begun to eliminate manual handling of goods in the production process and in the movement of goods to and from the production line. Many different types of automatic controls have been introduced. Among the most publicized of such controls are electronic computers for the handling of scientific and business data, integrated control systems for manufacturing proc esses, and numerical control systems which use tapes and other automatic devices to direct operations of machines.

There have also been many technological advances in industry which do not depend on automated equipment. In the steel industry, for example, larger furnaces, improvements in raw materials, use of oxygen in open hearth and blast furnaces, and higher mill speeds have resulted in stepping up production. In the trucking industry, increased size and weight of trucks, which accompanied the introduction of the diesel engine, and the shorter traveltime between intercity terminals resulting from construction of superhighways have increased the productivity of drivers.

NEED FOR DATA ON THE EFFECTS OF AUTOMATION AND TECHNOLOGICAL CHANGE

The introduction of new automatic equipment and processes, together with other technological changes, may have had a profound effect on the levels of employment and unemployment. The extent to which changes in the level of unemployment can be attributed directly to automation is not known, since it is impossible to isolate changes in the level of unemployment caused by automation from those created by changing consumer tastes, fluctuations in the business cycle, development of substitute materials, foreign competition, shifts in population, and many other factors. Detailed data are lacking to identify automation and technological changes concretely as causative factors of unemployment.

Many persons intimately involved in the problems of automation have deplored the lack of data on its effects. John Diebold, president of the Diebold Group of Management Consulting Companies, remarked that

We must frankly face up to the fact that we know very little about the social and economic consequences of automation. We must be willing to admit this ignorance and to gather the facts in an impartial manner. Lack of facts, unfortunately, has not hampered many individuals and organizations to propound vigorously divergent courses of action.

Dr. William J. Ronan, secretary to Gov. Nelson A. Rockefeller of New York, stated that

The extent to which unemployment is traceable directly to automation is unknown. There is a definite lack of appropriate data, a factor which contributes to public apprehension as to the effects of automation * *

The lack of data, as well as the differential impact under varying conditions, is reflected in the conflicting statements of representatives of industry and labor with respect to the relationship between automation and unemployment.

Dr. Emerson P. Schmidt of the Chamber of Commerce of the United States of America recently stated that

While it is generally argued that structural employment due to mechanization, including automation, is increasing rapidly, this conclusion may in fact be a myth

Automation and technological change

May create, and in the past have created, more job openings than they destroyed, but they were jobs requiring different skills and often in different locations.

In a paper presented to a conference on automation in manufacturing, an officer of an engineering firm stated that

If machine productivity had not increased over the past decade, unemployment would be greater now (April 1960) than it is.

R. Conrad Cooper, executive vice president, United States Steel Corp., recently testified:

That the problem of unemployment in steel results primarily from cyclical rather than technological causes *** there is no overall long-term problem of technological unemployment in steel.

Prof. Walter S. Buckingham, director, School of Industrial Management, Georgia Institute of Technology, has written that there

have been no mass layoffs from automation, but this is apparently be cause automation has proceeded slowly enough so far to allow normal turnover to disguise the displacement. The worker displaced is not fired. He is the one who is not hired. A directly opposite viewpoint has been stated by many representatives of labor, including George Meany, president, AFL-CIO. He has said that

Technological change has been radical. Its speed of introduction has been rapid. At the same time, sales and porduction have risen slowly. As a result, there has been an insufficient number of new job opportunities to provide fulltime employment for a growing labor force, as well as for those who are displaced by technological change.

EMPLOYMENT EFFECTS OF AUTOMATION AND TECHNOLOGICAL CHANGE

Although we do not know how automation and technological change have affected unemployment, we do know that after each of the postwar recessions, the unemployment rate has stabilized at a higher level than the previous one. The rate was about 3 percent after the 1948-49 recession, approximately 4 percent during the period following the recession of 1953-54, and over 5 percent subsequent to the recession of 1957-58. It is still too early to know what the employment level will be subsequent to the 1960-61 downturn in business. The total number of unemployed persons reached a peak of 5.7 million in February 1961-the highest since the summer of 1941. By July the total was down to 5.1 million, but the unemployment rate of almost 7 percent remained virtually unchanged during the first 7 months of the year.

Although the large number of persons unemployed is a matter of concern, what is even more important is the industry background of those who have been jobless the longest. Of the 1 million longterm unemployed who had been without work for 6 months or longer in July 1961, nearly two-thirds were blue-collar workersskilled, semiskilled, and unskilled workers. About half of those workers had been last employed in durable goods manufacturing industries. Although industrial production reached a record high in July 1961, manufacturing employed 300,000 fewer workers than a year earlier.

The impact of technological improvement depends, to a great extent, on how fast and how widespread is the introduction of new equipment and on the buoyancy of our economy. Opinions have been expressed that unemployment will not be a serious problem as long as improvements are made during periods of high economic activity and with a continuing high rate of economic expansion. Introduction of technological improvements generally results in shifts of workers from one occupation, plant, or industry to another. The required adjustments can be made much more smoothly and easily when the economy is operating at full employment. Malcolm L. Denise, vice president, Ford Motor Co., testified that

The reason for rising unemployment is that the economy is not growing fast enough to provide all the jobs that our growing population seeks * * *. More rapid growth, a stronger demand for labor, would soon put an end to complaints about automation.

Between 1947 and 1960 productivity in the nonagricultural sector of the economy increased by about 2.7 percent a year compared with a long-term rise of 2.1 percent; in agriculture, productivity advanced about 6 percent a year. Economic growth between 1953 and 1960 was relatively slow but the introduction of technological advances was rapid. While the civilian labor force increased by over 6 million persons during this period, employment rose by only 4.4 million and unemployment by more than 2 million, to a monthly average of 4 million. During the past several years, employment of wage and salary workers has increased in trade, finance, and service industry divisions and has decreased in manufacturing, mining, transportation and public utilities, and agriculture.

The viewpoint has been expressed that in order to maintain a reasonably full employment level, economic growth should expand by an average of 5 percent instead of by less than 3 percent. James B. Carey, president, International Union of Electrical Radio & Machine Workers, AFL-CIO, remarked that we "need * * * a rate of growth ranging from 4 to 5 percent a year***" otherwise, "unemployment will continue to climb by 1 million a year ***."

Unemployment resulting from the introduction of automated equipment has not always been noticeable for, in some cases, the changeover occurred in expanding companies or industries where displaced persons were readily absorbed. A few early studies of the effects of automation have indicated that, in some companies, employment did not decrease but, rather increased after the new equipment had been placed in operation. Where employers are sensitive to the public relations effects of layoffs, reductions in employment are timed so as to make it appear that they are not the result of automation. On some occasions, layoffs were made by firms during a period of declining business, and the workers were not recalled after business had improved. In specific situations, decreases in employment are attributable to causes other than the introduction of automated equipment into the operations of the particular plant. For example, the Packard Motor Co. permanently closed its Detroit plant in 1956, the Pressed Steel Car Co. discontinued its operations in Mount Vernon, Ill., in 1954, and the Murray Body Co. laid off approximately 5,000 workers in 1954.

A study of the Packard Motor Co. shutdown made in 1957 and 1958 showed that 22 percent of the workers affected had not been able to find any job at all between the closing of the plant and the time of the study, and 51 percent had been unemployed long enough to exhaust their unemployment compensation. Only 14 percent of the nearly 500 former employees studied were under 40 years of age, and over 50 percent were past the age of 55. Older workers predominated in the study because the younger men had been laid off prior to plant closing as the company's business declined. Of those who did find jobs, a substantial proportion had to accept work at lower levels of skill and with lower rates of pay than the jobs they had formerly held. In general, the lower their skill and greater their age, the longer they were unemployed.

In 1956, 2 years after the Pressed Steel Car Co. had closed its operations, 12 percent of over 1,500 car shopworkers were still unemployed, 11 percent were underemployed, and 9 percent had left the