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able to buy or rent the homes constructed by the private building industry today.
Year by year, the need for a large-scale public housing program has become more and more widely accepted. Only slightly less controversial is the realization by nearly everyone except spokesmen for the real estate interests that a special housing program is required to meet the needs of moderate-income families.
We cannot delay any longer. Each year's failure to enact adequate housing legislation has meant the loss of hundreds of thousands of homes. In very real terms this has meant that millions of Americans have been forced to go on living in rural and urban slums not fit for human habitation.
H. R. 4009 provides for slum clearance and urban development and redevelopment, public housing, housing research, and farm housing. In my remarks, I shall discuss only our recommendations regarding the public housing and farm housing titles, as we are in fundamental agreement with the other sections of the bill. In addition, I would like to state briefly our recommendations regarding legislation to provide housing for middle-income families.
Before discussing these questions, however, I should like to call to your attention the attached appendix I, a policy statement on housing legislation adopted January 31, 1949, by the executive council of the American Federation of Labor.
(Appendix I, referred to above, is as follows:)
APPENDIX 1-AMERICAN FEDERATION OF LABOR EXECUTIVE COUNCIL STATEMENT ON
HOUSING LEGISLATION, JANUARY 31, 1949
We are alarmed by the acute housing shortage wbich still confronts the Nation almost 4 years after the war. It is estimated that there is a current deficiency of 10,000,000 homes, and that 5,000,000 additional homes must be built within the next 10 years if the housing needs of the American people are to be adequately met. We should now be building at least 1,500,000 homes annually, but last year private builders constructed only 925,000 dwellings, most of them at prices which workers could not afford.
Indeed, the generally accepted figure of 15,000,000 homes needed during the next 10 years, since it is based on the Housing Census of 1940, may even be an underestimation of the Nation's housing requirements. In view of the large redistribution of population during the war and postwar years, it is quite possible that in terms of the area-by-area need the 15,000,000 figure is too low.
The lack of accurate up-to-date data indicated by this uncertainty emphasizes the need for a housing census in 1950. We, therefore, strongly urge Congress to enact as speedily as possible legislation authorizing the Bureau of the Census to take a comprehensive housing census along with the decennial population census in 1950.
NEW HOUSING LEGISLATION Ever since the war, the American Federation of Labor has been in the forefront of the fight for the Taft-Ellender-Wagner housing bill. However, because this bill never did represent more than a compromise, and because of the long delay in its enactment and the consequent worsening of the housing crisis, it can no longer be considered adequate to meet the existing housing shortage.
We are proud that the American Federation of Labor at its recent convention went on record as the first major organization calling for the erection of a minimum of 1,000,000 units of public low-rent housing, the program which was subsequently incorporated in the President's state of the Union message.
The President's housing program has now been given concrete expression in S. 138. This bill covers such subjects as public housing, slum clearance and urban redevelopment, farm housing, and housing research not included in the very inadequate Housing Act of 1948 of the Eightieth Congress.
We approve particularly the public housing provision of this bill which calls. for the construction of 1,000,000 low-rent units during the next 7 years at the rate of 150,000 a year. In addition, the President has the authority to increase this number by 100,000 in any one year if he determines that this is in the public interest. By using this power of acceleration to the maximum, this country can reach what we consider to be the desirable goal of 1,000,000 units in 4 years.
Although we feel that the bill in many respects is an improvement over the TaftEllender-Wagner bill, we cannot accept it as the solution to our housing problem because it contains no provisions for middle-income families or for agricultural workers and their families.
About 37 percent of American families are in the so-called middle-income group whose annual income is between $2,000 and $4,000. The housing needs of this group, which is ineligible for public housing, have been utterly neglected by private builders, and can only be met by large-scale construction of cooperative and rental housing within the means of these families.
In order to foster large-scale construction of decent homes for middle-income families, savings must be sought in carrying charges, profits, and other costs. rather than by reduction of space and lowering of construction standards. Therefore, the American Federation of Labor recommends authorization for direct Federal loans for large-scale rental and cooperative housing. The loans should be made for an amortization period covering the useful life of the dwelling at the going Federal interest rate; they should be made available to public agencies, cooperatives, nonprofit and limited dividend corporations, and private builders who can conform to the rent schedules which should be established under this program. Of the six housing bills now under consideration in Congress, only the bill introduced by Congressman Javits contains this feature. Unfortunately, the size of the program authorized by this bill is entirely inadequate.
We estimate that this type of program would make possible decent housing for middle-income families for which monthly payments would be in the neighborhood of $50 or $60. Because of the reduced financing and other costs, such dwellings would be, on the average, the equivalent of an $8,500 dwelling unit.
We cannot accept as a substitute for this legislation the so-called economy house drive which has recently been launched by the real-estate interests and by the Housing and Home Finance Agency of the Federal Government. The elaborate plans for this drive which have been made public cannot conceal the fact that the "economy house" represents simply an attempt to force middle-income families to accept standards below the level of decent housing. Cost reductions are achieved mainly by such drastic cutting down of living space that the houses are completely inadequate for ordinary family living. If these "economy houses" should be built in any appreciable numbers, they may well become the slums of tomorrow.
Construction of substandard "economy houses” is no substitute for a genuine middle-income housing program, but neither is tinkering with the existing program of mortgage insurance under the Federal Housing Administration. Simply increasing the limits on the cost of houses insured under the FHA program and permitting lending institutions to sell a larger percentage of mortgages to the Federal National Mortgage Association will not solve the fundamental problem of reducing financing charges and profits so that the rents of monthly payments of middle-income families will be at a level they can afford. What is needed is a separate constituent division set up within the Housing and Home Finance Agency specifically charged with the responsibility of making direct loans and providing technical assistance for cooperative and other types of nonprofit and limited dividend housing for middle-income families.
As now written, proposed housing legislation also neglects the needs of agricultural workers. The provisions of S. 138 relating to farm housing would aid only farm operators but would do nothing for the long neglected agricultural workers. We urge legislation providing for the construction of housing of permanent and mobile types for stationary and migrant agricultural workers. The responsibility for the housing program for farm labor must be placed in the Department of Labor.
The American Federation of Labor has long been on record in favor of a large-scale public housing program. Although we have a few suggestions for improving the public housing part of this bill, I want to say first that we consider this to be the best proposal for a public housing program that has been introduced in this or any previous session of Congress. We think that it will give the go-ahead signal for the kind of public housing program that has been needed for many years.
In line with our oft-stated policy, the housing resolution adopted at our sixty-seventh convention last November called for a million-unit public housing program over a 4-year period. We were, therefore, very pleased when the President recommended a public housing program of that size and are glad to see that such a program is provided for in H. R. 4009.
We feel that the 1,050,000-unit program over a 7-year period provided for in H. R. 4009 is the very minimum which should be enacted. Indeed, we hope that the President will see fit to exercise the power given to him under this bill of accelerating the program by 100,000 units a year, so that the million units may be built in 4 years. We regret exceedingly that the Senate has both reduced the over-all size of the program to 810,000 units and has set an absolute ceiling of 200,000 units in any one year. We hope that your committee will neither reduce the size of the program nor restrict the President's power of acceleration provided for in H. R. 4009.
We recommend elimination of the so-called 20 percent gap provision in H. R. 4009. This provision requires that there must be a gap of at least 20 percent between the upper rental limit for admission to a proposed public low-rent development and the lowest rents at which private enterprise in the community is providing a substantial supply of decent housing. The proponents of this provision believe that it is necessary in order to encourage the production of low-rent homes by private enterprise. The net result of this provision, however, will be to leave completely unprovided the families who are ineligible for public housing but still cannot meet the rents or payments on the homes constructed by private builders.
We also oppose the inclusion of any specific dollar limitation on construction costs of public housing units. While we recognize that low-rent units constructed in public housing projects must not be an elaborate or expensive design and must not exceed costs of comparable dwellings produced by private enterprise, we believe that those restrictions can be achieved without setting a specific dollar limitation in the bill. We fear very much that the inclusion of a specific maximum construction cost may seriously curtail construction of low-rent public housing projects in some of our metropolitan areas where the need is greatest.
H. R. 4009 includes two types of housing for rural areas: (1) A rural housing program for farm operators, and (2) a provision that 10 percent of the funds made available to public-housing projects shall be used in rural non farm areas. We feel that this legislation gives insufficient recognition to the peculiar housing problems of hired farm workers, particularly those who live off the farms. We hope that under the public-housing title of H. R. 4009, 200,000 units of public housing will be constructed for farm workers living off the farm. All of these homes should be of a permanent type that will make possible decent living accommodations for farm workers and their families.
In our view, approximately half of these units should be constructed for farm workers who permanently live in a particular area. These units would be administered the same as other low-rent units under the public-housing program. The remaining 100,000 units should also be part of the public housing program, but should be constructed in those areas where there are large seasonal concentrations of migrant farm workers.
In addition, as an emergency measure of utmost importance, we urge that title to the 37 housing projects for migrant farm workers which are now owned and operated by the Department of Agriculture be transferred to the Public Housing Administration. The Bramblet Act (Public Law 298) requires the sale of these projects by June 30, 1919. This transfer of the projects should therefore be made immediately. If it becomes impossible to make this change before June 30, we recommend that the Bramblet Act be extended beyond June 30 until the transfer of title can be put into effect.
As I stated earlier, we believe that the program set in motion by H. R. 4009 will go far toward meeting the housing needs of the Nation. However, even with this program, the housing needs of 40 percent of our population will still remain as pressing as ever.
I refer to the 10 percent of American families with incomes between $2,500 and $1,000 a year, a group so far untouched by any housing legislation. Included in this group are the vast majority of union workers throughout the country. According to the Department of Labor, the average factory worker today receives a weekly pay envelope of $53.37, which amounts to $2,775 a year.
Let me point out the housing problem which faces these families. It is summarized by a short table attached to this statement as appendix II. If their income were higher, previous acts of Congress would enable them to afford the purchase of a new home under the terms of an FHA-insured mortgage. Or they might be able to rent a unit in a new apartment house also mortgaged under the FHA insurance program.
(Appendix II referred to above is as follows:) APPENDIX II.—Distribution of family income compared with eristing and proposed
Source: Bureau of the Census. NOTE.-The family income group to be served by each program should be considered somewhat elastic. Thus, in some areas the income limit for admission to low-rent public housing projects is more than $2.000. The size of the family also is a factor affecting the particular housing program for which it may be elixible. II
so, construction costs vary from locality to locality, influencing the rents necessary under parh type of program,
If their income were less, they would be eligible for living quarters under the proposed public housing program. In order to make certain that this program benefits only the lowest income families, Congress has wisely limited the income of families eligible to occupy these
units. The limits vary with different parts of the country, but seldom do they permit a family with income over $2,000 to rent public housing units.
Thus, these families find themselves in a position of being too rich for public housing and too poor for FHA-guaranteed insurance. They are truly the forgotten families in the American housing public.
I understand that housing legislation to meet the needs of these moderate-income families will be considered in detail by your committee at forthcoming hearings. I shall, therefore, confine myself to the high lights of our proposals regarding this subject. Without discussing its detailed provisions, I want to say that we favor the approach contained in H. R. 3877, the housing bill introduced by Representative Mitchell, a member of this committee, in which the housing program for moderate-income families is considered as an integral part of the over-all housing problem, and included as a separate title in a single housing bill. We respect fully urge this committee to report out in a single comprehensive housing bill the provisions in H. R. 4009, plus a title which would adequately provide for the housing needs of moderate-income families.
The average factory worker earning about $55 a week can afford to pay for housing only about $50–$60 a month. We think that such low payments can be achieved without subsidies and that present construction costs, financial and operating can be reduced to the level where housing of sound standards for adequate family life can be produced and made available for moderate-income families.
The program which we advocate to accomplish this purpose provides for direct Federal loans at the going Federal interest rate-the average of what the money costs the Government, now approximately 2 percent-plus one-half of 1 percent to cover the cost of administration, for an amortization period covering the useful life of the dwelling. These loans would be made available only to cooperative and other nonprofit housing corporations.
The entire program should be administered by a new Cooperative Housing Administration set up as a constituent unit of the Housing and Home Finance Agency. It should be the responsibility of the cooperative and nonprofit housing groups organized to provide housing for families of moderate income, and to make available to them technical advice and other assistance which they may require in the planning, development, construction, and operation of these housing projects.
We estimate that total monthly payments or rents under such a program could be reduced to as low as $50–$60 by the savings which would be made possible. Savings could be achieved in at least four ways: (1) By reducing monthly financing costs through the lower interest rate and the longer amortization period; (2) by the nonprofit feature; (3) by an extremely low vacancy rate comparable to our experience in public housing; and (4) by reducing operating and maintenance expenses through avoiding luxury services to tenants and arranging for a certain amount of tenant maintenance. In addition, States and localities could make major contributions toward the achievement of additional savings by granting partial or complete tax exemptions to cooperative and nonprofit housing groups set up under this program.