Since last appearing before you, the Bureau of Employees' Compensation has been transferred to the Department under authority of Reorganization Plan No. 19. There has been no other material change in the Department's organizational structure. However, the defense effort with its related manpower problems has placed additional heavy burdens upon my office and most of the bureaus of the Department.

MANPOWER PROBLEMS

The administration's policy for financing new or expanded activities related wholly to the defense effort has been through the allocation of funds by the President from the appropriation for national defense production purposes. I have deemed it wise to establish an Office of Defense Manpower as a part of my immediate office, which functions directly under my supervision, for the purpose of developing, programing, and coordinating programs in the field of manpower. This office has a small staff and is financed in the manner heretofore stated.

Defense allocations have been made to expand activities of the Bureau of Employment Security, the Women's Bureau, and the Bureau of Apprenticeship. In addition it is anticipated that allotments will be forthcoming for the Bureau of Labor Statistics, the Bureau of Labor Standards, and the Bureau of Veterans' Reemployment Rights for a small study project of the possibilities of developing some form of reemployment rights for civilian workers who may be transferred from one establishment to another in the interest of supplying the best qualified workers where most needed.

I might say at this point there are many changes that have occurred in the course of the last 5 years in the condition of employment of workers. They now have a vested interest in their jobs through retirement pay, that goes with continuous service, and so many years of service, and this will make it a bit more difficult to attract people to shift their jobs than it was in the last war, and that is the study we are making at the present time.

In connection with that study, we will have the advice of technicians and experts from the leading management organizations of the country, the leading trade-union organizations of the country, and experts from our own office working on the program under the direction of the Bureau of Veterans' Reemployment Rights.

We assume that the advent of wage and price controls will bring additional requests for service to the Bureau of Labor Statistics and the Wage and Hour Division in the Department. Thus, it can be seen that the Department's basic programs are of a type that are more important in emergency and war periods than in normal times, and we are gearing such programs to meet the urgent needs of today.

More specifically, our problem is to increase not only the number of workers in the civilian labor force but to provide for the most effective utilization of our work force. This need is much greater now than it was in 1940 when we had unused resources of manpower. In 1940 there were about 55,640,000 in the civilian labor force. At that time there were 8,120,000 unemployed, constituting about 15 percent of the civilian labor force. As of December 1, 1950, there were 62,538,000 in the labor force, with about 2,229,000 unemployed, constituting a little less than 4 percent of the civilian labor force.

Our manpower resources are a vital factor which limits the ultimate expansion of our production effort. Steps must be taken to insure that the civilian labor force is so employed in ways that individual employees can contribute most of the defense program. This means that every effort must be made to use to the utmost the highest skill which each worker possesses, and to expand the labor force through drawing into the labor market people not normally seeking employment. We have the technical knowledge, ability, and experience to do this. We are already enlisting community participations through setting up voluntary labor-management committees at community levels in important and tight labor-marnet areas. I believe that through this medium we can keep management and labor fully informed concerning the problems facing the Nation and the impact upon their particular community, thereby enabling them to recommend the necessary action for the community and its employers to meet with the greatest degree of efficiency their part in this defense and mobilization effort.

Other major objectives we have established for ourselves concern

(a) concentrating on increasing the number of working people in the civilian labor force through the greater employment of women, handicapped, and older workers;

(b) through the application of our technical knowledge and assistance which we can provide to step up the training of workers, to promote safe working practices, to assist in the improvement of hiring practices, and to improve working conditions;

(c) through the Department's research and fact-finding facilities to produce the kind of information essential to determine the feasibility or over-all national production and the impact on manpower and our civilian economy, which includes the furnishing of guides as to what the scope of our production programs can be, furnishing data to govern the awarding of specific procurement contracts to specific localities, and the feasibility of awarding such contracts to such localities.

We are actively engaged in all of the above-mentioned functions, serving the military agencies, the National Security Resources Board, and the Office of Economic Stabilization and its subordinate arms.

Further, the Bureau of Labor Statistics is a reservoir of information and professional aid in the price and wage administration program. The history of the last war will show that the Wage and Hour Division was also used extensively in the administration of the wagestabilization program.

In fact, during the current week, arrangements have been made by the Wage Stabilization Board for the Wage and Hour Division to act as their information source during the preparatory period.

No doubt the committee will desire to pursue in more detail with the bureaus when they appear before you the extent to which their programs contribute to the defense and mobilization efforts of the present time. However, I would like to say a few words about the programs of each of the bureaus of the Department.

BUREAU OF EMPLOYMENT SECURITY

Major emphasis will continue to be put on meeting the manpower needs of Defense Establishments and farm employers. This Bureau is an operating arm of the Department, working through the State

employment-service agencies, in endeavoring to meet the needs of employers in a manner which will add the most to the production effort. In tight labor-market periods the supplying of adequate help to the farmers is always more difficult and will require careful planning to insure the proper movement of migratory groups and the importation of farm labor, so timed, to be available to meet the needs of the various seasonal crops in practically all areas of the country.

The only program increase included in our estimates for this Bureau involves $28,836 for the expansion of solvency studies of State funds. We have had recent experience where several States were approaching the danger mark in the charges against such funds whereas we have evidence that other States may have a great deal more in the fund than is required for financial stability. I believe that we should continue to appraise the actuarial soundness of State unemploymentinsurance funds, and this small increase is for that purpose.

I might say, having been a governor during the latter part of the war, I had the feeling at that time that a great many of these funds could have been placed in a more sound position to meet the heavy load that would inevitably follow in the postwar period, but few States took advantage of the opportunity to build up reserves that would have carried them in good stead at a later date.

In fact, one State in my own area was paying out in the year 1949 $4 for every $1 they collected.

Now, you will find another extreme where some of the States have reserves that run as high as $14 for every $1 expended in 1950.

An over-all actuarial study should be made of the soundness of all these funds. In the light of the information we gather, recommendations will be made to the Congress. I have the feeling, if the right kind of program were written and proper standards set up by the Congress, we could come out of this defense period with great strength to meet any economic stresses of the postwar period, but a great deal more information is needed than is available at the present time to make our best recommendations to Congress. So, I would urge that this increase be approved.

The work of the Veterans' Employment Service will place special emphasis on the utilization of disabled and older veterans. They will also exert efforts to service promptly veterans of the current Korean campaign who have recovered from their injuries and have been discharged.

BUREAU OF APPRENTICESHIP

The first manpower shortages encountered in the defense-production program have been encountered in the skilled trades such as machinists, tool and die makers, and draftsmen, in which workers are commonly trained through apprenticeship. As the defense effort expands, the need for the skills of these trades in tooling for a greater and greater volume of production will become more acute at the same time that the available supply of manpower decreases. It is therefore essential that the training of workers in the full skills of these trades be continued at as high a level as possible. The activities of the staff requested under the regular appropriations for 1952 will be directed toward the achievement of an intensified apprenticeship program in these shortage occupations in defense and essential civilian industries.