tend to retard administration right at a critical period in the employment situation in this country. Is that substantially how you feel about it?

Mr. MORSE. That is right.

The Employment Service has been somewhat of a moving object in the last few years, with very serious adverse effect. It was originally -in the Department of Labor, next in the Social Security Board then in the War Manpower Commission, and now it is in the Department of Labor. Now, if this legislative rider takes effect, it will go over to the Federul Security Agency. If the Hoover commission should decide 2 or 3 months thereafter that the Federal Security Agency is not the right place for the United States Employment Service, it might be moved back again to the Department of Labor.

Meanwhile, people are supposed to be getting on with their jobs. That situation, from a business point of view is not a very sound situation. I think the statements made by the Senators to whom I referred, concerning the Hoover survey, are sound.

Senator DWORSHAK. Mr. Morse, you are not in accord with the contentions of the members of the Senate whom you have quoted when they opposed the President's Reorganization Plan?

Mr. MORSE. No, I was not, Senator Dworshak. I supported the President's plan vigorously. Of course, the plan would have meant the Employment Service would have remained as is.

Senator DwORSHAK. You do agree, do you not, that both of these agencies should be combined, whether they be in the Department of Labor or in the Federal Security Agency?

Mr. MORSE. That is our judgment, sir, and that is a matter which the Hoover Commission has under consideration.

TRANSFER CONTEMPLATED UNDER THE LAW

Senator KNOWLAND. For the record, Mr. Morse, will you indicate what the situation will be under the law. Is there not a date at which time further change is to be made?

Mr. MORSE. Under the law, the United States Employment Service is to remain where it is in the Department of Labor, unless changed as a result of congressional action in connection with termination of the emergency. Six months thereafter, the service would be transferred out of the Department of Labor.

Senator KNOWLAND. Where would the Service be transferred to? Mr. MORSE. The Service would be transferred to the Federal Security Agency.

Senator KNOWLAND. Therefore, if Congress should terminate the emergency, then, without further action on the part of Congress, within 6 months from that date the transfer would be made substantially in accordance with the House action?

Mr. MORSE. That is right, sir, unless the Congress were to take a different view as a result of the Hoover Commission's reorganization study.

LETTER FROM THE GOVERNOR OF CALIFORNIA

Senator KNOWLAND. Before calling on the next witness, I would like to read into the record a letter I have received from the Governor of the State of California, dated May 4, 1948.

Hon. WILLIAM F. KNOWLAND,

United States Senator, Senate Office Building,

Washington, D. C.

DEAR SENATOR: When I talked to you over the telephone today about the action of the House of Representatives on April 29 in reducing the appropriation requests of the Social Security Administration for next year, I had reference to House Resolution 6355 and the report of the House Committee on Appropriations dated April 27, 1948, being Report No. 1821.

I understand that the action of the House on the supplemental Federal Security Agency bill for the fiscal year 1949 will result in a cut of approximately 66 percent in the staff of the office of the Commissioner for Social Security, a reduction of some 70 percent for informational and public services and more than a 55 percent reduction in research and analytic work.

I also understand that the action of the House will result in setting up within the Federal Security Agency, and independent of the Social Security Administration, a new bureau which will have jurisdiction over unemployment compensation and the United States Employment Service.

I also understand that the House bill appropriates no funds to the Social Security Administration for the maintenance of its regional offices but transfers funds substantially less than have been appropriated in the past for such regional offices to the Federal Security Agency. It appears from the House committee report that it is contemplated that these regional offices will operate for the Federal Security Agency as a whole and not for the Social Security Administration as they have operated heretofore.

I believe that it is important that the several social-security programs, including unemployment compensation, continue to be administered together as a part of the Social Security Administration. Public assistance, old age and survivors' insurance, unemployment compensation, and the Employment Service and the health and welfare work of the Children's Bureau all deal with the needs of individuals and families.

The planning for the expansion and strengthening of social security should be focused, I believe, in one place in the Federal Government, and I believe that the technical work and analyses in connection with these programs should be continued in the Social Security Administration.

I am not sure as to the forces which are operating in the direction of a disintegration of our social-security programs, but I believe that it would be difficult, if not impossible, for the work of planning, directing, and operating these programs to be carried out with efficiency if the Commissioner for Social Security does not have staffs sufficient for such purposes.

I have had some opportunity to observe the operations of the regional office of Social Security in this western region, and I believe that it would be inadvisable to remove the regional offices from the Social Security Administration and transfer them to the Federal Security Agency. The programs of the Social Security Administration are sufficiently broad and numerous and complicated in themselves. If these regional offices should be required to attempt to coordinate not only the social-security program, but programs of the United States Public Health Service, those of the Office of Education and all of the other activities of the Federal Security Agency as well, I am afraid that they would be spread so thin as to seriously impair their effectiveness.

I do not pretend to know what sums of money are necessary nor what numbers of staff are required for an effective job of coordinating and administering the social-security programs. However, my impression has been that there has been over the years a substantial reduction in the central staff used for these purposes, and I hope that adequate funds will be provided. I also hope that it may be possible to continue unemployment compensation as a part of the Social Security Administration and that the field arm of that administration which is used for coordination-the regional office-may continue under the jurisdiction of the Commissioner for Social Security.

It seems to me that it is dangerous to write administrative features into an appropriation bill as has been done here without a full opportunity on the part of the affected agencies to show the effect it will have upon the operation.

I believe this is particularly true in this new and extremely complicated field. This was apparently recognized by the Congress when it declined to approve the reorganization programs of the President until the report of the Hoover committee has been received.

I am happy to know that your committee will afford a full opportunity to be heard to the interested parties.

With best wishes, I am
Sincerely,

(Signed) EARL WARREN.

LETTER FROM COMMISSIONER OF PUBLIC WELFARE, STATE OF TENNESSEE

Senator MCKELLAR. Before we proceed, I would like to read a letter into the record which I have received from the commissioner of the department of public welfare of the State of Tennessee, dated May 6, 1948.

Hon. KENNETH MCKELLAR,

Senate Office Building, Washington, D. C.

DEAR SENATOR: I called you over the telephone this morning but was unable to reach you. In your absence I talked with your secretary, Mrs. Ward, and advised her that I was interested in knowing more about bill H. R. 6355 which recently passed the House and is now before your committee for a hearing.

A part of the bill deals with appropriations affecting Federal administrative funds for the Social Security Administration. This part of the bill, of course, is one that directly concerns the Federal Government. However, the part of the bill that affects appropirations for matching State funds on the three assistance programs is of interest to the people of Tennessee as well as the South. I have been advised that the matching feature of this bill will curtail Federal participation in the three programs and this curtailment, as usual, will affect the poorer States more than the richer ones, particularly the southern section of our country. I would like for you to look into this feature of the bill and, if it be true, that you put up your usual able and persistent fight for your State and the South. That I may be properly informed on the nature and scope of H. R. 6355. I would like for you to send me a copy, if you have not already done so, and any other information in reference to what this bill seeks to do.

Your very truly,

EFFECT OF HOUSE ACTION OF THE CONTRIBUTIONS TO THE STATES

I would like to ask the witness what effect this would have on the contributions to the States.

Mr. MORSE. I think Mr. Goodwin will be better able to answer that question.

Mr. GOODWIN. The question raised in the letter, Seantor McKellar, is one that affects only the Social Security Agency.

Seantor McKELLAR. It does not affect this at all?

Mr. GOODWIN. It does not affect the part that the Department of Labor is interested in.

Seantor KNOWLAND. Witnesses form the Federal Security Agency will appear either this afternoon or tomorrow.

Mr. MORSE. There might be less money available for the employment services.

Senator MCKELLAR. How much less might be available?

Mr. MORSE. The grant requested for the States is $72,000,000. House reported a reduction allowing $58,000,000.

Seantor MCKELLAR. How much money was allowed last year? Mr. MORSE. The amount allowed last year was about $66,000,000. Seantor MCKELLAR. That is the information I wanted.

Seantor KNOWLAND. Our next witness is Robert C. Goodwin, Director of the United States Employment Service.

STATEMENT OF ROBERT C. GOODWIN, DIRECTOR, UNITED STATES EMPLOYMENT SERVICE

Mr. GOODWIN. Mr. Chairman, and members of the committee: H. R. 6355 has very important implications for the continuation of the public employment service in this country.

NEED FOR MAINTAINING SERVICE

Before turning to the specific effects of this bill on employmentservice functions, however, I should like to discuss briefly a question that has recently been asked of me by some Members of Congress. Because this question is so logical, it may be in the back of the minds of some members of this committee: "Why, in the light of prevailing high levels of employment, is it necessary to maintain a fully functioning Employment Service?"

The first and most important answer to this question is the Employment Service is a positive program. Employers, job seekers, and youth newly entering the labor market look to the employment office for assistance in resolving their employment problems.

This development is due in part to the increased use of the Employment Service during the war and in part to such measures as the Servicemen's Readjustment Act of 1944. This act specifically provides that the veterans' employment representatives attached to the staff of the public employment service in the State, as well as the veterans' employment representatives in each local office shall be responsible for working with the public employment service in resolving the employment problems of veterans. Among the functions specifically mentioned in this act are: Registering of veterans in the local office for suitable types of employment and the placement of veterans in such employment; the securing and maintaining of current information as to the various types of available employment in public works and private industry or business; promoting the interests of employers in employing veterans; maintaining regular contacts with employers and veterans' organizations with a view of keeping employers advised of the veterans available for employment and veterans advised of opportunities for employment; and assisting in every way possible in improving working conditions and the advancement of employment of veterans.

It has been necessary for the public employment offices to strengthen and expand its program activities in a number of important areas. Employment counseling has been expanded to meet the obligation to veterans, youth entering the labor market and other workers confronted with the necessity of making vocational adjustments. Special job development programs have been established for handicapped workers and disabled veterans.

ECONOMIC AIDS

We are all presumably interested in reducing costs. I say to you that thoughtful placement work can save millions of dollars to industry. Young people just entering the labor market can be placed wisely in line with their abilities or can become drifters in the labor market if left to their own devices to shop around.

When job opportunities are greatest, the urge to change is greatest. All change is not unhealthy-men will, and should ever try to better themselves. If the Employment Service can place a man when he wishes to change to a job that fits his abilities and one where he will feel productive, the shift will be this good kind of change. The other kind is frequent shifting that looks only toward different or easier work, thinking less and less of building something into a job.

Men shifting around in this fashion, restlessly watching other spots for bigger pay are, in my opinion, easy subjects for the communistic type of organizer we are all concerned about. We have through other channels of Government given much painful thought to methods of penalizing communistic activity. How much thought has been given to the simple basic idea that a man who has been placed on a job thoughtfully in terms of his abilities and with full knowledge of all possibilities open to him is a producer on that job and given even fair cooperation from an employer, the well-placed man is a satisfied worker and no easy subject for communistic appeals.

WORK LOADS

The growth in the labor force and the changes in labor-market conditions have also added considerably to the employment office work load. Twice as many jobs had to be filled in industry in 1947 as compared with 1940. Although many of these jobs are normally filled through channels other than the public employment service, the activities of the employment offices greatly contribute to the increased stability of the employment market.

The employment offices made 6,300,000 job placements in 1947. Thirty-five percent of the nonagricultural placements were in manufacturing industry where the better-paying and more permanent jobs are found, as compared with only 20 percent in 1940.

AREA PLACEMENTS

Senator YOUNG. Do you find unemployed people willing to shift to some other area where there is a greater demand for labor?

Mr. GOODWIN. Yes; many of them are, Senator Young. The problems in shifting are many, at the present time, however, primarily because of the housing situation. It is difficult for people to shift in any large numbers, because they cannot solve the housing problem, but there is great willingness to change.

A good example of that situation is the thing that happened in connection with the Boeing plant which was reopened in Wichita, Kans., a few weeks ago. The Boeing Co. placed advertisements in the newspapers of Wichita and in other newspapers in the sur

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