Labor's Anti-Recession Program:

...It cannot be said too often that the unemployed do not make millions of purchases that businessmen find necessary for their profits...

...January figures, the latest available, showed that 76 major industrial centers— more than half the nation's big industrial labor markets—were listed as "areas of substantial unemployment" or distressed areas...

...The nation is losing billions of dollars of needed output and the possibilities of absorbing more workers are not increasing...

...Gross national product—the total output of all goods and services —fell an estimated 2.2 per cent from last year's second quarter peak by the first quarter of this year...

...A two-year effort toward improvement in the nation's total output—an average of 7 or 8 per cent a year—could bring high unemployment rates down appreciably...

...The really important questions then are: How much needs to be accomplished in order to achieve full utilization in this economy...

...Many economists, emphasizing only the mildness of the current recession and the possibility of an upturn soon, insist that very little or no action is necessary...

...8. Monetary policy also needs revision...

...5. Minimum wages also need improvement now...

...With the steady increase in the labor force, with increasing productivity or output per man-hour, this rise would still leave the unemployment level at a critical 6 or 7 per cent rate...

...3. Unemployment compensation is vital both as an aid for the unemployed and an economic stimulant...

...Other proposals for a two-dollar a week, 50week reduction would not prove as effective, because these actions would lack the speed and strength of a shorter, more direct reduction...

...The President has proposed and the Congress has acted on a temporary unemployment compensation measure to help the thousands whose benefits have been running out...

...Businessmen cut their stocks of goods on hand, but sales fell to such a degree that much new buying must now await a pick-up in sales...

...Practical steps, as soon as possible, to encourage overall interest rate revision would be the soundest monetary policy for both anti-recession help and the payments improvement...

...However, a look at some economic signs during this 1960-61 downturn reveals the need for immediate measures which will help improve the American economy...

...The Federal Government could effect a $300 million incentive grant program to stimulate these necessary projects...

...More significant is the absence of any indicator on the present scene that points toward a sharp upturn in the immediate future...

...Before the Congress is a bill which should be enacted as quickly as possible to give prompt and effective Federal help to the large numbers of distressed communities...

...February unemployment levels were the highest in 20 years...

...nor is the relative mildness of the decline the major consideration...

...By the end of 1960, new housing starts, adjusted for seasonal changes, were 25 per cent below those in the spring of 1959...

...2. At least $2 billion worth of planned state and local public works projects, already on the drawing boards, lack the initial sum to start them moving...

...The 1960-61 decline—the third recession in recent years—has been more moderate than those of 1953-54 or '57-58, but accumulated weaknesses, caused bv incomplete recoveries from the previous downturns, have helped create an economic situation which needs government attention...

...The President himself has expressed compassionate concern for the human problems involved and taken some important initial steps to deal with them...

...The best tax reduction method for getting money to consumers in order to spur sales would be to return the first $10 of withholding taxes each week for 10 weeks—a total tax reduction of up to $100 per tax-payer...

...His 12-point economic program was a laudable beginning...

...The Administration's bill represents a forward step, but coverage should be extended to at least 5.9 million more workers and the minimum wage should be raised immediately to $1.25...

...an expanded and revitalized urban renewal program and provisions for low-interest, long-term loans for housing for families whose means make decent homes beyond their present hopes...

...Federal Reserve Board Chairman William McChesney Martin seems convinced, even now, of the essential conflict between monetary policies necessary to end recession at home and those needed to improve the international balance of payments problem...

...These provisions would add about $1.2 billion to purchasing power in the first year...

...Stanley H. Ruttenberg is currently Research Director for the AFL-CIO...

...Meanwhile, almost seven out of every 100 Americans who are available for work cannot find jobs...

...Legislation to spur new housing construction should include financing for construction of several hundred thousand homes for low income families...

...If something is done to spur only a 3 or 4 per cent growth rate over last year, there could still be 7 per cent of the labor force unemployed by the beginning of 1962...

...If, on the other hand, economic levels are no higher at the end of 1961 than they were at the end of 1960, unemployment could reach a rate of 10 or 11 per cent...

...The operation of the economy demands that it provide for rapidly growing population in this decade...

...Admittedly, all current economic signs show slighter downward changes than in previous recessions...

...Smaller communities with similar unemployment rates of 6 per cent or more totaled another 152 distressed areas...

...Over five-and-a-half million people were completely unemployed...

...7. Distressed area legislation is so long overdue that further delay is unthinkable...

...By Stanley H. Ruttenberg LABOR'S Anti-recession Program AFL-CIO sees danger in interpreting signs of upturn as excuse for inaction The nation's economy can perhaps be likened to a person who in a short time has suffered three bouts of sickness, of which the third attack, although the mildest, began before the patient was completely recovered from the first two...

...Federal National Mortgage Association (FNMA) mortgage purchases should be greatly increased and discounting practices should be discouraged by more effective action in bringing long-term interest rates to lower levels...

...Only an all-out effort to reduce long-term interest rates and reduce discounts could produce much more than a small upturn in home building this year...

...Fast relief, concentrated in the lowest income tax bracket, would provide a short, sharp spur for the economy...

...Despite employment levels equal to the highest February totals on record, there are no jobs for 6.8 per cent of the U.S.'s growing labor force...

...Such a program would inject two billion dollars into the economy and also provide jobs for many not now employed...

...Otherwise, the improvements of productivity and the higher number of available workers will merely add to unemployment levels...

...Moving forward by 15 per cent in two years will not be an easy task for an economy whose growth rate has averaged about 3 per cent in recent years...

...At the moment, the real danger is that some hopeful signs of an upturn will be misinterpreted as an excuse for inaction...

...The U.S...

...Business spending for new plant and machines, which rose during early 1960, reacted to the combined effects of inadequate sales and production cutbacks by slowing down later in the year, causing business investment to fall from a seasonally adjusted yearly rate of $36.3 billion in the second quarter of 1960 to an estimated $34.9 billion in the first quarter of this year...

...Even if the economy turns upward and total output increases by 3 or 4 per cent this year, seven or more out of every 100 Americans will still be jobless when 1962 begins...

...How much action is needed to reach levels of output required to have a reasonably full employment situation...

...This is not merely a problem for labor...

...These measures would both help the unemployed and low-income families and also increase the nation's purchasing power and add to recovery...

...He has asked for an aid-to-dependentchildren program, a pilot food stamp program, early payment of veterans life insurance dividends, a better school lunch program, better old age, survivors and disability insurance benefits and higher minimums and broadened coverage under the Fair Labor Standards Act...

...Home building has been declining since the second quarter of 1959...

...The $74 per month average retirement benefit is inadequate...

...Since policies to strengthen the economy effectively and rapidly would, in fact, provide the best possible means of assuring continued improvement in the payments imbalances, this theoretical conflict in policies must not be allowed to assume the aspect of a real problem...

...Prompt action is needed on permanent minimum federal unemployment compensation standards...

...PRESIDENT Kennedy and his Council of Economic Advisers have offered a brilliant analysis of the economic situation, describing not only the current difficulties, but their relation to lags and gaps from past inaction...

...Unfortunately, the program so far seems less incisive than the analysis warrants...

...The sooner we get started, the better it will be...

...4. Social Security improvements should be more extensive than those proposed recently by the President...

...Without these programs, of course, output would probably not even increase 3 per cent over last year...

...This would put between $4-5 billion in the hands of those people who would spend it most quickly...

...It is in the nation's interest to initiate a program large and ambitious enough to bring the economy up to strength by the end of 1962 and to work toward and sustain relatively full employment through intelligent short- and long-range action...

...Business inventories started declining in June 1960...

...The total 1961 effect in the next six or nine months might add an additional half-billion dollar economic spur...

...More than three million other Americans were working only part-time, because fulltime work was not available...

...At the end of the year, an equivalent reduction should be allowed for persons not subject to withholding...

...Orders for new goods declined, with resultant production cutbacks, layoffs and short work-weeks in the nation's factories...

...The important question is not when or whether the upturn will start...

...The President has also wisely emphasized the need for stepped up Government contract placements, both for defense and non-defense items...

...Retail sales, which had been leveling off since 1960's second quarter, dropped an estimated 1.6 per cent by the first quarter of 1961...

...Other parts of the Administration economic program—however necessary they may be as initial help for national needs—would not affect the economy's momentum until the year 1962...

...cannot afford to allow mass unemployment to fester, whatever the monetary statistical indicators of economic activity may show...

...Proposals for distressed areas, education, housing urban renewal, health care for the aged, hospital construction and all the other economic improvements will not begin to have any real effect on the economy by the end of this year...

...The AFL-CIO, therefore, has called for further action to supplement the program proposed by the President: 1. Tax cuts, concentrated in the first $2,000 of taxable income, could have a faster effect on the economy than almost any other anti-recession action...

...They do not add to tax receipts for necessary government programs...

...Legislation should be enacted to give the President discretionary power, subject to Congressional disapproval each time, to cut taxes temporarily when the unemployment rate exceeds 7 per cent of the labor force...

...But their total probable effect, as an economic spur to the economy, would amount to just about $2 billion in the year 1961...

...The President's recent order reducing Federal Housing Administration (FHA) mortgage rates is not expected to have much effect on home building...

...Even unemployment rates did not change as much by February as in 1957-58...

...The Federal Reserve Board has recently shown some signs of departing from its long-standing "bills only" policy, but these steps have been tiny and their effectiveness slight...

...Otherwise millions of Americans will be jobless in periods of recovery, and another recession will be upon us before the nation has regained its full economic strength...

...When the growing labor force and increasing productivity are taken into account, it is clear that it will take an enormous upturn to get America back to even a 4 per cent unemployment rate...

...The result is that Administration programs would fail to move the economy forward by more than 3 or 4 per cent in the next nine months...

...Possibilities of a mild upturn in the near future do not in any way reduce the need for such statutory authorization...

...Federal standards would do away with the need for temporary stop-gap programs in the future...

...It must take vigorous steps to realize its full potential of producing and consuming...

...Both the minimum and the general level of benefits should be higher, thus helping retired workers and the economy at large...

...If nothing is done now to help the economy, there could be as much as 11 per cent unemployed by the end of the year...

...It will take an even greater effort to achieve a 3 per cent unemployment level...

...Despite inventory cutbacks of $1.3 billion between June and December, a $2.7 billion drop in sales during that period meant that the relationship between inventories and sales had grown somewhat worse by the beginning of 1961...

...But the mildness of the signs does not mean that the situation is not serious...

...With this in mind, and with the possibility of an upturn soon, probably at least by mid-year or a little later, some economic observers feel that the economy will soon right itself and therefore little or no action is needed...

...An additional 3 per cent decline is anticipated for 1961...

...Benefits should be extended for 13 weeks for everyone whose state claim has been exhausted, and those unemployed whose benefits have run out since May 1, 1960 should be included in the program...

...About a quarter of the U.S.'s industrial capacity is now idle...

...Although the eight-month decline in (seasonally adjusted) industrial production ended in February, the current level is 8 per cent below the peak of January 1960...

...In addition, benefits should be provided for the jobless not covered by unemployment insurance who have had a substantial employment record during the last two years...

...6. In the field of housing, the President's token reductions in interest rates for mortgages insured by the FHA to 5.5 per cent should be reduced to no more than 4.5 per cent...

...The sooner the Federal Reserve Board acts effectively to help lower long-term and strengthen shortterm rates, the sooner this spur to economic health and growth will get under way...

...To avoid further unemployment, additional action must be taken to move the economy forward more quickly...