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FEDERAL RESERVE BANK OF PHILADELPHIA
The Broiler Imbroglio
The Search for Work
BUSINESS REVIEW
is produced in the Department of Research. Evan B. Alderfer was primarily
responsible for the article, "The Broiler Imbroglio" and Bertram W. Zumeta for "The Search for Work." The
authors will be glad to receive comments on their articles.
Requests for additional copies should be addressed to Bank and Public Relations, Federal Reserve Bank of
Philadelphia, Philadelphia I, Pennsylvania.
THE
BROILER IMBROGLIO
Harassed heads of states, already overburdened
products
with troublesome
France,
domestic and international
from
Common
West Germany,
and
Market countries—
Italy,
Belgium,
Luxembourg.
the
tensions, are now confronted with another diffi
Netherlands,
Contemplated
culty from a most unexpected source— the hen
targets for retaliatory tariffs include wine and
house. Who would have thought the chicken
brandy, trucks and buses, photographic goods,
capable of creating an international furor, but
electric shavers,
it has!
cheese, and steel flat wire.
bulbs and
roots, Roquefort
The chicken fluttered up on the international
The broiler imbroglio is of special interest and
conference table as the result of a prohibitory
concern to people in the southern Delaware sec
tariff imposed on American poultry in mid-1962
tion of the Philadelphia Federal Reserve District.
by the European Economic Community. The
That is where the domestic broiler industry had
E.E.C., comomnly called the Common Market,
its origin (see “ The Broiler Peninsula,” Business
raised the tariff on our broilers from less than
5 cents a pound to about 14 cents because
sula continues to be one of the country’s leading
German housewives were buying our broilers in
producing areas. Now, a word or two about the
ever-increasing
chicken before revisiting the Broiler Peninsula.
quantities.
Common
Market
Review, August, 1950), and the Delmarva Penin
countries were buying two-thirds of our exports
of frozen chickens which had risen from 24
A w onderful bird, the chicken!
million pounds in 1958 to 173 million pounds
The chicken is a gallinaceous creature whose
last year.
young run about and start scratching for food
The higher tariff wall around the Common
soon after hatching. Of the world’s more than
Market countries achieved its purpose. West
8,500 species of birds, none is so prolific, so
Germans, who had been our best Common Mar
productive, and so important to our agricultural
ket customers, are now buying more chicken
economy as the chicken. Turkeys have their day
meat from the Netherlands (an E.E.C. member),
in late November, but chickens lay and die for
and the American poultry industry has lost an
us daily.
estimated annual market of $46 million.
The farm value of poultry products in 1962
A special mission to the Common Market,
came to $3.3 billion. Of that total, the chicken
seeking modification of the heavy tariff, recently
contributed $1.8 billion in the form of eggs, and
returned empty-handed. Now domestic pressure
another billion in the form of meat. Readers
is rapidly building up for the imposition of re
interested in the egg are referred for light read
taliatory tariffs on United States imports of
ing to Betty Smith’s “ The Egg and I” and for
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business review
heavy reading to “ The Avian Egg,” by Alexis
THE BROILER COUNTRY
Romanoff, who made a lifetime study of the egg
and is the world’s outstanding authority.
THE BROILER PEN IN SU LA
The Broiler Peninsula is that small, jagged body
of land which almost got separated from con
tinental United States by the Chesapeake Bay on
the west and Delaware Bay and the Atlantic
Ocean on the east. The Peninsula includes almost
all of rural Delaware, the eastern shore of Mary
land, and two counties of Virginia. The inclusion
of parts of these three states gave it the name
“ The Delmarva Peninsula” and, inasmuch as
broilers are its leading industry, it may well be
called “ The Broiler Peninsula.”
Broilerland embraces the shaded area of the
Peninsula as shown in the map. The heart of the
area, with the densest chicken population, is
Sussex
County
in
Delaware,
and
Somerset,
Wicomico, and Worcester Counties in Maryland.
The Delmarva Peninsula looks like a broilerland. It has chicken houses by the hundreds, and
thousands of acres in corn and soybeans to feed
the chickens. The region has numerous hatch
eries, a score of poultry-feed manufacturing es
tablishments and over a dozen processing plants
where the grown-up broilers are slaughtered and
prepared
for
market.
Fleets
of trucks
haul
chicken feed to the growers and still other fleets
everywhere— in bank lobbies, stores, restaurants,
of trucks equipped with refrigeration haul the
and over the telephone wires. In 1962, the
ready-to-cook broilers to the markets. Banks in
Delmarva Peninsula produced over 200 million
the area do a lot of broiler financing, and the
broilers, which
Universities of Delaware and of Maryland do a
revenue.
brought in $130 million of
lot of broiler research.
In Selbyville, Delaware, there is a Poultry
A m odern bro iler apartm ent
Exchange. A regional Trade Association— Del
The millions of broilers grown in Delmarva do
marva Poultry Industry, Inc., with headquarters
not overrun the countryside; there is no flutter
near Georgetown— sponsors an annual $100-a-
of cackling chickens seeking refuge from the
plate poultry boosters’ banquet; and, as you
motor vehicles speeding down Delmarva high
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business review
ways. Broilers live in houses, nice houses, the
eats the equivalent of its own weight in the
most modern of which are really one-floor apart
course of one day. Corn makes up 60 per cent of
ments and cost more than some of the homes
the broiler diet, soybean meal 18 per cent, and
occupied by the farmer-grower.
smaller percentages of fish-meal, and other feed
A modern broiler apartment accommodating
ingredients.
20,000 chickens is of cinder-block construction
In 1927, when the Delmarva Peninsula was in
and the 400-foot length is wire-screened into 20
its broiler infancy, 16 weeks and 12 pounds of
apartments. The roof is galvanized corrugated
feed were needed to produce a 2*4 pound
metal, with Fiberglas insulation between it and
chicken. In 1957, it took only nine weeks and
the plastic-coated ceiling. A wealth of window
eight pounds of feed to raise a 3 ^
space affords cross-ventilation assisted by electric
broiler. Currently, Delmarva growers are un
fans in summertime when needed, and individual
happy if they fail to produce a bird of about
stoves provide warmth in winter. Diminutive
four pounds in nine weeks.
pound
troughs in each apartment unit automatically de
As soon as one flock is mature, the chickens
liver food and water, respectively, in cafeteria
are caught and cooped for shipment to the
style. The floor is covered with fine wood chips.
processing plant. Then the grower cleans out his
The residents of the apartment we visited did
broiler house, covers the floor with clean litter,
not seem to resent our intrusion. Some were eat
and starts another flock of newly hatched chicks.
ing and drinking, others snoozing, and still
Most growers produce four flocks a year and
others were engaged in conversation. One thing
some five.
they all had in common, the same birthday—
they were all six days old.
A D elm arva fe ed mill
The customary business arrangement in Del-
The modern Delmarva feed mill is a half-million-
marva is one in which the feed company supplies
dollar rural skyscraper attended by a row of tall
the food, fuel, litter, medicine, chicks, insurance,
silos for grain storage. On top of the mill and
and supervision; the grower furnishes the
houses, equipment, and the labor. Supervision
towering above the silos is a device resembling a
means that the feed company has a staff of
shaped center, metal ducts radiate to the various
specialists who make periodic visits to the broiler
bins storing different kinds of grain for proces
houses to check up on the progress and health
sing 30 tons of chicken feed an hour.
of the flocks and to see that they are taken care
of in the best manner.
A broiler house is really a “ chicken meat
Maypole, called a turnhead. From its doughnut
The inside of a mill is a bewilderment of co
ordinated machinery where only an occasional
worker is seen. Almost everything is automatic.
It is a place where newly hatched
A formula capsule, predetermined by the chief
chicks are transformed into the maximum pound
operator, is plugged into the central control
age of edible meat in the shortest possible time
board where a multiplicity of illuminated buttons
by feeding them a highly nutritive, scientifically
flashing in various colors reveal a continuous
balanced diet. The chicken, of course, is a bird;
display of precisely what is taking place at every
factory.”
and birds have a voracious appetite and a high
major point of production throughout the mill.
speed metabolism. Among some species, a bird
The least-used button on the elaborate panel
5
business review
board is the “ panic button” with which the
operator can stop everything should the gauges
BROILER PRODUCTION
MILLIONS
reveal a deviation from the capsule formula as
much as l/10 th of 1 per cent. Absolute adher
ence to formula is a must in a mill that feeds
annually 6 million customers from newly hatched
chickhood to marketable broilerhood.
A D elm arva p rocessing plant
The processing plant is the last stage in the
“ manufacture” of a broiler. It is a continuous,
straight line, dissassembly process. Let’s just
gloss over the details with the general observa
tion that nicely dressed, Federal inspected broil
ers emerge from the end of the line whereupon
they are quickly packed into refrigerated com
partments of high-speed, motor carriers for rapid
transit to the market.
Within the limits imposed by Nature, every
thing goes fast. It takes 21 days to hatch the
eggs, and nine weeks to grow the broilers. Dress
ing is a matter of minutes, and the trip to
market is a matter of hours— usually three or
four and seldom over eight, depending upon how
far they go.
AVERAGE COST OF PRODUCTION,
SUMMER FLOCKS, 1961*
Item
C e n ts p e r pound
Feed ........................................ .................... 11.04
3.09
C h ic k s ..................................... ....................
H e a lth and sa nita tion . . . ............................. 66
Fuel .......................................... ............................. 46
L itte r ....................................................................... 27
Insurance .............................. ............................. 04
Se llin g ..................................... ............................... 01
O th e r ..................................... ............................. 04
To ta l (less co n tract) . . . .................... 15.61
1.66
Paid to g r o w e r .................... ......................
Total co st ........................... ....................
17.27
* Delmarva's Position in the Broiler Industry la report compiled by the Staff
College of Agriculture, University of Delaware and the University of
Maryland).
6
Source: United States D epartm ent of A g ric u ltu re .
Much of the selling of ready-to-cook poultry
is done over the telephone to chain stores, super
markets, and other retailers. At the Poultry Ex
change at Selbyville, open daily from Mondays
through Thursdays, about a half-million live
broilers change hands daily.
Sharp pencils in b ro ile rla n d
Broiler people, like bankers, deal in decimals.
There is nothing fancy about the office of a
broiler grower, but his pencil points are sharp.
Just take a look at the broiler breakdown pre
vailing the summer of 1961, according to a cost
business review
COMMERCIAL BROILERS— 1962
Value of production in leading areas.
study of several hundred flocks involving several
million birds. Note that the grower received only
million birds, and before 1935 production shot
up to 10 million. Subsequent growth is shown in
1% cents a pound for his labor and the depre
the chart.
ciation on his broiler house and its equipment.
Look what Delmarva started! Just as Mrs.
Steele’s neighbors were quick to follow her ex
The grow th of D elm arva
ample, other states were quick to follow the
Delmarva is said to have started in the broiler
example of Delmarva.
business in 1923 when Mrs. Wilbur Steele began
with a brood of 500 chicks in the usual manner
The interstate b ro ile r race
in connection with her laying flock. When the
By 1962, most of the states were in the broiler
birds reached an average weight of 2 pounds she
race and over half of them produced in excess of
sold over half of them at 62 cents a pound, live
10 million birds each. The leaders in the stam
weight, to a local buyer. The following year she
pede are shown in the chart and the accompany
raised a flock of a thousand and sold them at
ing broiler map of the United States. As you can
57 cents a pound. Others were quick to follow
see, other states are giving Delmarva a terrific
her example in this lucrative business. Within a
battle. Georgia led the pack with 354 million,
few years, Delmarva production jumped to a
and in hot pursuit were Arkansas, Alabama, and
7
business review
North Carolina— all three in the 200 million
class. In the early days, of course, Delmarva
GROWTH IN PER CAPITA MEAT CONSUMPTION
INDEX 1 9 4 6 -4 8 = 1 0 0
was the leader, and although the region has con
tinued to grow, her percentage of the total has
declined because of the interstate stampede.
The b ro iler e xp losion
Annual broiler production of the United States
is now over 2 billion birds. That is almost seven
times the production at the beginning of the
postwar period. This does not tell the full growth
story because broilers have gained in weight
in recent years.
The phenomenal growth in broiler production
is naturally reflected in the rising consumption
of chicken meat. The growing importance of
* 1946 not strictly co m p ara b le .
Source: U nited States D epartm ent of A g ric u ltu re .
chicken in the American diet is shown in the
PER CAPITA MEAT CONSUMPTION
POUNDS
charts portraying recent annual trends in per
capita consumption. Beef holds undisputed first
place— close to 90 pounds. Pork (surpassed by
beef a decade ago) seems to have a hard time
holding its position, but is still well ahead of
chicken. Chicken, however, has shown the fastest
rate of growth, as indicated in the second chart,
where the three meats are anchored on a 19461948 base index. Chicken shows the lustiest rate
of growth with an increase of 60 per cent over
the period. Improvement in the quality of the
chicken, no doubt, plays a part in its growing
acceptance; but most of the increase is attribut
able to its long-run decline in price. The price
of broilers declined from a postwar high of
better than 35 cents a pound live weight, to
15 cents last year, as shown in the chart.
Broiler com petition
Any standard textbook in economics points out
that competition is a relative term, that it varies
from complete monopoly, which is rare, to the
other extreme called pure or perfect competition
8
business review
which is also rare. Between these two extremes
gredient newly discovered by a copywriter. The
are various gradations of so-called imperfect
growers
get
no
Government
price
support,
competition. The essence of pure or perfect com
though their chickens eat price-supported grain.
petition is a market in which there are thousands
When broilers go to market, quality for quality,
of buyers and thousands of sellers, no one of
they fight it out on the price line. The chicken
whom is large enough to exercise any control
stands on his own two little feet.
over the price of an identical product. One of
The chart “ Postwar Trends in the Broiler
these textbooks points out that “ perfect” com
Industry,” showing the ascending line of pro
petition no longer exists except in a few lines of
duction and the descending line of price, bears
agriculture. We submit that the domestic broiler
eloquent testimony to the severity of competition.
industry is one of the best if not the best
In the six years from 1955 to 1961, the number
example.
of broilers produced in the United States in
The broiler-growing industry is one in which
creased from 1.1 billion to 2.1 billion, and the
there are thousands of producers and many,
gross income of producers rose only 17 per cent.
many buyers. If there is any one producer large
The comparatively small increase in gross in
enough to exert an overt influence on the market,
come in contrast with an almost doubling in
we have not heard of him. It cannot be claimed
number of birds produced reflects the vigor of
that all chickens, even after Federal inspection,
price competition.
are identical; but that is about the only criterion
Prices fluctuate from day to day, and broiler
of perfect competition that the broiler business
talk is always in decimals. When we visited a
fails to meet.
There are no chickens on the floor of the New
broiler grower in mid-July and asked the going
York Stock Exchange, there is no “ General
cents.” The cent is still a respectable coin in
price, the answer was “ 15.98,” — not “ about 16
Broiler Corporation” and there is no silly sing
broilerland and small fractions thereof separate
song advertising to the effect that so-and-so’s
the successful growers from the candidates for
Dun & Bradstreet’s “ Business Failures.”
broilers are fortified by a Madison Avenue in-
POSTWAR TRENDS IN THE BROILER INDUSTRY
BILLIONS OF POUNDS
CENTS PER POUND
Periodically, the broiler industry is plagued
with overproduction. A good market and rising
prices stimulate an expansion in chicks placed
for broiler hatchery supply flocks. As the grow
ing multitude of chicks mature to marketable
weight, prices sag, profits shrink or turn to
losses, marginal producers fail and go out of
business. With the ensuing cutback of chick
placements, broiler prices strengthen, and the
cycle repeats.
D elm arva vs. the Southeast
Delmarva has been encountering and continues
to encounter beak-and-claw competition from the
9
business review
Southeast. When Delmarva people speak of the
granary. Railway rate structures favor the South
Southeast,
Arkansas,
east. Broiler growers in that region enjoy still
they
mean
Alabama,
Georgia, and North Carolina. Each of these
further savings in transportation costs afforded
states, except North Carolina, is now producing
by barge and motor-truck transport. In 1960-
more broilers than Delmarva but the Peninsula
1961, the freight rate on corn shipped from
people are fighting the competition with Penin
Chicago to Salisbury, Maryland, was $11.80 a
sular weapons, as we shall see a few paragraphs
ton (all rail) in contrast with $10.80 to Durham,
hence.
The Southeast has a number of advantages
North Carolina (in part by barge), $7 to Gaines
over Delmarva. To begin with, the Southeast got
Gunthersville, Alabama (all barge). Such were
started later and profited by the mistakes of the
the handicaps under which Delmarva broiler
ville, Georgia (in part by barge), and $3.73 to
pioneers. The new broiler-growing areas have
growers imported over a million bushels of
newer broiler houses, equipment, feed mills,
corn from the West in 1961. However, the
and processing plants than Delmarva.
Southern Railroad is apparently determined to
Land is cheaper in the Southeast because there
beat the barge and motor-truck competition.
is more of it in relation to the number of people
The Southern is replacing its old 50-ton cars with
who want it than in the Peninsula. The Penin
new 100-ton lightweight aluminum hopper cars,
sula is a small area hard by the industrious and
which enables the railroad to reduce freight
populous Northeast which is already spilling
rates on grain shipments as much as 50 per cent
into the Peninsula, sending up the price of land.
on multiple-car shipments.
Lumber to build broiler houses is cheaper in
As a result of all these advantages, the South
the Southeast which has vastly greater forest
resources than the Peninsula. Labor to saw the
east had a cost edge over Delmarva of 2)/2 cents
in mid-1961 and, remember, in the broiler busi
timber into lumber and build the houses also
ness a 2)/2 cent advantage is 250 points.
costs less in the Southeast.
Delmarva, on the other hand, has one big ad
The cost of labor to grow the broilers is lower
vantage over the Southeast. It is closer to the
in the Southeast because the alternative oppor
big markets. Delmarva is strategically situated
tunities for employment in industry are not so
to serve the populous urban Northeast— Wash
great as in Delmarva. The lower cost labor is
ington, Baltimore, Philadelphia, the great New
probably the greatest single advantage enjoyed
York Metropolitan Area, up-state New York
in the Southeast, although this is an advantage
cities, and Boston. Delmarva broilers shipped
that may diminish as the South becomes more
into these great markets arrive fresher by hours
industrialized.
than those from the Southeast. The markets
The cost of fuel is less in the Southeast. This
served
by Delmarva
and their
Southeastern
grows out of a natural geographic advantage.
competitors, respectively, are shown in the ac
Broiler growers down South have shorter and
companying map. Curiously, Philadelphia buys
milder winters and therefore save on fuel.
more broilers from the Southeast than from
Finally, the Southeast has an advantage over
Delmarva which is only 2 % hours distant. A c
Delmarva in the cost of shipping corn, soybean
cording to the broiler growers, the reason seems
meal, and other grains from the great Midwest
to be that too many Philadelphians are unwilling
10
business review
APPROXIMATE DISTRIBUTION OF BROILER-FRYERS: MAJOR BROILER AREAS TO MAJOR CITIES— 1961
Source: D e lm arva's Position in the Broiler Industry (a report c o m p ile d by the Staff C o lle g e of A g ric u ltu re , U niversity of Delaware and
the U niversity of M a ryla n d ).
to pay the premium prices Delmarva broilers
per pound than those of most competing areas.
command in New York and other more discrimi
Lacking the means of underpricing their most
nating markets.
serious competitors, they produce the quality to
justify their higher prices.
How D elm arva is m eeting the com petition
Improvement in quality is obtained in a va
The broiler people on the Peninsula are meeting
riety of ways. The industry cooperates closely
the severe competition from other areas by
with the Agricultural Experiment Stations of the
two methods:
(1)
by turning out a superior
Universities of Delaware and Maryland where all
product and (2) by reducing their costs of pro
kinds of tests and experiments are performed to
duction.
determine the best procedures in egg selection,
To say that Delmarva puts out a superior
brooding, chicken diets, medical care and sani
product is not a matter of local pride but a
tation, feeding schedules, broiler-house construc
simple statement of fact, easily documented. In
tion,
the first place, Delmarva broilers are heavier
catching and handling chickens. You just can’t
than those of most competing areas; and in the
name any aspect of the business, full-cycle from
second place the records show that their broilers
egg to chicken to egg, that the Delmarva people
sell at premium prices— that is, at a higher price
haven’t explored and are continuing to explore.
light* and
atmospheric
conditions, and
11
business review
For example, they are now experimenting with
large broiler grower merges with or builds his
window-less
own dressing plant; or where the grower ac
broiler
houses,
illuminated
with
low-wattage electric bulbs and a short-cut method
quires or builds his own feed mill. The small
of producing soybean meal.
feed dealer has gone the way of the village
The Delmarva people do not overlook any
blacksmith. Broiler houses are likewise getting
avenue for cost reduction. To reduce the freight-
larger,
rate handicaps on corn imported from the Corn
tion. Broiler growing is no longer a sideline
thus reducing unit costs
of produc
Belt and soybeans from the Soybean Belt, the
Peninsula is growing more and more of its own
of general farming, but a full-time business of
its own.
corn and soybean requirements. Much progress
has already been made toward self-sufficiency but
The ta riff turm oil
the region finds difficulty in attaining that goal
Even though Delmarva sells very little of her
because of the limited amount of land and more
output abroad, she feels the impact of the col
profitable alternative uses.
lapsed E.E.C. market. With the loss of that
As the pioneer broiler area, the region nat
market, Southeastern producers are competing
urally has some of the oldest equipment in the
more vigorously in domestic markets, which
industry, but that is rapidly changing.
affects the Peninsula.
Old
processing establishments that had originally
Common Market countries have been buying
been built as tomato canneries are being replaced
about $1^4 billion of our agricultural exports or
by brand-new plants specially designed and built
about
for chicken dressing, and others are tightening
abroad. The chicken tariff, as stated at the out
one-tbird
of
our
farm
products sold
their operations to cut costs.
set, has caused an estimated annual loss to our
Old broiler houses are being replaced by
poultry industry of $46 million. Why all the
modern broiler apartments. New broiler-house
hubbub over chickens which constitute so small
construction in the Peninsula during the past
a percentage of trade in agricultural products
year or two has proceeded at such a rapid rate
between the United States and the Common
that it scares some of the oldtimers in the indus
Market countries?
try who fear that the new construction is leading
The broiler imbroglio is another example of
to overcapacity. Those in the know, however,
the fact that we are living in a rapidly changing
point out that the new construction has added
world. Since the end of World War II European
only 8 or 10 per cent to capacity because most
countries have made remarkable recovery and
of the construction is new equipment replacing
in the process we gave them considerable aid.
the old.
Now that they can fend for themselves they are,
There is a marked trend toward larger-scale
once again, formidable competitors and in the
production for the purpose of cost reduction. In
creation of the Common Market the participating
the past decade, at least four of the area’s dress
countries have further strengthened their com
ing plants have gone out of business and a
petitive position.
steadily larger volume is being handled by fewer
The General Agreement on Tariff and Trade
and larger plants. There is also a trend toward
(GATT, for short) promised greater freedom of
integration of the type where, for example, the
international trade, mutually advantageous to
12
business review
the 53-member organizations. Negotiations for
chronic surplus. Bargainers on this side of the
further tariff reductions were scheduled for next
ocean fear that the broiler tariff increase may
year, and to that end Congress gave the Presi
be the opening wedge of higher tariffs to come
dent greater tariff-cutting powers last year. But
on other farm products; and with a large adverse
with chicken feathers flying, negotiations at best
balance of international payments and outflow
are difficult.
The logic of free trade is unassailable. Under
of gold, retention of foreign markets is impera
tive.
free trade, the citizens of each country are em
Common Market countries, also burdened with
ployed in the industries where they excel in
agricultural surpluses, are eager to preserve their
productivity, and buy goods and services abroad
own markets for their own products. Although
in those countries where they get the most for
their surplus of broilers is not so great as that
their money. After some progress toward that
of some other commodities, the Common Market
goal, came the chicken tariff— and chickens are
broiler producers are utilizing American methods
allergic to logic.
American ingenuity combined avian dietetics
and expanding production rapidly in their quest
to become self-sufficient in broilers.
and mass production so successfully that our
The case of the American broiler versus the
broilers could cross the Atlantic, hop over a
E.E.C. has received so much publicity as to
5-cent tariff wall, and undersell Common Market
obscure basic problems of the industry. Even
chickens, whereupon protectionism superseded
if the tariff negotiations reach a mutually satis
logic.
factory accord, the domestic broiler industry
will still have its troubles of periodic over
Chickens are an agricultural commodity, and
farm products are especially sensitive to tariff
production,
bargaining because so many of them are in
profits.
falling
prices,
and
disappearing
13
THE SEARCH FOR WORK
Population shifted dramatically in the Third Federal Reserve District during the
Fifties as people m oved where the jobs are.
,
In Bucks County, Pennsylvania, there were 213
people in 1960 for every 100 who lived there in
I. The 14 counties where population decreased
between 1950 and 1960.
1950. Towns stood where there were only villages
II. A larger group of 33, which includes the
a decade earlier. Across the Delaware River,
first 14 plus 19 more which experienced net
Burlington County in New Jersey posted popula
out-migration even though their total popu
tion growth of 65 per cent over the decade. Kent
lations increased somewhat.
III. The remaining 27 counties, where popula
County in Delaware checked in with a 73 per
tion increased and more people moved in
cent increase.
Growth like that lifts up a region. There is
than out; i.e., there was net in-migration.
bustle and business; tradespeople prosper; con
Population shifts reveal how an economic re
struction is everywhere. Growing pains go with
gion is allocating its productive energies. In the
growth, of course: scars in the earth waiting to be
Third District after 1950, population changes
covered; too many jammed roads. But there are
indicated an important movement of resources
gains to seek, possibilities to
explore,
jobs
to do.
All the places cited are in the southeastern
out of the district’s northern and western regions.
The evidence, from the U. S. Census of Popula
tion, is developed below. It illustrates how dom
part of the Third Federal Reserve District. The
inant a determinant of change is people’s need
district as a whole experienced no such ebul
to work.
lience, however. In spite of the lift from the
south and east, the district’s population gain
People go w here the jobs a re
over the decade from 1950 to 1960 was only 14
When an area ceases to develop for whatever
per cent, compared with close to 19 per cent in
reason— lack of diversification, changing mar
the United States. The northern and western
kets, decline of a dominant firm— its inability to
counties almost all lost people through migration
employ a growing population will be reflected in
— more people moved out than in. In many cases
unemployment. A sort of folklore has grown up
this movement was masked by natural increase,
about such depressed areas; it is the notion that
that is, the excess of births over deaths. But in
unemployment in them is peculiarly intractable
14 counties the total population actually de
because people will not move out. This is cer
creased over the decade.
tainly true in particular: people do not take
The 60 counties of the Third District fall into
three groups:
14
kindly to the abandonment of their home terri
tory; there are numerous instances of fearsome
business review
SOUTHEASTWARD SHIFT
Population changes and migration in the Third Federal Reserve District, 1950—1960.
rsr
M cKEAN
SU SQ U EH AN N A
BRADFO RD
T IO G A
POTTER
W AYN E
W Y O M IN G
[CA M ERO N
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LACKAW AN N A
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LUZERN E
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U N IO N
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SN YD ER
>RTHAMPT{
SCH U Y LK ILL
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C AM B RIA
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PERRY
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\
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CUM BERLAN D
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(
YO RK
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'.B U R L IN G T O N \ O C E A N
DELAW ARE
AD AM S
C A M D EN * .
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SALEM
A T LA N T IC
C UM BERLAN D I
P O P U LA T IO N D EC LIN E A N D O U T -M IG R A T IO N , 1 9 5 0 -1 9 6 0
O U T -M IG R A T IO N BUT N O P O P U LA T IO N D ECLIN E
IN -M IG R A T IO N A N D P O PU LA T IO N IN C R EA SE
KENT
SU SSEX
trips to work undertaken to avoid moving. It is
force— is computed for each county, and the
not true in general, however. When total popula
rates are averaged for each of the three groups
tion movements over a decade are examined, the
of counties, the results look like this:1
areas which lost people turn out most often to be
those which had an unemployment problem; the
G ro u p of Cou n ties
N u m ber of
Cou n ties
ones which gained were usually those where jobs
were not so scarce.
The population censuses contain estimates of
labor force and unemployment for each county.
When the 1950 unemployment rate— unemploy
ment expressed as a percentage of the labor
M edian
U nem ploym ent
Rates, 1950
( Per C e n t of
La b o r Force)
14
6.7
II. N et o u t-m igration , 1950-1960
33
5.8
III . Population increases and net
in -m igra tio n , 1950-1960
27
4.0
1. Population d ecreases, 1950-1960
1 The av era ge em ployed is the m edian, which has the effect of
reducing the influence of a typ ica l counties. A m edian of 4.0
means that h alf the counties with unem ploym ent rates other than
4.0 had higher, and h alf had lower rates.
15
business review
The counties which lost people, either in total
Often it is not the people directly affected
or through migration, started the decade with
who move out; it is younger persons not so
considerably
the
firmly established in social and employment pat
others. This tendency, while quite clear in the
terns. This tendency is apparent in the census
averages, was not universal. There were some
data. In the 33 counties having net out-migra
counties having high unemployment rates in
tion, average ages increased. Among the others,
1950 which nevertheless gained population, and
average ages decreased.
higher
unemployment than
there were other counties with no unemployment
problem in 1950 which subsequently lost people,
either through migration or in total.
In 13 counties which gained population despite
having unemployment rates in excess of 4 per
cent in 1950, more often than not unemployment
decreased during the subsequent decade. The
major exceptions were four southern New Jersey
counties with salt-water shorelines: Ocean, At
lantic, Cape May, and Cumberland. Population
has grown rapidly along the South Jersey shore,
often for reasons not directly related to employ
ment opportunities.
There were 13 other counties which lost people
through migration in spite of beginning the
decade with unemployment rates under 5 per
cent. Of these, 12 had higher unemployment
percentages in 1960 than in 1950. In sum, then,
M edian A g e of
Population
G ro u p of C ounties
1. Population decreases, 1950-1960
II. N et o u t-m igration , 1950-1960
III . Population increases and net in -m igratio n ,
1950-1960
1950
I960
31
33
30
31
31
30
W here a re the jobs?
During the decade following 1950, people, and
apparently younger people, left the areas of high
or growing unemployment in the Third District.
People moved into areas with less unemploy
ment. The necessity for these adjustments is em
phasized by the fact that they were not sufficient.
Despite out-migration, unemployment increased
in the less favored areas; without that safety
valve, it might have exploded.
there were 26 cases where population changes
between 1950 and 1960 did not appear to be re
G ro u p of C ounties
actions to the relative scarcity or abundance of
jobs at the outset of the decade. In 20 of these
U nem ploym ent Rates
(Per C e n t of La b o r Force)
1950
1. Population decreases, 1950-1960
I960
6.7
8.2
instances, however, the population movements
II. N et out-m igration , 1950-1960
5.8
6.6
were associated with later changes in unemploy
III. Population increases and net
in -m igratio n , 1950-1960
4.0
4.6
ment rates. People usually moved out of counties
with growing unemployment; they moved into
counties with decreasing unemployment.
The census comparisons disclose also that in
each group of counties average unemployment
While it is no surprise to find that population
increased between 1950 and 1960. Pressures in
will shift to where there are employment oppor
creased, not only in the places of greatest pres
tunities, the extent of the adjustments which
sure, but in the more favored areas as well.
occurred in the relatively short space of a decade
Readjustment has been occurring in an environ
is impressive. The facts indicate that people do
ment where readjustment does not appear to be
go where the jobs are.
a sufficient remedy.
16
business review
Increases in unemployment were greatest in
the counties of Group I. The unemployment data
therefore suggest that economic differentials may
G ro u p of Cou n ties
M edian Fam ily
Incom es
1950
1. Population decreases, 1950-1960
I960
$2,700
$4,600
have increased over the decade. This is borne out
II. N et o u t-m igration , 1950-1960
2,700
4,800
by census estimates of family incomes. Differ
III . Population increases and net
in -m igratio n , 1950—1960
3,000
6,100
ences on the average were considerably larger
in 1960 than in 1950.
during the decade, economic disparities among
The Third District began the decade following
areas appear to have increased. These facts
1950 with regional concentrations of unemploy
underline the extent of the problem that still
remains.
ment. Despite substantial population adjustments
17
FOR THE R E C O R D
•
•
•
BILLIONS $
2 YEARS
AGO
YEAR
AGO
MEMBER BANKS 3RD F.R.D.
JULY
1963
Third Federal
Reserve District
United States
Per cent change
Per cent change
Factory*
Department Storef
Employ
ment
Payrolls
Sales
Stocks
Check
Payments
Per cent
change
July 1963
from
Per cent
change
July 1963
from
Per cent
change
July 1963
from
Per cent
change
July 1963
from
Per cent
change
July 1963
from
SU M M A RY
July 1963
from
mo.
ago
year
ago
7
mos.
1963
from
year
ago
mo.
ago
year
ago
7
mos.
1963
from
year
ago
— 6
+ 6
+ 5
July 1963
from
LOCAL
CHANGES
mo.
ago
MANUFACTURING
Electric power consumed.........
Man-hours, total*.....................
Employment, total........................
W age income*............................
-
2
1
0
1
+ 8
- 1
0
+ 2
+ 4
- 2
- 1
+ 1
CO N STRU CTIO N**......................
COAL PRO DUCTIO N...................
-3 3
+41
+ 7R
TRADE***
Department store sales...............
Department store stocks.............
+ 3
+ 4
+ 2
0
-
BANKING
(All member banks)
Deposits.......................................
loans............................................
Investments...................................
U.S. Govt, securities.................
Other.........................................
Check payments..........................
+
1
0
- 1
- 2
+ 1
+ 4t
+
+
+
+
+
8
9
4
2
19
11+
1
0
+
1
+
1
— 6
+ 10
+ 7
-3 8
+24
+ 5
0
+ 5
6
8
5
1
19
7t
0
0
- 1
- 2
+ 2
+ 7
+ 9
+ 13
+ 4
- 4
+21
+ 15
+ 7
+ 11
+ 5
- 3
+23
+ 9
+ 2t
0
0
0
+ 2
+
+
+
+
+
+
PRICES
Consumer.....................................
•Production workers only.
••Value of contracts.
***Adjusted for seasonal variation.
bit + n
0
1
t20 Cities
JPhiladelphia
R-Index revised
year
ago
mo.
ago
year
ago
mo.
ago
year
ago
mo.
ago
year
ago
mo.
ago
year
ago
0
0 +
1 + 2
1 +
1 +
1 + 3
Lancaster.............
0
0 -
i
Philadelphia.........
0
0 -
i + 2 + 6 + 4 + 4 -
2
Reading................ -
1 -
2 -
i
0 + 3 + 2 -
2 + 7 +18
Scranton.............. -
3 -
7 -
4 -
0 + 3 +
6 + 16 + 14
+
Trenton ................ -
2 + 4 -
Wilkes-Barre. . . . +
1
Wilmington.......... +
York..................... -
0
-
+ 4 + 7
+11
1 + 4 + 2 + 3 -
+ 3
8
1 +
+24
2 + 6 +17
6 + 2 + 4 + 11 + 12 + 2 2
0 + 11
+34
-
6
0 + 4 + 1 + 9 +
2 + 11 +11
1 + 6
0 + 10 -
2 + 8 + 10 + 19
1 -
2 -
5 -
7 + 3 +
1 + 2 + 2
+ 17
+ 7 + 3 + 5 +12
•Not restricted to corporate limits of cities but covers areas of one or more
counties.
tAdjusted for seasonal variation.
@FedFRASER