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Monthly “r r






Pension Data in Bargaining
Health Limitations of the Population
Changing Needs for Health Manpower
Job Tenure of American Workers

Federal Reserve Bank of St. Louis

W. Willard Wirtz , Secretary

Arthur M. R oss, Commissioner of Labor Statistics
R obert J. M yers, Deputy Commissioner

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Monthly Labor Review




L a w r e n c e R. K l e in , Editor-in-Chief




Technological Developments and Their Effects Upon Health Manpower
Manpower Facts in Labor-Management Negotiations
Out of Uniform—The Employment Experience of Retired Servicemen
Who Seek a Second Career
Hourly Earnings Differentials by Region and Size of City
Oak Glen—A Training Camp for Youth
Special Labor Force Report: Job Tenure of Workers, January 1966
Work Limitations and Chronic Health Problems
Adjustment to Plant Closure
Job Redesign for Older Workers: Case Studies
Trade Union Approaches to Income and Price Policy



This Issue in Brief
The Labor Month in Review
Foreign Labor Briefs
Significant Decisions in Labor Cases
Developments in Industrial Relations
Book Reviews and Notes
Current Labor Statistics


January 1967 • Vol. 90 • No. 1
Federal Reserve Bank of St. Louis

6 8 - 24 I 2

This Issue in B rief. . .

of labor-management disputes
is frequently aided by manpower-related data
gathered by the Bureau of Labor Statistics. In
Manpower Facts in Labor-Management Negoti­
ations (p. 9), Sol Swerdloff demonstrates the
sources and presentations of this type of material.
For example, data from private pension funds
and OASDI were used in the New Jersey Oper­
ating Engineers settlement, as well as in negotia­
tions in the Atlantic and Gulf Coast Longshore

T h e resolution

in patient care are discussed in
Technological Developments and Their Effects
Upon Health Manpower (p. 1) by Herman M.
Sturm. Automatic equipment in the clinical
laboratory, new drugs, research discoveries, pa­
tient monitoring systems, and improvements in
surgical techniques are expected to have varied
effects on the number and type of workers required
in the health care industry. Changes in hospital
supply and design and in information handling
techniques will also affect related health personnel.

I nnovations

surveyed in Out of Uniform—The Employment
Experience of Retired Servicemen by Laure M.
Sharpe and Albert D. Biderman (p. 15). The
report was prepared by the private bureau under a
contract with the Office of Manpower Policy,
Evaluation, and Research.
alteration o f a job to improve
production methods and plant efficiency, is dis­
cussed from the standpoint of benefit to older
workers in Job Redesign for Older Workers :
Case Studies (p. 47) by Herman J. Rothberg.
The value to the employer of an older but pro­
ductive worker’s experience combines with the
need to protect his health and morale as well as
his income to form a compelling rationale for the
application of the job redesign principle on a
broad scale, the author argues.

J ob redesign , or

With this issue, the Monthly Labor Review goes
into a faster production schedule which will bring
each issue to the readers early in the month of
publication, rather than at its close. To make the
transition, data published in December in certain
of the tables in the Current Labor Statistics sec­
tion are repeated in this issue; other tables are
updated. The Chronology, which does not appear
in this issue, will be resumed in February.

to which work training camps are
meeting their stated goal of assisting selected
young men to develop the traits and attitudes
necessary to become productive members of
society has been evaluated in a special study
prepared by the Stanford Research Institute
under a contract with the Department of Labor.
Reporting on the study in Oak Glen—A Training
Camp for Youth (p. 27), Jane R. Chapman cites
numerous indications that the program has ful­
filled its objective to some degree.
T h e extent

Special Labor Force Report on Job Tenure
of Workers, January 1966 (p. 31), by Harvey R.
Hamel, indicates that employees stayed with the
same job or employer an average of 4.2 years—
compared with 4.6 years in the January 1963 sur­
vey. Seven and a half million workers had been
working at the same job for 20 years or more, and
18.5 million had started their January 1966 job
sometime in 1965. One-third of the employed
men, but only one-fifth of the women, had 10 years
or more of consecutive employment.
T he

of the retirees from military
service covered in a Bureau of Social Science Re­
search report planned to enter the job market im­
mediately after retirement. An additional 13
percent planned only a short relaxation period be­
fore they looked for a job. Most of the men felt
their occupational skills would be useful and that
they would have few problems in the transition to
civilian life. These and other attitudes and
characteristics of retired military personnel are

A bout so percent
Federal Reserve Bank of St. Louis

N ew estimates of geographical wage differentials
based on average hourly earnings of nonagricultural persons are presented by Victor R. Fuchs of
the National Bureau of Economic Research, a pri­
vate research organization in Hourly Earnings
Differentials by Region and Size of City (p. 22).
About one-third of the South/non-South differ­
ential is attributable to differences in color, age,
sex, and education; one-third to differences in city
size; and one-third of the differential remains as
an apparent regional variation.

. The Labor Month
in Review

Opportunity and Action
in Appalachia
T h e people or A ppalachia —most of West Vir­
ginia, and the highlands of Alabama, Georgia,
Kentucky, Maryland, New York, North and South
Carolina, Ohio, Pennsylvania, and Tennessee—
share a long history of poverty and of physical and
cultural isolation from the rest of the country.

► Size of the Problem. Appalachia has been
singled out as the Nation’s number one economic
problem area. The economic boom has in large
measure passed it by, and the upsurge in social
action now aiding other areas of hard core unem­
ployment and deep-seated social ills has as yet had
little effect.
Appalachia’s inadequacies have been docu­
mented by the Appalachian Commission (a Fed­
eral-State body created by the Appalachian De­
* velopment Act) and by voluminous reports and
conferences during the years prior to the Commis­
sion. Appalachia has a low per capita income, low
rates of productivity, economic growth, and capi­
tal formation, a low level of urbanization, high
unemployment and underemployment, and a high
proportion of employment in the declining occu­
pations of agriculture and mining. Combined
with these are a high degree of dependence on out­
side aid, high fertility rates and family depend­
ency ratios, and low levels of health and of
educational attainment among its IT million
There is as yet no evidence of radical change,
and priorities are still being debated—whether to
put the emphasis on the current work force or con­
centrate on the education of the children ; to work
through a regional authority or through FederalState cooperation ; to concentrate on measures that
enhance the individual productive potential or on
the basic facility and road approach of the Ap-
Federal Reserve Bank of St. Louis

palachian Development Act. The fragmentary
evidence discussed here offers some early clues to
the directions that the development of Appalachia
may take.
In the past 5 years, a remarkable variety of Fed­
eral laws has underwritten a framework to enable
Appalachia to reach equality with the rest of
American society. The Area Redevelopment Act,
Manpower Development and Training Act, Pub­
lic Works and Economic Development Act, a se­
ries of education and civil rights measures, the
Economic Opportunity Act, health insurance, and
the Appalachian Regional Development Act of
1965 rival the social and economic legislation of
the 1930’s in their scope.
Goals and Emerging Approaches. The goal for
Appalachia is self-sustaining growth, productive
workers, jobs, and a better life for the people of
Appalachia. In the Appalachian Regional De­
velopment Act of 1965, Congress took an indirect
approach by counting on economic development
efforts to improve employment and income oppor­
tunities. The act authorized $1.09 billion for eco­
nomic development, of which $840 million was ear­
marked for highway construction. This left $250
million for all other projects—land, timber, and
mining development or restoration work, supple­
ments to existing Federal grant-in-aid programs,
and some health and education centers. Through
the first quarter of 1966, the Appalachian Regional
Commission had approved 450 miles of the 2,300mile projected highway development system.
The Federal legislation that offers increased
financial assistance in education, economic plan­
ning, employment services, and antipoverty efforts
merely blocks out guidelines and options for local
choice. The local community and the region as a
whole need to find or develop the leadership to
plan for their own needs and learn how to evaluate
and use the resources available. How well are
they doing?
Appalachia has had 21,000 trainees approved
under the Manpower Development and Training
Act—a start; but per capita MDTA expenditures
for 1965 for the Appalachian States ran 25 to 52
cents less than the U.S. average of Tl cents.
Local bootstrap operations are showing progress
in some areas. For example, in the 75-mile stretch
from above Scranton, Pa., to below Hazleton there
are almost 40 nonprofit industrial development



organizations. New and diversified industry has
been attracted to an area once devoted almost solely
to anthracite mining. Local banks have formed
pools to finance industrial loans, and State aid has
helped build more than 170 plants. Roads have
been improved and made more accessible to the
metropolitan areas of the eastern seaboard by addi­
tion of State highways and connections with the
Pennsylvania Turnpike.
Labor Unions. The approach of the AFL-CIO
Appalachian Council illustrates direct labor union
involvement in community problems as well as a
commitment to a regional approach. The Council
was set up in 1964 to work for the development of
programs or the stimulation of projects such as
work training, neighborhood organization, com­
munity health and welfare services, adult educa­
tion, and day care centers.
As one of its projects, the Council has under­
taken the training of 100 community action work­
ers at West Virginia University, with funds from
the Office of Economic Opportunity. Local union
leaders from various States are attending four
1-week sessions at the university in a year-long
program to broaden their skills in problem solving,
communication, and community planning and
The Council and the Institute for Labor Studies
at the Appalachian Center of West Virginia Uni­
versity sponsored a conference last May to explore
objectives and foreseeable manpower needs in Ap­
palachia. The conference illustrates the new en­
gagement of the university with the community
and, in this case, with its economic problems.
Education. At the meeting, Paul Miller, presi­
dent of West Virginia University, outlining the
model of the American university, which has fo­
cussed on a range of vocations and professions
related to economic growth, argued that it is high
time to pay more attention to producing leaders
for public affairs, as in the British system. Ana­
lyzing the historic relationship of the land-grant
institutions to agriculture, Miller illustrated how
universities have restricted their commitment:
Specializing in the husbandry of plants and animals,
and eventually, on the management of farm and firms,
the State land-grant university has so upgraded skills
as to make possible vast capital and technological in­
vestments in American agriculture. This process has
Federal Reserve Bank of St. Louis

been a major force in increasing the productivity of
agriculture at amazing rates. The relationship to eco­
nomic growth is well known, but it is an effort which
helps us learn the consequences of overlooking many
other implications of singular manpower development.
For example, despite the sums which have been expended
on the agricultural front through university systems to
increase the technical proficiency and productivity of
the American farmer, the people now living in rural
communities have generally the poorest schools, the
poorest public services, the poorest housing, and the
poorest cultural environment in the United States. . . .
The instance of upgrading the occupational skills in the
farming sector suggests the need of an agency that as­
sumes responsibility for a long-run commitment to the
whole view. This is a primary task of the university in
manpower development.

Other speakers at the conference, while defining
problems and assigning priorities, kept returning
to education. One way of removing competitive
disadvantage, as stated by Garth Mangum, con­
sultant to the Appalachian Commission, is to bring
the quality of the labor force to parity with the
rest of the Nation. S. C. Kelley, director, Center
for Human Resource Research of Ohio State Uni­
versity, having demonstrated that Appalachia is
predominantly an agrarian society whose economy
is based on family enterprise and simple technol­
ogy, took the position th a t:
Education is now recognized everywhere as the prin­
cipal means of manpower adaptation and a principal
instrument for economic and social change. It is the
only effective institution for breaking traditional con­
straints, and developing the attitudes and values rele­
vant to industrial performance and industrial life.

Mobility. Kelley’s thesis is illustrated by the
findings of two mobility demonstration projects
recently conducted in Appalachia by State employ­
ment services. There was no dearth of persons
Avilling to move, but many of those who relocated
were not prepared to adjust to town or city life
and about half of those who moved away came
home within 6 months to a year. Many had re­
ceived MDTA training, but skills training alone
was not enough to cope with the transition from
the mountains to the metropolis.
This finding supported the conclusion voiced by
Miles C. Stanley, chairman of the AFL-CIO Ap­
palachian Council, that within the Appalachia
projects “there is no program for the ‘social man’
or the ‘psychological man’ to go with the ‘economic
man.’ ”

Technological Developments
and Their Effects
Upon Health Manpower
Herman M. S turm*

A dvances i n health technology are expected to
have significant effects on health manpower re­
quirements. In addition to innovations originat­
ing in medical research and clinical practice, many
new types of equipment and materials which were
originally designed for use in homes, business
premises, or institutions are being adopted in pa­
tient care facilities. These technological advances
are likely to bring about many changes in the
nature and number of jobs in the health field.
Advances in technology are taking place during
a period when employment in the health field is in­
creasing rapidly. Rising standards in health care
practice and expanding demand for health care
services (resulting from rising family income and
the spread of private group insurance and govern­
ment programs for health protection) increase the
demand for health workers. Three-fourths of the
population is already covered by some form of
hospitalization insurance, and Medicare and re­
lated programs, as well as economic and popula­
tion trends, will sustain and perhaps accelerate the
growth in demand for health services.
In many communities, it has already become dif­
ficult or impossible to find enough skilled persons
to fill health service jobs; shortages of profes­
sional nurses are particularly acute. Training
programs for health workers are being stepped up
at all levels—Federal, State, and local—by both
public and private agencies.
The growing need for health manpower provides
new opportunities of employment to men and
women and helps accomplish another major goal of
national policy: utilization of untapped human
Federal Reserve Bank of St. Louis

resources. The health service field encompasses
many different kinds of jobs and calls for workers
having a wide range of skills and aptitudes, not ex­
cluding individuals among disadvantaged groups
who have a limited education or capability and
therefore have difficulties in getting suitable
work. During the past few years, especially since
the enactment of the Manpower Development and
Training Act (1962), the Vocational Education
Act (1963), the Health Professions Education Act
(1963), and the Nyirse Training Act (1964), there
has been steady expansion of provisions for train­
ing professional and nonprofessional workers for
health-related jobs.
Plans for expanding facilities to train people for
health jobs must take into account the fact that
many new technological developments are spread­
ing in the health field. This article summarizes
the findings of a study recently completed under
the sponsorship of the Office of Manpower Policy,
Evaluation and Research of the Manpower Ad­
ministration, U.S. Department of Labor.1 The
study focused on impacts of technological develop­
ments in the health service industry during the
next decade.
In 1965, there were approximately 2.7 million
full-time equivalent jobs in this industry—defined
to include only patient care facilities, such as hos­
pitals and nursing homes (both government and
private), physicians’ and dentists’ offices, and med­
ical and dental laboratories. The health service
industry accounts for about Sy2 million among
nearly 4 million persons engaged in all healthrelated activities.2
Varying Effects of Change

The manner in which specific technological ad­
vances affect manpower requirements in the health
service industry differs between one improvement
and another. Innovations in methods of disease
prevention have directly opposite effects from
those of improvements in disease detection; im*Of the Division of Technological Studies, Bureau of Labor
1 Technology and Manpower in the Health Service Industry,
1965-75 (U.S. Department of Labor, Office of Manpower Policy,
Evaluation, and Research, 1967).
2 Other persons engaged in health-related activities are em­
ployed mainly in a variety of jobs in scientific, industrial, and
retail establishments and in Federal, State, and local government
units concerned primarily with health protective programs.


provements in patient care technology move in
various directions. To illustrate, the discovery
and nearly universal application of polio and
smallpox vaccines and similar disease preventives
have greatly reduced needs for manpower to at­
tend victims of communicable diseases. On the
other hand, improvements in laboratory and X-ray
procedures and methods of detecting illness have
probably resulted in substantial increases in the
number of patients admitted, and therefore in
expanding hospital manpower requirements.
Improvements in methods of mending heart
ailments induce some patients to enter hospitals
and therefore require more manpower. On the
other hand, the increased acceptance of early
ambulation for some patients results in decreasing
the length of time individual patients need hos­
pital care, or in shortening the period during a
hospital stay in which a patient needs man-hours
of bedside care by scarce highly trained personnel.
Research discoveries during the next decade are
expected to have only modest, perhaps negligible
impacts on demands for manpower in health serv­
ice facilities. Major threats such as smallpox,
tuberculosis, tetanus, typhoid, diphtheria, and po­
lio have already been brought under control. The
remaining major health hazards are increasingly
recognized as connected with adulteration of the
air we breathe, the water we drink, the food we
eat, and other deteriorating aspects of the physical
environment. Attempts to combat these threats
through programs of Federal, State, and local
governments are growing, but there is no basis for
expecting that they will lead to substantial reduc­
tions in demands for manpower in patient care
facilities during the next several years.
Diagnostic Screening

Technological advances in the detection of dis­
ease may spur expansion of the patient load of
physicians and other facilities of the health service
industry during the next decade to a substantial
extent. Programs for utilizing available new
techniques for disease detection in systems for
diagnostic screening of the whole population can
be put into effect throughout the Ration within
a few years if sufficient funds and manpower are
made available. These plans provide for mass
physical examinations in which a battery of at
Federal Reserve Bank of St. Louis

T able 1. Causes for Admissions to Short-T erm
General H ospitals, 1946, 1954, and 1961



T otal, all causes.. ................................................... 100.0






9. 5






Deliveries and complications of pregnancy, childbirth, and p u erperium __________ ____ ___________
Diseases of the respiratory system __________________
Diseases of th e digestive sy stem ____________________
Injuries and adverse effects of chemicals and other
causes__ ___________________ __________________
Diseases of th e genito-urinary system ___ ___ ______
Diseases of the circulatory system _______________
Neoplasms (tum ors, cancers, e tc .)____ ______ _______
Diseases of th e nervous system and sense organs_____
Diseases of bones and organs of m ovem ent__________
Allergenic, endocrine system , m etabolic and n u tri­
tional diseases______
Infective and parasitic diseases.. ________________ _
M ental, psychoneurotic and personality disorders___
Diagnosis not ascertained___________________ ______
All others.- - _________ ______ _______________ -

Source: A m erican M edical Association, Report of the Commission on
the Cost of Medical Care (1964), Vol. I, p. 146.

least 20 laboratory health tests is performed in a
period of 2 hours, by automated techniques, as a
preliminary to physical examination and health
counseling by a physician. The results of the
tests are analyzed by a computer and a report
printed for the physician. The mass routine pro­
cedure would cost an estimated $25-$30 and would
replace procedures now costing $100-$200 and
requiring 1 to 2 days. However, there is no basis
at present for assuming that such systems will
take effect throughout the Ration during the next
several years, or for estimating their manpower
A recent study 3 has shown remarkable stability
over the 15-year period from 1946-61 in the pat­
tern of reasons for hospitalization of patients—at
least in regard to the importance and ranking of
major groups of diseases or conditions (table 1).
Throughout the period, childbirth and related con­
ditions accounted for about one-fifth of the patient
admissions. Diseases of the respiratory, digestive,
and genito-urinary systems, and injuries, ac­
counted for another two-fifths. Conditions such
as diseases of the circulatory system (heart disease,
stroke, and so forth) and cancer rose slightly in
importance, but remained relatively low among
causes of hospitalization. The continued impor­
tance of birth and injury rates (neither of which
are strongly responsive to either medical research
or public health efforts) tends to support the ex3
American Medical Association, Report of the Commission on
Cost of Medical Care, 1964, Vol. I, p. 146.


pectation that patterns of hospital admission will
not alter greatly during the next decade. Whether
other leading causes of hospitalization, such as dis­
eases of the respiratory and digestive systems,
will increase in importance remains to be seen.
Innovations in Patient Facilities

The effects of advances in patient care technol­
ogy on health manpower requirements in the fu­
ture are likely not only to be more substantial but
also more predictable than those resulting from
advances in disease prevention or detection. It
seems reasonable, therefore, to base an analysis of
the effects of technological change on manpower
requirements in the health service industry sub­
stantially on information concerning technological
developments that will affect activities within
health service establishments. The omission of
further reference to disease prevention or other de­
velopments in the field of public health programs
does not deny the possibility that they will also
affect manpower requirements.
Diagnosis and Patient Monitoring. The devel­
opment and spread of automatic equipment for
tests of body fluids and tissues has proceeded
rapidly in the clinical laboratory. It has been
estimated that in 1965 perhaps 25 to 50 percent of
the laboratory workload had been turned over to
automatic instruments. Some experts believe that
in 10 years this figure will climb to 75 percent.
Most of the work in a typical hospital laboratory
consists of repeated performance of a small num­
ber of routine tests, many of which can now be
done on a few automated devices. Analyses for
glucose and urea nitrogen account for between 25
and 35 percent of all tests in the typical labora­
tory; 10 types of tests can account for 70 to 80
percent of the entire workload.
Procedures have been worked out for determin­
ing at least 18 different components in blood and
urine on one type of automatic chemical analyzer.
Advanced models of this analyzer allow for tests
simultaneously measuring eight different chemical
components of the same specimen with a degree of
accuracy at least equivalent to that of manual
methods. In an 8-liour day, the analyzer can run
960 individual tests; the average technician does
an equivalent amount of work in 3 weeks.
Federal Reserve Bank of St. Louis


Other significant laborsaving developments in
automated laboratory equipment have been intro­
duced: for example, the blood-gas analyzer, the
automatic chloride titrator, and automatic blood
cell counters. Some laboratories are also using
electronic computers to save time in recording and
calculating test results.
The sharp growth in demand for clinical labora­
tory tests that has occurred in recent years is
expected to continue and perhaps accelerate.
Laborsaving effects of automated equipment will
therefore only partially offset the expanding de­
mand for medical technologists. The utilization
of automated equipment and semiskilled laboratory
assistants will free highly trained technical staff
for more advanced, complex tests involving difficult
patient care problems.
Fundamentally the same type of X-ray
equipment has been used for diagnosis for many
years, but developments now under way will
probably result in adoption of a broad range of
advanced equipment. New electronic devices now
being installed in hospitals magnify very small
radiations and achieve brighter images without
increasing radiation risk to the patient or fluoroscopist. Images can be transmitted over wires,
making it possible for rural or other remote hos­
pitals to have the advantage of interpretation by
expert roentgenologists located in distant cities.
One innovation converts images of optical scanning
of X-ray films into a digital form which a
computer can then store and process.
These developments will enable technicians to
work more quickly and accurately, but will also
require more highly trained technicians than have
been needed up to now.
In recent years, such electronic instruments as
the electroencephalograph (EKG) and electro­
myograph (EMG) have been incorporated into
“total monitoring systems” (often mounted in con­
soles for use in operating rooms or at tin; bedside
of patients) for observing, recording, and signal­
ing measurements of numerous body functions.
These complex instruments are generally acknowl­
edged to be of great value in surgery, though
opinions are divided concerning their usefulness
in patient care units. It is sometimes said that
by saving on the need for professional nursing
time they promise substantial aid in alleviating
the nursing shortage. Other specialists acknowl-

edge the need for multipurpose monitors during
surgery and urge the use of the simpler cardiac
monitor (which provides continuous EKG
measurements only) in specialized intensive care
units for coronary patients. Adhering to the prin­
ciple that nursing staff, rather than electronic
monitoring, should take measurements of the pa­
tient’s other body functions, they deny that mon­
itoring equipment will offset needs for nurses.
The electronic computer is making important
advances in clinical medicine as an instrument for
recording, calculating, and communicating infor­
mation. Physicians are using banks of infor­
mation on heart disease as a basis for aiding in
the diagnosis of cardiac conditions in patients;
computer-aided diagnoses can be made on pa­
tients for whom electrocardiograms have been
transmitted over ordinary telephone wires. Com­
puters are also being used to develop statistical
correlation techniques for determining the opti­
mum length of time a cast should be worn follow­
ing surgery for straightening the spine, to help in
preventing embolisms after surgery, to im­
prove the effectiveness of patient therapy and
custody arrangements in mental hospitals, and in
many other clinical applications.
Surgical Techniques. Enormous progress in
cardiac surgery has been made through the de­
velopment of the heart-lung machine, a pump and
a blood aerator that permits the patient’s blood
flow to bypass his own heart and lungs so that
these can be operated on to repair defects or mal­
functions. Synthetic body parts are now being
implanted in place of other organs of the body.
Even the brain is amenable to implantation of
artificial devices. Only 10 years ago, a child born
with hydrocephalus (water on the brain) was
doomed to mental retardation or early death. To­
day, more than 80,000 youngsters with this con­
dition have been helped by an implanted plastic
Limited advances have also been made in trans­
plantation of organs, such as bones, skin, and the
cornea of the eye. Some specialists hope that
kidney transplants will soon become the preferred
method of treating kidney diseases. Meanwhile,
artificial kidney machines are used in treating
chronic kidney failure. These machines are avail­
able only at a few kidney dialysis centers and help
Federal Reserve Bank of St. Louis


but a small number of the many thousands of
persons suffering from incurable kidney disease.
The cost of care per patient at a dialysis center is
estimated at $10,000 a year. Enough centers to
take care of most chronic kidney sufferers in the
country could ultimately require billions of
dollars, as well as thousands of health workers.
Home dialysis machines would substantially re­
duce the cost of treatment but would require the
efforts of many physicians, nurses, and technicians
to instruct and otherwise treat patients using them.
An important artificial aid to body functions
which is still under development is the surgically
implanted pacemaker, a tiny battery-operated de­
vice which is installed under the skm in the
abdominal area, with electrodes embedded in the
heart muscle. This unit paces the heartbeat of
victims of heart block, a condition in which the
heart beats too slowly or undependably.
Among other dramatic examples of the use of
electronics in surgery have been applications of
extreme heat, in the form of laser beams, and
extreme cold, using cryoprobes, and the use of
hyperbaric oxygen chambers for performingsurgical and other procedures.
Considering the many advances that have been
taking place and are on the horizon in the field
of surgery, it is evident that during the next 10
years an increased number of professional and
other health workers trained in new surgical spe­
cialties will be needed. Surgical advances will
also change job content and alter the nature of
traditional health jobs.
Therapeutic Methods. Many important new
clinical developments are occurring outside of
surgery. Some examples are specialized intensive
care units in hospitals, treatment of cancer by
various types of radiation devices—using X-rays,
gamma rays, and linear accelerators, and major
advances in rehabilitative medicine and dentistry.
New drugs which help in the treatment and care
of mental patients, along with improved methods
of psychotherapy, have aided many “hopeless
cases,” and have shortened the length of the aver­
age hospital stay of mental patients. With these
drugs, security is a much smaller problem, and the
need for custodial manpower is reduced. On the
other hand, because substantial rehabilitation is
a more realistic possibility, the need for personnel
trained in psychiatric techniques has risen.



In the treatment of chronic respiratory diseases,
such as tuberculosis, drugs have, been so effective
that needs for hospital beds and staff previously
reserved for care of their victims has fallen off.

T able 2.

T rends in U tilization of S elected H os­
I tems and S ervices, 1946, 1954, and 1961
R atio of utilization
per patient admission



Hospital Information Handling
N um ber of different generic drugs - ............ .............

4. 67

4. 32


N um ber of laboratory procedures_________ _____
Like many commercial firms, hospitals began
1. 50
N um ber of diagnostic X -ray procedures_________
N um ber of tim es operating room u s e d . __ . .
using computers for operations such as billing,
payrolls, inventory, and related business activities.
Source: Am erican M edical Association, Report of the Commission on
Cost of Medical Care (1964), Vol. I, p. 148.
As the capabilities of computer equipment ad­
Design and Supply
vanced, applications related to the special needs of
hospitals have been developed. The computer will
The hospital’s central service unit provides the
be used both to improve the accessibility of data , supplies and equipment used by all departments
on the history and current condition of the patient
that render clinical patient care. Where it is not
and to transmit the doctor’s orders for treating
a separate operation (still the case in many older
patients quickly, accurately, and simultaneously
hospitals), sterilization and other processing work
to all affected hospital departments.
is done in the individual nursing units and sterili­
Currently, only a few hospitals are working on
zation equipment tends to be duplicated on many
the more difficult problems central to the develop­
hospital floors.
ment of “total hospital information systems.”
The potential for laborsavings from adoption
Total systems, embracing patient care as well as
of the autonomous central service principle is
business, research, and other functions, will, how­
shown by studies of time required for selected pro­
ever, eventually be installed in many hospitals.
cedures in general hospitals. In 1955, a catheter­
In 1963, a survey covering all registered hos­
ization setup was prepared (only when needed) by
pitals of the American Hospital Association (more
a registered nurse in a nursing unit; it involved 18
than 7,000 hospitals) showed that only 7 percent
workload items, 4 of which were unsterile, and took
of the reporting hospitals (less than 400) had
6i/2 minutes. Beginning in 1956, a nurse aide in
either electric punchcard equipment or electronic
central service prepared these setups in advance;
computers. Only 39 hospitals were using com­
this procedure involved 13 items, 2 of which were
puters. However, interest in utilization of com­
unsterile, and took less than 1 minute.
puters in hospitals has been spreading. By 1965,
Catheterization setups are now available in
the number of hospitals that had either installed
completely prepackaged, sterile form, for one-time
or ordered computers was believed (by computer * use, at reasonable cost. These and other new
industry sources) to exceed 200, most of which
disposable items of plastic and other inexpensive
were large hospitals.
materials, for example, hypodermic needles, sur­
The pace at which the installation of computers
geon’s gloves, and surgeon’s knives, can be thrown
will spread between now and 1970 will probably
away after one use and involve practically no labor
be moderate. The main obstacle will be cost, both
requirements inside the hospital. Another signifi­
of equipment acquisition and its continued opera­
cant development has been the adoption of
tion. Time-sharing arrangements among groups
improved materials handling equipment, such as
of hospitals will make it possible for medium-sized
automatic and other specialized systems using
and smaller hospitals to obtain some computer
carts, conveyors, and pneumatic tubes.
services on the basis of smaller outlays. After
In the hospital pharmacy service, systems utiliz­
1970, the spread of computers among hospitals is
ing mechanized drug stations, specially designed
expected to accelerate, and by 1975 most large
drug carts for each nurse station, and prepackag­
hospitals, as well as many smaller facilities, will
ing of medications for single dose use, promise im­
probably be depending on computers of their own,
proved quality of patient care, as well as laboror at least on membership in a network of hospital
saving gains.
computer services, for carrying out a wide variety
New laundry techniques and equipment and im­
of hospital functions.
proved kitchen equipment are among the other
Federal Reserve Bank of St. Louis


advances that are bringing about substantial sav­
ings in man-hour requirements in hospital service
Advances in the functional and structural de­
sign of hospitals provide buildings that save un­
necessary steps and labor. Buildings are being
designed in accordance with gradations of patient
care that require the attendance of varying levels
of trained health personnel. Applications of the
concept of “progressive patient care,” for example,
are specifically aimed at bettering the quality of
patient care while improving efficiency in the use of
scarce manpower. Along with innovations in
the physical design of patient care facilities, in­
creased attention is being given to improved meth­
ods of hospital organization and management,
especially from the standpoint of achieving better
utilization of personnel.
Health Manpower—Today and Tomorrow

The size and type of manpower supply that will
be required in health service establishments in fu­
ture years depend on three interrelated factors:
(1) Total demand for health services, a result of
trends in the birth rate and the general health of
the population as well as the ability and willing­
ness of families and governments to spend money
on health care; (2) the nature and composition of
health service facilities and activities—for ex­
ample, growth in use of nursing home beds in com­
parison with use of hospital beds, and increased
use of surgery, and (3) productivity trends, that
is, the changes in the ratio of output to input (as
measured in units of health service performed per
man-hour) in the industry as a whole—which in
turn will be affected by the types of health facili­
ties used as well as by improved efficiency in spe­
cific activities.
The demand for health services in hospitals,
nursing homes, and other health facilities will
probably increase between 1965 and 1975 at a
slightly faster rate than in the recent past.
Though the total demand is likely to be spurred
in the next year or two by the inauguration of the
Medicare programs, the benefits of these programs
are limited in scope and duration. Unless gov­
ernment provisions for health care are substan­
tially expanded, the trend in total demand for
Federal Reserve Bank of St. Louis


patient care for the entire 1965-75 period will
probably rise only moderately above the trend for
the past decade.
Among the more significant trends expected to
emerge in the next decade is a shift in importance
among the types of health care facilities and ac­
tivities demanded. The total number of hospital
beds is likely to grow to about 2 million in 1975,
from about 1.7 million in 1965; most of this in­
crease will occur in short-term general hospitals.
An even sharper increase is expected in the num­
ber of beds in nursing homes (largely as a result
of Medicare). By 1975, nursing home beds will
probably increase to 1.2 million (from 500,000 in
1965) and surpass the number of beds in short­
term hospitals. Outpatient departments of hos­
pitals will also expand greatly; annual outpatient
visits in hospitals may number over 180 million by
1975, 50 million visits more than in 1965. Hos­
pital home care programs, which until recently
had been provided in only a few hospitals, are also
likely to increase rapidly and provide care for
many thousands of patients who might otherwise
have become hospital bed patients.
Table 2 shows the average number of times cer­
tain clinical services were provided, per hospital
admission, in 1946, 1954, and 1961, as reported by
a representative sample of hospitals. It seems safe
to predict that both X-ray and laboratory utiliza­
tion and the number of new medications adminis­
tered will continue to rise sharply over the next
decade. However, it is doubtful that the 1946-61
trend showing a declining use of the operating
room will continue. Use of surgical services will
increase, partly because of the expected rise in the
birth rate, and also because of new advances in
surgical techniques.
Productivity Trends

Productivity in the health service industry, as
expressed by the ratio of output to man-hours, is
likely to improve during the decade 1965-75. Ad­
vances in technology will lower man-hour require­
ments per unit of service. Automation in the
clinical laboratory will spread, reducing the aver­
age labor requirements for many tests. Man-hour
requirements per unit for X-ray and related diag­
nostic procedures will also decline. Increased use


of disposables and other changes affecting the sup­
ply function will eliminate needs for many existing
workload items—thereby reducing man-hour re­
quirements in both central services and nursing
units. Improvements in supply methods will be
particularly significant to the extent that they
release professional nurses for bedside patient
Greater awareness of the potentialities for
payroll and other cost savings is expected to result
in the increased use of computers for improved
information handling in many hospital depart­
ments, and in the adoption of other innovations
in functions such as food service, laundry, house­
keeping, plant maintenance, and office work. It
is not likely, however, that the computer’s effect
upon manpower requirements in the industry as
a whole will be significant until after 1970.
The increased importance of nursing homes,
hospital outpatient care, home health services, and
related programs of progressive patient care
will lower the average number of paid employee
man-hours per patient treated in the industry as
a whole. About a fourth as much time is required
to care for a patient in a nursing home as is
needed, on the average, in a short-term general
hospital. Outpatient programs and home-care
programs also require a relatively small amount
of employee time. Increases in these programs
will eventually level out or turn downward the
trend in manpower requirements of the past
Employment Projections

Estimates of full-time equivalent employment
of wage and salary workers (that is, the number of
filled jobs) in major occupation groups in the
health service industry in 1965, 1970, and 1975
are presented in table 3. These projections were
developed by translating into numbers of full-time
equivalent jobs expected demand, changes in tech4
A d is c u s s io n o f th e m e th o d o lo g y a n d lim ita tio n s r e la tin g to
th e e s tim a te s p re s e n te d in ta b le 3 is g iv e n in th e fu ll s tu d y . I t
s h o u ld be n o te d t h a t th e r a t e o f g ro w th sh o w n by th e s e p r o ­
je c tio n s re fle c t th e in d u s tr y d e fin itio n a n d th e fu ll-tim e e x p re s ­
sion o f e m p lo y m e n t on w h ic h th e y a r e b a se d . T h e fig u res d iffer
frorn^ p ro je c tio n s fo r S IC 80, “ M ed ic a l a n d O th e r H e a lth S e rv ­
ic e s,” g iv e n in th e p u b lic a tio n , A m e r ic a ’s I n d u s tr ia l a n d O ccu­
p a tio n a l M a n p o w e r R e q u ir e m e n ts , 1 9 6 4 -7 5 ( B u re a u o f L a b o r
S ta tis tic s , 1 9 6 6 ), in a c c o rd a n c e w ith d e fin itio n a l d ifferen c e s.
Federal Reserve Bank of St. Louis


T able 3. E stimated E mployment i n H ealth S ervice
I ndustry, by Occupation G roup, 1965, 1970, and 1975

Occupation group

T otal em ploym ent................ ..............
M edical laboratory personnel___________
X -ray te c h n o lo g ists.......................................
R ehabilitative and other technicians____
N ursing personnel........................................_
All other employees.........u.............................
M edical records personnel.............................
D ietary personnel............................ ..............
L aundry, housekeeping, and m aintenance.
A dm inistrative and office...... .......................
P h arm acists............................................... ........

N u m b er of employees 1




3, 600





1 Expressed as full-tim e equivalents (excludes physicians and d e n tists).

S ource: U.S. D e partm ent of Labor, M anpow er A dm inistration, Office

of M anpow er Policy, E valuation and Research.

nology, and related factors affecting employment
in health service establishments. The estimates
are based on available statistical evidence and
qualitative data, supplemented, where necessary,
by judgments obtained in interviews.
According to these projections, the number of
full-time equivalent jobs of wage and salary work­
ers in the health service industry will rise from
2.7 million in 1965 to 3.1 million in 1970 and 3.6
million in 1975. These figures (which exclude
physicians and dentists) imply an overall percent­
age increase of employment in the health service
industry (as defined here) of 33 percent from
1965 to 1975, slightly lower than the average rate
experienced during the decade before 1965.4
Jobs in the X-ray and clinical laboratory depart­
ments are likely to expand twice as fast as jobs
for health service employees in general; increases
in the use of X-ray techniques and clinical labora­
tory testing during the next 10 years will be only
partly offset by the spread of automated equip­
ment. As a result of improvements in surgical
and clinical techniques requiring intensive care by
highly trained personnel, increases in number of
jobs will also be above average for nursing person­
nel and rehabilitative and other technicians.
Employment expansion between 1965 and 1975
will probably be slower among the following
groups: medical records personnel; dietary per­
sonnel; laundry, housekeeping, and maintenance
personnel; administrative and office personnel;
pharmacists. The growth in jobs among these
groups will tend to decelerate significantly in the


latter half of the decade, when laborsaving effects
of productivity improvements have noticeable
In general, the effects of innovations in the
health field will be to raise the quality of health
care, increase the demand for highly qualified
manpower trained in new skills, and reduce de­
mands for less skilled labor. Many innovations
will not only create new kinds of jobs, but will also
broaden existing jobs by requiring that they
incorporate new duties calling for specialized
knowledge. Some innovations will have several
different effects. The computer, for example, will
begin by broadening the jobs of office workers, lab­
oratory workers, and nurses; it will bring a new
category of electronic-data specialists into hos­
pitals ; and eventually it will also effect substantial
laborsavings and probably reduce the need for
some jobs in clerical and related categories.
Steps To Deal With Shortages

The pace of technological change is not ex­
pected to be rapid enough to have much effect on
existing and immediate problems of health man­
power shortages. During the next few years, at
least, technological advances will not spread
quickly enough to displace or even reduce demand
for workers employed in traditional health jobs.
Until the 1970’s, it is likely that health manpower
training programs will emphasize expansion of
the supply of persons qualified for existing health
jobs, while remaining alert to needs for modifica­
tions in programs and their curricula to take ac­
count of technological innovations.
The need to train nursing personnel—which in­
cludes professional nurses, practical nurses, nurse
aids, and orderlies—will continue in the near
future. These occupations as well as physicians
and dentists are in the critical shortage category
in many communities. In view of the long periods
required for training health workers in profes­
sional categories, much stress is also being placed
on the need to train technicians and technical aids
who can relieve professionals of some of their less
complex burdens. In several areas of health serv­
ice, notably in dentistry, this approach has helped
raise productivity in the utilization of scarce
Federal Reserve Bank of St. Louis


During the past few years, important steps have
been taken by the Federal Government to increase
the supply of health workers. Programs provided
by the Manpower Development and Training Act
and the Vocational Training Act have been partic­
ularly important. Under MDTA, for example,
in the last 4 years, over 50,000 persons have been
given training leading to placement as practical
nurses, nurse aids, orderlies, and other health
workers. These and other health manpower de­
velopment programs are steadily being expanded.
Early in 1966, President Johnson took note of
the urgency of health manpower shortages by ap­
pointing both a President’s Committee on Health
Manpower, consisting of heads of the Federal
departments and agencies concerned with health
manpower matters, and a National Advisory Com­
mission on Health Manpower. In September 1966,
he called on the Departments of Labor and of
Health, Education, and Welfare, the Veterans
Administration, and the Office of Economic Oppor­
tunity to step up immediately their programs for
training health manpower. He particularly em­
phasized the need for bringing back into
employment trained workers not now employed
in the health field. In his letter communicating
this request, the President also drew attention to
the need for an intensive study of hospitals to
provide efficient and economical use of nurses and
other health workers.
The potential for efficiency gains made possible
by the spread of technological improvements is a
major factor affecting the outlook for improving
health manpower utilization. Fuller use of avail­
able technological advances promises to help raise
the quality of the Nation’s health care while limit­
ing the rapid rise in the cost of patient care
Existing Federal programs for the construction
and improvement of hospitals and medical centers
now provide some types of financial and technical
support to encourage the adoption of advances in
health technology. A substantial expansion of
financial and organizational support for hospital
modernization and related health manpower de­
velopment programs will be needed, however, in
order to realize more fully the potential for better
health services offered by broad-scale technological

Manpower Facts
in Labor-Management
S ol S werdloff*

and worker utilization have long been
major issues in industrial relations. Issues rife
with conjecture and laden with emotional tension,
they have been aggravated by a lack of information
both parties would accept as a starting point.
Since job security and worker utilization are likely
to remain vital issues on the bargaining agenda,
both labor and management may want to examine
the statistical insights the Bureau of Labor Sta­
tistics has developed in preparing information for
negotiations in the construction, longshore, and
railroad industries.
J ob s e c u r i t y

Bones of Contention

Work rule changes, impact of technological de­
velopments, the amount of available work—all
factors affecting worker utilization—have been
subject to hard bargaining. To tackle these issues
in a rational way takes manpower information.
Encouragingly enough, it is possible to develop
data so that their integrity and relevance are
acceptable to all involved in the negotiations.
What is needed is information about the char­
acteristics of the work force; age, sex, length of
service, occupational progression, unemployment
* C h ief, D iv is io n o f M an p o w e r a n d O c c u p a tio n a l O u tlo o k,
B u re a u o f L a b o r S ta tis tic s .
D e te r m in a tio n in th e m a t t e r o f th e c o n tr a c t b e tw e e n L o c a l
825, I n t e r n a t i o n a l U n io n o f O p e ra tin g E n g in e e rs , a n d th e A sso ­
c ia te d G e n e ra l C o n tr a c to r s o f N ew J e r s e y . A lth o u g h th e c o n tr a c t
e n te re d in to b e tw e e n th e p a r tie s d id n o t re fle c t a t t h a t
tim e m a n y o f th e p ro p o s a ls in c lu d e d in th e d e te rm in a tio n , th e
d e te r m in a tio n do es d e m o n s tra te th e u s e fu ln e s s o f m a n p o w e r d a ta

in negotiations.
Federal Reserve Bank of St. Louis

experience, annual earnings, and attrition rates.
More information is needed about the occupational
structure of the industry; geographic locations and
shifts in employment; seasonality; the amount and
distribution of work provided by the industry;
reliance by the industry’s workers on jobs outside
the industry; and an assessment about the indus­
try’s future employment requirements.
Cases in Point

An obvious—in retrospect— but often neglected
source of data can be found in the files of one or
both of the parties. Viewed with an eye open to
manpower implications, heretofore dormant pen­
sion and welfare insurance records can yield
constructive information. Some of the data are
available from regular Government statistical
programs, from agencies such as the Bureau of
Labor Statistics and the Bureau of the Census.
The sources and presentations of manpower-re­
lated data will be demonstrated in this article
through three examples in which the Bureau of
Labor Statistics was called upon as a factfinder to
help in the resolution of labor-management
Operating Engineers. To illustrate the use of
data from both private pension fund records and
from the Bureau of Old-Age and Survivors
Insurance, here is a discussion of the information
developed by the Bureau in connection with a de­
termination 1 made by the Secretary of Labor and
the Commissioner of Labor and Industry of New
Jersey in the matter of the contract between Local
825, International Union of Operating Engineers,
and the Associated General Contractors of New
The case was submitted to the Secretary and the
Commissioner “for determination, resolution, and
disposition” in March 1966 because a substantial
but incomplete agreement on a 3-year contract had
been reached that was far in excess of the 3.2percent wage guideposts.
The union’s position was that a substantial pay
increase was necessary because of the limited num­
ber of hours of work that its members had been af­
forded by the industry. The seasonal nature of
the work, and large productivity increases, thanks
to new equipment, were cited in justification of
higher wages.



How much work operating engineers actually do
get during a year, and how the work is distributed
could be found in the jointly controlled PensionWelfare Fund records. The figures showed that
about half the work force was employed 1,600
hours or more in 1964. (See table 1.)
The fund data also showed that operating en­
gineers with the greatest amount of experience did
not get significantly more work during the year
than those with less experience. Moreover, age
did not appear to have any appreciable effect on the
number of hours worked. The records showed
that the number of operating engineers working
sometime during the year had increased since 1960,
and that the work force had increased faster than
the total hours worked. The result was a decline in
the average hours worked per employee in the
1960-64 period as shown below:
number of


number of hours
worked during years

4, 774
4, 770
4, 394
4, 058
3, 722

7, 046, 875
6, 847, 595
7, 460, 115
6, 855,100
6, 293, 630

1 1, 476


1 T h e m edian num ber of hours w orked was calculated a t 1,614 (138 hours
more th a n th e arithm etic m ean shown in th is tab u latio n ).

Since the issue of a guaranteed work year had
been raised, it was necessary to determine the
number of workers who had a strong attachment
to the industry.
The data indicated the presence of men who
looked to the industry as a casual employer, men
who would pursue their livelihood primarily in
T able 1.

D istribution of Operating E ngineers ,
H ours W orked in 1964


Percent distribution of
operating engineers1
H ours w orked in 1964

U nder 200_____________________________________
1,000-1,999________________________________ ____
2^000-2,199___ ______
2,200 and over____ _______ . . . . . . .

7. 8

C um ula­
tive percent

1 Includes operating engineers in N ew Jersey and 5 southern counties in
N ew Y ork covered b y th e fund. Excludes persons covered b y th e fund who
h ad 0 hours in th e year and operating engineers no t covered b y th e fund.
Federal Reserve Bank of St. Louis

T able 2. E stimated Cost T o H ave Guaranteed
Operating E ngineers 1,600 H ours of E mployment
in 1964 for T hose Covered by the P ension F und

H ours of work


N um ber of

num ber of
hours for



Cost to provide 1,600
hours 1

223, 066
260, 734
350, 862
384, 080
334, 080
230, 093
404, 846
289, 775

C um ulative
543, 032
1, 755,638
2,139, 718
2, 838, 019
3, 068,113
3, 616,699
4,980, 701

1 Based on an assum ption of $5.50 per hour.

other industries. Conclusive answers came from
the records of the Bureau of Old-Age and Sur­
vivors’ Insurance. BLS assembled OASI infor­
mation to indicate how much wages operating
engineers with a small number of hours in con­
struction had earned from other industries during
the year.
It turned out that operating engineers working
less than 700 hours in construction had earned
more than half of their annual incomes from
other industries, places where operating engineers
would usually not be employed. But those oper­
ating engineers with 700 to 1,299 hours reported
by the fund drew less than one-fourth of their
earnings from “other industries.” The 700 hours
in construction seemed a logical dividing line
between the “regular” and the “casual” operating
This information gave the basis for estimating
the cost of a full work year. Assuming that 1,600
hours a year would provide an acceptable annual
income, it was calculated that $2.8 million would
pay for providing 1,600 hours of work to those
who had been putting in at least 700 hours. (See
table 2.) In addition, estimates were made of
the income operating engineers had received from
other industries in 1964 which might be deducted
from the cost of guaranteeing an annual work year.
For example, information derived from BOASI
records showed that about 25 percent of total
reported earnings of operating engineers working
700 to 1,599 hours in work covered by the pension
fund were earned in industries other than con-


struction. The cost of the guarantee thus would
have been reduced by about $700,000 if workers
with 700 hours in the industry received the guar­
antee with their outside earnings deducted.2

T able 4.

P roportion of P ort of N ew Y ork Long­
shoremen With S pecified E arnings , by E mploy­
ment Center , in Contract Y ear 1961-62

E m ploym ent

Longshore Industry. The second example of the
use of public and private pension data was in con­
nection with a Department of Labor study of the
Atlantic and Gulf Coast longshore industry. On
January 16, 1963, President Kennedy appointed a
special board to mediate a work stoppage affecting
the industry. As part of a recommended basis for
settlement, the Board proposed that a study of
manpower use and job security be made by the De­
partment of Labor. On January 20,1963, the New
York Shipping Association and the International
Longshoremen’s Association signed a Memoran­
dum of Settlement agreeing to the proposed study.
Subsequently, similar agreements providing for a
departmental study were concluded for nine other
Atlantic and Gulf Coast ports.
The Department of Labor study covered: (1) the
characteristics of the longshore force; (2) the
hiring practices affecting manpower utilization;
(3) work force flexibility and manning require­
ments; (4) job security; (5) imminent future
technological changes in the industry, and their
potential impact on manpower needs.
C o n s tr u c tio n in d u s tr y th r o u g h o u t th e c o u n try , a n d o th e r
in d u s tr ie s w ith s e a s o n a l w o rk p a tte r n s , m a y w e ll w a n t to ta k e
a look a t “ R e d u c in g S e a s o n a l U n e m p lo y m e n t,” a n e x c e rp t fro m
th e d e te r m in a tio n by S e c re ta ry W irtz a n d C o m m issio n e r M ale
t h a t a p p e a re d in th e S e p te m b e r 1966 M o n th ly L a b o r R e v ie w .

T able 3.

D istribution of E arnings of Longshore­
men in the P ort of N ew Y ork, Contract Y ear

Class intervals of earnings

A ll earnings classes__
U nder $500_______
$6,500, $7,499____
$10,500 and ov er________
Median earnings___________

throughout year

employed only
p art of y e a r1

N um ber


N um ber












1 Were not in th e in d u stry a t both beginning and ending of contract year.
Federal Reserve Bank of St. Louis


Percent of longshoremen in centers w ith earnings
Less th a n $2,500

4 /5 _______________


$5,500 or more

$8,500 or more

Again, important sources of statistical data re­
garding the personal and work characteristics of
the longshore personnel were the various pension,
health, and welfare funds and the Bureau of OldAge and Survivors’ Insurance.
What could be learned from pension, health, and
welfare funds is illustrated by the detail available
from the New York Shipping Association. The
records of this pension fund showed the number
of workers employed in a given year; the earnings
and hours of work of each worker at the port; the
age of the worker; the length of experience;
whether he was covered by the pension fund;
death, retirement, and disability information by
year; occupational shifts; and location of jobs by
The general impression that much of longshore
employment was casual was verified by the Labor
Department study. While the degree of casual­
ness varied from port to port, every port studied
(with the exception of New York) had a con­
siderably larger work force than would have been
required even for peak demands. In some ports,
the total number of men who had some employ­
ment attachment in the industry during a year
was twice as high as the number of employees
needed for a typical workday.
The basic wTork force of the industry—men who
depend upon longshoring for a livelihood—was
generally considered by the industry itself to in­
clude those who worked a sufficient number of
hours to qualify for certain contractual benefits,
such as pension and welfare payments. The usual
work requirement for pension benefits was 700-


T able 5 . L ongshore E arnings and OASI Covered
E arnings of L ongshore W orkers in the P ort
of N ew Y ork E mployed L ess T han 700 H ours,
Calendar Y ear 1962
Earnings on w hich social security taxes
were paid
longshore in d u stry

T otal
m en
th a n

T o ta l m en w ith less
th a n 700 hours 1____ 5,937
Less th a n $300___ . . .
$300 to $599__________
$600 to $899
$900 to $1,199 ______
$1,200 to $1,499 _____
$1,500 to $1,799______
$1,800 to $2,099 _____
$2,100 to $2,399
$2,400 to $2,699______
$2,700 to $2,999______
$3,000 and over

$600 $1,800 $3,000 $4,200 $4,500
$1,700 $2,999 $4,199 $4,499 over






4, 310









1 Longshore w orkers whose earnings records appear to be in error have
been rem oved from th is table. T h is includes such cases as the longshoreman
whose longshore earnings were reported as $3,000 or more, b u t whose OASI
records show less th a n $600 on w hich social security taxes were paid.
Source: Based on d ata provided by th e N ew Y ork Shipping Association
a nd B ureau of Old-Age and Survivors Insurance.

800 hours a year. In nearly all of the 10 ports
studied, the basic work force by this definition
was less than half the total number of men em­
ployed during the year. In four ports, more than
three-quarters of the work force were employed
under 700 hours during the year. In nearly all of
the ports studied, the group working less than 100
hours—“casual” by any definition—constituted
from one-third to over half of the work force.
By way of contrast, in the Port of New York,
which had an established decasualization program,
over one-half of the employees worked more than
1,600 hours a year in 1961-62; over four-fifths
worked more than 700 hours a year; and the com­
pletely casual employees (working less than 100
hours) represented only about 7 percent.3
Besides helping to determine the degree of
workers’ attachment to the industry through a
distribution of earnings of longshoremen in the
Port of New York (table 3), the pension and wel­
fare records of the International Longshoremen’s
Association and the New York Shipping Associ­
ation also demonstrated the uneven work load dis­
tribution among the longshoremen at different
groups of piers (as grouped by employment cen­
ters—table 4).
3 Working Paper on Labor Force Characteristics and
ment Patterns and Trends in the Longshore Industry of
of New York (unpublished).
4 Working Paper on Labor Force Characteristics and
ment Patterns and Trends in the Longshore Industry of
of New Orleans (unpublished).
Federal Reserve Bank of St. Louis

the Port
the Port

In one center, more than one-fourth of the men
earned $8,500 or more during the contract year; in
another, less than 1 percent of the work force
earned this amount. Such differences in earnings
also suggested that increased mobility between em­
ployment centers might well be one way to allevi­
ate short-hour employment.
What about the stability of the longshore work
force ? Pension and welfare fund listings of indi­
vidual workers were also used to develop estimates
of total annual separations (including with­
drawals for reasons other than death and retire­
ments) and year-to-year retention rates. Exami­
nation showed, for example, that nearly 39 percent
of the men in the Port of New Orleans who were
employed in the industry in 1959-60 were not em­
ployed in the industry the following year.4
Because a large proportion of the employees in
the longshore industry work a relatively small
number of hours and earn relatively little money
in the industry, an investigation was made to de­
termine whether the longshore industry provided
T a b l e 6. S e pa r a t io n s by A ge G r o u p A mong B r a k e men,
F ir e m e n , S w it c h t e n d e r s , a n d
H ostlers
H a v in g 10 or M ore Y e a r s ’ S e r v ic e ,1 1957-59,
a nd
A v e ra g e A n n u a l S e pa r a t io n s P er 1,000
E xposures 2
Separations (1957-59) 3
A nnual
E x­
posed separations
w ork­
per 1,000
D e ath s4 ers 3
N o r­ Pre- D is­
m al normal abil­
R etirem ents

Age group
T otal

All ages___ 15,101 8,419
U nder 40 y e a rs...
40-44 y e a r s . _ _
45-49 y e ars.. ___
50-54 y e ars.. . . .
55-59 years_____
60-64 years. . . .
65-69 years_____
70 years and over.

2, 587
7,290 6,640
1,954 1,779

225 2,532

3,925 412,976

225 1,337


90, 330
50, 562
21, 069


1 Years of service derived from cum ulated m onths of com pensated service.
2 R etirem ents are actual num bers. D eaths and exposures are based on a
4-percent sample.
3 Separations include retirem ents and deaths of workers having 10 or more
years’ service and who, therefore, had established eligibility for retirem ent
or survivors’ benefits under the R ailroad R etirem ent A ct. “ N orm al” age
retirem ents occur among w orkers 65 and over. “ Prenorm al” age retirem ents
occur among workers under 65 b u t a t least 60, who have com pleted 30 or
more years’ service.
4 Excludes deaths after retirem ent.
* Exposures for a single year represent workers eligible for retirem ent
benefits under the R ailroad R etirem ent A ct and who worked th a t year or
the preceding year and were alive and not retired a t th e beginning of the year.
Among w orkers under 65, the relevant benefit was an a n n u ity for disability,
for w hich all workers having 10 or more years’ service were eligible. Among
w orkers 65 and over, th e relevant benefits was a retirem ent pension, for which
workers qualified after com pleting 10 years of service. To avoid duplicate
counting, w orkers who had established eligibility for survivors’ (death)
benefits were n o t counted separately; workers who had established eligibility
for survivors’ benefits also were eligible for retirem ent benefits.
Source: R ailroad R etirem ent B oard as shown in A ppendix Volume I I I
to th e R eport of the Presidential R ailroad Commission, February 1962.

T able 7.

T y p e of attritio n plan

Separation of firem en b y Ju ly
1963 w ith less seniority th a n —
10 years__________________
9 years_____ __ _______
7 years— . . .
6 years.-- - _____ _______
5 years____ __ __________
3 years—
2 years_____ . _ .

Computation Showing Costs

Cost of lu m p ­
N u m b er of sum paym ents
for early
b y Ju ly 1963

6, 200


N um ber of
b y a ttrition

26, 500
32, 200
36, 250

these workers with their primary sources of earn­
ings or whether their primary employment was in
another industry.
For New York longshoremen who worked less
than 700 hours, data were obtained from the
BOASI records on total earnings on which social
security taxes were paid in 1962, whether from the
longshore or other industries. Analysis showed
that more than three-fourths of the longshore
industry personnel who worked less than 700
hours in the longshore industry in calendar year
1962 had earnings in some other industry. (See
table 5.) That longshoring was a source of
“extra” earnings was brought out by the finding
that of those who received less than $1,500 from
pier work, more than two-thirds had earned at
least $4,500 in covered wages and salaries. The
bulk of their income—at least $3,000—had no
connection with the loading and unloading of
Railroad Industry. A third case in which the
characteristics of workers in an industry were
derived from social insurance records involved a
report prepared for the Presidential Railroad
Commission.5 This report contains exceptionally
complete tabulation of manpower data for a single
industry. They came from the comprehensive
records of the Railroad Retirement Board. The
Board had work history information for each in­
dividual in the industry from which data could be
developed by occupation, showing age distribu­
tions, length of service, age at retirement or dis­
ability, periods of unemployment, and patterns of
BSee Studies Relating to Railroad Operating Employees, Ap­
pendix Volume III to the Report of the Presidential Railroad
Commission (Washington, D.C., February 1962).

239-630 o— 67-------2
Federal Reserve Bank of St. Louis


E n d of
a ttrition
p e rio d date

Ju ly
Ju ly
Ju ly
Ju ly
Ju ly
Ju ly


Lump-S um P ayments
Length of
attritio n


Cost of
a ttrition
paym ents

847. 97
901. 24
1, 039.90

cost of
attritio n

T otal
attritio n
plus lum p­
sum cost


1, 044.40

A nnual
tion to
to ta l cost


The report of the Commission provided a review
of past employment trends by occupation, an
analysis of occupational mobility, and separation
rates, as well as an appraisal of future employment
requirements of operating employees.
How the data proved useful can be illustrated
by one of the many problems considered by the
Commission—the phasing out of some railroad
firemen’s jobs in the event that a recommendation
was made to change the work rules to eliminate
firemen in some types of services. The question
asked was: If no firemen replacements were hired,
how long would it take for normal attrition (in­
cluding retirements, deaths, and movements to
other jobs) to reduce firemen employment to spec­
ified levels? Data were developed to show the
age and number of years of service of firemen.
Past annual separation rates by age for workers
for 10 years or more of service were developed,
as shown in table 6.
Computations were made of various plans pro­
viding lump-sum payments as a result of early
separations, and the costs to maintain workers if
they were permitted to remain on the job and let
normal attrition operate to reduce employment to
the determined levels. Table 7 is an example of
computations which shows costs of lump-sum pay­
ments, plus wages, while letting attrition reduce
the work force to determined levels assuming im­
mediate separations at different years of seniority.
Figures Speak For Themselves

This excursion into pension and welfare fund
records shows that the facts are often there for the
digging. For example, a recent investigation
showed that in most cities with a population over
250,000 detailed pension and welfare fund records
can be obtained for many construction crafts.



These facts are likely to be indisputable, since
both labor and management have a vital interest in
their correctness. The ways of presenting the
salient points are simple, too.
Beyond making a contribution to rational labormanagement relations, the data from these records
can help employers, unions, trade associations, and
local training facilities to develop sound man­
power policies. While there is a great deal of

manpower and occupational outlook information
for the Nation as a whole, there is much to be
done in improving local manpower data. Prop­
erly mined, pension and welfare fund records
could help business, labor, government, and aca­
demic researchers put manpower and training
needs in proper perspective. This would help
States and localities take the steps necessary to
develop human resources.

The 20th century has brought a new industrial world, built up through
continual changes in techniques, habits, and technology, with a consequent
creation and shifting of occupations. Some of the skilled trades of 1850 either
no longer exist or are fast disappearing; others, however, have expanded and
new trades have arisen to take the place of those no longer needed. Also a
large part of the machinery used today requires operators more skilled than
were the hand employees replaced by machines.
The purpose of this study has been to assemble reasonably comparable
data for selected significant occupations, both skilled and unskilled, and to
present the figures in sufficient detail for further analysis. The basic informa­
tion . . . was compiled from the decennial reports of the occupational census
of all persons 10 years of age and over in the United States, published by the
Bureau of the Census beginning with the year 1850, the first year in which
the population was classified by occupations. While employees in most of
the trades increased in actual numbers from one census period to another,
many of them show relative decreases when compared with the change in
Federal Reserve Bank of St. Louis

—“Occupational Changes Since 1850, as Shown
by Census Reports,” M onthly Labor Review, November 1933.

Out of Uniform
The Employment Experience
of Retired Servicemen
Who Seek a Second Career

For the great majority of former servicemen,
however, their specific military experience is
neither as much of an asset as they are led to be­
lieve (or want to believe) nor as much of a draw­
back as is sometimes popularly assumed by those
unfamiliar with the current realities of the mili­
tary establishment.
The Career Shift


Laure M. S harpe
A lbert D. B iderman*

of the military system
depends for its functioning on its ability to move
members out of the system shortly after they have
spent 20 years in active service. Only in this way
can a pyramidic structure such as the military
maintain its essential “open opportunity” features,
as well as satisfy its changing technical needs.
Thus, the system rests on a rather remarkable
assumption: that each year, many thousands of
individuals, more or less middle aged, whose train­
ing and experience in work was largely or ex­
clusively gained in the military, will be able to find
civilian jobs of at least roughly comparable eco­
nomic and status value. It assumes employment
opportunities in the civilian world which are not
unlike those in the military, and a large reservoir
of them.
The findings presented in this report1 suggest
that the assumptions on which military retirement
policies are based—the ready transfer of military
skills and credentials to the civilian environment—
have operated satisfactorily in most cases. There
were noteworthy exceptions, however: those who
were able to make a career in the military despite
educational deficiencies experienced greater dif­
ficulties in finding a suitable civilian spot than
those who had acquired formal educational cre­
dentials commensurate with the status and occu­
pation they aspired to attain after retirement.
Furthermore, men with a background in certain
specific military specialties often found themselves
particularly handicapped, whereas many others
were at a distinct advantage.

h e p r e s e n t o r g a n iz a t i o n
Federal Reserve Bank of St. Louis

It is clear from some earlier findings2 that the
problems of the military retired are similar to
those which many civilians—usually older work­
ers—must face. The very phenomenon of “retire­
ment” in the new sense of a mid-career change in
occupational role, institution, or both, is also a di­
rection in which some civilian occupations are
moving. Skill obsolescence and shrinking work
force requirements in certain employing institu­
tions are currently the most visible sources of this
pattern in the civilian world. Increasing expecta­
tions of mobility with seniority also make early re­
tirements necessary in stabilized civilian institu­
tions. Legislation establishing retirement rights
after 30 years of Federal civil service, regardless
of age, has recently been enacted. And there is a
steady movement toward setting earlier retirement
ages in pension systems. Thus, it was hoped that
a study of the midlife career changes of the mili­
tary might cast some light on those problems
which increasing numbers of civilians are expected
to confront.
Cohort and Sample

The data on which this study is based were ob­
tained from two sources :
1. A three-phase panel survey of selected mem­
bers of the cohort of officers and enlisted men who
retired in May 1964. Throughout this report, this
source is identified as the BSSR study.
2. Selected items from the September 1963 De­
partment of Defense Survey of Ketired Military
*Of the Bureau of Social Science Research, Washington, D.C.
1 This is the first of two articles excerpted from a report of two
Bureau of Social Science Research studies conducted under the
auspices of the Office of Manpower Policy, Evaluation and
Research of the U.S. Department of Labor. The full report is
entitled The Employment of Retired Military Personnel.
2 See especially U.S. Senate Committee on Armed Forces, A
Study of the Military Retired Pay System and Certain Related
Subjects j prepared by the Study Committee of the University of
Michigan, July 6, 1961.


Personnel. Subsequently, we will refer to this
source as the DOD study.
The BSSR study, based on the selection of a sin­
gle monthly cohort, presented certain advantages
as well as drawbacks. The principal advantage
was ease and economy of procedure. I t was pos­
sible to collect preretirement data at one given time
from a group of men known to be leaving the serv­
ice and since corrections for different dates of re­
tirement were unnecessary, the development of re­
tirement data was facilitated. But, by the same
token, caution must be used in generalizing from a
single monthly (or even yearly) cohort to the total
retired population, or using the experience of the
May 1964 group as a reliable predictor for the em­
ployment experiences of future cohorts. The
particular shortcomings of the sample will be dis­
cussed in greater detail below. On balance, how­
ever, we feel that the advantages of selecting a sin­
gle monthly cohort outweighed the disadvantages.
The intensive examination of the 1-month cohort
provides the basis for qualitative analysis of the
processes through which the transition from mili­
tary to civilian status takes place. Furthermore,
in our decision to adopt this design, we relied on
the availability of the DOD data to provide in­
formation on the overall success of retirees in the
job market, as well as on the differential experi­
ence of various components of the retiree popula­
tion. Some possibilities for longitudinal analysis
were also present in the large sample of DOD data.
The BSSR Study

Data collection for the three-phase BSSR study
took place over a 1-year span, from early March
1964 until the end of February 1965.
Phase I consisted of the administration of a pre­
retirement questionnaire to all career personnel re­
tiring in May 1964. Excluded from the study
population were various groups whose second
career patterns might be anticipated to be atypi­
cal, and who were not sufficiently large to warrant
separate analysis: those with a high degree of dis­
ability (over 30 percent) ; those over a given age
limit; women; and reservists who were retired un­
der Title III, PL 810. For practical reasons, we
also decided to eliminate from the study those men
who, during the months prior to retirement, had a
current duty station outside of the continental
Federal Reserve Bank of St. Louis


United States. Thus, the study population con­
sisted of all personnel due for retirement during
the month of May 1964 who met the criteria of
absence of disability established for the survey,
length of service, age, being male, and regular or
extended active duty career status.
Between March and May 1964, 3,350 question­
naires were distributed to career military personnel
retiring at the end of May 1964. Of this total,
2,878 individuals (86 percent) replied by the cutoff
date, September 21. A total of 2,638 question­
naires were processed for further analysis.
In addition, 116 respondents sent back the white
card which was attached to the preretirement ques­
tionnaire for the purpose of indicating that no
paid employment would be sought after retire­
ment. In Phase II, these individuals were sent
postretirement questionnaires to determine if any
of them had changed their minds about getting a
The known refusal rate for Phase I was exceed­
ingly small (1 percent). Only 32 individuals
wrote to tell us that they were not going to fill out
the questionnaire, and very few of these 32 made
negative comments about being asked to partici­
pate in the survey.
The preretirement questionnaire was a far more
extensive and demanding instrument than is usu­
ally considered appropriate for mail surveys of a
randomly selected population. Personal and edu­
cational background information, military career
details, and plans for retirement were among the
main topics covered in the questionnaire. Al­
though our pretests had shown that we could rely
on an unusually high level of motivation among
military trainees, the high proportion of completed
questionnaires and the small number of refusals in
the study proper constitute gratifying results.
Much of the credit for the high number of re­
sponses and the low refusal rate must go to the
Compensation Affairs Section, Office of the As­
sistant Secretary of Defense, Manpower, Depart­
ment of Defense, and to the four individual
services that distributed the initial copy of the
Phase I I participants were asked to submit
weekly and monthly reports on their job-seeking
activities. Furthermore, every time a participant
had a job counseling interview or an employ­
ment interview he was requested to complete and



send in a report on the interview. A questionnaire
was then sent to the job counselor or potential em­
ployer who had interviewed the retired military
man. These counselor and employer question­
naires tried to tap the interviewer’s opinions on
such items as the retiree’s chances for getting the
type of job he was looking for, training needs,
realistic salary expectations, and so forth. Each
time a retiree received an actual job offer, whether
or not he accepted it, he was asked to send in a
special Job Offer Form. When an individual ac­
cepted a job his case was closed for the intensive
Phase I I I involved postretirement question­
naires which were sent to all men (2,755) who had
answered the preretirement questionnaire, as well
as to those who had sent in cards indicating that
they did not plan to look for work. This question­
naire focused on the job-seeking, job-finding, and
job-changing processes during the first 6 months
following retirement, but it also repeated some of
the expectation and attitude items contained in the
preretirement questionnaire to enable us to study
the attitudinal changes which might have taken
place over this period.
The DOD Sample

In September 1963, the Department of Defense
conducted a Survey of Retired Military Personnel,
using a sample of 19,000 drawn from lists of all
currently retired uniformed personnel. This
study was primarily concerned wih matters other
than postretirement employment (its focus was
on medical care for retired personnel and their
families) but it included several items—dealing
with personal employment characteristics—perti­
nent to our interests.
Fifteen items on employment matters com­
parable with items in the intensive study
instruments were incorporated in the Defense
Department’s questionnaire which was mailed
during September 1963 to a sample of 19,000
retirees of all the services. The DOD question­
naires also incorporated items on military and
civilian background that were of high relevance
to our study. In effect then, the DOD study—in
those areas covered by its questionnaire—extends
the coverage span of the study to the years 1960-63.
Federal Reserve Bank of St. Louis


Preferences and Expectations

The overwhelming majority of the retirees—
83 percent—planned to enter the job market im­
mediately upon retirement; another 13 percent
planned to join the job hunt after a period of
relaxation. No doubt because they expected to
be gainfully employed shortly following separa­
tion, only 42 percent of the officers and 25 percent
of the enlisted men anticipated a decline in their
economic well-being in the first year after retire­
ment. At the same time, their initial salary
expectations were modest: the median salaries
expected by officers and enlisted men were respec­
tively $6,260 and $4,735. Obviously, many of
the men felt that in conjunction with their retired
pay and their use of military facilities, these
relatively low salaries would not lead to a drop
in their living standard. And they were exceed­
ingly optimistic about the future. Hardly any
of these men (3 percent) thought that they would
have lower incomes 5 years after retirement than
they had had in the service, and 46 percent of
both officers and enlisted men expected to be “much
better off.”
To a large extent, this “optimism” was based on
the men’s conviction that they had valuable occu­
pational skills to offer and that the civilian world
would make at least as good use of their talents
as the military had done. Prior to retirement,
most men were convinced that their service train­
ing would be of help in their post-retirement work.
Further, most felt that they brought to the job
market qualifications at least equal, and often
superior, to those of civilians doing the same kind
of work. Only 13 percent of all retirees consid­
ered themselves less qualified than the civilians
with whom they were about to compete. -Their
main concern was that their age might present
a problem. When asked to rate eight factors
which might affect their chances of finding a
suitable job, over three-fourths of the respond­
ents selected age., A sizable proportion (50-60
percent) chose “company hiring and employment
practices.” Conversely, status as a retired mili­
tary careerist was more often seen as an advantage
than as a drawback.
The majority were generally optimistic in their
expectations as to the length of time needed to lo-


M O N T H L Y L A B O R R E V IE W , JA N U A R Y 1967

cate a suitable job once they had started active job­
seeking efforts. Seventy percent of the enlisted
men and 64 percent of the officers expected to find
a suitable job within 3 months.
This does not mean that they saw no difficulties
before them. When asked how easy or difficult it
would be to locate a civilian job equal to their
service job in terms of pay, satisfaction, benefits,
interest and challenge, the jobseekers were less
sanguine. Sixty-two percent of the officers and 42
percent of the enlisted men thought it would be
difficult. But, once the initial difficulties of locat­
ing a job had been overcome, they looked forward
to a rosy future.
Furthermore, most men expected to be able to
accomplish the transition to a civilian job without
extensive retraining—only 45 percent of the
officers and 27 percent of the enlisted men had
made any plans for further training, education, or
retraining at the time they were about to retire.
While about two-thirds of the officers and half of
the enlisted men thought that they might need
some additional training to qualify for the civilian
jobs they hoped to get, this was largely visualized
as training that could be acquired on the job.
Many officers, however, either intended to com­
plete the requirements for a college degree or to
acquire a graduate degree:
Officers’ plans to obtain an academic degree (B S S R sample)

Total--------------------------------------No plans for academic degree__________
Plan to obtain academic degree________
Master’s _________________________
Ph. D ___________________________
Other (law, medical, divinity)_____













Qualifications and Aspirations

In the BSSR sample, the retirees were asked to
indicate their qualifications in the broad skill areas
listed in the questionnaire. These encompassed
most of the skills needed in the civilian job mar­
ket. From the list, they were asked to pick the
three skill areas in which they were best qualified.
Table 1 lists those skill areas which were checked
by at least 5 percent of the officers or enlisted men.
Most officers aspired predominantly to jobs at
the business-managerial level. Many enlisted
men shared this aspiration, but the skilled trades
were also frequently selected. The low interest in
Federal Reserve Bank of St. Louis

T a b l e 1.
P e r c e n t o f B r o a d C iv il ia n S k il l A r e a s in
W h ic h R e t ir e e s C o n s id e r T h e m s e l v e s B e s t Q u a l i­
f i e d 1 (BSSR S a m p l e )

Skill area

T o ta l2___________
A dm inistration. . _____
A viation_____ __ _
Personnel adm inistration________________
Organization and
m ethods. _ ________
Teaching__ ____ __
Supply and procurem e n t____________ . . .
Public relations. _. .
Security______ _____ . .
E lec tro n ic s____________
Mechanical work (all
types)____ ________
Com m unications_______
Research d e velopm ent.__
Engineering. _ _
C onstruction_________
Production___________ _
W riting__
______ _

(N = 556)


Skill area

T o t a l2

m en

Mechanical work
A dm inistration
Supply and procurem ent.
Personnel adm inistration
T ransportation and
commerce. _ _
A viation
C lub and food. __ ____
General clerical. _
C o nstruction... __
C omm ii n ieat ion s
O rdnance
Organization and
m ethods
Public relations
A griculture
_ _ _
Medicine and hospital___


1 Proportion nam ing skill area as 1 of 3 in which they are best qualified.
2 Because of m ultiple choice of skill, percents add to more th a n 100.

technical jobs, reflecting a limited perception of
competence for all but the small group of men
qualified in electronics, is noteworthy. Con­
versely, it is also clear that, among both officers
and enlisted personnel, men with administrative
and quasi-administrative experience and aspira­
tions dominate. This somewhat lopsided skill dis­
tribution is undoubtedly a factor in the employ­
ment difficulties experienced by some of these men.
The preretirement questionnaires listed types of
employing institutions and asked the respondents
to state for each one whether it was preferred, was
acceptable, or was unacceptable. Among enlisted
men and officers, the Federal Government was the
institution most frequently checked as preferred.
A much higher proportion of enlisted men than
officers preferred Federal employment, however;
about one-fifth of the officers, in fact, listed the
Federal Government unacceptable as an employer.
The difference presumably is affected by the dual
compensation and dual employment statutes in
1964 (modified since then by legislation). Regular
officers in the sample were still largely barred
from civil service. Large business (over 1,000
employees), medium-sized business (50 to 1,000
employees), and State and local government were
the other types of institution most commonly
designated as preferred.
These preferences for affiliation with large
bureaucratic organizations are clearly related to


the civilian job roles for which most of these men
see themselves qualified. The great majority of
the men apparently do not visualize a second
career which would involve a radical departure
from their military work pattern. Most of them
rather plan to replicate their service working life
in a civilian setting. There are exceptions, of
course, with an occasional preference for selfemployment, part-time employment, or “unusual”
occupations which would satisfy a hobby. But,
for most of the officers and enlisted men, aspira­
tions were for orderly careers with a large
This preference probably has its roots in the
men’s job value system. When asked prior to re­
tirement to rate 19 job attributes, 94 percent of the
officers and 88 percent of the enlisted men rated
“chance for advancement” as a very important or
somewhat important factor in judging a job. A
job that is respected in the community was con­
sidered important by 85 percent of the officers,
whereas 80 percent of the officers rated as impor­
tant the job location in a specific geographic area.
Salary considerations, albeit modest ones, were the
second most preponderant type among the enlisted
men: 84 percent thought it important to earn at
least $5,000 on the post-retirement job. Not at all
surprising, given the potentially long and ir­
regular hours on military duty, is the fact that 81
percent of the enlisted and 78 percent of the ofT able 2. E mployment Status and B ranch
(DOD Sample)


S ervice

Branch of service
E m ploym ent status
A rm y


M arine

(N =460) (N =192) (N =50)

T o ta l_____________
Full-tim e em ployed___
P art-tim e em ployed____
Looking for em ploym ent - .
Will look for em ploym ent.
R etired _____________
Full-tim e stu d e n t________

E nlisted M en

N avy



(N=228) 1(N=930)












(N = 535) (N =946) (N = 122) (N = 540) 2(N=2143)

T o ta l_______ _____ _






Full-tim e em ployed____
P art-tim e em ployed____
Looking for em ploym ent. _
Will look for em ploym ent.
R e tire d .. _______
Full-tim e s tu d e n t________






1 Excludes 7 no answers.
2 Excludes 18 no answers.
Federal Reserve Bank of St. Louis


fleers rated regular hours as important.. On the
other hand, freedom from supervision—which one
might have assumed to be of interest to men who
had worked for 20 years or more in a highly
hierarchical context—was seldom rated important.
Long-run salary expectations were generally
modest. To earn at least $15,000 or even $10,000
was not among the most frequent stipulations for
a job, not even among officers. As was previously
shown, they expected to earn only modest salaries
in their first post-retirement job.
Interest in fringe benefits—notably, a claim to
second pension—was considerable, however. It
was greatest among the enlisted men, 77 percent of
whom thought it important to hold a job covered
by social security and 59 percent, a job covered by
pension. While only 32 percent of the officers
stressed pensions, half of them wanted their job to
be covered by social security. The superior finan­
cial resources of the officers and their significantly
greater military retirement pay undoubtedly ex­
plain their lesser concern, but the responses of both
groups clearly indicate that military retirement
pay alone is considered inadequate protection for
one’s old age.
In summary, the retiree’s “ideal” job as
it emerges from the data is one with opportunity
for recognition and advancement, but not neces­
sarily much “executive” leeway (for officers) or in­
dependence (for enlisted men). Regular hours,
retirement benefits, and a congenial environment
are more important than high salaries, freedom
from supervision, opportunity to travel, or a
chance to make important decisions and exert
leadership. In this, too, the preferences of the
military retired appear to be quite similar to those
of his civilian counterparts.
In the Job Market

The great majority of the retirees in the BSSR
sample of May 1964 had been able to locate a job
of some kind by the time they were contacted 6
to 8 months after their retirement. At the time
they completed the post-retirement questionnaire,
71 percent of the officers and 76 percent of the en­
listed men reported that they were employed.
Sixteen percent of the officers and 21 percent of the
enlisted men were actively looking for work at
that time. The others—13 percent of the officers



and 3 percent of the enlisted men—were full-time
students, those unable to work due to physical rea­
sons, those now permanently retired with no plans
for future employment, and those who were not
active seekers at the time of the survey but w h o
said they would be looking for work in the future.
In the main, placement took place rapidly.
Among the jobholders, over one-half had started
to work within 2 months of their retirement
date—54 percent of the officers and 50 percent of
the enlisted men—and an additional 32 percent of
the officers and 33 percent of the enlisted men
found their first jobs during the third and fourth
month after retirement.
The proportion of men actively looking for
work at the time of the survey is quite high com­
pared with the male civilian population in the
same age group. This no doubt resulted partially
from late job-seeking starts. Those who had not
located a job within 6 to 8 months after retirement
had waited longer than their job-holding col­
leagues to undertake active job-seeking efforts.
Probably the jobseekers also included a few men
who had found a job since retirement, but who
were again in the job market at the time they re­
ceived the post-retirement questionnaire. Many
of the unemployed doubtless succeeded in locating
jobs after they were surveyed. The DOD data, in­
deed, show a lower unemployment rate among the
men who retired earlier. For both officers and en­
listed men who were retired between 1958 and
1959, only 4 percent were looking for work at the
time of the survey in 1963. An additional 1-2
T able 3. E ducational L evel and Job Status (BSSR
S ample)
T o tal
Educational level

Job status

N u m ­ P e r­
ber cent


M iddle

seekers Others

T o ta l______________







N o t high school g ra d u a te ..
H igh school g rad u ate_____
Some college ............... .........
College graduate_________







T o ta l______________ 1.614











E nlisted M en

N ot high school g ra d u a te ..
H igh school graduate . . . .
Some c o lleg e______ _____
College g raduate_________
Federal Reserve Bank of St. Louis


percent had despaired of finding a job and had
given up looking and another 1 percent were about
to begin looking for work.
Although the percentages are small, there is a
disturbing uptrend in the DOD survey unemploy­
ment figures each year between 1960 and 1962 so
that, for officers, 5 percent of the 1961 retirees were
looking for work and 7 percent of the 1962 retirees.
For enlisted men, the figures are 4 percent of the
1960, 6 percent of the 1961, and 8 percent of the
1962 cohorts. This trend may indicate either a
fairly slow adjustment to the job market by some
retirees or slightly increasing difficulty in getting
placed. There has been some speculation that a
large number of the openings in the economy for
these second careers, especially for enlisted men,
are in interstices of limited capacity and that, con­
sequently, progressively greater difficulties can be
expected as the number of retirees seeking employ­
ment climbs.
Variations in Employment Rates

Data from both the BSSR and DOD surveys
suggest that jobseekers and jobholders differ with
respect to several important personal, behavioral,
and attitudinal dimensions. Thus, the DOD data
show there are variations in employment status
between men who served in the various branches
of the service (table 2). Naval and Marine Corps
retirees, both officers and enlisted, have a higher
rate of employment than Army and Air Force
retirees. The interservice differences in employ­
ment rates are more pronounced in the BSSR
sample of more recent retirees. Again, Air Force
and Army men—and especially Army enlisted men
—are most frequently in the jobseeker categories.
Twenty-five percent of the Army and 21 percent
of the Air Force were unemployed, compared with
15 percent of the Navy men and 11 percent of
Perhaps these differences are due partially to
the slightly higher educational levels in the Navy
and Marine Corps. Education and age are gen­
erally believed to be of crucial importance in their
effect on employability. We examined the rela­
tionship between educational achievement of three
groups of retirees: “Early jobholders” (those who
had lined up a firm civilian job offer prior to retire­
ment), “middle jobholders” (those who found a


job during the 6-8 month period following retire­
ment), and jobseekers (those who reported
themselves looking for work 6-8 months after re­
tirement) . The findings are summarized in table 3.
In general, the higher educated usually experi­
enced earlier job placement and less unemployment.
Only the small group of officers who were commis­
sioned despite the lack of a high school education
deviated from this pattern. As we will show,
moreover, education appears even more significant
as a determinant of the kind of job the retiree is
able to obtain than of employment status per se.
The presumed importance of age in getting a
job—and especially the supposed disadvantages of
the older jobseeker—is not clearly demonstrated by
the data for the entire BSSR sample. Although,
as was shown earlier, the men themselves were
Federal Reserve Bank of St. Louis


quite apprehensive on this score, only the fears of
the enlisted men appear justified. Among the en­
listed retirees, there are indeed significant differ­
ences in the unemployment rate by age group, with
the older groups at a distinct disadvantage.
Religion and race affect job status among enlisted
men. (The officer sample is too homogeneous in
race and religion for a sensitive test of differences.)
Negroes and members of other minority groups had
relatively greater difficulty in obtaining employ­
ment. Thirty-three percent of the Negroes and 27
percent of the members of other minorities (Orien­
tals, Spanish Americans, American Indians) were
still unemployed 6-8 months after retirement,
whereas only 17 percent of the white Protestants
and 19 percent of the Catholics were still looking
for work.

Hourly Earnings
Differentials by Region
and Size of City
V ictor R. F uchs *

E ditor’s N ote :

This is an excerpt from an Occas­
ional Paper to he published by the National
Bureau of Economic Research as part of its
study of productivity in the service industries
undertaken with the assistance of a grant from
the Ford Foundation. For ease in reading,
signs to denote elisions have not been em­
ployed. Most of the conclusions are pre­
sented; the full paper should be considted for
additional evidence, bibliographical refer­
ences., and details concerning data and

T he e x i s t e n c e of lower wages in the South than
in the rest of the United States has been a subject
of continuing practical and scientific interest. For
businessmen, union leaders, and public officials, the
regional wage differential has significant implica­
tions for policy purposes. Some economists have
concentrated their research on explaining the
differential. Others have found it to be of con­
siderable value in testing economic theories and
in deriving quantitative estimates of important
economic relationships.
Thus, the fact that the price of labor relative to
the price of capital differs between regions permits
the estimation of production functions for individ­
ual industries and the calculation of elasticities of
substitution between labor and capital.
Similarly, if it is true that the regional wage
differential is significantly greater for unskilled
than for skilled labor, it should be possible to use
this information to gain insights concerning the
elasticity of substitution of human capital for raw
labor. Such insights would contribute to an
understanding of interindustry differences in rates
of change of output per man over time. In
addition to its role in the estimation of production
Federal Reserve Bank of St. Louis

functions, the wage differential is important in the
analysis of income distribution, population migra­
tion, and changes in the location of manufacturing.
Geographical Standardization

Standardization for geographical differences in
industry or occupation mix is a useful way of
getting at the question of geographical differences
in labor quality, but it is deficient to the extent
that there are labor quality differences within the
same industry or occupation. An alternative
approach to the problem would be to look at such
labor quality proxies as color, age, sex, and
education, since it is well known that there are
significant wage differentials at the national level
associated with each of these variables.
The purpose of this paper is to present new
estimates of geographical wage differentials based
on average hourly earnings of all nonagricultural
persons as calculated from the 1960 Census of
Population. The availability of a 1/1,000 sample
of the census on punched cards makes it possible
to standardize simultaneously for color, age, sex,
and education1 and to investigate the relation
between city size and wages along with the analysis
of regional differentials.
The population studied included all persons
who were employed in nonagricultural industries
during the Census “reference” week (varying
weeks in April) in 1960, and who had some
earnings in 1959. The total number of persons
covered in the sample was 56,247. Estimates of
annual hours worked were obtained for each
worker by multiplying the number of weeks
worked in 1959 by the number of hours worked
in the Census reference week in April 1960.
Though the use of hours for a single week in a
different year and inaccuracy in reporting of
hours may produce considerable error for any
single worker, no large or systematic error is pres­
ent in comparisons of groups. Annual hours and
annual earnings were each aggregated across
»Associate Director of Research, National Bureau of Economic
1 The computer program was written by Charlotte Boschan of
the National Bureau of Economic Research with the assistance
of a grant of computer time from International Business Machine
Corp. Details concerning the program are available upon request
to the author.
Certain data used were derived from punch cards furnished
under a joint project sponsored by the U.S. Bureau of Census
and the Population Council. Neither the Census Bureau nor
the Population Council assumes any responsibility of the validity
of any of the figures or interpretations of them, published herein,
based on this material.


workers in each group. Average hourly earnings
for each group in 1959 were estimated by dividing
aggregate earnings by man-hours. These esti­
mates are referred to as “actual” hourly earnings
to distinguish them from “expected” earnings.
“Expected” earnings for each region or city
size were obtained by multiplying, for each worker,
the estimated number of hours worked in 1959 by
the national hourly earnings rate for his particular
color, age, sex, and education cell. (There are
168 such cells.) These earnings were then aggre­
gated and divided by the aggregate man-hours to
get “expected” hourly earnings. To the extent
that labor quality is associated with color, age, sex,
and education, differences in average “expected”
earnings across regions and city size groups
measure differences in labor quality; differences
in the ratio of estimated actual earnings to
“expected” earnings measure differences in wages,
holding labor quality constant.2
It should be noted that the differentials studied
in this paper are relative differentials; they are
obtained by dividing “actual” by “expected”
earnings. I t is also possible to study absolute
differentials by subtracting expected from actual
earnings. Because our primary interest is how
demand for labor responds to changing wage
rates, the relative differentials appear to be more
relevant. If one were primarily interested in
questions concerning the supply of labor, absolute
differentials would be used.
Regional Differentials

The regional differentials in average hourly
earnings in dollars and in index-number form with
the South equal to 100, are shown in table 1. The
figures contain few surprises. Earnings are signi­
ficantly lower in the South than in other regions;
earnings in the West are slightly higher than in the
Northeast or North Central divisions. The dif­
ference between the South and the rest of the
country is much greater for nonwhites than for
whites; within each color group, the differentials
for males and for females appear to be about the


The following tabulation shows the extent to
which regional earnings differences can be ex­
plained by differences in color, age, sex, and
“ Expected” Average Hourly Earnings, by
Region, 1959 (dollars per hour)
T o tal______________
White m a le s .,...... .............
White females___ ____________1.77
N onw hite m ales_______
N onw hite females______


Where the comparison is for a given color-sex
group, the effect of differences in age and educa­
tion is reflected in the “expected” earnings. Labor
quality, as measured by these variables, appears
to be somewhat lower in the South than in the rest
of the country, and highest in the West. The
regional difference is slightly greater for males
than for females. In fact, white females in the
South have slightly higher “expected” earnings
than in the Northeast and North Central.
A significant regional wage differential remains
after standardizing for color, age, sex, and educa­
tion. (See table 2.) For all nonagricultural em­
ployed persons, the differential between the South
and the rest of the country is approximately 17
percent. It is much greater for nonwhites than
for whites and is smallest for white males where
the differential is of the order of 14 percent,
It is worth noting that the standardization pro­
cedure used here is not the only one available for
studying this problem. It would be equally appro­
priate to standardize by using the actual earnings
rates for each color, age, sex, and education cell
in each region, weighted by the national distribu­
tion of man-hours. When the two standardization
T able



A v e r a g e H o u r l y E a r n in g s , N o n a g r ic u l ­
E m p l o y e d P e r s o n s , b y R e g i o n , 1959




N o rth ­

N orth
C entral

W est

Dollars per hour
T o ta l__

_ _

W hite males
W hite fem ales..
N onw hite m ales_____
N on w hite females___






$2. 54






2. 22


2. 25

2. 43

Index, South = 100

3 Systematic differences in national hourly earnings rates by
color, age, sex, and education suggest that these variables do, to
some extent at least, measure labor quality. The white-nonwhite
differences are probably due in part to market discrimination, but
color is relevant to quality because of the likelihood that, at given
levels of education, nonwhites have received poorer quality school­
ing and less on-the-job training than have whites.
Federal Reserve Bank of St. Louis

_ _






W hite males ______
W hite females
. .

T o tal. __






N onw hite m ales___
N onw hite females____






Source: U .S . Censuses of Population and Housing: 1960 1/1,000 Sample.



procedures yield markedly different results, inter­
pretation is difficult. Fortunately, in this instance
the two standardization procedures give similar
results. For white males the difference in results
is of the order of 1 percent. For nonwhite females
it goes as high as 2 percent.
This section has shown that only a portion of
the gross non-South/South wage differential is at­
tributable to demographic differences in the labor
force. I t is sometimes argued that the remainder
is largely attributable to differences in city size,
rather than to a regional differential at given city
sizes. The next section deals with the question of
wage differentials associated with city size.
City-Size Differentials

A strong and consistent positive relation exists
between earnings and city size. Average hourly
earnings tend to rise with city size in every region
and for every color-sex group. The rate of in­
crease is sharpest in the South, and least pro­
nounced in the Northeast and West. I t is also
sharper for nonwhites than for whites. Because
the South has a relatively large proportion of non­
whites, a question arises whether the sharper citysize gradient is predominantly a regional or color
phenomenon. The last four rows of table 3 show
that only the regional difference is significant.
Holding color constant, the city-size gradient is
steeper in the South than in the non-South for both
whites and nonwhites. Holding region constant,
there is no evidence of a steeper gradient for non­
whites than for whites.
T able 2.

R atio of Actual to “E xpected” H ourly
E arnings, by R egion, 1959




N o rth ­

N orth
C entral

W est

T o ta l.. _____






W hite males .
W hite fem ales.. . . .


1. 03



1. 05
1. 07

N onw hite males
N onw hite females . .



1. 09



Index of ratio, South = 100
T o ta l________






W hite m ales. _
W hite fem ales.. . . .






N onw hite m ales_____
N onw hite females . . .





Federal Reserve Bank of St. Louis

Little of the city-size wage differential can be
explained by differences in color, age, sex, or edu­
cation (table 4). There is a slight tendency for
“expected” earnings in rural areas to be below
average, but on the whole the labor force “mix”
is similar in all city-size categories.3 Strictly
speaking, similarity of expected earnings only
proves that the “mix” is similar on average; there
could be significant offsetting differences in the
distributions by years of schooling or other vari­
ables. In fact, the distributions are quite similar,
but there is a tendency for the larger cities in the
non-South to have a greater than average share
of workers in the lowest and the highest educa­
tional classes.
The sharp variation in actual earnings, com­
bined with great similarity in “expected” earnings,
means that the ratio of actual to “expected” varies
greatly with city size. These ratios indicate that
within each region there is a very considerable
range of earnings, after standardizing for color,
age, sex, and education. They also show that
within each color-sex group, wages vary consid­
erably by city size after standardizing for age and
Regional Differential Adjusted

The South has a much larger share of its nonagricultural work force outside of Standard Met­
ropolitan Statistical Areas and a much smaller
share in SMSA’s of 1 million and over than does
the non-South. This fact, plus the existence of a
significant wage differential across city sizes within
regions, suggests the possibility that a substantial
portion of the regional wage differential observed
in table 2 is a reflection of the city-size effect.
One method of adjustment consists of taking
the ratio of actual to expected in each city size in
each region and weighting it by the share of that
city size in national total man-hours.5
3 When the differences in “mix” are very small, the problem
of choosing between alternative standardization procedure is
4 The city-size differential may be biased upward to the extent
that some nonagricultural employed persons may have been
employed in agriculture in 1959, and a disproportionate share of
such persons may be in the areas outside SMSA’s. The chances
of this being an important source of bias seem very slight.
5 The possibility of an alternative standardization procedure
arises again and again, fortunately, the other procedure gives
very similar results, except for nonwhites in the individual
regions of the non-South.

T able 3.

Average H ourly E arnings, N onagriculE mployed P ersons, by City Size, 1959
U rb an places

Ite m

Stan d ard M etropolitan
Statistical Areas

R ural
U nder 10,000- U nder 250,000- 500,000- 1,000,000
10,000 99,999 250,000 499,999 999,999
Dollars per hour

T o tal______ $2.00





$2. 56


$1. 71
2. 22

$1. 82

2. 41
2. 50

2. 54

2. 50
2. 61
2. 62

2. 67
2. 51
2. 79
2. 71

2. 90

W hite m a le s.. _. 2.24
W hite fe m a le s...
N onw hite m a le s.. 1.28
N onw hite females. .83



2. 78

2. 77
1. 89

2. 00

2. 00








2. 22
>1. 80

1. 62




2. 71


S o u th ___ . . _ __
N on-South___ __
N o rth east_______
N o rth C en tral___
W est. . . .

W hites______
N onw hites__
N on-South:
W hites______
N onw hites___

1 Based on fewer th a n 50 observations.

Whereas, after adjusting; for color, age, sex, and
education, the differential between the non-South
and the South was of the order of 17 percent; it is
about 9 percent after city size is also taken into
account. City size does make some difference, but
does not explain all of the regional differential.
It makes the greatest difference in the Northeast,
and the least in the North Central. The regional
differential continues to be much greater for non­
whites than for whites.
It is also possible to recalculate the city-size dif­
ferentials holding region constant. The effect of
this adjustment proves to be relatively small. In
general, hourly earnings in the largest urban areas
are approximately 30 percent higher than in the
rural areas and small towns, and approximately 15
percent higher than in the small Standard Metro­
politan Statistical Areas.


These estimates cannot be precise, partly because
of the limitations of the data, and partly because
the standardization techniques are necessarily im­
perfect. Some experimentation with alternative
standardizations produced similar results; these
estimates therefore are probably reasonably good
guides to the order of magnitude of the various
factors that contribute to the regional wage differ­
For white males alone, the gross non-South/
South differential is approximately 18 percent.
Differences in education and age explain less than
one-fourth of the differential; city-size differences
explain more than one-third; and the regional dif­
ferential, after adjusting for all these factors, is
slightly more than one-third the gross differential.
In the case of white females, education and age do
not explain any of the 17 percent regional differ­
ential, but city size explains about one-half of it.
For nonwhites, the gross differential is of the order
of 60 percent. Differences in education and age
explain about one-fourth of the differential for
males, but only one-tenth for females. The re­
verse is true for city size, so that both nonwhite
groups show the same net differential, approxi­
mately 35 percent.
An attempt to explain interindustry differen­
tials in average hourly earnings through multiple
regression analysis offers some confirmation of
these findings. The percentage of employment in
T able 4.

“E xpected” A verage H ourly E arnings,
City S ize, 1959
U rban places

Ite m


Standard M etropolitan
S tatistical Areas

R ural
U nder 10,000- U nder 250,000- 500,000- 1,000,000
10,000 99,999 250,000 499,999 999,999
Dollars per hour


The observed average hourly earnings in the
non-South are about 25 percent higher than in the
South. About one-third of this differential is
attributable to regional differences in the labor
force as measured by color, age, sex, and education;
about one-third is related to regional differences
in city size; and about one-third of the differential
remains, after adjusting for labor force composi­
tion and city size.
Federal Reserve Bank of St. Louis

T o ta l______ $2.41



$2. 49

$2. 50



S outh______ ____
N on-South______
N o rth east_______
N orth C entral___
W est_________ __

$2. 26
2. 56
2. 49
2. 59

2. 62
2. 59
2. 60
2. 72

2. 55
2. 55
2. 51

2. 54
2. 63

2. 62

2 53
2. 57


W hite m ales_____
W hite females___
N onw hite m a le s..
N onw hite females.

2. 70
1. 74

2. 89


2. 86

2. 85

1. 78
1. 87
1. 23



2. 56


2. 57

2. 59

2. 60
1. 56




2. 57

1. 74

2. 55

2. 61

2. 63

W hites______
N onw hites__
W hites______
N onw hites___

1 Based on fewer th a n 50 observations.

tlie South, the percentage of employment in large
cities, “expected” hourly earnings, extent of
unionization, and size of employer were used as ex­
planatory variables. Taken alone, the regional
variable is significantly related (inversely) to
hourly earnings. The significance of the relation­
ship is sharply reduced when account is taken of
“expected” earnings and is further reduced when
account is also taken of the percentage of employ­
ment in large cities. The remaining relation be­
tween earnings and percentage in the South is en­
tirely explained by industry differences in extent
of unionization.
One of the important conclusions of the paper
is the findings of a substantial difference in hourly
earnings across city size. Furthermore, these dif­
ferences are relatively unaffected by standardi­
zation for labor force composition and regional
mix. Standardized hourly earnings in the
SMSA’s of 1 million and over are typically 25 to
35 percent higher than in the areas outside SMSA’s
within the same region, and about 15 percent
higher than in SMSA’s of less than 1 million. The
city-size gradient is steeper in the South than in
the rest of the country. Multiple regression
analysis across industries again tends to confirm
these findings. Furthermore, the regression anal­
ysis rejects the hypotheses that the higher earnings
in the large cities can be attributed to unionization
or size of employer.
The non-South/South differential is found to be
inversely related to skill level as measured by edu­
cation, sex, and color. The fact that the regional
differential varies with education within each color
may help to shed new light on an old problem—the
reason for the large regional wage variation for
nonwhites compared with whites. This has usu­
ally been explained in terms of greater market dis­
crimination against nonwhites in the South than
in the non-South. But there is an alternative ex­
planation. It may reflect, at least in part, the
fact that nonwhites are disproportionately of low
skill, both in the South and the non-South, and
that the regional differential is greater, the lower
the skill level, regardless of color. This hypothe­
sis appears worthy of further study. An alterna­
tive way of interpreting the data would be to say
that there is more economic segregation in the
South than in the non-South. This depresses the
price of nonwhite unskilled labor but raises the
Federal Reserve Bank of St. Louis


relative price of non white skilled labor because of
its relative scarcity.
The city-size differential in hourly earnings ap­
pears to be about the same at all levels of educa­
tion. One possible explanation of this differen­
tial is differences in cost of living. Adequate
data are not available for a thorough check of this
hypothesis. Fragmentary information provided
by the Bureau of Labor Statistics on the cost of
living in different cities suggests some slight cor­
relation between hourly earnings and prices,6 but
intercity differences in cost of living appear to be
small relative to differences in hourly earnings.
However, it should be noted that conventional
measures of cost of living do not include items like
length of time needed to get to work which may
vary systematically with city size.
One of the most promising hypotheses to explain
the city-size differential is that it reflects differ­
ences in labor quality not captured by standardi­
zation for color, age, sex, and education. This
might take the form of better quality schooling,
more on-the-job training, selective in-migration to
the big cities of more ambitious and hard working
persons, or other forms. Another possible expla­
nation is the existence of a disequilibrium in the
supply of labor and capital. Surplus labor from
agriculture may tend to move first to the small
towns, and then later to the larger cities. Capital
may be more readily available in the large cities.
If there is disequilibrium, we should observe a
tendency for labor to migrate from small to large
cities, and for industry to move in the reverse
Possible explanations of the city-size differen­
tial such as unmeasured labor quality, cost of liv­
ing, and disequilibrium are not mutually exclusive.
Since the differential to be explained is quite large,
it is possible that all of them are valid and signifi­
cant, with each explaining a part. Just as the
regional differential has been put to good use in
the testing of economic theories, it would appear
that the large city-size differentials in hourly earn­
ings revealed in this paper could provide a fruit­
ful basis for considerable new economic analysis.

8 See “City Workers Family Budget for October 1951,” Monthly
Labor Review, May 1952, pp. 520-522, and “The Interim City
Workers Family Budget,” Monthly Labor Review, August 1960,
pp. 785-808.

Oak Glen—
A Training Camp
for Youth
Jane R. Chapman *

I n 1963, the California legislature established Oak
Glen training camp for unemployed youth in a
rural area between Riverside and San Bernardino,
Calif.1 Little is known about the effectiveness of
current programs such as the one at Oak Glen
because little serious research has been done on
work camps. For this reason, the U.S. Depart­
ment of Labor arranged for the Stanford Research
Institute (SRI) to undertake a study which would
determine the extent to which the Oak Glen pro­
gram was meeting its stated goals.2 The urgent
need for this information led to primary reliance
on existing data, such as camp files or employment
service information.
The study covered 479 young men who either
entered the program or were eligible to enter be­
tween November 1963 and July 1964. Its objec­
tives were to determine: the proportion of trainees
who find employment or enroll in further training
following the camp experience; the extent to which
trainees who entered the program but terminated
before completing the program may have bene­
fited from their experience—that is, have found
employment or enrolled in additional training
or education programs; the factors within the
camp experience that benefited trainees in mov­
ing toward the goal of employment or further
training or education; and the characteristics of
boys who are likely to benefit from such a program
and the characteristics of those who are not.
The Oak Glen Camp prepared young men 16
to 21 years old for jobs as forestry trainees and in
occupations related to camp operations, such as
Federal Reserve Bank of St. Louis

cooks and laundry workers. A voluntary educa­
tional program, including courses in reading and
arithmetic, was also available to the youth. The
enrollment period was usually for 6 months,
although this was at times extended to 1 year. In
order to qualify for the program, prospective
trainees had to be out of school; unemployed with
poor employment prospects because of lack of
skills and education; and without conviction for
A “profile” of typical trainee characteristics pro­
vides perspective on the challenge faced by the
Oak Glen Camp. The average trainee had neither
employment experience, nor knowledge of how to
look for a job. His life had been an almost un­
relieved series of failures. His physical condition
was not good. He had an IQ below average, was a
low achiever in reading and arithmetic, and did
not know how to use the most elementary tools. He
came from an economically disadvantaged, and
often a broken, home.
Termination of Training

Because a great number of trainees dropped out
of the Oak Glen program, the question of termi­
nation was a crucial one for the camp. Of the
group of trainees entering the program in No­
vember 1963, 66 percent terminated before gradu­
ation. The rate dropped for those entering in the
summer of 1964 (to 58 percent), but the differences
were not statistically significant. The camp staff
felt that the first few weeks were critical and that
if they kept a trainee for that length of time there
was a good chance that he would stay the full term.
Among all trainees entering during the period
studied, 22 percent terminated during the initial
2 weeks.
As would be expected, the graduates of the pro­
gram were more likely to become employed, enter
the military, or return to school than were the
*Of the Office of Manpower Policy, Evaluation and Research,
Manpower Administration, U.S. Department of Labor.
1 In the summer of 1965, support of the Oak Glen Camp was
transferred from the State of California to the Office of Economic
2 An Evaluation of the Concept of Trainee Camps for Unem­
ployed Youth, Gertrude D. Peterson (Stanford Researcli Institute,
Menlo Park, Calif., 1965). A monograph based on the full report
was published by the Department of Labor: Oak Glen—A Train­
ing Camp for Unemployed Youth (Manpower Administration,
Manpower/Automation Monograph No. 5, Washington, D.C.,
1966). Both the original report and the monograph contain a
bibliography resulting from the literature search undertaken as
part of the study.


terminees. In fact, the likelihood of terminees
being employed increased the longer they stayed
in camp.
Determining the real reasons for dropping out
of camp was extremely difficult. I t was necessary
for the researchers to rely on subjective file mate­
rial which gave a staff member’s opinion as to the
reason for a termination. The accuracy of this
information, therefore, could have been affected
not only by the trainees’ reluctance to reveal rea­
sons for leaving the camp, but also by the staff’s
interpretation of the trainees’ explanations.
The most frequent reason for dropping out cited
in the trainees’ files was a general one—“disinter­
ested, unwilling to participate.” Forty-six per­
cent of the terminations were attributed to this
reason. Dismissals from camp accounted for 13
percent of the terminations; 11 percent were at­
tributed to trainee immaturity, and 3 percent to
emotional or unstable behavior. Of all the trainees
who dropped out before graduation, 9 percent said
finding employment was their reason, and 2 per­
cent indicated an intention to enter military serv­
ice. The remaining 6 percent had a variety of
reasons for leaving.
The researchers considered homesickness among
the young men a serious cause for dropping out,
which can perhaps be accounted for by the fact
that a large proportion of them were under 18
years of age. Though only 10 percent of the ter­
minations were ascribed to this problem, the re­
search team felt that not all cases of homesickness
were identified.
A number of prospective trainees did not show
up at Oak Glen after acceptance into the program,
and it was not possible to obtain information for
44 percent of these cases. I t was determined that
17 percent of the “no shows” joined the Armed
Forces. The balance accepted employment (17
percent); returned to school (10 percent) ; changed
their minds about joining the program (7 per­
cent) ; or were kept away by family problems (4
Whether trainees graduated or terminated
varied sharply according to their level of educa­
tion. The more education a trainee had before
coming into the program, the greater the likeli­
hood of his graduating. The data showed a steady
progression from 24 percent graduating among
trainees who had not completed the ninth grade to
58 percent among those with a high school
Federal Reserve Bank of St. Louis


diploma. The age of the trainee also seemed to
affect his propensity to drop out. I t was clear
from the data that 16 yearolds were least likely
to graduate, and 19 yearolds were most likely to
Educational Factors

Of the Oak Glen trainees studied about 21 per­
cent were high school graduates; about 61 percent
had had some high school education; and 11 per­
cent had completed less than the ninth grade.
The educational attainment of 7 percent was
The SRI study found differences in post-train­
ing employment status according to educational
level. High school graduates were more likely to
be working (whether they graduated or termi­
nated), while those who had not completed the
ninth grade were less likely to be working. The
same was true of improvement m general attitude,
as rated by the camp staff. The more education
a trainee had, the more likely he was to be rated
as having improved in attitude over the course of
the program. The research team determined that
there was a steady progression in the staff’s rating
of attitude improvement—from 31 percent of
those who had not completed the ninth grade to
57 percent of those who graduated from high
The reading levels of the trainees were far below
the level indicated by the years of education com­
pleted. Most trainees used the camp’s educa­
tional facilities and the gains in reading achieve­
ment while at Oak Glen appeared to be significant.
Among all the graduates tested for reading gain,
47 percent had gained a year or more. This was
considered particularly impressive, because the
trainees in general had never done well in school.
A gain of a full year during the 6-month training
period is twice the gain that would be expected of
an average student in a regular school in the same
period of time.
The level of mathematics achievement on enter­
ing the training program was considerably lower
than reading achievement among the trainees.
Those graduates who were retested were at a much
higher math level upon completing the program—
55 percent at the sixth grade level or higher—
than when tested upon entering the program. Of
those retested, 45 percent gained a year or more,


and 25 percent gained from a half to nine-tenths
of a year. The marked improvement in reading
and mathematics resulted in part from the fact
that graduates tended to have higher entry scores
in these subjects. Nevertheless, the gains were
considered by the staff and by the researchers to be
There were no great changes over time in the
IQ scores of trainees. Among all trainees, 23 per­
cent had IQ scores below 80; 54 percent between
80 and 99; and 23 percent 100 or over. This in­
formation was compared with a number of other
variables, but IQ did not prove to be a potential
predictor of trainee success.
Ethnic Group

There were no significant changes in the distri­
bution of trainees by ethnic group over the time
period studied. The great majority of trainees
were white (76 percent) with 12 percent Negro, 11
percent Mexican American, and 1 percent from
other non white groups.
Several cross tabulations were run by ethnic
group, but none of the differences found was sig­
nificant. The research team considered this lack
of significant differences an important finding in
itself, because it indicated that regardless of ethnic
group, trainees entered with essentially the same
background, performed equally in camp, and were
meeting with essentially the same degree of success
on leaving Oak Glen.

Most of the factors studied by the researchers
were readily measurable with existing data. Dur­
ing their weeks of study and observation at the
camp, however, a number of impressions were
formed. The analysis based on these impressions
is for the most part subjective, and was not sys­
tematically documented. Since the impressions re­
lated to important aspects of the Oak Glen pro­
gram, they are worth discussing.
The research team emphasized the unusual ded­
ication of the camp staff to their task. The staff
believed in the program and put forth extraor­
dinary effort to help each trainee develop in ac­
cordance with the program objectives. The re­
searchers felt that staff dedication was probably
crucial to the success of any such program. The
239-630 o—67-----3
Federal Reserve Bank of St. Louis

camp director and other staff members had applied
specifically for assignment at Oak Glen because
they believed in the concept of the program, and
this element of “self-selection” was considered
salutary. In addition, many of the State Forestry
Division personnel had had previous experience
in forestry camps for convicts and juvenile
Though dedication to the overall purpose of the
camp was uniform, it was observed that the For­
estry Division foremen varied greatly in their ap­
proach to the trainees. Some were quite author­
itarian, while others tended to be permissive. It
appeared that the most authoritarian of the fore­
men were in general the least effective, however,
several ex-trainees wrote later expressing gratitude
for learning strict discipline from these foremen.
The researchers considered the camp administra­
tion imaginative in thinking of ways to give praise
and rewards to trainees. Whenever possible, the
reward was tangible—a certificate or a trophy.
For example, the trophy for “Trainee of the Week”
provided immediate rewards and continuing goals
and other certificates and trophies were presented
at the graduation ceremony. The staff felt that
since the lives of the trainees had been marked by
failure—in school, in work, and at home—every
effort should be made to help trainees achieve even
small successes.
The research team concluded that the individual
attention given to trainees appeared to be an impor­
tant factor, since trainees could feel for the first
time in their lives that “somebody cared.” The
dedication of the staff and their general behavior
made their concern clear to the trainees, and they
made every effort to assist each trainee and per­
suade him to complete the program successfully.
The research team noted that there were indica­
tions that the location of the camp had a signifi­
cant effect on trainees. Oak Glen is in a moun­
tainous area in a national forest and gives the
impression of being isolated from civilization. It
appeared that the isolation affected some trainees
adversely and was a contributing factor to their
There was- some feeling among the researchers
that the climate may also have had an adverse
effect on the trainees. The weather in the camp
area is not severe in comparison with many other
parts of the United States, but it is more severe
than most of the trainees were accustomed to.

Snow may occur during the winter, and it is more
often foggy and rainy than in nearby areas. There
was speculation that when the weather was dreary,
more terminations occurred.

The SRI study took a preliminary step toward
determining the types of young people that can
best be aided through such residential programs
and the program ingredients which give the high­
est degrees of success with youngsters of diverse
backgrounds. The need for more comprehensive
and refined research was stressed by the research­
ers, but they felt that even within the limitations
of the available data, two general conclusions
emerged from their analysis.
The first relates to the success of the Oak Glen
program. Full evaluation could not be made at
this point; however, there are numerous indica­
tions that the program had been “successful’ or
fulfilled its objectives to some degree. One cri­
terion for eligibility was that the individual be
unemployed with no employment prospects.
Given this situation, the fact that graduates were
more likely to become employed or return to school
than were those who terminated would indicate
that the program was indeed successful. Among
all graduates for whom there was followup infor­
mation, 69 percent were employed compared with
54 percent of the terminees.
If the educational advancement of the trainees
can be considered a measure of success, the Oak
Glen program had significant accomplishments.
A high proportion of trainees made use of the edu­
cational facilities, and the average gain in reading
achievement was twice that expected of an aver­
age student in a regular school. The level of edu­
cation of the trainee upon entering the program
was cited by the researchers as the only potential
predictor of completing the program.
The second conclusion relates to the objectives
of the Oak Glen program. The researchers felt
that, ultimately, a program like that at Oak Glen
can be evaluated only in terms of specific goals.
Federal Reserve Bank of St. Louis


During the period under study, the goals, as set
forth by the Legislature, were general—“to de­
velop [in the trainees] the traits and attitudes
necessary to become productive members of so­
ciety.” In addition to specific, measurable goals,
the more subjective effect of the program on the
lives of individual human beings should be evalu­
ated. The study concluded that it is important
to know whether a trainee goes to work or returns
to school after leaving the camp. But it would
also be useful to know the effect of the camp on
the young men in more subtle ways, such as atti­
tude changes; an increase in self-respect, selfreliance, and the like. Unfortunately, the full
impact of such a program may not be known for
years. Adolescence and young adulthood tends to
be a difficult period for many young men, not just
the disadvantaged—making it even more difficult
to trace the effects of camp life.
In its recommendations for future research on
work camps, the SRI team suggested that more
background and attitudinal data on trainees is
needed. More extensive and reliable followup in­
formation on trainees after they leave work camps
was also cited as critical to evaluation studies.
Any such program must inevitably stand the
scrutiny of an economic evaluation, that is, meas­
uring the net economic benefits of the program,
if any, to the trainees and to the public. A de­
tailed economic evaluation of the Oak Glen pro­
gram was not within the scope of the SRI study,
but this area was cited as one deserving future
research. The use of a control group (a group like
the trainees in every way except that they do not
have the experience of the program) was urged
for future work camp research. I t was felt that
only when it is known what would have hap­
pened to the trainees if they had not gone to Oak
Glen can the program be fully evaluated.
The SRI study was clearly an exploratory effort
in the field of studying and assessing work camps
for young people. But, to the extent that the
youth population and operations at the Oak Glen
Camp are similar to those at other work camps,
the study’s findings may offer useful guidance.

Special Labor Force Report

Job Tenure of Workers,
January 1966
H arvey R. H amel*
I n a d y n a m i c e c o n o m y in which changes in tech­
nology and in the demand for various kinds of
goods and services create a changing demand for
labor in each industry, occupation, or locality, a
substantial degree of job mobility is needed to
achieve full utilization of the labor force and en­
able the economy to operate at full capacity.1 On
the other hand, the individual employer and em­
ployee are often more interested in job security
and stability. The employer prefers stability be­
cause it means costs of hiring and training new
workers are kept down. To the employee, sta­
bility means relative freedom from job losses or
layoffs and protection of his unvested equity in
A survey of job attachment in January 1966
provides information on one aspect of mobility—
the length of time that workers had been con­
tinuously employed on the job they held at the time
of the survey. Data indicate that employees
stayed with the same job or employer an average
of 4.2 years, a slight decline from the 4.6 years
measured in the January 1963 survey. A rise in
the proportion of workers under age 25—the
group typically having the shortest length of time
on the job—accounted for part of the change. In
addition, the rapidly tightening job market during
the 3-year period between surveys probably
caused the number of workers making job shifts
to improve their economic status to increase.
The survey examined the differences in job
tenure by age, sex, color, industry, and occupation.
Men averaged nearly twice the length of time on
the current job as women in both the 1966 and the
1963 survey. Job tenure for men was signifi­
cantly greater in each age group. Considering
Federal Reserve Bank of St. Louis

length of employment, one-third of the employed
men, but only one-fifth of the employed women,
had 10 years or more of consecutive employment.
Negro men averaged fewer years on their cur­
rent job than white men, probably because of the
concentration of Negro men in seasonal arid casual
jobs.2 On the other hand, white and Negro
women averaged about the same length of time on
their current job.
As indicated in previous surveys, job tenure
varied considerably with occupation and Industry
of the employed. Occupationally, self-employed
farmers and professionals, managers, and crafts­
men had the longest job tenure. Among industry
groups, workers in the transportation and com­
munications industries had the longest continuous
association with the same employer.
Measuring Job Attachment

This article is based primarily on information
from a supplementary question—“When did . . .
start working at his present job (or business) P —
in the regular monthly survey of the labor force
conducted for the Bureau of Labor Statistics by
the Bureau of the Census through its Current
Population Survey for the week ending January
15,1966.3 The 71 million persons employed at that
time averaged slightly over 4 years of continuous
*Of the Division of Labor Force Studies, Bureau of Labor
1 See “Job Mobility in 1961,” Monthly Labor Review, August
1963, pp. 897—906, and “Geographic Mobility and Employment
Status, March 1962-March 1963,” Monthly Labor Review, August
1964, pp..873-881. These articles were reprinted as Special Labor
Force Reports Nos. 35 and 44. An article on Occupational
Mobility will appear in a forthcoming issue of the Monthly Labor
2 Data for nonwhites will be used to represent Negroes who are
about 92 percent of all nonwhites in the United States.
3 For wage and salary workers, a “job” was defined as a “con­
tinuous” period of employment with a single employer; for selfemployed workers, as a “continued period of employment in a
particular type of business in the same locality.”
Previous survey findings were published in “Job Tenure of
American Workers, January 1963,” Monthly Labor Review,
October 1963, pp. 1145-1152 (reprinted with additional tabular
material and explanatory note as Special Labor Force Report
No. 36), and in Current Population Reports, Series P-50, No. 36.



association with their current employers (table 1).
Four and a half million (6 percent) had acquired
their current jobs prior to the United States’ en­
trance into World War II and had held these jobs
for 25 years or more despite two wars, changing
occupational and industrial structures in the
economy, and several business downturns with
high levels of unemployment. Another 8.7 million
workers (12 percent) had held the same job for
more than 15 years but less than 25. On the other
hand, nearly 38 million persons (35 percent) had
started their jobs since January 1961. About 18.5
million of the latter group were relative newcomers
to their jobs, having acquired them during the year
prior to January 1966.
Though this study measures the propensity of
employed persons to remain with a particular em­
ployer for a given period of time, it does not
identify the reasons for this tendency. The factors
which influence a worker’s decision to remain or
not to remain on a particular job are both numer­
ous and personal. A few appear obvious. A
worker whose earnings are relatively high and who
takes pride and satisfaction in his job is more
likely to remain on that job for a long time. The
underpaid dissatisfied worker who believes he can
earn more elsewhere would probably want to
change jobs. Expertise in work, pleasant working
conditions, and steady employment also influence
job tenure, and workers who value security are
inclined to remain on a particular job, while those
interested in personal advancement prefer to
search for new opportunities.
Financial Pressures

Private pension plans are often specified as a
contributing factor to job immobility or continued
tenure.4 There is a good deal of controversy on
the extent to which pension plans act as financial
inducements for persons to remain working for a
particular employer. Older workers who had
accrued substantial benefits would probably be
more hesitant to lose pension rights. For many
other reasons, these older workers are not as prone
as young workers to make voluntary j ob shifts. In
1965, a Presidential Committee on pension funds
reported that pension plans have little effect on
involuntary job changes but they do affect the
voluntary mobility of older workers with many
Federal Reserve Bank of St. Louis

T able

L en g th of E m ploym ent of W o rk ers
C u r r e n t J o b , b y S e x , J a n u a r y 1966


[Thousands of persons 14 years old and over]

B oth




7, 263
Jan u a ry 1951-December 1955..
5, 677
. 3,047
_ 1,724
' 2,726
Before Jan u ary 1936.
_ 2,361
D ate not re p o rte d ...

3, 326





Period w hen current job

T otal workers em ployed in
Jan u ary 1966____________
Ju ly 1965-January 1966..
Jan u a ry -Ju n e 1965-------January-D ecem ber 1964.
January-D ecem ber 1963.

Median years on current job.

B oth Male


25,271 100.0 100.0












years of service under a given plan.5 Specific
provisions related to vesting, early retirement,
and portability are contained in a substantial
number of private pension plans; they could, to
some extent, counteract the effect that plans have
on voluntary mobility. Vested benefits are like
money in the bank: even if a worker changes jobs,
the pension he has accrued is usually payable when
he reaches 65, the retirement age in most pension
plans. Vesting, therefore, tends to decrease bar­
riers to mobility. Early retirement and porta­
bility provisions (in which the worker carries his
pension rights with him when he changes jobs)
have a similar effect on job mobility.
Other factors play a role in a worker’s decision
to remain on his job. Seniority and other servicerelated benefits may be more of a deterrent to a
voluntary job change than pension rights; senior­
ity may result in better types of job assignments,
relative freedom from layoffs, and better prospects
for promotion.
Workers in manufacturing are more likely than
those in other industries to be covered by pension
plans. (The only exception is transportation,
communications and public utilities.) In January
1966; men working in factories averaged nearly
2 years longer on their current job than other
4 For a more detailed analysis of the relationship between
pension plans and job mobility, see Labor Mobility and Private
Pension Plans (BLS Bulletin 1407, 1964), and Private Pension
Plans and Manpower Policy (BLS Bulletin 1359, 1963).
5 See Public Policy and Private Pension Programs, A Report
to the President on Private Employee Retirement Plans by The
President’s Committee on Corporate Pension Funds and Other
Private Retirement and Welfare Programs, January 1965.



nonfarm wage and salary employees. Whether
the longer job tenure among factory men is asso­
ciated with the high concentration of pension plan
coverage in the industry has not been determined.
Other factors encouraging job stability mentioned
earlier could play a more important role in de­
termining the length of time these workers remain
with the same employer.
Personal Characteristics

The average job tenure of employed men de­
clined by 6 months between January 1963 and
January 1966, but there was virtually no change in
average tenure among men in the various age
groups (table 2). A change in the age distribution
of the employed during the 3-year period was a
prime cause of the decline; the proportion of em­
ployed men under 25 years of age increased to 17
percent in 1966 (from 14 percent in 1963). A
second factor might be the economic recovery
which would induce more workers to change jobs.
Job duration for all employed women and for
Negro workers remained about the same in both
The length of continuous employment on the
current job differs substantially among workers
depending on their age, sex, and color. Job tenure
varies directly with age; workers under age 35
averaged only about 1.5 years on their current job
while those 35 years old and over averaged 8 years.
Younger workers have been in the job market
fewer years than older persons, voluntarily change
jobs more frequently, and are more subject to un­
employment, and therefore show shorter job dura­
tions. (As students, younger persons work at
temporary or intermittent jobs, and after leaving
school they often try several different jobs before
settling down into one.) Nearly one-third of the
persons under age 35 but only 10 percent of those
over that age had worked at their current job for
half a year or less. Frequency of job change de­
creases with age, and when older workers do
change jobs, it is often involuntarily.6
Men averaged nearly twice as long as women on
their current job—5.2 compared to 2.8 years. As
many studies have previously indicated, women

See “Job Mobility in 1961,” op. cit.
Federal Reserve Bank of St. Louis

often leave the labor force, especially during the
central working ages, because of their family re­
sponsibilities. A larger percentage of women than
men have part-year jobs, or work in part-time jobs
which are often of shorter duration than full-time
jobs. Also, a greater proportion of all employed
women than of all employed men are under age 25,
the age group in which average job duration was
less than 1 year. When the data are examined with
age held constant, however, the men average longer
tenure. Differences in job tenure for men and
women become much sharper in the central work­
ing ages. Though there was only a 1-year differ­
ence in job tenure between men and women age 25
to 34, the gap grew to 4 years for 35 to 44 year olds
and 7 years for 55 to 64 year olds.
Job attachment was much longer for single
women workers than married women in each age
group, except for women under age 25 where the
average duration was about the same for both
groups, as shown in the following tabulation:
Median years on cur rent job





All employed women
to 24 years
to 34 years
to 44 years
years and over


4 .2


8 .9

6 .7

The overall measure of job tenure for women of
all ages, however, was lower for single than mar­
ried women. Most of the single women are under
25 years of age where tenure is very short, while
T able 2. M edian Y ears on Current J ob by A ge, S ex ,
and Color, J anuary 1963 and 1966
Median years on same job
Age and Color

B oth sexes







A ge
T otal, 14 years and over_____







14 to 17 years. _________ _ _
18 and 19 years_______ . . .
20 to 24 years____
______ ____
25 to 34 years____________________
35 to 44 y e a rs.. . . . . . __________
45 to 54 y e a rs.. __ __ _________
55 to 64 y e a rs.__
. _________
65 years and over______




14. 7
16. 6



C olor
W hite___________________________
N on w hite____________ . ______









Chart 1. White Men Averaged More Years on Their
Job Than Negro Men But the Job Tenure of White
and Negro Women Was A bout the Same
M e d ia n y e a rs on
c u r r e n t jo b ,
J a n u a ry 1966


group averaged about 3 years. Though Negro
women are more concentrated in less stable occupa­
tions than their white counterparts, an element
which would imply shorter job tenure, this factor
is offset by the greater propensity of Negro women
to remain in the labor force for economic reasons.
In 1965, for example, 46 percent of all Negro
women compared with 37 percent of all white
women of working age were in the labor force.
Job Tenure by Occupation and Industry


most of the married women are in the older age
groups where average duration tends to be higher.
Among widowed, divorced, or separated women,
job tenure for each age group was similar to that
for married rather than single women. Women
who usually worked at part-time jobs averaged a
shorter period (1.7 years) with the same employer
than women who usually worked full time (3.3
years). Part-time women workers are inclined
to have temporary or seasonal jobs and to move in
and out of the labor force more frequently than
women who usually work at full-time jobs. Parttime workers also tend to be younger than full­
time workers.
White men employed in January 1966 averaged
about 2 years longer on their current job than
Negro men—5.5 and 3.4 years, respectively. For
men over 45, there was more than 3 years differ­
ence in job tenure—13.4 versus 10.2 years (chart
1). The proportions of white and Negro men
who have been continuously employed on their
current job for over 15 years were 23 and 16 per­
cent, respectively. The variations are caused by
the significantly larger proportions of Negro men
who work at part-time jobs which tend to be of
shorter duration than full-time jobs; employed Ne­
gro men are also more concentrated in the less
stable unskilled and semiskilled occupations where
unemployment rates tend to be highest.
For women, however, length of job attachment
did not vary for white and Negro workers—each
Federal Reserve Bank of St. Louis

As observed in past surveys, job tenure was gen­
erally longer in those occupations and industries
that require a more than average investment by
employed persons in training, capital, or both.
Not all occupations requiring a high degree of edu­
cation or skill are characterized by long job
tenure, however. In fact, salaried professional
and technical persons worked fewer than the aver­
age number of consecutive years on their current
job, probably because of the rapid expansion in
employment in this field in recent years and the
favorable employment opportunities engendered
by this growth.
The average number of years that men were on
the same job as of January 1966 ranged from a
high of 19 years for farmers and farm managers to
a low of 2 years for nonfarm laborers (table 3).
The longest duration was reported by selfemployed men—farmers, businessmen, and pro­
fessionals such as doctors, dentists, lawyers—a
majority of whom were over 45 years old.
Twenty-eight percent of the self-employed profes­
sionals and 44 percent of the farmers had worked
continuously in their current business for over 20
years. These men have invested considerable time
and money in their careers and businesses, and
traditionally they remain at the same work for a
long time.
Skilled craftsmen outside the construction in­
dustry, including machinists, metal craftsmen, and
foremen, were on the same job for an average of
11 to 13 years, more than twice as long as the aver­
age male worker. This long job duration reflects
the older age composition of these skilled work­
ers—nearly half were age 45 or older.
The shortest job tenure for men occurred among
farm and nonfarm laborers, carpenters, service
workers except protective service workers, and
sales employees. Many of these workers were in



seasonal industries and hence had involuntary in­
terruptions in their job tenure.
Occupational differences in the job tenure of
women workers were generally similar to the vari­
ations in job attachment found among employed
men. Among farm laborers, however, women
averaged considerably longer on their current job
than their male counterparts—11.6 years and 2.7
years, respectively. Most of these women were un­
paid workers helping to run family farms. The
small number of women who operated farms them­
selves had the longest average job tenure of any oc­
cupation group—male or female—over 21 years.
The largest number of employed women worked
in clerical occupations where the average length
of employment was 2.7 years—not significantly
different from that for all women. The second
largest group were in service occupations, such as
private household workers and waitresses; their
jobs lasted an average of only 2 years. Women
employed as managers held their jobs, on the
T able 3.

M ajor Occupation


average, three times as long as those in sales and
service occupations. The short average duration
of sales and service jobs results from several fac­
tors—their seasonal and temporary nature, the
comparatively large proportion of part-time work­
ers employed, and the number of women inten­
tionally coming into the labor force for temporary
periods who seek this type of employment.
Job tenure varied widely not only by industry
but also by whether or not a person was selfemployed or working for a wage or salary. In
agriculture, the average male hired farm worker
held his current job for only 2 years but the selfemployed farmer for nine times as long. Among
nonfarm workers, about 19 percent of the selfemployed but only 11 percent of the hired workers
had been on the job for over 20 years.
The average tenure of 4.6 years for all men
employed as nonagricultural wage and salary
workers conceals a great deal of industry variation.
Within this group, railroad employees had the

I ndustry Group and Class of W orker: L ength
J ob, by Sex , J anuary 1966


E mployment



[Percent distribution]
Occupation, in d u stry , and class of w orker

T otal, 14 years and over



T o t a l1 years
or less


5 to

10 to

15 to


T o t a l1 years
or less
on job

5 to

O ver
10 to

15 to


on job





































Ì0. 7




100. 0

73. 6

10. 4


5. 4





























35. 5

















T otal wage and salary w orkers 3____
M ining___ _____
C onstruction____ _ . . .
M an u fac tu rin g ___
T ransp o rtatio n ___ _ „
Com m unications and public utilities
Wholesale and retail tra d e ___ .
Service and finance. .
Public adm in istratio n .
Self-employed and u npaid family
w orkers__

100. 0

47. 2

13. 2

15. 7

10 4

13. 6




























O ccupation
Professional, technical, and kindred w orkers.
Farm ers and farm m anagers.-- ______
Managers, officials, and proprietors, except
fa rm ...
Clerical and kindred w orkers .
. _
Sales w orkers___
_ .
C raftsm en and kindred w orkers___
Operatives and kindred w orkers. - . .
P rivate household w orkers.. .
Service workers, except private hou seh o ld .. .
F a rm laborers and forem en_______
Laborers, except farm and mine
I ndustry and C lass of Work er
A griculture________________


Wage and salary w orkers....... . . . . _
Self-employed w o rk e rs ____ ____
U npaid fam ily w orkers. .
N onagricultural industries___

1 Excludes persons no t reporting length of tim e on current job.
2 Percent and m edian not shown where base is less th a n 100,000.
Federal Reserve Bank of St. Louis

3 Includes forestry and fisheries not shown separately.



T a b l e 4. P e r c e n t o f W o r k e r s 25 t o 54
W i t h C u r r e n t E m p l o y e r O v e r 10 Y e a r s
1966 W h o C a n B e E x p e c t e d t o R e m a i n
E m p l o y e r 10 A d d i t i o n a l Y e a r s , b y A g e

Age in Jan u ary
1966 and sex

Percent w ith
current em­
ployer in
Jan u ary 1966







Age in
Jan u ary

Y e a r s O ld
J anuary
W it h S a m e
and Sex 1

Percent of those w ith
cu rren t employer
over 10 years in Jan­
Percent uary 1966 remaining
surviving w ith same employer
from 1966
to Jan u ary 1976
to 1976
U n ad ­
A djusted
justed for

tries declined between January 1963 and January
1966 from an average of 7.2 years to 6 years, partly
because of the large increase in employment in
these industries since 1963. The greater volume
of hiring in recent years was clearly indicated by
the larger proportion of men employed for 3 years
or less in 1966 than in 1963, as shown in the fol­
lowing tabulation:
Percent em­
ployed at same
job for 3 years
or less

25 to
30 to
35 to
40 to
45 to
50 to
55 to
60 to

29 y e a r s ...
34 y e a rs.. .
39 y e a r s ...
44 y e a rs.. .
49 y e a rs.. .
54 y e a rs.. .
59 y e a rs.. .
64 y e a rs.. .

35 to
40 to
45 to
50 to
55 to
60 to





35 to
40 to
45 to
50 to
55 to
60 to





F emales
25 to
30 to
35 to
40 to
45 to
50 to
55 to
60 to

29 y e a r s ...
34 y e a rs.. .
39 y e a r s ...
44 y e a r s ...
49 y e a rs.. .
54 y e a r s ...
59 y e a rs.. .
64 years. _.

1 T h e estim ation procedure can best be described b y th e following exam­
ple: 34.6 percent of working m en 35 to 39 years old were reported to have
been w ith th eir current employer over 10 years in Jan u ary 1966. Similarly,
the percent of those 45 to 49 years old w ith over 20 years of service w ith their
curren t employer was 17.0 percent. D ividing th e latter percent b y the
former yields an estim ate of th e proportion of m ale workers now age 35 to
39 years w ith over 10 years of service w ith th eir current em ployer w ho can
be expected to rem ain w ith th e same employer an additional 10 years, w hen
they w ould be 45 to 49 years old. In this example, the result is 49.1 percent,
as shown in column 5 of the table. However, this com putation makes no
allowance for the loss of workers due to m ortality. I t is therefore necessary
to m u ltip ly this percent b y th e proportion of m ale workers who could be
expected to survive from age 35 to 39 years to age 45 to 49 years. For this
example, 10-year survival ratios were obtained from the U.S. D epartm ent
of H ealth, Education, and Welfare, Social Security A dm inistration, “ Illus­
trativ e U nited States Population Projections,” A ctuarial S tudy No. 46
(May 1957), tables 6-H and 7-H (the “ high m o rtality ” assum ption). In
our example, th e adjusted percent comes to .491 X .956, or 46.9 percent.
In extending this procedure to estim ate th e proportion of w orkers who
w ould rem ain w ith the same em ployer to the age of retirem ent, it is neces­
sary to introduce further assum ptions regarding job retention rates for periods
of service beyond 20 years’ duration.

longest tenure, over 18 years on their current job.
More than 1 out of 4 railroad workers had been
working at the same job for 25 years or more.
In addition to their potential Railroad Retirement
pension benefits, a large proportion of railroad
workers are older men who because of their age7
and seniority are not inclined to change jobs vol­
untarily or involuntarily. Other industries in
which men had very long job tenure were com­
munications and public utilities and Federal serv­
ice (especially the postal service where average
job tenure was over 10 years).
The average length of continuous employment
was substantially greater among men working in
factories than it was for all men working for a
wage or salary. However, job tenure of men em­
ployed in the durable goods manufacturing indus­
Federal Reserve Bank of St. Louis

January January

Primary metal_______________ __________
Fabricated metal products_______________
Machinery, except electrical_____________
Electrical machinery__ _______
Transportation equipment_______________
Other transportation equipment_____
Other durable goods____________________

36. 6
36. 0
37. 7
37. 6

33. 7
28. 6
26. 2
31. 0
32. 2

Notwithstanding the decline, workers in the pri­
mary metals industries had long job tenure, aver­
aging 11 years. Nearly 15 percent of the men
working in the industry had been employed on
their current job for 25 years or more. Automobile
workers averaged about 7 years on their current
job, and workers in the stone, clay, and glass in­
dustries also had longer than average job tenure—
7.5 years. Among the nondurable goods indus­
tries, longest job tenure was found in such diverse
manufacturing industries as tobacco, paper, petro­
leum, leather goods, and rubber and plastic goods.
Construction workers were among those with
the shortest job tenure, averaging only 2.4 years;
more than one-third of these men had been on their
current job 1 year or less. Construction jobs usu­
ally are of short duration and the demand for
workers in the industry fluctuates with the sea­
sonality of the work. In the lumber and wood
products industry, workers also had short job dura­
tion because of seasonal factors. Other industries
in which men had comparatively short job dura­
tion were retail trade and service—particularly
business and repair services, private households,
personal services, and entertainment.
Average job tenure for men in a particular oc­
cupation varied considerably with the industry in
which they were working. For example, crafts7
Sixty percent of railroad blue-collar workers are 45 years old
and over.


Chart 2. Among Men 45 Years O ld and Over,
Job Tenure Varied Considerably for Workers
Within Individual Occupations
M e d ia n y e a r s o n
c u r r e n t jo b ,
J a n u a ry 1966
2 5 ---------------------------^■









men 45 years old and over averaged 13.5 years on
their current job. The range extended from 5.2
years for construction craftsmen to 22.5 years for
craftsmen in the transportation industry (e.g.,
skilled railroad workers). Craftsmen in manu­
facturing industries averaged 17.4 years on their
current job (chart 2). Laborers generally were
connected with their current job a much shorter
time than more highly trained workers. However,
among men 45 years and over laborers employed in
manufacturing and transportation had been work­
ing on their current job about 14 years, nearly three
times as long as skilled construction workers.
Continuation on Present Job

Data on job tenure are used to make rough esti­
mates of the proportion of workers already having
l°ng job attachment who can be expected to re8
A similar table and analysis based on January 1963 data
appeared in Special Labor Force Eeport No. 36.
Federal Reserve Bank of St. Louis


main on their current jobs a specified number of
additional years.8 For example, from table 4, it is
possible to project the proportion of employed men
or women in particular age groups with 10 years
or more experience on their current job as of Jan­
uary 1966 who can be expected to remain on that
job another 10 years. This computation yields
rough estimates of job retention ranging from
about 40 to 70 percent for men and women in
various age groups.
These projections assume that the pattern of job
attachment at successively older ages as of January
1966 can be used to represent the pattern of job
attachment for each age cohort as it ages over time.
The patterns of job attachment observed among
working men in January 1966, however, reflect the
interruptions of civilian careers brought about by
World War II and the Korean conflict. For this
reason, the proportion of men 35 to 54 years old
having over 20 years of continuous service with
their current employer in January 1966 was un­
doubtedly lower than it would have been had it not
been for these national emergencies.
Consequently, smaller proportions of men 30 to
44 years old than of men 25 to 29 (as of January
1966) are expected to remain with their current
employer an additional 10 years. This percentage
would normally be expected to rise with advancing
age, and projections of job retention derived for
men in these ages may require further adjustment
before they can be used to describe future experi­
ence of men who are now in the younger age
A similar procedure could be used to estimate
the proportion of workers who could be expected to
remain with a given employer until they reached
the age of retirement or until they become eligible
for retirement benefits. Such projections could be
used as rough guides in estimating the costs of pri­
vate pension plans.

Work Limitations
and Chronic
Health Problems

Carl Rosenfeld
E lizabeth Waldman*

peo ple
who are not working report
chronic health conditions that may limit their
work abilities. In fact, of the 2.2 million men
25 to 64 years of age who were neither working nor
looking for work during the year ended June 1965,
60 percent reported chronic health problems.
These and other findings from a Public Health
Service survey 1 indicate the difficulty of escaping
unassisted from the frequent linkage of ill health,
low income, and work restrictions. The health of
the population therefore assumes major signifi­
cance in any program aimed at decreasing the
Nation’s unused or underutilized manpower re­
sources. Presented here are data on the age, sex,
and labor force status of the persons in the civilian
noninstitutional population whose work abilities
were limited by chronic health conditions or im­
Individuals reported varying degrees of restric­
tion in performing their usual activities, depend­
ing on the nature of their condition. Chronic
health problems may range from only minor limi­
tation to total inability to work.
Among men 25 to 64 years old, health problems
most frequently affected the work capacity of
those who were not in the labor force. As shown
by the chart and table 1, chronic health conditions
limited more than 60 percent of the 2.2 million men
not in the labor force in the year ended June 1965.
These 1.4 million men included about 900,000 who
reported they were not able to work at all. The
remainder believed that their condition limited the
amount or kind of work they could perform.
Of the 1 million unemployed men 25 to 64 years
old, about 20 percent reported some work limita­


Federal Reserve Bank of St. Louis

tion related to health (table 2). In almost all
cases, the disability affected the amount or kind of
work rather than preventing work completely. It
may be that this limitation prevented many from
taking a job, even if only a part-time job for which
they would otherwise be qualified. Of course,
within this group work limitations may be rela­
tively more numerous among the long-term unem­
ployed (15 weeks or more) than among those job­
less for only a few weeks.
A smaller proportion of the employed men 25 to
64 years old, about 7 percent (2.6 million out of
36.8 million), said that a chronic health condition
caused them to curtail their work activities.
Leading causes of limitation on work or other
activity for men and women are heart conditions,
arthritis and rheumatism, and orthopedic impair­
ments of the back, spine, and extremities (exclud­
ing paralysis), and to a lesser extent mental and
nervous disorders, hypertension without heart in­
volvement, visual impairments, and asthma and
hay fever. Chronic health problems were
found to occur more frequently and to cause an
increasingly higher rate of chronic disability
with advancing age. Disability rates of persons
with heart conditions show a significant increase
among persons age 45 and over, particularly
among men.
At least one chronic condition was reported by
about half (54 percent) of the 47.6 million men 17
years old and over in the labor force. The pro­
portion was about the same for the employed as
for the unemployed, and for both groups the pro­
portions, as expected, increased with age. For ex­
ample, 38 percent of the men 17 to 24 years old in
the labor force, but 75 percent of those 65 years
and over, had at least one chronic condition.
♦ O f th e D iv is io n o f L a b o r F o rc e S tu d ie s , B u re a u of L a b o r

stie s.
1 T h e p r e lim in a r y fig u re s in th is a r tic le w e re d e riv e d fro m th e
N a tio n a l H e a lth I n te r v ie w S u rv e y ( H I S ) w h ic h w a s c o n d u c te d
by th e P u b lic H e a lth S e rv ice, U .S. D e p a r tm e n t of H e a lth , E d u c a ­
tio n , a n d W e lfa re d u r in g th e p e rio d J u ly 1964 th r o u g h J u n e 1965.
T h e fig u res a r e a v e ra g e s o f d a ta c o lle c te d e ac h w eek d u rin g th e
y e a r a n d re fle c t e a c h r e s p o n d e n t’s e v a lu a tio n of h is p h y s ic a l
s ta t u s a n d re la te d w o rk a c t iv ity lim ita tio n s .
R e s p o n d e n ts p ro v id e d in f o r m a tio n on illn e s s, in ju r ie s , c h ro n ic
h e a lth c o n d itio n s , a n d im p a irm e n ts a t th e tim e of th e su rv e y .
F o r th o s e w ho h a d c h ro n ic c o n d itio n s su c h a s a s th m a a n d h a y
fe v e r, m e n ta l a n d n e rv o u s c o n d itio n s , h e a r t c o n d itio n s , a r t h r i t i s
a n d rh e u m a tis m , o r im p a irm e n ts su c h a s d e a fn e s s , b lin d n e s s a n d
d e fo rm itie s o f b a ck o r lim b s, th e re s p o n d e n ts in d ic a te d w h e th e r
th e illn e s s o r im p a irm e n t p re v e n te d th e m fro m w o rk in g a lto g e t lei
o r w h e th e r i t lim ite d th e a m o u n t o r k in d of w o rk .
D e sp ite s lig h t d ifferen c e s in d e fin itio n s of e m p lo y m e n t s ta t u s
a n d in m e th o d s of c o m p ilin g d a t a a s b e tw e e n th e H IS a n d th e
B L S —C P S su rv e y s, th e n u m b e rs in th e tw o s u rv e y s a re n o t \ e r y
d iffe re n t f o r th e v a rio u s la b o r fo rc e g ro u p s .


However, there were sharp differences between
the employed and unemployed men in the propor­
tions who reported that their conditions affected
their ability to work. About 13 percent of the
1.8 million unemployed men reported they were
limited in amount or kind of work they could
perform, a proportion double that for employed
men. Even higher proportions were found among
unemployed men in the older age groups; work
limitations were as high as 23 percent for those 45
to 64 years old and 31 percent for those age 65 and


Proportion of Men 25-64 Years of A ge, Employed,
Unemployed, and Not in the Labor Force, with
Limited Work A ctivity, July 1964-June 1965

Men Not in Labor Force

Nearly all adult men no longer in school and in
good health are in the labor force. Those men
who are not in the labor force, because of special
circumstances or situations, can be expected to
have a chronic condition and be unable or limited
in their ability to work more often than persons
who are in the labor force. The exception would
be in the younger group 17 to 24 years of age.
About 2.4 million of the 10 million men 17 years
old and over who were not in the labor force in
1965 were 17 to 24 years old. Undoubtedly, many
of the young men were attending school. Kelatively few young men whether in or out of the labor
force had some degree of work limitation, an indi­
cation of the small proportion with a chronic con­
dition, and the probability that even among those
with a health problem the condition had not yet
deteriorated far enough to affect their ability to
Work limitation owing to health problems oc­
curred more among men 25 to 44 years
T able 1.

E xtent




old and, as would be expected, most frequently for
those 45 to 64 years old. About half of the nearly
600,000 men 25 to 44 years old who were neither
working nor looking for work reported some dis­
ability ; 34 percent were not able to work at all, and
14 percent said they were limited in the amount
or kind of work they could perform. Over 40
percent of the 1.6 million men 45 to 64 years old
not in the labor force reported they were unable
to work and another fourth said they were re­
stricted as to the amount or kind of work they
could do.
In this survey, men 45 years and over who were
not employed or looking for work were asked
whether they had retired. In the age group 45 to
64, a million of the 1.6 million not in the labor

W ork L imitations A mong M en N ot in the L abor F orce, 25 Y ears . Old
J uly 1964-J une 1965



[Num bers in thousands]

Age of men

T o tal no t in
labor force

T o tal w ith work
lim itations

N um ber
T otal, 25 years and over______

N ot able to w ork a t all

Percent of
total not in
labor force

N um ber

Percent of
total not in
labor force

A ble to w ork b u t lim ited
in am ount or kind of w ork

N um ber

Percent of
total not in
labor force








25 to 64 years____________________
25 to 44 years___________ ____ _
45 to 64 years_____ __________
R etired ____ _____ ____
N ot retired ___________







14. 0

65 years and over_______ .
R etired ______________
N ot retired ________________








N ote : Because of rounding, sum s of individual item s m ay not equal
Federal Reserve Bank of St. Louis

Source: U .S. D epartm ent of H ealth, E ducation, and Welfare, P ublic
H ealth Service.


40__________ ______________________________

65 do so because their illness is so severe that it
prevents them from working at all, rather than
just restricting the amount or kind of work they
can do.

force reported that they had retired. Among the
retired, the proportions who were not able to work
or who had some work limitations were the same
as for the men who had left the labor force but
who did not consider themselves retired.
Among the 5.4 million men 65 years and over
who were not in the labor force, the incidence of
partial work limitation was about the same as for
men 45 to 64 (about 25 percent), but the propor­
tion who were not able to work at all was smaller—
31 percent compared with 40 percent. The lower
incidence of total restriction among the aged men
may indicate that (1) many men with the more
debilitating health conditions may have died be­
fore reaching age 65 and (2) more men who retire
or otherwise leave the labor force before reaching
T able 2.

L abor F orce S tates



The proportion of women 17 years old and over
in the labor force who reported having a chronic
condition was about the same as for men, 56 per­
cent and 54 percent, respectively. However, a
smaller proportion of the 1.6 million unemployed
women than of the unemployed men had work
limitations, about 10 percent of the women com­
pared with 14 percent of the men. F or the unem­
ployed 45 to 64 years old, work restrictions were

P ersons 17 Y ears Old




P resence





Chronic Con-


[Percent distribution]

Fem ale

M ale
Age and condition

T o tal, 17 years and over: N u m b er (thousands).
Percen t.........................

T o tal pop­
E m ployed

57, 585
100. 0


U nem ­


N o t in
force 1

T otal pop­
E m ployed

64, 501
100. 0












17 to 24 years: N um ber (thousands)..
P e rc e n t..........................
W ith 1 or more chronic co n d itio n s.. . . . . . . L im ited (or unable) in w ork activities.
L im ited in other activ ities......................
A ctivity no t lim ited ..................................
W ith no chronic conditions................... .........

100. 0
1. 7
32. 5




2. 6
36. 5
58. 9


25 to 64 years: N um ber (th o u san d s)..
P ercen t.......... .............. W ith 1 or more chronic conditions. . . . . . . . .
Lim ited (or unable) in w ork activities.
L im ited in other activ ities......................
A ctivity not lim ite d ...............- ................
W ith no chronic conditions............................

40, 014
100. 0

100. 0



100. 0


25 to 44 years: N um ber (thousands) —
P e rc e n t........................ W ith 1 or more chronic conditions----------Lim ited (or unable) in w ork activities.
L im ited in other activities...............—
A ctivity no t lim ited ..................................
W ith no chronic conditions........ ....................

21, 613
100. 0

20, 507
1Ò0. 0



58. 0


45 to 64 years: N u m b er (thousands) —
P e rc e n t....................... W ith 1 or more chronic conditions-----------Lim ited (or unable) in work activities .
L im ited in other activities......................
A ctivity not lim ite d ............................
W ith no chronic conditions...... .....................

64. 0




13. 3


100. 0


74. 5


84. 6
15. 4
Federal Reserve Bank of St. Louis



57. 3

i D ata for females no t in labor force are not strictly comparable to those for
th e males because of d a ta collection procedures; lim ited in w ork activities
refers to a b ility to keep house.



W ith 1 or more chronic conditions------ - - - L im ited (or unable) in w ork activities.
L im ited in other activities............... —
A ctivity no t lim ite d -...................... .........
W ith no chronic conditions---------------------

65 years and over: N um ber (thousands).
P e rc e n t........................
W ith 1 or more chronic conditions........ ............
Lim ited (or unable) in w ork activities----Lim ited in other activ ities............................
A ctivity no t lim ited .............................. .........
W ith no chronic conditions........ .............. ...........

N ot in
force 1

U nem ­








































8 .0



2 Percent not shown where base is less th a n 50,000.
N ote : Because of rounding, sum s of individual item s m ay not equal to ta ls.



reported by 12 percent of the women, a proportion
half that for the men.
Among employed workers 25 to 64 years old,
equally small proportions of men and women had
restrictions related to work; among those 65 and
over, the proportion with limitations was much
greater for men than for women, 27 percent and 18
percent, respectively. Perhaps the older women
with work limitations were more likely than men
their ages to leave the labor force.
Information similar to that for men is not avail­
able for women not in the labor force, since the
health survey did not distinguish between women
who had limitations with respect to household du­
ties and those related to paid employment.
Disability and Income

The lower the family income, the higher the in­
cidence of chronic health conditions which result
in reduced activities. Of course, in many cases,
the low income may be the consequence of the dis­
abling chronic condition rather than the cause.
The proportions of persons with chronic disabili­
ties increase with each successive age group, but
within each group these proportions decrease
dramatically as family income rises. This inverse
age-income relationship is illustrated as follows:
Age group and fam ily income

Percent of total population with chronic
conditions which lim it or result in
inability to perform major activity 1

U nder 45 years____ ________________
U nder $3,000____
$7,000 and over_____________ ___
45 to 64 years______________________
U nder $3,000___________________
$7,000 and over_________________
65 years and over___________________
U nder $3,000____________
$7,000 a n d over_________________


cause of early diagnosis and treatment resulting
from better medical care. Because persons with
high incomes are less likely to have jobs requir­
ing strenuous physical activity, they may also
be better able than persons in low income families
to continue working despite chronic disabilities.
More nonwhite than white persons, as well as
persons in low-income families, were limited in
their major activity not only because of the type
of major activity performed (for example, bluecollar rather than white-collar work), but also
because nonwhites do not visit physicians as often
as whites for diagnosis and correction or relief
of chronic conditions.
According to this study, over 5 million persons
who have work limitations of one kind or another
were working or looking for work. Therefore,
it would seem reasonable to conclude that some
of the persons not in the labor force could lie
usefully engaged if efforts were made to find out
what kind of work they can do and under what
As an initial step in improving the utilization
of manpower, efforts might be directed to the
1.3 million men 25 to 64 years old who are not in
the labor force and who have no work limitations
at all or only some curtailment of amount or kind
of work. As shown below, this group includes
about 825,000 men (a few of whom may still be
in school) who either have no chronic condition
or have a chronic condition but no work limitation,
and about 475,000 with some work limitation.
M en not in labor force, excluding unable to
work (in thousands')
With no work limitations

Total Total

With no

With a




1 M ajor activ ity refers to w ork, keeping house, or going to school.
Source : Age Patterns in Medical Care, Illness and Disability, U .S., J u ly
1963-J u n e 1965 (U.S. D ep artm ent of H ealth, E ducation, and Welfare, Public
H ealth Service, N ational Center for H ealth Statistics), Series 10, No. 32,
table 22.

In one HEW study,2 the author speculates that
“poorer diet, poorer environment, or poorer health
habits associated with lower income” may be
responsible for the higher prevalence of chronic
disabilities among lower income families. Con­
versely, as family income increases, decreasing
proportions of the population tend to have chronic
conditions which restrict activities, probably be2 Medical Care, Health Status, and Family Income (U.S. De­
partment of Health, Education, and Welfare, Public Health
Service, National Center for Health Statistics), Series 10, No.
9, p. 53.
Federal Reserve Bank of St. Louis

Age group
T otal, 25 to 64 years_____. . . .
25 to 44 y e a rs ..
______ 45 to 64 y e a r s ... . _________
N or re tire d ..
R etired________________



N ote : Because of rounding, sums of individual items m ay not equal

The above totals include about 575,000 men 45
to 64 years old who reported they had retired but
were able to work. Undoubtedly, some of these
retired men as well as some of the others not in the
labor force might be available for work if they
could obtain required job training, particular
prosthetic devices, or special environmental condi­
tions at work.

Adjustment to Plant Closure
Cooperation in Planning
for the Transfer of Negro Workers
Into a White Community

article is excerpted, with mi­
nor stylistic modifications, from “A Report to
the Automation Fund Committee” on workers'1
adjustment to the closing of the Armour and
Cols meat processing plant in Kansas City.
The report teas prepared l>y James T. Stem ,
professor of economics, University of Wiscon­
sin, who supervised the Kansas City activities
of the Committee. Accounts of the Commit­
tee's actions in other closure situations were
reported in the Review in November 1965
(pp. 1297-1301), January 196Jj (pp. 53-57),
and August 1961 {pp. 851-857).

E ditor’s N ote.—This

I n accordance w ith the collective bargaining
agreement between Armour and Co. and the United
Packinghouse Food and Allied Workers Union,
AFL-CIO, the company issued a 90 days’ advance
notice on June 1,1964, that the slaughtering facili­
ties at the Kansas City, Kans., plant would be
closed on August 31, 1964. The action led to the
elimination of the jobs of about one-half of the
approximately 1,900 workers in the bargaining
unit. Later the company found it necessary to
terminate all activities at that plant and notice
was given at the beginning of February 1965, to
the remaining workers that the plant would be
completely closed and all jobs eliminated as of the
end of May 1965. This report reviews the activi­
ties that the Automation Fund Committee
undertook to minimize the adverse effect of the
closing upon the employees of the Kansas City
plant. (Members of the committee are listed at
the end of the article.)
The application of provisions in the collective
bargaining agreement about interplant transfer,
separation pay, and pensions afforded substantial
assistance to workers with at least 1 year of service
Federal Reserve Bank of St. Louis

in their adjustment to the plant closing. Initially,
328 workers obtained jobs in other Armour plants,
220 retired, and approximately 1,250 took separa­
tion pay averaging $2,000 a person.
The successful effort to increase the number of
workers taking interplant transfers raised ques­
tions of community relations and adequate hous­
ing, particularly as regards unionized Negroes
from large urban centers moving into small allwhite rural communities in areas that were not con­
sidered hospitable to unions. The Automation
Fund Committee, established under the 1959 con­
tract, undertook a special program to facilitate the
adjustment in a situation of this nature involving
the transfer of almost 50 minority group members
to Worthington, Minn. Assimilation of the Ne­
groes and workers of Spanish-American descent
was accomplished successfully mainly because
community leaders, including representatives of
the newspaper, church, local government, business,
and fraternal and social clubs created a community
relations climate favorable to the integration of
the newcomers into the life of the community.
Community Relations

On July 30, 1963, an announcement had been
made that Armour and Co. would build a plant in
Worthington. The first steps taken by the Com­
mittee in the summer of 1964, a few months before
the plant was scheduled to open, were to ascertain
the views of the community about the forthcoming
transfer, and to estimate the number of workers
who would be transferring and how many of these
were Negroes. Unfortunately, the Worthington
community had gained the impression from early
news reports that most of the jobs in the new plant
would be filled by local residents. These assertions


eventually were contradicted by the companyunion agreement on transfers, providing that up
to 80 percent of the jobs in the plant would be
filled by employees from other Armour plants.
This development had not at first been publicized
in Worthington, and there was no discussion of
how this agreement would affect local residents’
opportunities of employment at the new estab­
In the early summer of 1964, Worthington citi­
zens became aware of rumors that some Armour
workers would be transferring to their city. Sev­
eral Negroes and one worker of Spanish-American
descent came from Kansas City to Worthington
for a weekend, to survey the housing situation for
others who would be considering transfer in the
fall. White workers from the St. Paul, Minn.,
plant and from the Sioux City area also visited the
city. The Worthington Daily Globe ran a lengthy
story about the pending plant opening and the
possibility that a rather large number of workers
would transfer to Worthington.
Telephone conversations with Worthington
community leaders at that time made it clear to
the Committee that it would be useful for top
company and international union officials to ar­
range a visit to Worthington to discuss the dimen­
sions of the forthcoming transfer. Armed with
all the information that they could gather, several
members of the Committee and their representa­
tives flew to Worthington on August 1 to meet with
community leaders. It should be noted that much
of the success of the efforts of the community and
of the Committee is attributable to the personal
help provided by James Vance, the editor of the
Daily Globe, and to the excellent press coverage
by the newspaper. The Globe helped immeasur­
ably in the creation of a community relations
climate which facilitated the integration of Ne­
groes into this previously all-white community.
Meetings With Local Leaders

During the 1-day visit, representatives of the
Committee attended a series of meetings with
Worthington city officials, political leaders, busi­
nessmen, and representatives of religious, educa­
tional, social, and fraternal organizations. Rep­
resept atives of the press and radio were present at
one of the meetings.
Federal Reserve Bank of St. Louis

The procedure was approximately the same at
each of these meetings. First, a company repre­
sentative on the Committee reviewed the develop­
ments leading to the location of the new Armour
plant in Worthington, and summarized informa­
tion concerning the anticipated employment, vol­
ume of production, and date of the plant opening.
A representative of the public members of the
Committee explained that 550 workers in other
Armour plants had indicated a desire to be con­
sidered for transfer to Worthington, and that from
this list, the company would transfer to Worthing­
ton in September approximately 125 employees
who would become a nucleus of the first shift. The
community leaders were also told that an addi­
tional group of about the same size would be asked
to report to Worthington about 60 days later to
staff the second shift. An assumption was stated
that approximately one-third of the workers trans­
ferring would be Negroes or of Spanish-American
The Committee knew from past experience that
many of the men on the transfer list woidd not
move when the time came. I t had some idea—not
certainty—as to how many Negroes would transfer
to Worthington, yet, it faced a problem in com­
municating its estimates to the community. I t did
not want to convey the impression that only a few
Negroes would transfer and that nothing needed
to be done; nor did it want to raise the possibility
that most of the transferees would be Negroes.
The one-third guess, or about 50 of the first 150
workers to be called, was made with the hope that
it would be correct, and with the realization that
even though it was a most tentative figure, it would
be accepted by the community as the definite state­
ment of the proportion of the transferees who
would be minority group members.
A union representative on the Committee, a
Negro, then told the community leaders that the
Committee was concerned about the impact of the
transfer on the community, and that it was hoped
that the transferees would be good citizens and
would participate in the life of the town. The
final speaker, another company member of the
Committee, explained the wage scale that would be
used at the plant and indicated the types of jobs
that would be performed and the wages paid for
this work. The total presentation at each meeting
was short and questions and discussion were en-

couraged. There was extensive discussion of the
limited housing available and of the desirability of
avoiding racial discrimination.
Committee members were impressed by the
spade work that had apparently been done by a
few of the most influential leaders of the com­
munity. When housing was discussed, one real
estate man said that he knew he would be asked if
he would sell property to Negroes and, therefore,
had asked each of his clients whether any of them
would refuse to sell to a Negro. He said that only
2 of more than 100 had expressed reservations. He
explained, in a slightly defensive fashion, that he
had made this survey so that he would later avoid
any embarrassment that might occur if he showed
a home without first alerting the owner that the
potential buyer was a Negro. Ministers stated that
they had discussed the advantages of integration
over segregation among themselves and had given
sermons on this topic during the previous weeks.
Women leaders of the Welcome Wagon, City Host­
ess Service, League of Women Voters, Newcomers
Club, and the Worthington Country Club stated
that they looked forward to welcoming all new
community residents. Representatives of the
school system inquired as to the number of chil­
dren who would be coming and expressed their
willingness to help the children of transferees
minimize the difficulties of shifting to a different
school system.
Temporary Accommodations

When representatives of the Committee left
Worthington that evening, they were greatly im­
pressed by the apparent desire of the community
to welcome all newcomers and to avoid the estab­
lishment of segregated housing. They could not
help but wonder, however, if these good intentions
could be realized. It was clear that housing was
in short supply, particularly by rental housing.
At the outset many of the workers would need
temporary inexpensive sleeping rooms while they
looked for more permanent housing for themselves
and their families. The question of whether rooms
in private homes would be available to Negroes in
an all-white community of private single-family
dwellings, with few apartments, was one which
would put an unusual burden on the community.
The Committee and the community leaders put
Federal Reserve Bank of St. Louis

M O N T H L Y L A B O R R E V IE W , JA N U A R Y 1967

aside their misgivings and embarked on a program
to meet the critical housing problem.
The union representative on the Committee dele­
gation that went to Worthington sent a housing
survey form to all potential transferees to deter­
mine whether the whole family was making the
move together or whether temporary housing was
needed for the man, what type of housing was
desired for the family, and when it would be
needed. Results of the housing survey were sent
to the town’s Chamber of Commerce office which
had agreed to pass the information on to all the
real estate companies. In addition, community
leaders urged all residents of the area “to list
available housing with their local realtor. This
includes rental houses, apartments, vacant farm
buildings, and rooms. Those having real estate
to sell have also been asked to place it on the
market.” 1
The first 57 responses to the housing survey con­
firmed that most of the initial demand would be
for rental rooms—44 of the group asked for this
type of accommodation. Also, although 25 of the
57 respondents were homeowners and 22 indicated
that they wished to purchase homes in Worthing­
ton, it was clear that this could not be done imme­
diately as they needed first to sell their present
homes. Thirty-four of the respondents indicated
a desire to rent rather than buy, and half of these
said they needed at least three-bedroom homes.
However, much of the rental housing demanded
was not for immediate use as most men preferred
to come alone first and then make arrangements
for their families.
Arrangements were made by the Committee for
the union to open a local union office 1 week before
the transferees were due to report for work, to
act as a referral center for housing. Advertise­
ments were run in the newspaper encouraging
people with rooms for rent to call this office.
Agreements were made with the two local hotels
to house incoming transferees at low weekly rates.
The Negro union official who had visited W orth­
ington previously returned at the time of the trans­
fer to be on hand to help solve any racial problems
that might arise. All was in readiness when the
plant opened on September 21.
By the middle of October, there were 151 em­
ployees working in the plant—27 local male resi1 W o r th in g to n D a ily G lobe, O ct. 6, 1964.


dents, 115 male transferees, and 9 female trans­
ferees. Thirty of the men and 2 of the women
transferees were Negroes. It was clear also that
further expansion of the plant’s employment
would benefit mainly local residents as only about
1 in 4 of the workers on the transfer list had
accepted transfer and there were only a few more
scheduled to come. A survey taken in December
1964, after the second shift had been hired, showed
that of the 165 who were working in Worthington
at that time, 41 were Negroes and 4 were of Spanish-American descent.
No racial problems arose during the first month,
although the search for rental housing proved to
be difficult. Two weeks after the first transferees
arrived, the Daily Globe ran a story about the
housing problems. It noted that “workers are
staying in local hotels and motels, rooming houses,
and tourist homes and even sleeping in their
cars.” 2 Residents with rooms to rent were again
encouraged to call the housing service being oper­
ated at the local union headquarters. No mention
was made of the needs of any racial group, but
the accompanying picture of the nine local union
officers showed two of them to be well-dressed,
respectable appearing Negroes.
The next day the newspaper ran a followup
story in which the president of the local union
said that “calls started coming in this morn­
ing. . . . Some people said they really had not
thought of renting a room or apartment, but since
there is such a shortage they decided to make their
space available. I think we can get this problem
worked out.” 3 The union president noted that
there were still about 20 people who were renting
hotel rooms but would prefer more permanent
accommodations. Again, no reference was made
to any problems facing Negroes, but accompany­
ing this front page story was a picture of the
first union meeting which showed several Negroes
among those present. Two weeks later the news­
paper ran another front page story summarizing
the housing situation as follows:
Placement of Armour workers in local and area
housing is progressing satisfactorily, but more rental
units are needed . . . Union officials have been
amazed at the number of housing units made
available. It was greater than had been earlier
expected . . . .
[The local union president] went on to say
assimilation of Armour men of minority races into
the community has been very little of a problem . . .
He sa id : “Most of the men really like Worthington
and are pleased with their move here.” 4
239-630 O— 67-----4
Federal Reserve Bank of St. Louis

A representative of the Committee visited
Worthington in December to ascertain whether
there was need for further activity on the part of
the Committee. He found there was not. One
Negro to whom he talked reported that strangers
stopped him on the street to shake hands and wel­
come him to Worthington. A tour of the town
was made to see what type of housing had been
obtained by the transferees. Many of the people
still were in temporary housing, but the addresses
of the Negroes and whites who had purchased or
rented homes were fairly well scattered through­
out the city. From the outside appearance of the
homes and from comments of community resi­
dents, the Committee representative could not find
any difference between the housing acquired by the
Negroes and that of the whites.
Two Years Later

Two years after the first transfer took place a
final recheck was made of the housing acquired by
Negroes and workers of Spanish-American de­
scent. The situation at that time, in September
1966, was that 35 of the 41 Negroes and 3 of the 4
workers of Spanish-American descent who had
been working in Worthington in November 1964
had remained in the community. This compared
favorably with the proportion of the white trans­
ferees who settled in the community. The three
men of Spanish-American descent had been rent­
ing one house in the fall of 1964; 2 years later, all
of them had brought their families to Worthing­
ton and found homes for rent in different areas.
The 35 Negroes also were fairly well dispersed
around the city. They had purchased 6 homes and
were renting at 16 different addresses. Approxi­
mately 10 of the 35 Negroes may still be in tem­
porary housing since 9 of the 19 married men with
children have not yet brought their families to
Worthington. Three of these men still live in
hotels, as does one married man without children
whose wife has not accompanied him to Worthing­
ton. At the time of this final survey, Committee
representatives were told again by community
leaders that the Negroes are accepted in the com­
munity and that a few of them have become quite
active in community affairs.
2 Ibid., Oct. 7,1964.
3 Ibid., Oct. 8, 1964.
4 Ibid., Oct. 22, 1964.


The Committee is pleased with the results of the
transfer to Worthington. It recognizes that the
credit for the success of the move goes mainly to
the community leaders of Worthington who
created the atmosphere in which integration was
possible. The remaining credit is due the mi­
nority group members who acclimated rapidly to
the changed environment, and to the people of
Worthington who welcomed them and facilitated
their acceptance into the community. Integration
of 40 minority group members into a town of

10,000 is not a problem of the magnitude en­
countered in major urban centers today. Yet the
accomplishment s h o u l d not be underrated.
Worthington is situated near the Minnesota area
where a packinghouse strike occasioned widely
publicized outbreaks of violence. Acceptance of
unionized minority groups into this part of the
State in the fashion in which it was done illustrates
to the Committee the favorable results that can
be obtained from advance community planning to
meet the impact of sudden change.

The Automation Fund Committee was created by the Collective Bargaining
Agreement between Armour and Co., the Amalgamated Meat Cutters and
Butcher Workmen of North America (AFL-CIO), and the United Packing­
house, Food and Allied Workers (AFL-CIO). Members of the committee
are :
For the company—Harold E. Brooks, vice president; Walter E. Clark, vice
president, labor relations; Clifton B. Cox, assistant to the president; and
Frederick R. Livingston, Kaye, Scholer, Fierman, Hays & Handler.
For the Amalgamated Meat Cutters and Butcher Workmen of North Amer­
ica {AFL-C IO )— Russell E. Dresser, vice president and director, packing­
house division, and J âmes H. Wishart, research director.
For the United Packinghouse, Food and Allied Workers (AF L-C IO )—
Ralph Helstein, president, and Jesse Prosten, director of contract
Co-chairmen—Clark Kerr, president, University of California, and George
P. Shultz, dean, Graduate School of Business, University of Chicago.
Federal Reserve Bank of St. Louis


Job Redesign for Older
Workers: Case Studies
J obs a r e c o n s t a n t l y being redesigned or altered
for the purpose of improving production methods
and plant efficiency. To the extent that the
changes result in the reduction of various fatigu­
ing tasks, they greatly benefit older workers, who
are more affected by physical strain than the
younger ones. But rarely are jobs adapted spe­
cifically to the declining physical capacities of
older workers. In some instances, job redesign is
the only way of keeping at the job aging employees
who are still productive, a goal which is especially
desirable under current conditions of labor
Apart from such immediate economic consider­
ations, however, job redesign for older workers has
important advantages from the standpoint of
human and social values. By easing job strains,
application of the job redesign principle protects
the health and morale as well as the income of
older workers.
This article describes how 10 industrial estab­
lishments in the United States successfully used
methods of job redesign to maintain the employ­
ment and productivity, as well as the morale, of
aging employees. It is based on the findings of a
study conducted by the Bureau of Labor
The study’s objective was to locate and report on
cases of job redesign specifically related to prob­
lems of older workers. The individual case
studies were carried out through interviews with
officials of 10 companies which were selected for
field visits from 284 firms that had replied to a
mail canvass. The replies represented 56 percent
of a total of 500 manufacturing companies,
drawn from the Fortune plant and product
directory of the 1,000 largest U.S. industrial corpo­
rations, which had been queried concerning their
practices in aiding older workers through job
Examples of job redesign were found in a wide
variety of manufacturing industries. The case
studies included plants producing aircraft engines,
aluminum framing, building materials, carpets,
computers, copper pipe fittings, footwear, heavy
Federal Reserve Bank of St. Louis


iron pipe, precision instruments, and printed
novelties. Employment at these plants ranged
from fewer than 100 to many thousands of
Some of the older workers whose jobs were re­
designed were employed as low-paid porters, others
were semiskilled machine operators, and a few
were highly skilled craftsmen. Most of the
workers affected were older men and women whose
physical condition had not substantially affected
their performance, but in several cases ailments
had significantly reduced work capacity.
Only one of the cases studied—at the aircraft
engine plant—involved a formal program of job
adaptation to the functional capacities of workers,
with participation by medical and other special­
ized personnel. More prevalent among the cases
studied was the informal practice of redesigning
jobs to improve operational efficiency of a specific
aging worker or group of workers, by accommo­
dating declining physical capacities. This prac­
tice was also used to retain at the job older workers
who had suffered an illness that made it impossible
for them to continue work under existing con­
ditions. In these informal job redesign situations,
the changes were generally effected with a mini­
mum of fuss and at relatively little cost by the
plant managers and foremen.
Where a group of workers were involved, the job
adaptations were accomplished by removing the
more strenuous tasks, such as heavy lifting, push­
ing, pulling, or carrying, from the older workers
and assigning them to the younger ones in the same
group. Mechanization resulting in job redesign
for some older workers made their tasks much
easier to perform. It also brought about displace­
ment of workers in some cases, reassignment or re­
tirement in others.
In several cases, a substantial rise in output per
man-hour occurred as a result of the redesign. At
the computer manufacturing plant, the substitu­
tion of tape recorded for visual instructions and
1 The full study will be presented in a forthcoming BLS bulle­
tin, Job Redesign for Older Workers: Ten Case Studies, prepared
by the BLS under contract to the Office of Manpower Policy,
Evaluation and Research, under Title I of the Manpower Develop­
ment and Training Act. In recent years, the Organization for
Economic Cooperation and Development has sponsored a series
of seminars, several research publications, and a survey of cases
on job redesign (of which the study is a part) in several coun­
tries. For example, see Stephen Griew, Job Redesign (Paris,
Organization for Economic Cooperation and Development, 1965).

easier, more systematic access to components re­
duced work fatigue factors for a group of assembly
workers age 45 and over. Output in the operation
tripled and assembly errors were reduced to a
minimum. In none of the cases studied was pro­
ductivity adversely affected.
The case studies revealed that job redesign had
some advantages for both the older worker and
management, over the practice of reassigning such
workers to other jobs. When the requirements of
their jobs were eased, some older workers who were
still productive continued to perform the tasks
they knew, in their customary work places, rather
than being shifted to unfamiliar work and sur­
roundings. They continued to use their experi­
ence and skills and, with one exception, maintained
or increased their prior earnings levels. Their
employers benefited from the use of their skills.
Job redesign made possible the retention of some
skilled workers with declining capacities for whom
reassignment or early retirement would not have
been feasible.
Four of the ten individual case studies are sum­
marized below. The first presents an application
of job redesign within the framework of a formal
job placement program. The others reflect studies
with less formal procedures: in one, more mechan­
ical aids replaced manual controls; in another, job
redesign resulted from technological change; in
the third, the redesign involved reallocation of
duties among a group of workers.
Electric Motor Repairman

A plant manufacturing aircraft engines had
many thousands of employees, of whom two-thirds
were production workers. The plant’s formal and
very thoroughgoing job analysis and employee
placement programs were designed to provide con­
tinuing evaluations of each job in terms of physical
demands, and of each employee in terms of his
functional capacities, as well as necessary arrange­
ments to assure that the job and the incumbent
were matched.
This case study relates to the redesign of the job
of an electric motor repairman, age 46, who had
worked primarily on locating trouble and repair­
ing and overhauling defective electric motors and
other electrical apparatus. He visually inspected
parts for imperfections, examined dials and gages
on testing equipment for short or open circuits,
Federal Reserve Bank of St. Louis


checked schematic diagrams, and planned details
and sequence of operations for necessary repair
work. Using a variety of hand and portable
power tools, he dissassembled motors and other
equipment, cleaned parts, made adjustments, and
repaired or replaced worn parts. He also operated
various stationary power machines (drill press,
engine lathe, and others).
In performing his duties in the repair crib or
shop or in the plant production areas, the repair­
man moved gear and materials both manually and
by equipment such as handtruck, tricycle, and
chain hoist. From time to time during the work­
day, he lifted without mechanical help objects
weighing from 10 to 65 pounds. A small amount
of push and pull effort, ranging from 15 to 35
pounds, was also required. Except for occasion­
ally sitting at a workbench in the electric motor
repair shop, or riding a tricycle to different trouble
spots in the huge plant area, the repairman was on
his feet most of the workday. He walked about
and climbed stairs, ramps, and occasionally a lad­
der to reach a work area. He was 1 of 8 electric
motor repairmen on the plant’s day shift. Their
average age was 40 and their service with the com­
pany ranged from 10 to 20 years.
The repairman suffered a heart attack early in
1965. When sufficiently recovered to be able to
report back to work several months later, he re­
ceived a medical reexamination as required by
company policy; the physician found that the ex­
tent of standing, climbing, lifting, and movement
required by his full job would be too strenuous for
him. By agreement among the plant’s examining
physician, the safety engineer, and the motor re­
pair foreman, the physical demands of the repair­
man’s job were substantially altered to adjust it to
the restriction of the man’s functional activity.
The repairman was still required to perform
all the basic duties of an electric motor repairman.
However, he was no longer required to move
about and work in the plant production areas but
remained in the electric motor repair shop. The
lifting demands were limited to items weighing no
more than 20 pounds for a total of 30 minutes
during an 8-hour shift, as opposed to the full-job
weight effort of 65 pounds for possibly 2 hours of
the shift. Push and pull effort was removed en­
tirely from his specific job requirements. He was
allowed to stand only 3 hours a day, on an inter­
mittent basis, provided that at least 15 minutes of


each hour was spent sitting. Climbing of ladders
and riding a tricycle were also removed from his
specific job demands.
These adjustments enabled the repairman to
resume work without discomfort or danger at a
job in which he could use his skills and experience
fully. The changes in the requirements of his job
did not affect its skill classification or its rate of
Crane Operator

The plant in question was engaged in processing
slag (a residue of iron melting operations) to pro­
duce various types of aggregate for use in readymixed concrete and for other purposes. It em­
ployed about 50 workers. Its processing activities
were an open-yard operation spreading over a 5acre area that embraced several structures, piles
of aggregate, and lines of railroad tracks. Cranes
were used to move slag and aggregate in and out
of the yard.
The job redesign relates to the work of the op­
erator of an electric locomotive crane, which was
used to load and unload various sizes of slag
aggregate on and off open-top railroad cars.
Prior to redesign of the job, the crane operator
had to put forth a great deal of physical effort
working in the cab of the crane. To enter the cab,
he climbed a short step-up ladder. He manually
pushed and pulled three long-handled levers to
actuate the booms (i.e., hoists) which either
raised, lowered, or moved the bucket sideways.
He also manipulated a lever to move the loco­
motive crane forward or backward along the track
(third-rail powered). This involved the use of
two friction clutch foot brakes, on which the op­
erator had to place his full body weight while
standing, to apply a braking action. Although
he had a stool available, he could seldom sit down.
To operate the levers and brakes he exerted con­
siderable effort, using arm, leg, back and other
muscles constantly. In the operator’s own words,
he “fought the machine all day.”
There was only one electric locomotive crane
at the plant, and consequently only one locomo­
tive crane operator. His experience, muscular
strength, and quickness and skill in the use of his
hands and legs made the operator a highly valued
Federal Reserve Bank of St. Louis


The operator, who was 54 years of age and had
operated a crane for most of his 25 years of service
with the company, developed a painful skin disease
on his legs and thighs. He lost strength and was
having difficulty in standing. His work output de­
clined. He was unable to continue working and
left his job.
When the leg condition finally responded to
medication, 21 months after leaving his job, he re­
quested reemployment. He was now 56 years old.
It was apparent he would have to work: in a sit­
ting position a good part of the time because his
legs were still weak. Reassignment to another job
was not feasible because all other jobs at the plant
required standing most of the day. Moreover,
the plant superintendent wanted to use the man’s
skill as a locomotive crane operator; replacements
had not been very satisfactory.
The plant superintendent and a maintenance
shop leadman knew that the locomotive crane
controls and brakes would have to be modified to
permit the operator to sit in the cab most of the
day. They were aware of the improvements in
control devices, such as easily operated mechan­
ical foot brakes and pneumatic controls that could
be substituted for the friction clutch foot brakes
and long-levered manual controls with which the
crane was originally equipped. The new parts
were ordered and their installation took place
over a weekend, at a total cost of about $500.
The operator was able to return to his job. He
now manipulates short air-powered levers or
valves to work the clamshell bucket and to move
the crane along the track. He no longer has to
reach, pull and push long-levered handles. Slight
pressure on the valves moves the booms. The
new mechanical brakes require very little pedal
effort, enabling the operator to sit at his job most
of the day. He has retained his previous job
classification and pay rate level.
Material Handlers

The carpet manufacturing plant in which this
case of job redesign occurred employed approxi­
mately 750 employees, of whom 610 were produc­
tion workers. The average age of all production
workers at the time of the study was 53, reflecting
the plant’s longtime position as the principal
employer in a small town.

The warehousemen or material handlers at this
plant had a physically strenuous job, requiring
individual and team effort in lifting, handling,
carrying and positioning of rolls of carpet weigh­
ing up to 800 pounds. The 11 men in this job
usually worked in groups of 5 or 6. They had to
manually lift and load the carpet rolls on dollies
in the warehouse and push them to a loading plat­
form, and then manually load the rolls onto freight
cars or trucks. Each trip took about 15 to 20 min­
utes and covered approximately 150 feet. Remov­
ing the carpet rolls from the piled stacks in the
warehouse and placing them in freight cars and
trucks required frequent stooping, squatting,
reaching, and climbing.
The average age of the 11 warehousemen was 55;
their ages ranged from 46 to 68. All had a mini­
mum of 25 years of service, and three were eligible
for retirement. Because of an increasing number
of accidents, and the advancing age of the men,
the company management decided that some less­
ening of the heavy physical demands of the job
was essential. The warehouse had been experienc­
ing the heaviest incidence of injury among depart­
ments in the plant: 15 injuries were reported in the
5-year period preceding the job redesign, 6 of
which resulted in lost time.
The plant’s methods engineer and saf ety engi­
neer decided that the most effective way to lower
the physical requirements of the warehousemen’s
job would be to use a specially designed forklift
truck with an 18-foot steel ramming rod or shaft,
4 inches in diameter, affixed to its front. The op­
erator of the truck could lift and carry rolls with
the rod, which could be lowered or raised as re­
quired. When inserted into the hard core paper
center of a carpet roll, the operator could dislodge
a particular roll from a stack of rolls and lift it
for movement to the area or loading station.
Two of the specially designed forklift trucks
were ordered. After some structural building
changes to accommodate the 18-foot shaft, the sys­
tem was fully implemented. Only 6 men were
needed to do the work of the 11 men previously
required. The average age of the six who stayed
at the job was 54, with a range from 46 to 59. Of
the remaining five, four men retired with benefits
of a company pension and Federal social security
payments. Their ages at retirement ranged from
63 to 68. The fifth worker, 58 years old, was
Federal Reserve Bank of St. Louis


transferred to a different department where liis
work was lighter. His earning level was un­
The base pay rate of the six warehousemen who
stayed on the job remained the same; however, the
group incentive rates were revised to reflect the
change in method. The increased output per man
of the mechanized operation resulted in an ap­
proximately 15-percent net increase in workers’
hourly earnings. In the 6 years since the job re­
design, there have been only five work-incurred in­
juries, only one of which involved loss of time from
Top-Stitch Workers

A shoe manufacturing plant had about 7,700 em­
ployees, of whom 6,200 were production workers,
most of them semiskilled. I t required about 6
months for most workers to attain proficiency at
the various shoemaking machines, which are the
basic production equipment in use at the plant.
Among the machine operating jobs at the plant
was that of the “top stitching” done by a group of
20 women. Most of them were over 50 years of
age and had had long periods of experience at the
work. The job involves stitching the shoe’s lining
to its upper leather on a sewing machine. Prior
to the job redesign, the sequence of tasks was as
follows: The worker walked from her sewing ma­
chine to a supply rack, 10 to 15 feet away, to collect
a batch of materials—12 pairs of leather uppers
for shoe tops and 12 pairs of linings—which
weighed about 10 pounds. Finding the appro­
priate batches of leather and linings on the rack
usually required squatting, stooping, and bending
and occasionally some eye strain in looking for
specific materials. She obtained her own thread
and other supplies at nearby shelves and cabinets
and returned to her machine to perform the stitch­
ing operation. She put the completed work in a
box, which she later carried to a nearby area to
make it available to the workers in the next opera­
tion. Each cycle required approximately 15 to 20
Shortly bef ore the job redesign was undertaken,
the plant superintendent and department manager
became aware that the productivity of the top
stitchers had been declining seriously; it had fallen
to 13 percent below standards set by time study


engineers. Moreover, the workers were complain­
ing about the frequent bending, squatting, and
stretching required to procure material from the
supply racks. A steady increase in absenteeism
was also taking place.
After studying the problem, management de­
cided to redesign the job of the top stitchers by re­
moving from it the chores that were not involved
in the actual stitching or sewing operation. This
called for assigning these tasks to two “service
workers” chosen from among the 20 stitchers on
the basis of personal bids. Two of the younger


stitchers (only four were under 45 years of age)
were chosen to fill these service jobs because of the
physical demands of the nonsewing tasks.
After the job redesign the top stitchers (reduced
to 18 in number) could sit and work at their ma­
chines uninteruptedly. Absenteeism declined and
complaints about the work became infrequent.
Productivity increased by 16 percent 2 months
after the redesign.
— H e r m a n J . K othberg
Division of Technological Studies

Although population projections suggest that the proportion of old persons
will remain relatively constant for the next quarter century, about 10 percent
of the total, their absolute numbers will increase still further to about 25
million in 1985.
Significant changes are also taking place within the aged population itself.
Between 1900 and 1963, the number of persons age 65-74 increased 5.2 times;
by contrast, those age 75 and over increased 8.8 times. Moreover, estimates
indicate that between 1963 and 1985 the number of persons moving into the
65-74 year cohort is expected to increase only 0.3 times, whereas those 75
years old and over will grow by over half. As a result, an increasing pro­
portion of older persons will be in the upper end of the aged group.
Federal Reserve Bank of St. Louis

Sidney Goldstein, “Changing Income and Consumption Patterns of the
Aged, 195U-1960,” Journal of Gerontology, October 1965.


M O N T H L Y L A B O R R E V IE W , JA N U A R Y 1967

Trade Union Approaches
to Income and Price Policy
E ditor ’s N ote .— The

following is taken from
uNon-Wage Incomes and Prices Policy,” the
ninth in a series of reports published by the
OECD Social Affairs Division in connection
with their program of International Semi­
nars. Sizable cuts have been made in this
excerpt from the concluding chapter of the

t h e most detailed examination of the work­
ing of the British economy yet published, J. C. R.
Dow said:

A fter

One of the major conclusions of this study is that
the attempt to manage the economy by means of
fiscal and credit policy alone has shown them to be not
enough. They need to subserve a policy for directly
promoting economic growth, and to be flanked by a
wages policy.1

These conclusions are probably equally applica­
ble to other countries. Trade unions may wish to
change the reference to wages policy to cover all
forms of income, or to delete it, but this is not at
this stage the major point. What we are more in­
terested in is the conclusion that neither monetary
nor fiscal policy are capable of controlling the
economy. The more complex the aims of the
economy, the more things we want the economy to
provide, the less satisfactory monetary and fiscal
policy become. For, if we were to be content to
have only a high level of employment as our goal,
irrespective of growth and income distribution,
it might be possible to adjust taxes and use mone­
tary policy to obtain it.
We do not in fact have only one simple economic
goal. We have a number of them, and they are
often in conflict. Thus, high levels of employ­
ment create high levels of demand which create
inflationary conditions which cause balance of
payments problems and so on. I t is necessary
therefore that we accept the limitations of mone­
tary and fiscal policy. For if they cannot control
the economy in such a way as to give us what we
want, then we must support or supersede them
J. C. R. Dow, The Management of the British Economy (Lon­
don, Cambridge University Press, 1&64).
Federal Reserve Bank of St. Louis

with other policies, or abandon some of our eco­
nomic goals.
The choice is perhaps academic. Trade unions
cannot abandon the goal of high employment. I t
might be possible to obtain high employment
without growth, but if so, unions will have to
decide if they will settle for it. I f we come down
to the fundamentals, it is extremely doubtful
whether any trade union organization can in prac­
tice reject any of the goals of high employment,
growth, some limitation on rising prices, and some
policy on income distribution. These are now
part of the very fabric of trade unionism. The
only issues are the relative importance and partic­
ular interpretation adopted in particular countries.
Competitive System

One of the major distinguishing features of
trade union approaches and policies is acceptance
of the view that the working of market forces can
fundamentally provide the sort of economic en­
vironment and results that are considered desir­
able. It may be necessary to make some changes
in the working of these forces, or to alter the in­
stitutions and structure of the economy in order
that the forces are able to operate, but the bulk of
the burden of achieving desirable objectives is to
be laid on the working of economic forces. It may
be that it is thought that obstacles to competition
should be removed. Strong antimonopoly legis­
lation and restrictions placed on the activities of
cartels might be regarded as not only necessary but
also sufficient conditions for the smooth function­
ing of an economy. This is not meant to imply a
return to the working of the invisible hand of
competition as preached by nineteenth century
economists. Competition is not to be completely
free and unhindered; it is to operate within certain
rules and through certain institutions. Thus, one
rule might be that no firm is to be allowed to be
so successful at competition that it defeats all its
rivals and becomes a monopoly. Or, another, that
there will not be competition in all products.
The essential conditions for the working of this
kind of system might require that the government
provide machinery for creating and maintaining
conditions suitable for, or necessary for, the main­
tenance of competition. The pressures then gen­
erated by different producers competing for sales,
and different social groups competing for shares in


income, will lead to an allocation of economic re­
sources most conducive to fast growth and at the
same time the pressure of unions for higher wages
will encourage firms to develop and install laborsaving techniques which will lead to productivity
increases. Prices will be kept low by the removal
of cartel arrangements and the fostering of com­
To meet criticism of naivete this outline scheme
can be made more sophisticated to enable or com­
pel the government to intervene to maintain a level
of demand sufficiently high to provide full em­
ployment. For it is generally accepted that there
is no reason at all why the working of the com­
petitive process should of itself lead to full em­
ployment. But once the government has been
given this responsibility, once it is accepted that
the State should interfere to regulate in some ways
the working of the economy, it is difficult to pro­
vide a method which does not also affect other
aspects of the economy.
Stimulus to Change

Given this condition, it might then be argued
that free collective bargaining can result not only
in the development of pressure to modernize, but
also in the development of institutional changes
which will lead to the achievement of trade-union
goals. Thus the establishment of capital-savings
schemes on the Italian or German lines could be
seen as an extension of free collective bargaining,
under conditions of competitive economic forces
which did not require any increase in government
power or State interference in the working of the
economy, beyond the passing of laws to enable such
agreements to be made. The resulting effects on
profit retention, investment policies, economic
growth, and the development of relatively back­
ward areas or industries of the economy could all
take place under the stimulus of competition and
collective bargaining.
It might be objected in turn that these proposals,
while possibly encouraging investment in produc­
tivity-increasing equipment, and while perhaps en­
couraging firms to resist wage demands, need not
do so. For it might still be the case that, if the
government maintains the level of demand suffi­
ciently high to ensure full employment, firms will
still feel able to increase prices and so will have
little real cause to resist wage demands. A firm
Federal Reserve Bank of St. Louis


will have strong pressure not to resist wage de­
mands if other firms are granting them. I t will
increase its wages in the hope of retaining its labor
force. Thus the methods might work only if
everyone believes they are going to work. That is,
if all firms believe that no other firm is going to in­
crease wages the pressure for wage increases might
be resisted. On the other hand, it is just in these
circumstances that any single firm has the most to
gain. If it is the only firm increasing wages it
might be able to attract additional labor.
The Role of the Trade Union

It is not clear what the role of the trade unions is
in these circumstances. Presumably they are to
press for wage increases, because this is how they
increase the real conditions of their members in a
competitive society, and their wage pressure is also
expected to be an important factor leading to
changes in productive techniques to increase pro­
ductivity. In these circumstances, an increase in
industrial conflict appears inevitable. This may
be regarded as good or bad, as undesirable or as the
normal means of resolving differences of opinion
between workers and employers in a competitive
system. Even if there is not additional conflict,
will the outcome of these pressures have a signifi­
cant effect on the allocation of labor ? Will it lead
to changes in the relative earnings of different
groups of workers in different industries, so that
labor is drawn to those industries which can use it
more efficiently and thus pay more ?
The evidence about the allocative role of wages
in existing economic systems is not encouraging.2
There might be some effect. If all wages tend to
move together at more or less than same rate of
increase, then the less profitable or declining indus­
tries will find that they have to increase their wages
at much the same rate as the profitable, expan ding
industries if they are to retain their labor force.
So, even if there is ultimately some allocative
effect on labor, there may be a lot of inflation gen­
erated in the process.
Two lines of reply could be developed to this.
It could be said that the inflationary pressures
could be prevented by some modification of the
bargaining processes on a bilateral basis. Or the
inflationary effects could be ignored; it does not
See Wages and Labor Mobility (Paris, Organization for Eco­
nomic Cooperation and Development, 1965).

follow that because trade unions are concerned in
certain instances about the consequences of infla­
tionary pressures they must always modify all
their policies to prevent any price increases. They
may decide that inflation is a small price to pay
for keeping free collective bargaining and that
they would be able to secure adequate protection
for their members and the weaker members of
society from their own strength, given the mainte­
nance of high levels of demand, so that they need
not fear inflation. To some extent this might de­
pend upon the balance of payments position.
Unions need to determine their attitudes to the
harmonization of their objectives and the means by
which they hope to achieve them. This will always
prove a difficult task, as they aim to achieve a num­
ber of different goals some of which might be in
conflict. To some extent this fundamental issue
is superimposed on the related question of whether
or not unions should participate in economic deci­
sion-taking on a broader front. If they do wish to
so participate it will almost inevitably mean that
they will have to change their existing methods,
procedures, and attitudes.
Institutional Changes

Some trade unions will reject proposals to rely
on the improved working of more effective market
forces, and believe that there can be no solution
from sharpening up certain aspects of competition,
even though this may be a desirable supplement to
other policies. They will advocate changes to
alter the way in which the economy works.
Basically, they will be starting from a position
of saying that competition cannot provide the
things trade unions want. The modern complex
economic system, with its increasing technological
pressures towards bigger and bigger productive
units, and the growth of business and unions as
political pressure groups or powers, means that
the old views of competition are redundant.
The adoption of more active manpower policies
which change the type and distribution of the labor
force between different industries, areas, and skills
could have considerable effect on prices and growth.
It might allow a redistribution of labor to take
place more easily without having recourse to the
somewhat imprecise and possibly ineffective but al­
most certainly inflationary method of bidding up
wages. To the extent that inflationary pressures
Federal Reserve Bank of St. Louis


were thus avoided it should be possible to prevent
prices rising; in some circumstances it might be
possible to reduce prices even after allowing for
the costs of retraining or moving labor, as the skill
and quality of labor improves.
The modern system of international payments
and exchange prevents a government from abdicat­
ing responsibility for certain aspects of economic
policy. Membership of the International Mone­
tary Fund (IMF) implies that the economy will
be run in certain ways so that certain results on
balance of payments will not occur. There are
limitations on devaluation opportunities. I t may
be that some unions have not yet caught up with
the implications of these things for them and their
ability to indulge in free collective bargaining in
conditions of full employment.
Whether unions have seen this or not, govern­
ments have. This is why they attempt to influence
wage determination.
Price Policy

A price policy might require that wage increases
be kept within certain predetermined limits.
Sometimes, it may be the case that unions reject
price control because they are not prepared to
concede wage restraint. If a guidepost policy was
adopted so that the overall average increase in
wages was dependent on the average rate of
increase in productivity over the past few years,
this could involve the trade unions in accepting a
rate of increase in incomes which was determined
by the actions of another group. For many of the
decisions affecting the rate of increase in produc­
tivity are investment decisions and these are taken
by employers. Unions might decide that they
could not accept this limitation on their permissible
rate of increase in real income. It might be pos­
sible to solve this difficulty by giving trade unions
some voice in the investment decisions. They
would then be partly responsible for determining
the increase in productivity.
The distribution of income is an issue of vital
concern to trade unions. They do not accept the
existing distribution, and therefore seek to change
it. A guidepost policy often builds into the
system the continuation of existing distribution
between social groups. Exhortations to exercise
voluntary restraint would be unlikely to be effec­
tive ; it is unrealistic to expect either employers or


unions to exercise restraint in a policy vacuum.
They can only exercise restraint if it is reasonable
for them to expect that other groups will not take
advantage of their self-discipline. I t is very diffi­
cult to see how this can be achieved without some
form of machinery to exercise control or to offer
guidance in specific cases.
It could well be, therefore, that unions will have
to change their organizations and institutions.
They may have to submit to some form of cen­
tralized trade union authority; in some countries
this will require a much greater change of practice
than in others. In Britain, for example, it will
be very difficult to persuade unions to transfer
some of their authority to a centralized organiza­
tion. For it is one of the underlying aspects of
this subject that, unless some changes are made,
trade unions will lose effective control over the
determinants of their real wages, as the reality
of economic power shifts away from the areas over
which the unions have traditionally exerted
Unions will have to decide whether they should
participate in price policies, or whether they should
confine themselves primarily to wage questions
and allow prices to be settled by the working of the
economic system as a whole, or in response to more
specific government policies.
If machinery for controlling prices is estab­
lished, it will be necessary for unions to become
versed in the problems associated with price deter­
mination, and to provide staff competent to judge
when increases are permissible and when they are
not. There will be conflicts between the apparent
short-term interests of the members of the unions
involved in the industry concerned, and the
interests of the rest of the movement in their role
of consumers. The more open the participation
in controlling the economy becomes, the more
important it is that unions be equipped for dealing
with these possible conflicts. This might require
organizational changes of a drastic nature or it
may be sufficient to change union attitudes to each
other and their mutual relationship.
Thus the difficulties should not be seen as addi­
tional burdens which result from making changes
which are then compared with a situation in which
there are no difficulties. The real comparison
should be between the difficulties which will arise
if certain courses of action are adopted and those
Federal Reserve Bank of St. Louis


which will arise if action is not taken and the
existing course of development continues. It is
possible to be so concerned to point out the weak­
nesses and faults in a proposed new system that
one forgets the faults in the existing one.
Capital Growth

Unions have a basic decision to take; do they
prefer to try and obtain their share of capital
growth through the orthodox processes of collec­
tive bargaining, or do they seek to introduce some
form of capital sharing? A number of schemes
have been discussed but it may be that the choice
will depend not so much on the amount of increase
which may be received by workers as upon the
matters of principle which unions believe to be in­
volved in choosing one method rather than another.
There is a possibility that the policy adopted by a
trade union movement need not be that which
would result in the highest overall level of eco­
nomic growth. On the other hand, it might be that
certain combinations of policies will best satisfy
unions and encourage the highest growth rate of
the economy. For example, some unions believe
that a tough wages policy by them, combined with
a suitable general economic framework conducive
to growth, will lead to the best results all round.
It might be that by pursuing tough wage bargain­
ing policies which force the marginal firms out of
business the general rate of economic growth is in­
creased. Others prefer a system of capital sharing
allied perhaps with some form of incomes and
prices policy.
Capital savings schemes are regarded by many
unions as the only effective way by which the needs
of faster growth can be reconciled with trade
union participation in the control of industry and
with substantial redistribution of income and
wealth. I t is seen as an adaptation of trade union
approach and bargaining rights to meet the pecu­
liar needs of the 1960’s. I t attempts to come
to grip with the requirements and workings
of a modern economy. Its opponents may believe
that by drawing the trade unions into joint deci­
sion-taking, which must in some ways bind them to
accept some of the consequences of their decisions,
there will be a weakening of trade union strength,
and all that will be gained will be the transfer of
some income that would have been received in the

form of wage increase into a form of saving. The
schemes are seen as detracting unions from their
main purpose.
International Cooperation

Although trade unions profess their belief in
international trade union cooperation, and indeed,
often produce striking demonstrations of their
support of it, there is often a feeling that workers
in one country are attempting somehow to beat
those in another. Or workers in one country are
told that their problems arise from the fact that
they are overpaid or work less hard or are less pro­
ductive than workers in other countries. This is
particularly noticeable when balance of payments
problems are being discussed. If one reads
through the reports of trade union debates on in­
comes policy in Britain, for example, one cannot
help noticing how often the argument is used that
an incomes policy is desirable so that Britain will
be able to sell more abroad. This is always meant
to imply that more will be sold at the expense of
some other country. The opponents of incomes
policy always try to show that there really isn’t
any need for one, as foreign wages, or labor costs
per unit of output, are higher than at home, or
rising faster. I t is impossible to avoid the feeling
of basic conflict between the international and the
internal aims of unions. Employers often play on
this; demands for reductions in the length of the
working week may 'be countered by a recitation of
the hours worked by competitors abroad.
There seems very little doubt that if there were
some international coordination it could well be
easier to speed up the pace of social and economic
advance by trade unions. In the field of interna­
tional payments and trade there would appear to
be much room for trade unions to work out a policy
which is acceptable to them, whereby high levels
of employment and sustained rates of growth
could be reconciled with means of financing inter­
national trade. There is a danger that if an in­
comes policy were introduced in one country and
appeared to be working, it could either be doing so
by taking trade from some other country, or its
effects could ultimately be negated by actions in
foreign countries. Dutch experience shows how
external wage movements and levels can be one
of the factors exerting pressures which can be so
Federal Reserve Bank of St. Louis


strong as to seriously challenge the stability or
working of a policy.
With the importance of world trade, an inter­
nationally agreed policy is as important as is a na­
tional approach to wages inside any one country.
To the extent that internal competition and at­
tempts to either increase differentials or maintain
previous relativities can result in trade unions mis­
spending their strength and ultimately having a
lower level of real income, so can there be inter­
national disharmony with probably greater harm­
ful effects.
Further, the spread of international companies,
large or giant firms with factories or outlets in
many countries, has made it more important that
unions adjust their organization, or they will be at
a disadvantage. Firms will be able to switch their
production according to their own interests, and
indeed may even try and enlist the support of
unions in one particular country to help under­
mine the strength elsewhere. There may be con­
siderable benefit to be gained by trade unions ex­
changing information about relative price struc­
tures in their own countries. Not only in the case
of products from international companies but
other commodities, too, so that unions will have
more information on which to approach a prices
policy. A similar exchange of details of cost and
profits structures might prove of a great benefit.
The need for international cooperation is strong­
est in small countries. They are often at the mercy
of price movements in larger ones. It is probably
the case that no matter what steps are taken to con­
trol internal inflationary pressures and to co­
ordinate the various strands of economic policy in
countries such as Norway, Austria, and the Nether­
lands if there is inflation in the more important
trading countries it will spread to these other
countries. Small nations may be unable to isolate
themselves from price rises elsewhere. They
clearly have a direct interest, therefore, in trying
to prevent inflation developing in the larger coun­
tries. They will also have to modify their price
policy in the light of the policies in larger nations.
Not only the rate of change of prices but also price
structures and levels will probably be much in­
fluenced by what happens overseas.
The tendencies towards free trade areas and
common markets, plus the uneven levels of eco­
nomic development, are leading to a greater inter-


national mobility of labor. There is a danger that
the migrant labor, which generally takes the less
skilled and lower paid jobs, will be looked down on
by the national labor force and ignored by the
trade unions. I t is probably true that the level of
organization of this kind of worker is lower than
the average, although to some extent this will be
because they work in industries which are difficult
to organize anyhow. But too often, it may be the
case that no strong efforts are made. Unions will
also have to consider to what extent they are pre­
pared to admit foreign workers, and what the
effects on their home economy will be if this supply
of additional labor dries up. For if the less de­
veloped countries are successful in their develop­
ment policies, the supply might well be restricted
or stopped altogether.
It might be possible to secure some form of inter­
national cooperation which could enable detailed
and reliable information of selling prices to be
passed on from exporting to importing countries,
so that when the trade barriers are removed and
tariffs reduced trade unions can exert pressure to

ensure that the reductions in taxes or tariffs are
actually passed on to consumers. It is widely be­
lieved that these cost reductions become absorbed
by importers or other middlemen and so possible
price reductions are not in fact achieved.
The Choice

One thing this report has tried to do is to point
out that a choice must be made between various
methods of controlling the economy. It is not
possible to choose whether or not to control it, only
how this is to be done. A modern industrial econ­
omy, like peace, is indivisible.
The real choice facing trade unions therefore is
not whether there should be governmental inter­
vention, but how much intervention, in which
areas, and by what methods ? No matter how free
a “free enterprise system” may be, the government
intervenes to influence some incomes and to exer­
cise some restraints on some price formation. It
might take the form of antimonopoly legislation or
action against cartels, but action there is.

Trade unions also contribute another dimension to the discussion which
may or may not be uppermost in the thoughts of government policymakers ;
namely, their own value system. In the system of priorities of trade union
thought there are a number of important yardsticks by which they have
regularly tested broad economic policy, management conduct and the opera­
tions of the economy. These center around the demands for economic growth,
rising standards of living and greater equity in the distribution of income
and capital. Moreover, the unions have jealously guarded the rights to free
bargaining; rights which they have acquired only after a century of battle.
They are keenly aware of the need to participate freely and fully in the
decisionmaking process.
Federal Reserve Bank of St. Louis


—From Non-Wage Incomes and, Prices Policy: Trade
Union Policy and Experience (Organization for
Economic Cooperation and Development), 1966.

Foreign Labor Briefs*

Common Market—S o cia l D evelo p m en t

The basic changes in the European Economic
Community (EEC) since its establishment in 1958
were reviewed in the annual report for 1965 which
the EEC Commission recently submitted to the
European Parliament: Private per capita con­
sumption increased by one-third, i.e., by 4.2 per­
cent per year; the working population increased
less than 4 percent, to 74.6 from 72.4 million; the
number of unemployed persons fell to 1.5 million
from 2.75 million; labor mobility increased, as the
number of Italian workers placed in other member
countries rose to 268,000 from 156,000, and the
number of vacancies filled by workers coming
from outside countries grew to 578,000 from
84,000; gross hourly wages rose by almost 80 per­
cent, while annual net income showed a real mean
increase of about 40 percent; the number of work­
ing hours decreased, particularly in Germany, the
Netherlands, and Italy, and length of annual leave
increased (to 2*4 or 3 weeks from 2 weeks in
Germany, to 3 from 2 weeks in Belgium, and to 4
weeks from 3 weeks in Franee) ; the school leaving
age was raised; and the housing shortage eased,
though the rate of progress was not fast enough
and construction costs and rents increased con­
Finding it impossible to say which of these de­
velopments have been caused by the free play of
market forces and which by the creation of the
EEC, the Commission stated that the Community
has influenced all social developments either
directly or indirectly and that social issues cut
across national frontiers and can be solved only by
joint efforts at the Community level.
Communist China—M o b iliza tio n

Numerous ways of increasing harvest employ­
ment have been discussed in the Chinese press. In
several Provinces, the Armed Forces are reported
Federal Reserve Bank of St. Louis

to be “volunteering” to work in the countryside,
“taking with them Chairman Mao’s works and
tools for harvesting.” Local militia units, Red
Guards, teachers, and students have also been
mobilized. A model “farming division” was
praised for carrying out military training and
farm production “side by side, with a hoe in one
hand and rifle in the other.” At one oil field, 90
percent of the workers’ wives formed production
brigades for farm work. An experimental type of
mobilization was initiated at the Canton Iron and
Steel Works; hundreds of workers and trainees
are participating in a farm and study program in­
volving 5 hours of farm work, 3 hours of military
or cultural activity and reading of the works of
Mao, and 2 additional hours of study.
Denmark— W age a n d P rice R e s tra in t

The Government issued a strong appeal for
restraint on wages and profits in a letter from the
Prime Minister to business and labor organiza­
tions. The October 3 appeal was supported in
separate analyses prepared by the National Bank,
the Economic Secretariat of the Economics
Ministry, and the Council of Economic Advisers.
The latter unanimously recommended protection
of the competitive position in the export markets
through wage and price restraint in addition to
continued tight fiscal and monetary policies.
Based upon an anticipated growth rate of 3 to 4
percent in 1967 and a maximum domestic price
rise of not over 3 percent, guideposts are set for an
annual increase in total money incomes not to ex­
ceed 6 percent. These guideposts have an im­
mediate relevance for the national bargaining
sessions between the central labor and management
organizations which began in mid-October.
Labor spokesmen have already protested the
German Democratic Republic—F in an cial A id

Returnees to East Germany as well as migrants
from West to East Germany may obtain small
nonrepayable grants to cover immediate expenses
*Prepared in the Office of Foreign Labor and Trade, Bureau of
Labor Statistics, on the basis of material available in early


and long-term, low-interest loans (3 percent inter­
est and possibly less with repayment waived in ex­
ceptional cases) under a new law of October 3.
Previously only West Germans moving to East
Germany were entitled to financial assistance.
The grants are expected to encourage the return
of former residents, especially those of working
Latin America—M a ritim e W orkers

Maritime and dockworkers unions in two major
Latin American countries were recently affected
by Government actions. A new Argentine law,
which went into effect on October 18, eroded the
powers previously exercised by port unions. Port
workers in Buenos Aires, affiliated with the Inter­
national Transport Workers’ Federation (IT F),
quickly responded to the new regulations by
paralyzing loading and unloading operations with
a strike by as many as 30,000 workers. The Gov­
ernment reacted just as quickly by intervening the
port workers’ union and removing port workers
who remained on strike from the labor register.
Under the terms of the new regulations, port
facilities will be operated 24 hours a day—four 6hour shifts. The two shifts from 7 a.m. to 7 p.m.
will'receive straight-time pay, and the other two
will get time and a half. Time required to change
clothes or for preparatory work not specifically
assigned will not be counted as worktime. Cargo
or work determined to be unhealthy by the Trans­
port Secretariat (or the Port Captain) will be
compensated by a 30-percent premium with no re­
duction in hours of work; commodities recently so
classified total 48, a great reduction over the previ­
ous list, Only national holidays applicable to in­
dustrial and commercial workers will apply to
port workers; “special” holidays will not be per­
mitted. Ports are no longer under the jurisdiction
of the Labor Ministry, but are within the jurisdic­
tion of a Port Captain appointed by the President
and responsible to the S e c r e t a r y of
Federal Reserve Bank of St. Louis

Early in October, the Brazilian Government re­
voked a 1945 law granting employees in public
sector enterprises the right to form trade unions.
A majority of maritime and port workers were
thereby removed from trade union membership
and the future of the union of maritime workers—
the majority of whose dues-paying members are
employed on Government-owned shipping lines—
was endangered.
Earlier in 1966, railway and maritime workers
were transferred from civil service status to the
jurisdiction of Brazil’s consolidated labor laws;
port workers were given the choice of retaining
civil service status or transferring. The labor
force of the Government-operated transport enter­
prises was restructured to eliminate excess person­
nel, who were to be paid while being trained for
other jobs.
These measures led to work slowdowns in the
major port of Santos as workers protested longer
working hours and large cuts in their take-home
pay. Later unions criticized the measures because
they affected membership and because they de­
prived unions of many rights to which they are
entitled under other Brazilian labor laws.
Spain—D eclin e in E m ig ra tio n

The long-time trend of net emigration from
Spain was reversed in 1965, according to figures
published recently by the Spanish Institute of
Emigration (SIE ), through which about 60 per­
cent of all emigrants are channeled. In 1965, the
Institute assisted a total of 191,472 Spaniards
emigrating to other countries, compared with
218,348 in 1964; this indicates a decrease of about
12 percent. Emigration to European countries de­
clined 27 percent (from 102,146 in 1964 to 74,539
in 1965) and to overseas countries 16 percent.
Moreover, the figures on emigrants returning to
Spain (52,730 in 1963; 98,993 in 1964, and 120,678
in 1965) reveal that in 1965, for the first time, the
number of returnees exceeded that of migrants
leaving Spain for other European countries.

Significant Decisions
in Labor Cases*

Labor Relations

Duty to Bargain. The National Labor Relations
Board has held 1 that an employer was required by
the Labor Management Relations Act to bargain
with his employees’ representatives about a de­
cision to terminate a portion of his operation per­
Owners of three corporations functioning as a
single integrated enterprise decided to close one
of them (Ozark) for economic reasons, and the
management of the plant shortly thereafter began
to lay off the employees on the basis of seniority.
At no time, however, were the employees or their
representative notified of the reason for the layoffs.
Eventually the plant was closed completely and
its equipment tranferred to another of the com­
panies for storage. The Board found that the
employer had clearly breached his duty to bargain
about the effects of its decision to close the plant
and discharge all employees “without consulting
with the union or giving it an opportunity to bar­
gain over [the matter].” A “more difficult issue,”
the Board held, was whether the employer had
also violated the law when it failed to bargain over
the decision to close the plant permanently.
The Board first disposed of the question as to
whether the case should be dismissed because of
the U.S. Supreme Court’s dictum in NLRB v.
Darlington Manufacturing Co.2 that a total clos­
ing of business could not be the subject of an un­
fair-labor-practice charge, but a partial closing
could. The Board found that the present case in­
volved only a partial closing since Ozark was only
1 of the 3 companies which jointly formed a single
employer, and therefore Darlington did not require
dismissal of the complaint.
Federal Reserve Bank of St. Louis

In pursuing the issue of bargaining over the
decision to close a plant, the Board leaned heavily
on the Supreme Court’s ruling in Fibreboard
Paper Products Corp. v. NLRB .3 There the Court
held that subcontracting of work led to termina­
tion of employment and, therefore, was within the
statutory “terms and conditions of employment”
regarding which bargaining is mandatory. Since
the Ozark plant closure—a partial one of the entire
enterprise—also led to termination of employment,
the Board held, it affected “terms and conditions
of employment” and was, therefore, subject to bar­
gaining. Furthermore, the Board said, partial
closure of plant in this case, just as subcontracting
in Fibreboard, was “a problem of vital concern to
labor and management within the framework es­
tablished by Congress as most conducive to indus­
trial peace.”
The Board found the factual situation in this
case similar to that in Fibreboard in another re­
spect. The Court noted there that the economic
factors underlying the employer’s decision to con­
tract out work were primarily related to the cost
of labor, such as size of the work force, fringe
benefits, and overtime payments—matters “pecu­
liarly suitable for resolution within the collective
bargaining framework.” Two of the factors relied
upon by this employer to justify its decision to close
the Ozark plant—rate and quality of production—
are traditional subjects of bargaining.
The Board brushed aside the employer’s argu­
ment that imposing the duty to bargain in this
situation so impedes management flexibility that
the act ought not to be read to require it. I t
pointed to experience showing that such problems
can be resolved through negotiation. Only
slightly more consideration was given to the em­
ployer’s further argument that the question of
♦Prepared in the U.S. Department of Labor, Office of the
Solicitor. The cases covered in this article represent a selection
of the significant decisions believed to be of special interest. No
attempt has been made to reflect all recent judicial and adminis­
trative developments in the field of labor law or to indicate the
effect of particular decisions in jurisdictions in which contrary
results may be reached based upon local statutory provisions, the
existence of local precedents, or a different approach by the
courts to the issue presented.
1 Ozark Trailer, Inc. and Allied Industrial Workers, Local 770,
161 NLRB No. 48 (Oct. 27, 1966).
2 380 U.S. 263 (1965) ; see also Monthly Labor Review, May
1965, p. 566.
3 379 U.S. 203 (1964) ; see also Monthly Labor Review, Febru­
ary 1965, p. 191.


plant removal and shutdown are impossible of
resolution by collective bargaining. In refuting
this argument, the Board indicated that bargain­
ing about decision on plant shutdowns and re­
movals does take place and need not be futile. For
example, the Board said, “unions have accepted
cuts on wages and fringe benefits to save employees’
jobs threatened by proposed plant relocation.”
Rehiring of Economic Strikers. Refusing to
enforce an NLRB reinstatement order, a U.S.
court of appeals ruled 4 in line with the Board’s
own previous decisions that retainment of rein­
statement rights by economic strikers is determined
at the time they apply for reemployment. The
court held, further, that if no job vacancy exists at
the time the striker seeks reemployment, but should
subsequently develop, the employer is obligated
neither to seek out the economic striker nor to give
him preference.
About half the employees of a house trailer man­
ufacturer went on strike in support of contract
demands, and by the time the strike ended, 21 of
them had been replaced. The employer decided
not to return to full-scale prestrike production but
to continue operation with the number of workers
employed at the end of the strike. Two days after
the strike ended, six strikers applied for but were
denied reemployment. Two and one-half months
later the employer hired six new employees and
passed over the strikers in doing so.
In deciding the unfair labor practice charge by
the six strikers who had been passed over, the
Board concluded that the men had not been
permanently replaced and their jobs had neither
been abolished nor absorbed. I t decided, there­
fore, in line with the U.S. Supreme Court’s opinion
in N LRB v. MacKay Radio and Telegraph Co.,5
that the manufacturer had committed an unfair
labor practice.
Concurring in the Board’s oft stated Gposition
regarding the rights of economic strikers who have
not been replaced permanently, the court found it
difficult to understand why in this case the Board
4 NLRB v. Fleetwood Trailer Co., Inc. (C.A. 9, Sept. 8, 1966).
5 304 U.S. 333 (1938). That case held that an employer has a
duty to reinstate on a preferential basis those economic strikers
who have not been permanently replaced.
0 See Brown and Root, Inc. 132 NLRB 486 (1961).
Thriftown, Inc., and Astra Shoe Co., 161 NLRB No 42
(Nov. 1, 1966).
239-630 O— 67-

Federal Reserve Bank of St. Louis


ruled differently. The court concluded that the
six complaining strikers had been replaced perma­
nently. It reasoned that the abolition or absorp­
tion of a job is the equivalent of replacement and
that under the MaxaKay decision, the employer may
refuse to rehire the strikers. The question of
whether a striker has been replaced, the court
continued, is to be determined as of the date of his
request for reemployment. Since the facts indi­
cated that as of the date of the strikers’ applica­
tions for reemployment the jobs either had been
filled, abolished, or absorbed, the employer had no
duty to reinstate them, the court held.
In reaching this conclusion, the court noted, but
refused to accept, the ruling of the Board that the
economic striker “retains his status as an employee
and his right to preferential rehiring as long as he
has a reasonable expectation of recall to work
within the foreseeable future.” The court pointed
out that the Board itself had never used this theory
of “reasonable expectation of recall” for the pur­
pose of determining whether a striker had been
replaced (although it had used it in election situa­
tions) . It added, “And we are not inclined to do
so.” The court reiterated that the question of
whether a vacancy exists is determinable upon a
striker’s application for reemployment. In this
case, the availability of the claimants’ jobs was not
established, the court held, and the only support
for their claims was the employer’s stated inten­
tion to resume normal prestrike production “at
some time in the future.”
Appropriate Bargaining Unit. In a 3 to 2 opin­
ion, the NLRB held 7 that a discount department
store and one of its concessioners were joint em­
ployers of the concessioner’s employees, and that
the employees of both should be treated as a single
bargaining unit for the purposes of a representa­
tion election, despite a specific agreement between
them that they would not constitute a “copartner­
ship or joint venture.”
A discount department store (owned by Thrif­
town) consisted of a number of departments some
of which were operated by separate firms under
special agreements. Its business, however, was
conducted in such a manner as to give the appear­
ance of being an integrated department store.
Advertising was in the store’s name, checkout
facilities were centralized, and there was no

physical separation of departments. Astra, one
of the lessees, was licensed under an agreement
that allowed Thriftown to control advertising,
price policies, and decision on what articles could
be sold; Thriftown also had authority to audit
records, adjust customer complaints, terminate
the agreement on 15 days’ notice for a “good
cause” or a 60-day notice without cause, and
receive a commission on Astra’s gross sales. The
employees were also required to wear common
uniforms and to obey all company rules. How­
ever, Astra did retain the right to hire, fire, and
determine the pay of its employees.
The central issue of the dispute was whether all
store employees—Thriftown’s as well as conces­
sioners—should be treated as a single bargaining
unit. In reversing a regional director’s determi­
nation,8 the Board expressed the opinion that he
had “failed to take into consideration the special
nature of the relationship which existed between
the parties in a discount department store, and
therefore did not give sufficient weight to those
factors which established actual or potential con­
trol by Thriftown over the labor policies of Astra.”
The Board observed that the owner of a discount
department store entering into an operating agree­
ment would retain the authority required to enable
him to “take those steps necessary to remove the
causes for disruption in store operations.” The
Board then determined, on the basis of the
operating agreement, that Thriftown had ex­
tensive actual power to control the department’s
operations, as shown by its right to dissolve the
relationship entirely, its retention of overall
managerial control, and the extent to which it
had retained the right to establish the manner
and method of work performance. Therefore,
Thriftown was in a position to influence Astra’s
labor relations policies, the Board held.
The Board indicated that this holding should
not be interpreted to mean that under such agree­
ments there will necessarily be a joint employer
relationship. But, it said, “where . . . the par­
ties operate an integrated business enterprise
under a single roof and the provisions of the
operating agreement establish that the owner
possesses significant control over the operational
and personnel policies of the operator, the owner
and operator are joint employers of the employees
Federal Reserve Bank of St. Louis


of the operator.” Once having found the exist­
ence of a joint employment relationship, and since
no union had sought a more limited unit, the
Board determined that all the employees should
be treated as a single bargaining unit.
The dissenting Chairman McCulloch and Mem­
ber Fanning were of the opinion that no joint
employer relationship existed (and thus one
bargaining unit was inappropriate) because of
the specific disavowal of intent, as expressed in
the operating agreement, to create such a joint
employment relationship. The provisions for
Astra to hire, fire, and pay its own employees
further showed absence of intent to create such
relationship, nor was evidence produced to show
actual control of Astra’s employees by Thriftown.
The minority thought there must be some legal
foundation for holding a joint employer relation­
ship, that is, either language in the operating
agreement that the lessor is empowered to influ­
ence the lessee’s labor policy or proof that the
lessor had actually done so. Neither was shown,
the opinion stated.
Railway Labor Act

Scope of NRAB’s Authority. “In obedience to
the Supreme Court’s order on remand,” a Federal
court of appeals reversed itself by ruling9 that
the National Railroad Adjustment Board had
been warranted in holding a railroad to have vio­
lated an agreement by shifting its workload and
eliminating certain jobs in disregard of the exist­
ing seniority system and without consulting the
union. Such ruling was called for, the High
Court indicated in the reversal, under its decision
in Gunther10 that the Railway Labor Act’s pro­
visions for the Adjustment Board should be con­
sidered as “compulsory arbitration” in this field.
By changing its train schedule and thus reallo­
cating its workload, the railroad created additional
jobs in one seniority district and eliminated jobs
in another. The union, which was not consulted
That Thriftown’s influence over Astra’s employees was too
indirect to constitute a joint employer relationship, either under
the lease agreement or in actual practice, and thus a single
bargaining unit was inappropriate.
Hanson v. Chesapeake and Ohio Railway Co. (C.A. 4, Sept. 16,
1966). 'The appeals court’s original decision in this case was
vacated by the Supreme Court May 16, 1966 (384 U.S. 211)1 and
remanded for reconsideration.
10 Ounther v. San Diego <& Arizona Eastern Railway Co., 382
U.S. 257 (1965).


on these changes, claimed that the provisions of
the collective bargaining agreement protecting
seniority rights had been violated, and brought
the dispute before the NEAB.
In interpreting the agreement, the Board ruled
that the rescheduling, which removed work from
one district to another, did affect the seniority
rights of union members and required consulta­
tion with the union.
This determination had been reversed by the
district court, which had held that, under the
agreement, making the schedule change was a pre­
rogative of management, and that, therefore, the
railroad had no duty to consult with the union.
The court also held that the Board had exceeded
its authority to interpret contracts when it changed
and rewrote the bargaining agreement, and that
Federal Reserve Bank of St. Louis

the issue in question was not covered by the
Following the court of appeals’ affirmation, the
Supreme Court summarily vacated the judgment
and remanded, directing the lower court’s atten­
tion to the Gunther decision where it stressed that
Congress had invested the NEAB with “broad
power to arbitrate grievances” and plainly in­
tended that the Board, composed of “railroad men,
both workers and management,” should exercise
its expertise in interpreting controversial provi­
sions of collective bargaining agreements, and
that its determination is to be final.
The court of appeals vacated the district court’s
judgment and remanded the case for a determina­
tion of the amount of damages due to the
aggrieved employees.

Developments in
Industrial Relations*

g r e e m e n t s r e a c h e d in November by 96,000 mem­
bers of the Brotherhood of Railroad Trainmen and
27.000 members of the Brotherhood of Locomotive
Firemen and Enginemen with Class I Railroads
were expected to set a pattern for some 62,000
additional workers belonging to the three other
operating unions in the industry. Two 2-year
settlements in the footwear industry covering
20.000 workers followed the October agreement at
Interco, Inc. First, 15,000 United Shoe Workers
and Boot and Shoe Workers in seven southeastern
and midwestern .States were covered by a contract
with the Brown Shoe Co. reached in mid-October,
and on November 1, some 5,000 United Shoe
Workers in the metropolitan New York area con­
cluded a settlement with 18 manufacturers of
women’s quality footwear. The telephone negoti­
ations round continued as agreements for at least
an additional 32,000 Bell System employees were
concluded. The first agreement covering manu­
facturing operators of Western Electric was also
reached. Several agreements were reached in the
shipbuilding industry, but a strike by 1,400 Elec­
trical Workers (IBEW) employed by the Pacific
Coast Shipbuilders Association continued, affect­
ing 11,000 workers.



On November 2, the Brotherhood of Railroad
Trainmen (BRT) with 96,000 members obtained
a settlement with the Nation’s class I railroads
that provided a wage increase of -5 percent retro" active to August 12, and 3 weeks of vacation after
10 instead of 15 years. There were no provisions
for additional changes in wages until the end of
1967. A similar agreement was accepted by the
27,000-member Brotherhood of Locomotive Fire*Prepared in the Division of Wage Economics, Bureau of Labor
Statistics, on the basis of published material available in late
1 Including linemen, cable splicers, and generator operators.
Federal Reserve Bank of St. Louis

men and Enginemen (BLFE) over the weekend
of November 20. The other three operating un­
ions were expected to follow the pattern of the
The Teamsters (Ind.) and the Eastern Labor
Advisory Association reached agreement in early
November on a 1-year contract covering some 1,300
tank-truck drivers and mechanics from Washing­
ton, D.C., to northern New Jersey. The pact
provided an immediate wage increase of 15 cents
an hour and additional increases of 5 cents on May
1,1967, November 1,1967, and November 15,1968,
and 4 cents on November 15, 1969. Increases ef­
fective after the stipulated term of the agreement
are typical of Teamster clauses designed to bring
about greater nationwide uniformity of wage rates
in the trucking industry. Other terms included
reduction in the workweek from 50 to 48 hours,
improved vacations, pensions, and health and wel­
fare benefits.

The Illinois Bell Telephone Co. and the Elec­
trical Workers (IBEW ) agreed in early Novem­
ber to a 3-year contract providing wage increases
averaging $7.36 a week (18.4 cents an hour) for
some 11,000 plant department employees1through­
out the State.
Agreements between the Communication Work­
ers and the Chesapeake and Potomac Telephone
Company of Virginia and the Pacific Northwest
Bell Telephone Co., were also achieved for workers
in all departments. Affecting some 13,500 em­
ployees in Washington, Oregon, and northern
Idaho and 7,500 employees in Virginia, these
agreements provide weekly wage increases rang­
ing from $3.50 to $8. All contracts followed the
Bell pattern in vacations, pensions, life insurance,
and health benefits; wages may be reopened after
18 months.
Services and Trade

Discord in the entertainment field continued into
November. On November 15, the opening of the
New York City Ballet season was delayed by
a strike over orchestra size by Local 802 of the
Musicians. Under terms proposed by the ballet
managers, all 55 musicians would work the per-


formances of the City Ballet a t the New York
State Theater in Lincoln Center, but only 46 would
be employed for the Joffrey Ballet a t the City
Center’s W est 55th Street House, where officials
claimed they could not use a larger orchestra.
The strike ended the following day when a tenta­
tive 3-year agreement deferred the orchestra size
issue until the second year of the contract.
On November 15, members of Local 77 of the
Musicians ratified a 3-year contract with the P hila­
delphia Orchestra Association and ended an 8week strike.2 The 106 m u s i c i a n s of the
Philadelphia Orchestra resolved the workload is­
sue by having their maximum workloads reduced
to four (from five) concerts a week and improving
tour conditions. The previous $200 a week min­
imum salary scale was increased to $225 this sea­
son, $230 the second season, and $237.50 in the
final season of the contract. Five instead of 4
weeks of vacation were provided in the first year
of the contract, increasing to 6 weeks in the second
year. Pension fund contributions by musicians
and the association were raised to $7.50 from $5.
Members of the Musicians also ratified a con­
tract ending a 3-week strike against the Southern
California Sym phony-Hollywood Bowl Associa­
tion which had delayed the opening of Los
Angeles’ 1966-67 concert season. The 3-year
agreement provided weekly minimum salaries of
$200 the first year (from $180), $210 in the second,
and $225 in the th ird year. I t also perm itted the
resumption of the season on November 23. The
concert season was increased from 38 to 46 weeks
by the th ird year. The president of the association
announced th a t the increases were made possible
by a 90-day loan.
In late October, agreement was reached »on a 3year contract between the B uilding Service E m ­
ployees and the Building M anagers Association of
Chicago. Covering some 8,000 janitors, the pact
provided wage increases totaling 35y2 cents an
hour over the life of the agreement, and increased
employer contributions to the health and welfare
fund to 17y2 from 8y2 cents an hour.
2 See Monthly Labor Review, December 1966, p. 1399.
3 Local 441, Jacksonville; Local 1625, Miami; and Local 1636,
4 See Monthly Labor Review, December 1966, pp. 1396.
5 Of the 14,000 Westinghouse Workers represented by the
IBEW, about 3,500 are currently covered by a master contract.
Federal Reserve Bank of St. Louis

B argaining for the first time on a multilocal
basis,3 the F lorida Retail Clerks agreed in late
October w ith Food F a ir Stores, Inc., on a 3-year
contract which provided wage increases ranging
from $3 to $11 a week over the contract term for
some 2,700 employees of 130 stores throughout the
State. In itial wage increases were retroactive to
A pril 17. Weekly salaries for fulltim e clerks,
which had ranged from $50 to $68, were increased
to $53 to $77. Employees whose salaries were
above these ranges, such as departm ent m anagers
and head cashiers, received $3 a week increases
each year. H ealth and welfare benefits were also
improved. Employees are now required to work
only 2, instead of 4, 9-hour days a week.

On October 24, the Communications W orkers at
Tonawanda, N.Y. ratified the union’s first settle­
ment in the W estern Electric Co., Inc., current
round of negotiations with its m anufacturing
plants. Covering 2,000 workers and extending for
3 years with a wage reopening after 18 months,
the agreement provided a 12- to 23-cent-an-hour
wage increase retroactive to September 28. A c­
cording to union estimates, the increases averaged
17.9 cents an hour or 5.88 percent. The parties
exchanged a letter of understanding on reduction
in incentive rates. O ther changes, sim ilar to those
in settlements with other Bell System affiliates, in ­
cluded 4 weeks of vacation after 20 instead of 25
years; a reduction in the social security offset in
the pension plan to one-quarter from one-third;
improved hospital-surgical-medical insurance; in ­
creased company payment of insurance premiums
and improved eligibility for paid sick leave.
The strike of Electrical W orkers (IB E W ) at
W estinghouse Electric Corp. continued into No­
vember, idling 11,000 workers at its peak. The
IB E W was the only m ajor union th a t failed to
settle with W estinghouse in October.4 Among
the outstanding issues were the union’s demands
for a national agreement,5 a common expiration
date for local plant contracts, and a narrow ing
of geographic wage differentials. A t the end of
the month, some 4,000 members of the IB E W were
still out.
Meanwhile, the W estinghouse plant a t Lester,
Pa., was struck by the Independent Electrical


Workers (UE) over the firing of a shop steward.
The company claimed that he had fallen asleep
on the job while the union contended that the stew­
ard was fired for opposing overtime for third-shift
employees. The strike involving 4,600 workers
was unrelated to contract negotiations. On No­
vember 17, the workers returned to their jobs, end­
ing the walkout that began on November 1.
The Electrical Workers (IBEW) also struck the
Raytheon Co., on November 13, idling 10,000 work­
ers at 12 plants in the Boston area. Issues in­
cluded the size of a new contract package and lan­
guage covering work assignments. The company
had offered a 2-year wage and supplementary bene­
fits package, which it valued at 6.04 percent the
first year and 5.49 percent the second year, and
claimed that the union was demanding an annual
package of 11 percent. Among the facilities af­
fected were the Andover plant producing the
Hawk ground-to-air missile, and the Lowell plant
Avhere the Sidewinder and Sparrow I I I air-to-air
missiles are produced.
At the General Electric Co., some 15,000 mem­
bers of four unions were still on strike over local
issues.6 Among the struck plants was the one at
Schenectady, N.Y., where some 12,000 Electrical
Workers (IUE) were out. The principal issue
Avas the union’s desire to modify the Make Sche­
nectady Competitive (MSC) agreement estab­
lished in October 1964. That agreement had pro­
vided for the transfer of 3,000 incentive Avorkers
to hourly Avages Avith the company providing pay­
ments to compensate for the anticipated loss in
earnings of the incentive Avorkers.7
The IB E W agreed to a 3-year contract with
Avco Corp.’s Ordnance Division in Richmond,
Ind. The pact afforded 2,000 Avorkers a 12-centan-hour, first-year Avage increase Avith skill adjust­
ments ranging from 10 to 24 cents; additional Avage
increases of 11 cents an hour Avere to be effective in
both the second and third years. The contract also
included improved vacation, pension, and insur­
ance provisions. The plant produces aerial rock­
ets and mortar shells as well as arming devices for
the Navy’s Polaris Missile.
Some 2,200 Marine and Shipbuilding Avorkers in
Bath, Maine, Avere covered by a 42-month agree­
ment reached in mid-October with the Bath Iron
Works Corp. Wage increases of 30 cents an hour
over the term of the contract were provided, as was
Federal Reserve Bank of St. Louis


a third week of paid vacation after 15 instead of 20
Early in October, a 23-month agreement ended a
5-day strike by 1,400 Marine and Shipbuilding
Avorkers against Dravo Corp., in Neville Island
(Pittsburgh), Pa. Wage increases of 4.5 percent
Avere provided in both October 1966 and 1967.
Adjustments ranging from 3 to 25 cents Avere in­
cluded for skilled trades. Other terms included
triple time (instead of double time and a quarter)
for holiday work, and company assumption of the
full cost of life, accident, and hospitalization
The Aluminum Company of America announced
plans to pay $717,000 on December 16 to workers
at its N oav Kensington, Pa., plant as a result of a
March 1966 agreement betAveen the company and
the Steelworkers Avho represented 1,700 of the
plant’s 2,200 employees.8 (Employment at the
plant had since been reduced to 1,650.) The union
agreed to changes in work rules such as elimination
of incentive pay, revision of seniority lists, and
the transfer of some operations to other plants. In
return, Alcoa set up a fund to permit early retire­
ment at increased pensions for 175 Avorkers and to
provide lump-sum payments to Avorkers Avhose pay
Avould be reduced by the elimination of incentives.
The $717,000 payment Avill go to 800 workers Avho
were either taken off incentives or early retirees
Avho Avere on incentives before retirement.
Other Manufacturing

A 2-year contract affecting approximately 15,000
Avorkers in 35 plants in Missouri, Illinois, Indiana,
Kentucky, Arkansas, Tennessee, and Mississippi
Avas reached over the weekend of October 15 by the
Brown Shoe Co., Avith the United Shoe Workers
and the Boot and Shoe Workers. On January 1,
1967, pieceAvorkers Avere to receive a 6-percent wage
increase and hourly workers 9 cents an hour, with
additional increases of 7 percent and 12 cents,
respectively, scheduled for January 1,1968. Piece
rates Avere to be raised on jobs not producing an
average of $1.54 an hour by February 1,1967, and
$1.70 an hour by February 1,1968.
o T h e E le c tr ic a l W o rk e rs ( I U E ) , A u to W o rk e rs , P lu m b e rs , a n d
T e c h n ic a l E n g in e e rs .

7 For further details see Monthly Labor Review, Decembei 19o ,
p. 1436.
8 See Monthly Labor Review, May 1966, p. 539.


Pensions for those retiring on or after Novem­
ber 1, 1966, were increased to $2 from $1.75 a
month for each year of credited service, and effec­
tive November 1, 1967, pensions for those retired
before November 1,1966, were to be raised to $1.75
a month for each year of service. A t age 68, pen­
sion credits can be accumulated to a maximum of
30 years. Insurance improvements, to be effective
November 1, included up to 31 days of hospital­
ization benefits at a rate equivalent to the area
cost for a semiprivate room (instead of $15 a d a y ),
$5 instead of $3 a day for in-hospital doctors’ visits,
a $350 instead of $300 maximum surgical schedule,
and a company agreement to pay the $3 a month
premium for Medicare. A reduction in service re­
quired for vacation eligibility and improved leave
provisions and machine breakdown policies were
among other benefits.
On November 1, the U nited Shoe W orkers and
18 m anufacturers of women’s quality footwear
reached agreement on 2-year contracts affecting
an estimated 5,000 workers in the m etropolitan
New York area. A 15-cent-an-hour general wage
increase was effective on November 1; the minimum
starting rate was increased to $1.50 from $1.25 an
hour, with a fu rth er increase to $1.60 to be effec­
tive F ebruary 1, 1968; and the minimum after 1
year of service was raised to $1.65 from $1.50 an
hour, and to $1.75 on F ebruary 1,1968. Provisions
for 2 weeks of vacation after 3 years of service
(instead of 3 years of employment and 5 years in
the in d u stry ), and a th ird week after 10 y e a rs; and
pensions of $45 instead of $40 a month effective
September 1, 1967, and $50 a month a year later,
were included in the terms of the contract.
Blue Bell, Inc., the w orld’s largest m anufacturer
of men’s work clothes and play clothes w ith plants
located prim arily in the South, announced two 6percent wage increases—the first to be effective Oc­
tober 31, and the second, on Jan u ary 2, 1967.
A 2-year contract between the U nited Glass and
Ceramic W orkers and the Rohm and H aas Com­
pany at Bristol, Pa., provided some 1,900 workers
a 3-percent general wage increase retroactive to
October 25. Some maintenance workers were to
receive a 5-cent hourly inequity adjustment. Other
9 Service and nonservice workers employed in restaurants,
hotels, and apartment houses will receive the increases 6 months
after the other groups (in August of 1967, 1968, and 1969).
10 Except for workers in hotels and restaurants whose final
overtime rate will be established by regulation in August 1968.
Federal Reserve Bank of St. Louis

terms included a ninth paid holiday; a fifth, week
of vacation after 20 years; improved pension and
insurance benefits; and a liberalized companysponsored savings plan. The agreement may be
reopened on October 27, 1967.

Minimum Wage
On October 16, President Johnson signed a bill
raising the W ashington, D.C., minimum wage and
extending its coverage to an additional 200,000
men. Previously, some 88,000 women and chil­
dren were covered. U nder the new provisions, a
$1.25 minimum wage will be effective on February
1, 1967,9 increasing to $1.40 on February 1, 1968,
and to $1.60 on February 1, 1969. The new law
also establishes a wage floor for all wmrkers in the
D istrict with m inor exceptions, with provision for
establishing higher minimums for seven industry
.groups by adm inistrative action. Form erly m ini­
mums were established only by W age Board O r­
ders. The newAninimums are on an hourly basis,
whereas form erly weekly minimums were estab­
The largest increase will go to service employees
of restaurants, hotels, and apartm ent houses
whose previous minimums were set at $28 for a
40-hour week, or 70 cents an hour. Those previ­
ously covered in building service, retail, and cleri­
cal and semitechnical capacities were already
receiving $1.25 an hour ($50 for a 40-hour week).
W ith the exception of workers in retail trade,
where time and one-half for work after 40 hours
was already in effect, time and one-half will be
paid for work over 42 hours a week a fter A pril 15,
1967, and for work over 40 hours 6 months later.10
U nder the previous provisions, workers in other
industry groups received a flat premium above
their normal rate (e.g., 15 cents) for work beyond
40 hours.
The effect of the new minimum wage law and
of the amendments to the FD SA effective in Feb­
ruary 1967 and subsequent years will be closely
related. A large proportion of the men brought
within coverage of the new D istrict minimum wage
were already covered by the F L S A or will be cov­
ered when the amendments to this act go into
effect. HowTever, all workers w ithin the scope of
the D istrict minimum will be subject to a $1.25
minimum while the minimum for most newly cov-

ered workers under the F L S A will sta rt at $1.
Moreover, the D istrict minimum wage will cover
all employees in retail trade, hotels, and restau­
rants, rather than only those in enterprises and
establishments with a specified annual sales vol­
ume. As of 1967, about 70,000 of the 288,000
workers covered by the D istrict of Columbia m ini­
mum will not be covered by the F L S A ; this, in­
cludes about 45,000 in retail trade, hotels, and
restaurants having annual sales of less than
$500,000. Some of these will come w ithin the
scope of the Federal minimum in 1969, when its
coverage will be extended to enterprises with
$250,000 or more in sales in these industries.

President Johnson signed a bill on November
12, giving the 6,200 D istrict of Columbia school
teachers an 8.9-percent average increase in wages
and 4,200 policemen and firemen a 9.9-percent in­
crease, each retroactive to Ju ly 1, 1966. The new
legislation raised the starting annual salary for
teachers to $5,840 from $5,350 and the uniformed
rookies’ starting salary to $6,700 from $6,010.
A “truce” between Pontiac, Mich., city officials
and representatives of the Pontiac Police Officers
Federal Reserve Bank of St. Louis


Association ended the 36-hour “sick call” walkout
by policemen on November 3 and averted a strike
th at threatened to be the N ation’s first full scale
police strike in 47 years. I t was estimated th at
sick calls reduced the police force to 20 percent of
its normal work force of 117 men. Following the
truce, policemen warned they would boycott their
work again, “regardless of any penalty,” unless
their pay was raised. A n Association spokesman
claimed th a t Pontiac policemen earn between
$6,084 and $7,059 a year, about $1,000 less than
policemen in D etroit and other cities in the area.
Pontiac has some 85,000 residents.
In another dispute involving public employees,
Rhode Island State employees stayed away from
work to press their demands for a pay increase.
The State, County, and M unicipal Employees
which represents some 3,500 of the 11,000 State
employees had scheduled a 4-day walkout early in
November, but the workers were ordered back to
their jobs after 1 day by an injunction issued by
Superior C ourt Justice Jo h n E. Mullen at the re ­
quest of Governor John H. Chafee. Among the
workers involved in the stoppage were kitchen and
laundry workers at state institutions, ferry crews,
and highway workers.

Book Reviews
and Notes

Pleasant Reading

The Age of Keynes.

By Robert Lekachman.
New York, Random House, Inc., 1966. 324
pp. $6.
This book is prim arily an account, w ith partic­
ular reference to the United States, of the impact
on national economic policy of a bundle of ideas; it
is not a personal and intellectual biography of
John M aynard Keynes in the sense of H arro d ’s.
Sufficient biographical detail is included, however,
to provide a vivid picture of an extraordinary
individual and of the development of his thought.
I t is a superb example of “popular” w riting on
economics; indeed, it can be read with pleasure as
well as profit by any intelligent person w ith a
modest grounding in the subject.
Keynes, born into comfortable circumstances,
had an exceedingly full life as Cambridge don and
bursar of his college, civil servant, editor, financial
speculator, and member of the literary and artistic
Bloomsbury set. H is w riting ranged from a
treatise on probability to short essays in biography.
He is reputed also to have exhibited th a t charm ing
but sometimes exasperating provincialism th at one
tends to associate w ith English intellectuals. He
was, with all this, the greatest innovator in eco­
nomic thought since Adam Smith. The General
Theory of Employment, Interest and Money
(1936) provided the theoretical foundation for
policy actions th at have helped greatly to preserve
relative political and economic freedom in the
industrial civilizations of the West.
The first th ird of Professor Lekachm an’s volume
is devoted to the early years of Keynes, his activi­
ties through the 1920’s, the evolution of the ideas
that went into The General Theory, and the sub­
stance of th at powerful, and in places obscure,
book. The great external influences on Keynes
were the B ritish economic difficulties during the
latter p a rt of the 1920’s and the mass unemploy­
ment of the following decade. W hat Keynes did,
in a word, was to replace classical doctrine on the
Federal Reserve Bank of St. Louis

determination of output and employment with a
theory of aggregate demand th a t provided a basis
for positive governmental action, prim arily
through monetary and fiscal policy, to prevent wide
swings in economic activity and to sustain growth.
The General Theory was addressed to technical
economists. In terms of policy impact, the ideas
it contained had first to win acceptance among that
group, and then filter through to government policy
officials and a wider public. Professor Lekachman
traces this process in the U nited States through
the New Deal, W orld W ar I I , and the postwar
period. I t is a fascinating story. The Tax Re­
duction A ct of 1964 appears to represent in this
country the full acceptance of the central ideas of
Keynes. “Never again,” writes Professor Lekach­
man, “will an American Government profess
helplessness in the face of unemployment, recession,
and lagging economic grow th.”
Perhaps a concluding word of caution is neces­
sary. In reading this book, one may get an over­
simplified impression of the content of modern
economics and of the nature of economic problems,
despite the fact th a t Professor Lekachman dis­
cusses inflation, structural unemployment, and the
question of balance between public and private
spending. Actually, there is much still to be
learned about aggregative economic behavior, and
many of the older economic tools remain highly
serviceable for analysis of resource allocation and
a host of related problems. B ut this book does
provide a splendid introduction to the contribu­
tions of one whom Professor Lekachman justly
terms “the greatest economist of our age.”
—H. M.



Senior Research Consultant
Bureau of Labor Statistics

Welfare Writings

Essays in Normative Economics. By Abram
Bergson. Cambridge, Mass., H arvard U n i­
versity Press, 1966. 246 pp. $5.95.
One may find in these essays a most thorough
discussion of the assumptions, principles, and con­
troversies which surround the theories of welfare
economics. Bergson himself has made a notable
contribution to clearing our minds on these m at­
ters. Students anxious to get their ideas straight
should read very carefully w hat the author has to
say. The essays were w ritten at various dates

from 1938. One of the contributions is a most
valuable essay on “socialist economics,” in'w hich
Dr. Bergson presents a clear and succinct summary
of the various argum ents about the practicability
of a socialist economic structure, as well as a dis­
cussion of the application of welfare-economics
criteria to socialist planning.
There is not the space to take up some questions
which are raised in a t least one m ind after reading
this highly thought-provoking collection. There
is the semiphilosophical issue of the nature of in­
dividual goals, the tendency to desire the un attain ­
able, to wish to have one’s cake and eat it too.
Thus, in a country in which the State happens to be
responsible for much of the investment expendi­
ture (for instance, In d ia ), the public is likely to
desire the fruits of the investment w ithout wishing
to pay for them. Is there then much m eaning in
the citizens’ time preference? P rivate investors
are often inspired, as a gambler is, by the hope of
big gains. A taxpayer-investor has no recogniz­
able re tu rn ; as a citizen his share in his country is
vague and unidentifiable, and spectacular projects
become a species of politico-economic necessity, to
convince the citizen'that something is really being
done w ith his money. However, there usually has
to be some species of forced savings.
F o r different reasons, the citizens of New York
have to cover out of taxation p a rt of the cost of the
subway. A re these examples of departure from a
welfare optimum? I f not, why not? How can
this optimum be defined or identified, otherwise
than in a pure free-m arket model, in which its ex­
istence is, so to speak, p a rt of the definition of the
model? An Indian, who had absorbed western
economic education, declared at a seminar th at the
government ought to “maximize the social welfare
function.” I t ought indeed, but how can this gen­
eralization be turned into usable criteria for I n ­
dian planners, or for their critics ?
Bergson is aware th a t any elegant or rigorous
theory has only limited application to the real
world, but argues th a t “the welfare economist
m ight still hope th at the world would be a better
place to live in with his counsel than w ithout it.”
A very proper hope. I n my view, the ideas so
logically expressed by him would gain in force if
he were to give greater consideration to dynamic
and developmental problems, and if the concept of
interdependence (which Bergson considers to be
“overstressed” ) were extended beyond the narrow
Federal Reserve Bank of St. Louis


question of individual satisfaction; the pursuit of
deliberate economic policies designed to change an
existing situation gives rise to interdependencies
of other kinds, which, rath er than being over­
stressed, are generally overlooked. The book is,
however, definitely a worthwhile addition to an
economist’s library.
—A. N ove
Department of Economics
University of Glasgow

Stimulus to Study

The -New Technology and Human Values. E dited
by John G. Burke. Belmont, Calif., W ads­
worth Publishing Co., Inc., 1966. 408 pp.
A lthough the editor of this book of readings
has organized his selections systematically and co­
herently, he makes hardly any attem pt to evaluate
them or integrate the diverse conclusions reached.
The first section contains readings which show
the different attitudes tow ard the advances of
science and technology prevailing during the
19th century. Some discussions of the possible
purposes and roles of education in modem life
The development of autom ation is indicated as
a m ajor cause of changing hum an values, especially
because of the effects it will have on the adequacy,
in number, of jobs th a t the economy can provide
and on the effective utilization of leisure tim e as it
becomes increasingly available to the population.
Dr. Burke includes conflicting views on the pros­
pects of solving these problems.
The technological advances taking place are
affecting many of the accepted hum an values.
The sharp reduction in the death rate throughout
the world during the past few decades has resulted
in a population explosion th a t will shortly tax the
earth’s natural resources, unless m ankind is able to
control fertility effectively. Yet there is consid­
erable disagreement by the contributors on whether
this is possible to achieve. The readings cover
the impact on individual rights brought about
by the increased use of lie detectors, w iretapping,
and drugs th at affect behavior and the thought
processes. A group of selections deal w ith the
possible effects of the advances in biological science
on the future of the hum an race.


The role of government in planning and con­
trolling the progress of science and technology and
prospects for the survival of democracy in the
m idst of these rapid changes are discussed in the
final section of the book. Once again, the selec­
tions included contain differing opinions.
M any of the selections stress a particular point
of view without presenting a balanced account
of the overall problem under consideration, which
may sometimes leave the general reader puzzled.
On the other hand, this method may lead some
students to undertake fu rth er inquiry into back­
ground and come up with opinions or conclusions
of their own.
— R obert D . L eiter
Professor of Economics
City College of New York

Thought Behind the Thinking

The Structure of Economic Science. E dited by
Sherman Roy K rupp. Englewood Cliffs,
R .J., Prentice-H all, Inc., 1966. 282 pp.
Thirteen economists and three philosophers
have contributed original essays to this compen­
dium of economic methodology. A philosophical
approach is m aintained throughout this valiant a t­
tem pt to unify, or at least rationalize, the basic
concepts and methods of a science noted for its
acrimonious controversy.
The work is rem arkable on several counts. I t
contains a distinguished group of authors, a wellarticulated series of topics, a unity of purpose, an
honest appraisal of strengths and weaknesses, a
comprehensive variety of viewpoints, and a con­
sistently high level of performance. This collec­
tion may well be considered indispensable by the
professional economist and graduate student, but
the typical undergraduate will probably find it too
rigorous and profound.
M artin Bronfenbrenner, H enry Morganau,
Sherman K rupp, F ritz Machlup, and Lawrence
Nabers consider the m atrix of theory and m eth­
odology, the relationship between observational
data and theory, and the assumptions and com­
ponents of theory. Questions are raised concern­
ing the validity of techniques and procedures.
Value judgments are both questioned and justified
as a necessary means of investigation of phenom­
ena. The basis of controversy is probed, and its
Federal Reserve Bank of St. Louis

usefulness is demonstrated for an evolving and in­
exact science.
The limitations, achievements, and possibilities
of mathematical economics are examined by Wil­
liam J. Baumol, Eugene Rotwein, Gerhard Tintner, and Kenneth Boulding. Realism vs. relev­
ance, observation vs. concepts, induction vs. de­
duction are the conflicts that the mathematician
must resolve. He must clearly delineate how and
why some problems are clarified by quantitative
analysis, and others are not. Oversimplification
is obviously dangerous, but can become useful in
avoiding inundation by an infinity of variables.
Probably the-most intriguing task is that of de­
fining a discipline and setting its boundaries.
But economics is an eclectic science: Its assump­
tions and postulates are drawn from many fields,
some closely related, but some only remotely akin.
Emile Grunberg, James M. Buchanan, Benjamin
Ward, and Kelvin Lancaster throw considerable
light on the “spillins” and “spillouts” from the
other disciplines, but emphasize the viewpoint
that, except in a closed system, setting strict
parameters and rigid definitions is not productive
of results.
F o r many years economists have been aware of
the significance of value judgm ents and the lim i­
tations they impose. Jerom e Rothenberg, C. W.
Churchman, and R ichard B. B ran d t subject the
concept of values to rigorous analysis, and demon­
strate the empirical validity and objective content
of utility theory, w ithout which the field of eco­
nomic analysis would become circumscribed in­

The careful reader might conclude that, al­
though the economist may be groping in a haze of
confusion, he is fully alive, intellectually broad
and curious, and vitally concerned with the pur­
suit of science and truth. James Buchanan says
his weakness may be in tending to become a social
engineer, but perhaps he should be compared with
an architect who culls all the arts and sciences for
material for his structure, which turns out beauti­
fully, but is sometimes unsuited to its occupants.
The curse of the economist is that his carefully
elaborated models must be inhabited by unfath­
omable and unpredictable men.
— W alter G. B ecker
College of Business Administration
Arizona State University


Rational Defense

America in the Market Place. By P aul Douglas.
New York, H olt, R inehart, and W inston, Inc.,
1966. 381 pp. $7.95.
The very last paragraph in the book carries the
“message” to which this entire work points. In
the author’s words, “By and large, there has been
a loss during these last years in the will of nations
to cooperate in the field of trade and international
finance. I f we are not to revert to a period of crass
mercantilism, we should move forw ard on as wide
a scale as possible. Thus fa r our national record
has been a good one. Despite all the frustrations
and provocations, we should not be weary of well­
doing. I t is in the broader interests of the world to
cooperate. Let us do so w ith those nations which
show an honest will to take p a rt in these m utual
endeavors and at the same time let us be on guard
against the efforts of those who would tear down
the international fabric of fa ir trade and m utual
U sing an historical approach, beginning with
the mercantilists, Senator Douglas surveys the
shifts and turns in foreign trade and policy relat­
ing thereto in the parts of the world w ith which the
U nited States has had the greatest economic con­
tacts. H e also surveys the argum ents for free trade
and for protection. H e examines the problems
created for international trade by a variety of na­
tional currencies and the recent and current effort
through the International M onetary F u n d to pro­
duce more stability in foreign exchange.
The book reflects the point of view and philo­
sophy th a t stems from two, or perhaps three,
careers in which the author has distinguished him ­
self. The point of view of the educator-economist
shows throughout the book by the conviction th a t
greater and greater freedom of international trade
would be desirable. B u t the pragm atism of the
politician (and perhaps the m ilitary experience of
W orld W ar I I ) enters to cause Senator Douglas,
though looking nostalgically tow ard the free trade
of the economist, to recognize th a t we have enemies
who would destroy our way of life and th a t we
must be realistic and selective in our foreign trade
policy. H is position in this analysis seems wellfounded and defensible.
The portions of the book dealing with current
financial, trade, and tariff policies reflect one of
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M O N T H L Y L A B O R R E V IE W , JA N U A R Y 1967

the Senator’s prim e characteristics. T h at which
he believes, he believes w ith conviction and a will­
ingness to defend with great vigor. Thus, the
currently applicable sections of the book are a
strong defense of the position of the author as a
Senator and of the Democratic elected officials at
the national level. In a sense the work goes beyond
strong defense; it offers rationalization.
Senator Douglas does not hold the same respect
for appointive officials th a t he holds for those who
are elected. In a few instances the position taken
by the D epartm ent of State is recounted with ap­
parent distaste.
Here is a cogent presentation and rationalization
of a liberal Democrat of his philosophy and posi­
tion on international economic relationships. The
supporting historical background needed to state
th a t position is inclusive. The book is well-writ­
ten and well-organized; it does not require the
training of a professional economist for profitable
— G l e n n W. M iller
Department of Economics
The Ohio State University

Academia and Industrial Relations

Industrial Relations: Challenges and Responses.
E dited by John H. G. Crispo. Toronto,
O ntario, U niversity of Toronto Press, 1966.
156 pp. $6.50.
Despite the excellence of the w riting, this col­
lection of papers has running through it a dis­
quieting note of benign academic conservatism.
F o r example, Jam es R. B right in an article on
“Autom ation and W age D eterm ination” poses a
critical problem : Does autom ation upgrade or
downgrade work?. The question is so smothered
by discussion on meeting the needs of management
about wage determ inants th a t job satisfaction and
the m eaning of work are ignored. This m anner of
concentrating on the irrelevant is typical of the
tone of the volume.
F red H arbison writes tellingly of collective b a r­
gaining, and his conclusions and perspective seem
unassailable: Collective bargaining is not a vehicle
for revolutionary change, but does it really make
no difference to American life or the American
worker whether a union raises critical social prob­
lems among its demands or only settles for ‘more’ ?


W ilbert Moore in his article states th a t it may
be “perverse” to suggest th a t industrial relations
has no future. A greed; it is perverse. Agreement
stopped there. Being concerned about bureauc­
racy is no reason to deny “th at we are dealing with
two well-organized antagonists.” I t is obscuran­
tism to subsume open divisions in the society under
the blanket of bureaucracy, mass society, or the
Unions and the universities (these papers were
presented at the founding of the Center for Indus­
tria l Relations, U niversity of Toronto) are not
dram atic change agents in our society. B ut both
m ust do better in delineating the alternatives th at
exist for their constituencies.
— B ill G oode
Leadership Study Center
United Auto Workers

Further Proof

Work and the Natuve of Man. By Fredrick
Herzberg. Cleveland, Ohio, The W orld P ub­
lishing Company, 1966. 203 pp. $6.
H erzberg’s original study of job attitudes, with
his resulting M otivation-Hygiene theory, pub­
lished in The Motivation to Work , 1959, probably
created more interest, concern, and criticism than
any other sim ilar study of recent years.
Briefly stated, this new theory postulates five
m ajor job satisfaction factors and five m ajor job
dissatisfaction factors. The satisfaction factors,
or motivators, are achievement, recognition, work
itself, responsibility, and advancement. The dis­
satisfaction or hygiene factors are company policy,
adm inistration, supervision, wage or salary ^ inter­
personal relations, and working conditions. The
principal result of the original study was the sug­
gestion th a t j ob attitudes were two dimensional—
one dimension involving the avoidance of un­
pleasantness and a separate dimension involving
personal growth. Personnel policies designed to
decrease job dissatisfaction may have the desired
effects w ithout increasing job satisfaction. A
worker may become less “dissatisfied” w ithout be­
coming more “satisfied.”
In this book, Herzberg further develops the
theory of the duality of m an’s needs; man as Adam
trying to avoid pain-provoking events in his en­
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vironm ent and man as A braham attem pting to
fulfill his innate potential, his creativity. B ut even
more im portant th an the philosophical-historical
theory development is the report of over 20 studies
which seem to effectively overcome the basic
shortcomings of the original th eo ry ; namely th a t
the theory was an overgeneralization based on an
inadequate, nonheterogeneous sample.
The original study was of 203 accountants and
engineers in the P ittsburgh area. I n his latest
work, H erzberg reports on studies carried out in
many areas of the U nited S ta te s; one study covers
three other countries—F inland, H ungary, and
Russia. Subjects in these studies were white- and
blue-collar, in government and private employ­
ment. They were supervisors, adm inistrators, sci­
entists, engineers, technicians, factory operators
and assemblers, nurses, food handlers, students,
high- and low-skilled maintenance workers, house­
keepers, etc.
The results of the extensive replication are im ­
pressive. The concept of the parallel nature of
job “satisfiers” and job “dissatisfiers” seems to be
more than mere theory and its implications for in ­
dustry are great. As the author w a rn s:
“Industry, as the dom inating institution in our
society, must recognize th at if it is to use hum an
beings effectively, it m ust tre a t them in term s of
their complete nature rather than in term s of those
characteristics th a t appear to be suitable to their
organization. Industry cannot progress by con­
tinuing to perpetuate a half conceptual view of
man. As already suggested, its present personnel
programs, which in effect serve to minimize the
natural symptoms of an am putated individual, can
lead only to tem porary, opiate relief and further
the basic psychic pathology.”
“There is one organizational change I feel is
essential if we are to structure hum an institutions
to meet m an’s needs and to reflect the dual struc­
ture of his nature as well. This reorganization
would separate present-day industrial relations
into two form al divisions. One division would be
concerned with the hygiene-need system of the em­
ployee and the other section would be concerned
with his m otivator needs.”
— B ertram G ottlieb
Center for Labor and Management
University of Iowa



A Reappraisal of Marxian Economics. By M ur­
ray Wolfson. New York, Columbia U niver­
sity Press, 1966. 220 pp. $6.75.
Marxist Ideology in the Contemporary World—
Its Appeals and Paradoxes. E dited by
M ilorad M. Draclikovitch. Stanford, Calif.,
Stanford U niversity, Hoover Institution on
W ar, Revolution, and Peace, 1966. 192 pp.
$6.50, Frederick A. Praeger, Inc., Publishers,
New York.
M arxism seems to be undergoing a new round
of reappraisal—several books have been published
recently on the subject.
“Is M arx rig h t? ” asks Dr. W olfson and pro­
ceeds to argue that, as viewed in term s of current
country development, he is not. B ut, “if one is
to argue th at even a modified capitalism is a viable
social order, it is necessary to examine the arg u ­
ment [M arx] advanced.” A fter a searching
scrutiny of M arx’s dialectic in chapter 1, the author
finds the philosophy of m aterialist determination
of history a “scientifically inadmissible way of
m aking predictions” and incapable of w ithstand­
ing a scientific test. F u rth er, he says M arx’s
economic analysis is based on false assumptions
and reaches erroneous conclusions quite contrary
to the claims of “scientific socialism.”
I n chapter 3 the author reviews the labor theory
of value, the cornerstone of M arx’s economic
system, and concludes th a t abstract concept of a
commodity’s value per se cannot stand the scrutiny
of reality. F irst, it does not allow for the
“m ultiple factor” (the action of various forces
in determ ining the price), and second, it does not
consider the influence of subjective demand upon
the exchange of goods. Dr. W olfson points out
in chapters 3 and 4 th a t M arx’s value concept is
contradicted by fact. In reality the profit motive
continues to exist, the proletariat’s misery de­
creases instead of increases because wages rise;
and the prophesy of the inevitable collapse
of capitalism remains but a prophesy. A nd the
theory of gradual disappearance of the State as
a country develops seems to be working in the
The Hoover In stitution’s compilation of seven
essays is the last of three independent volumes of
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m aterial delivered at an international conference
recently organized by the Institution on the sub­
ject of “One H undred Years of Revolutionary
Internationals.” The authors’ consensus is th a t
M arxism has lost its strength as an economic sys­
tem and a promise to the proletariat, but still
retains attractiveness as an ideology. I t is a
m atter of faith rather than reason, quite the op­
posite to what it set out to be about a century ago.
I t has become different things to different people
throughout the w o rld : hopefully a “dissolvent of
the existing order” in the W est, a doctrine of State
building in the newly emerging and underdevel­
oped countries, and a “social cement” in Soviet
Most likely, the editor observes, M arxism ’s
present-day attractiveness resides in its role as a
modern “revolutionary messianism,” and in the
promise of power to leaders of a Communist State.
— E ugene S kotzko
Office of Publications
Bureau of Labor Statistics

Looking at the Future

The Limits of American Capitalism. By Robert
L. Heilbroner. New York, H arp er & Row,
Publishers, Inc., 1966. 140 pp. $4.95.
The classic but neglected field of political econ­
omy has one of its strongest exponents in Robert
Heilbroner. In the two essays contained in this
volume, he states and defends w ith w it and brevity
the following provocative and by no means uncontroversial propositions: (1) American capitalism
is today, at one and the same time, more solidly
entrenched and more insecure than ever before in
our history; (2) the business community is still
the single most im portant shaper of national pol­
icy, although this power has m arkedly and steadily
decreased; (3) leading capitalists have begun to
evolve a philosophy which accepts a leadership role
for nonbusiness elites in form ulating public eco­
nomic policy; (4) the movement toward a planned
society will continue, not under the politically pro­
hibitive title of “economic planning,” but under the
generally approved title of “manpower planning” ;
(5) the elimination of poverty for those at the
lower level of the economic scale is likely to occur
w ithin the next generation or two, but will not be
coupled w ith a change in our patterns of income


distribution under which extreme wealth is con­
centrated in the hands of a few; (6) the power of
science and scientific technology is the one force in
our society that in the longrun may undercut the
foundations of capitalism, creating new social
structures and institutions in its place.
Heilbroner’s position demonstrates once again
the essential conservatism of the neo-Keynesians.
In the face of the challenge of Marxian socialism,
they would preserve the main structure of capital­
ism by introducing conscious public control to pro­
tect the existing system from its own destructive
— C harles M. R ehm us
Department of Political Science
University of Michigan

Widening the Scope

Consumer Behavior and the Behavioral Sciences.
By Steuart Henderson Britt. New York,
John Wiley & Sons, Inc., 1966. 592 pp.
A well-rounded understanding of consumer
behavior is of great importance to the success of
most business firms. Traditionally, the study of
consumer behavior by practitioners and students
has been undertaken within the single context of
economics. In more recent years, however, there
has been a growing recognition that other social
sciences could provide worthwhile insights and
analyses of why consumers behave as they do.
This book provides a major contribution to that
trend. I t is written for persons in the field of
marketing as well as in other business areas in
which consumer behavior plays a significant role.
The behavioral sciences referred to in the title
are anthropology, psychology, and sociology.
Drawing from the extensive and diverse literature
in these fields, Dr. Britt has put together 348
readings from 269 different authors. Although
this book is not the first of its kind, it is certainly
the most complete in scope. The table of contents
alone contains 22 pages.
Such a vast compilation of individual contri­
butions leads to two important observations.
Federal Reserve Bank of St. Louis

First, there is obviously much material from the
behavioral sciences which is relevant to consumer
behavior. The task of integrating into a business
framework what literature already exists must be
accomplished before further progress can be made
along these avenues of analysis.
Second, a collection of so many readings could
easily result in a tedious and confusing volume.
In this book, however, the readings have been
shortened to emphasize major points and has been
organized nicely into 9 major parts and 42 chap­
ters. After first looking at the foundations of
consumer behavior, the editor focuses on readings
discussing cultural influences (the sphere of
anthropology), individual influences (the sphere
of psychology), and group influences (the sphere
of sociology). Next, some contributions to con­
sumer behavior from economics, although not
specifically classified as a behavioral science in this
book, are presented.
These early parts provide the background for
the consideration of specific marketing topics such
as the relationship between the consumer and the
business firm, product attributes, and various