While the giant security concerns have their own computer systems, an increasing number of smaller brokerage houses are using the facilities of service centers. All of the back office accounting for three brokerage concerns is accomplished at the IBM unit, known as the Service Bureau Corp. Each day at the close of trading, all information dealing with customer stock trades, commissions due, and other important data are forwarded to the center. The centers work all night and deliver to the users, before 8 a.m. the next day, complete records for all customers. Complete monthly statements for each customer are also prepared and sent to the brokerage concerns.

RCA's Electronic Systems Center at 45 Wall Street provides daily individual processing of trades, including calculations of commissions, transfer taxes, and net amounts of customers' accounts.

Fees for this work vary, depending upon the amount of work accomplished. Obviously, however, the firms using these centers find it more economical to operate in this way rather than to pay regular salaries, taxes, and fringe benefits for permanent employees (Coughlin).

Computers, however, are only a part of the problem of automation in the office. There are numerous automative devices other than computers which, over the next few years, will eliminate many additional jobs. Some of these machines include the automatic sales clerk which can dispense as many as 36 varieties of merchandise and accept payment in return. These machines, manufactured by Universal Match and Universal Controls, will accept payment up to $5 and will give the customer the exact change due.

A major firm announced last fall that it has created, in effect, an automatic law clerk. This machine, recently demonstrated to members of the American Bar Association, performs 7 man-hours of legal research in a matter of minutes. In order to get the answers to a question involving tax exemptions, this brain analyzed 400 laws from 50 States, and the District of Columbia. In less than 10 minutes, it had typed out all of the statutes and case citations and was beginning the full text of the material. While this machine is expensive and would cost $12,000 monthly if rented, it is also true that we can expect smaller and less expensive machines of similar capability in the foreseeable future (Coughlin).

IBM announced the development of a reading machine which scans entire typewritten pages at the rate of 1,800 words a minute and can automatically operate a teleprinter machine for long distance transmission of messages. An electronic scanner is presently being used at the Atlantic City Electric Co. in New Jersey. It would take 24 key punch clerks to do the work of this scanner (Coughlin).

Recently, we have learned that the David Sarnoff Research Center of RCA was working on a phonetic typewriter. This typewriter will automatically transcribe from the spoken word. At the present time, it uses a type of sound language similar to speedwriting. This machine puts down exactly what it hears, and, therefore, is not orthodox in spelling. In accordance with an article published recently in the New York Times, the machine will transcribe the word "ultimate" as ultimit" and the word "typewriter" as "tipriter." Just as in speedwriting, it is not difficult to understand the language used by the phonetic typewriter (Coughlin).

There is also experimentation in Kyoto University in Japan with the phonetic typewriter. It would appear from the translation of the material that we have received that the Japanese may well be ahead of RCA in the development of this educated typewriter. This machine, known as Sonotype, is being perfected at Kyoto University in cooperation with the Ministry of Education and the Japan Electronics Co.

The Japanese stated that it eventually will be used for any language or dialect. While we are told that the phonetic typewriter has imperfections and is not ready for production, we believe that the committee should be aware that this machine, when perfected, can eliminate the jobs of 1,500,000 secretaries, stenographers, and typists (Coughlin).

The rate of increase in clerical and kindred workers in companies where electronic data processing existed is only 7 percent as compared to 15 percent in companies where such systems have not been installed (Coughlin).

The Bureau of Labor Statistics has found that 25 percent of the jobs affected by the installation of electronic data processing systems have been permanently abolished (Coughlin).

FACTORY AUTOMATION

In the electrical industry employment of production workers dropped from 925,000 in 1953 to 836,000 in February 1961. Here was a decline of 10 percent despite an increase of. 21 percent in production in this industry (James B. Carey, president, International Association of Electrical, Radio, and Machine Workers, AFL-CIO).

In spite of a huge jump in the production of electrical appliances, a 50 percent drop in employment has occurred in this group since 1953 (Carey).

Instrument production, too, has enjoyed a major boom and yet today there are 30,000 fewer production workers a drop of 15 percent-than there were 7 years ago. In the manufacture of refrigerators and washing machines, etc., the job falloff has been about 18 percent (Carey).

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Last year meat production was up a percentage point to 26.9 billion pounds. But the total of workers was down from 191,000 to 161,000. Job totals in the industry between 1956 and 1960 had been shrinking at a rate of more than 7,000 a year (Patrick E. Gorman, secretary-treasurer, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO).

Since 1947 output of leather has dropped by about 25 percent. In the same years the total of industry jobs has dropped by more than 40 percent, from 51,500 in 1947 to 30,200 in

1960.

In the canning and preserving industries there has been a very substantial rise in output since 1947, but the rise in productivity has been even steeper. As a result even in this very rapidly expanding industry the total of jobs had dropped from an average of 211,000 in 1947 to 193,000 in 1960 (Gorman).

The year 1960 was almost identical with the year 1950, a decade earlier, in terms of steel production and shipments. Yet in the year 1960, production-worker employment in steel averaged 461,800 compared with 540,000 in 1950-a decline of almost 80,000. The average workweek was 35.7 hours in 1960, compared with an average of 39.0 hours in 1950 (David J. McDonald, president of the United Steel Workers of America, AFL-CIO).

GENERAL TECHNOLOGICAL CHANGE

Because of automation and the shift from airplanes to missiles it has been estimated that the aircraft industry alone has eliminated 200,000 production jobs in the past few years even though the industry's dollar volume has continued to rise (A. J. Hayes, president, International Association of Machinists, AFL-CIO).

During the postwar period, productivity in the soft coal industry rose by 96 percent-while employment was falling by 262,700. Railroad productivity rose by 65 percent during the same period of time-while employment fell enormously by 540,000 (Arthur J. Goldberg, U.S. Secretary of Labor).

Since 1947, productivity has nearly tripled in the synthetic fibers industry; more than doubled in cigar manufacturing; about doubled in bituminous coal mining and agriculture; and increased by about two-thirds in such diverse industries as railroad transportation, canning, processing, and freezing, and cement manufacture (Goldberg).

Diesel locomotives have almost entirely replaced steam, but were only 15 percent of the total in 1947. Coal loaded mechanically has risen during the same period of time from 61 to nearly 90 percent of the total underground coal mines. Tractors used on farms have jumped from 2.6 million to 4.8 million. Electronic computers, practically unknown except to a few scientists only 15 years ago, are now spreading rapidly through offices in many different industries (Goldberg).

Some idea of the immediate problem ahead can be seen from the fact that, even if all we do is increase our productivity at the same rate as we have been doing during the past dozen-odd years since the end of World War II, a total of 1,800,000 persons will feel the impact of the technological change just in the year ahead. In other words, we are going to need enough output increases between now and next year to take care of 1,800,000 persons affected by productivity change (Goldberg).

This decade will see an unparalleled 26 million new young workers coming into the job market-and if current levels prevail, 72 million of them will be dropouts, without a high school diploma and very ill-fitted for the job world ahead which will see major advances on the technological scene (Goldberg).

Today, 20 percent-1 in every 5-of our unskilled workers are unemployed-a rate which is two-thirds higher than semiskilled workers, 100 percent higher than that for the skilled craftsman (Goldberg).

Right now 40 percent of men 45-64 years of age who are unemployed have been out of work continuously for 16 weeks or longer (Goldberg).

Our most recent data (for March 1961) show that fully 101 out of the 150 major labor areas in the United States are now classified as "areas of substantial labor surplus." Another 184 smaller areas are in this category, too. Experiencing an unemployment rate of at least 6 percent, all of these depressed areas now account for more than 3 million, or about 55 percent of all the unemployed in the country (Goldberg).

During the 1960's, it will be necessary to create an even greater number of job opportunities-perhaps as many as 4 million or more job opportunities each year-to provide employment for the average yearly growth in the labor force of 1,350,000 and the possible annual displacement of as many as 212 million or more workers from rising productivity (Stanley Ruttenberg, Director of Research, AFLCIO).

Figures from the U.S. Census show some increase in the total of wage earners employed in the retail food industry as a whole. Between 1948 and 1958 their number rose from 1,006,000 to 1,183,000-a 17-percent gain in employmentwhile output, measured in constant dollars, rose more than 45 percent. Offsetting this gain in wage earners there was a sharp drop in the number of working proprietors-small businessmen who helped tend their own stores. That total dropped from an estimated 475,000 in 1948 to 380,000 in 1958. The net real gain in combined retail employment was 6 percent in this 10-year period (Gorman).

Eighty percent of those now employed in unskilled jobs did not finish high school. It is estimated that 30 percent of the people entering the labor force during the 1960-70 period will not have completed a high school education and that 1 out of 3 of these will not have gotten as far as high school. The biggest increases in employment opportunities during the next decade will occur in professional and technical occupations. Employees in these fields now average more than a baccalaureate degree. Clerical and sales workers, another rapidly expanding group, now are averaging more than a high school diploma. The direction of change in the occupational structure of our labor force is clear and points to the necessity for better preparation in order to enter our rapidly changing and complex world of work (William A. Faunce, Department of Sociology and Anthropology, Michigan State University).

The National Bureau of Economic Research recently reported that from 1919 to 1957, two-thirds of the increase in output resulted not from any increase in capital equipment but from the ideas and skills of people (Hayes).

It is recognized that these facts are taken out of context and although they are representative of conditions in general some of them may not represent the whole picture in any particular industry. For example, in the electrical industry the large reductions in employment cited were taken from peaks and troughs in the employment cycles and did not recognize the increase in white collar employees.

NECESSITY FOR ECONOMIC GROWTH

Since the time of the Senate committee's study, economic conditions in the country have become much worse, the official percentage rate of unemployment having almost doubled. Hence the problem is now more critical than ever. The United States has become the first nation in the world in which the number of productive workers has declined while total output continued to rise. From 1950 through 1960, the number of workers in factory production in the United States fell 10 percent while production rose 43 percent and population increased 19 percent.

More recently two developments appear especially significant. First, each of the last three recessions has been worse than its predecessor. Four examples of this will illustrate this longrun decline:

1. Each of the three postwar prosperity periods was shorter than the preceding one. The 1949-53 economic expansion period lasted 45 months; the 1954-57 one lasted 35 months; the 1958-60 growth period lasted only 25 months.

2. The bottom of each of the last three recessions has been lower than the preceding one, falling from 6 percent at the lowest in 1954 to about 7.5 percent at the bottom in 1958, to a trough of nearly 8 percent in early 1961.

3. The rate of unemployment at the peak of each of the last three prosperity periods has been higher than the previous one. Unemployment at the peak of prosperity fell from 3 percent in 1953 to 3.9 percent in 1956, to 4.8 percent in 1959.