THE DEPRESSED-AREA PROBLEM

The Cure Must Begin at Home

THE weather was dreary and drizzling one morning last week as 500 people filed into the silent Ackermann plant of the Wheeling Steel Corp. in Wheeling, W. Va. The men were not workers arriving for the morning shift but guests at a funeral. They came to bid at an auction to liquidate the plant. In 18 hours of bidding, they bought $5,000,000 worth of idle equipment that once had hummed busily under the hands of 1,200 workers. To Wheeling, the auctioneer's machine-gun chant was an old familiar dirge; for years, thousands of its skilled workmen have looked on helplessly as, one after another, the gates of its plants have closed for good. Once-thriving Wheeling is a prime example of an urgent problem: the depressed area.

By Government reckoning, a depressed area is one in which at least 6% of the workers are unemployed and the total has run at least 50% above the national average for four of the last five years. The U.S. has 19 major depressed areas and dozens of minor ones scattered from Washington to Maine, most of them concentrated in the industrial East. They account for more than half a million unemployed workers for whom recession is a year-round, inescapable fact even when the nation's economy is booming. Both parties introduced bills to aid depressed areas in the last Congress, but squabbled them to death. The cost was comparatively small: $180 million for the Administration bill v. $251 million for the Democratic bill. Now President-elect John F. Kennedy has put a depressed-areas bill at the top of his list of must legislation.

The nation's pockets of economic blight are caused by the fact that industries that once provided the major payrolls have either left the area, collapsed or severely cut back their work force under the stress of technological change or competition from more efficient plants elsewhere. The textile industry has moved out of New England for the South's lower wages. In Pennsylvania, West Virginia and Kentucky, automation in the coal mines and a national shift from coal to oil and gas have thrown thousands out of work. Modernization of the steel industry, abetted by a slump in steel sales is pushing Youngstown and Pittsburgh toward the depressed category.

Most depressed areas are not economic skeletons incapable of revival; they need only saving infusions of new industry. While they deserve a helping hand from the Government, chiefly in the form of loans and grants to encourage new plant building and new public facilities, it is a fact that Government help can do little, good unless depressed areas first go to work to cure their own problems. Many have already arrested the decline, even made healthy comebacks by aggressively working to attract industry, but others are so badly depressed that they lack even the "seed money" to make a fresh start.

Pennsylvania has set up the strongest program to aid local communities in their battle for survival. With about a fourth of all U.S. depressed areas within its borders, the state five years ago launched an industrial development program. Its heart was a $20 million revolving fund authorized to make loans to nonprofit development agencies for the construction of new plants in distressed areas. Result: the plan has attracted 389 plants (including Radio Corp. of America, Fruehauf Trailer and Chrysler Corp.) providing 106,000 factory jobs, encouraged the expansion of 700 existing firms, put to work 391 idle plants.

At the city level, Scranton has come up with one of the most imaginative programs. Hit by a cut in mining workers from 17.910 in 1940 to about 2,200 this year, Scranton set out to attract new employers by offering to build them a modern factory to meet their specifications. The city paid for all construction, charged the company only rent. The plan was first financed by the sale of municipal bonds, but the public has chipped in willingly with outright donations to keep the fund going. About 30 community-financed plants have been built at a cost of nearly $20 million, providing jobs for more than 10,000 people. One secret of the plan's success: low wage rates, which 81% of the new industries admitted were what made the area attractive to them.

Many plants have closed up or moved away from depressed areas largely because area workers cling to high wage rates out of line with other regions. But as their savings melt away, workers have lowered their sights. The loss of the Ackermann plant so upset Wheeling workers that a jobless steelworker, Thomas Elliott, set up a "save-a-plant" movement, signed up more than 700 unemployed workers who are willing to take much lower wages.

Industrial development agencies have found that one of the most valuable investments they can make is a complete survey of a depressed area's facilities and natural resources. A geological survey of the area around Freedom, Ind. turned up the presence of gypsum; it took little urging to persuade a gypsum mine and mill to locate in the area. More and more depressed communities are setting up training programs to re-educate workers for new jobs. Pennsylvania spends $500,000 a year retraining unemployed workers. Though it costs about $140 to train one worker over a course of several weeks, the state figures that it easily gets that back in taxes within a year.

Instead of concentrating solely on industrial plants, many communities now realize that their biggest hope is to create or attract more service industries. Pennsylvania's service industry employment has steadily increased, jumped from 79,000 in 1950 to 103,900 this year. By attracting enough factories to employ 10,000 people, Scranton figured that it created 17,000 additional jobs in the service industries, retail businesses and professions. One reason: an average of three people leave the relief rolls for every new job created, thus increasing the market for services.

By working in partnership with the state, local businesses and--most important--with the workers themselves, local communities can do at least as much as Lawrence, Mass., which, by careful planning and aggressive selling of its assets, has cut its unemployed from 25,000 to 4,500 since most of its textile mills left. All the areas that have worked on curing their own problems agree on one basic fact: Government aid, if it is forthcoming, will not work without the will of a city to revitalize itself.

This file is automatically generated by a robot program, so reader's discretion is required.