16. Chapter 16 Begins: The sixties

So we begin “Contemporary Economic/Community Development.” This chapter concentrates on the 1960s. Two motifs (themes) dominate our chapter: the federal government and the spectacular rise of new forms of community development. Not so obvious, however, is the unspoken backdrop of intensified suburbanization that will be dealt with in Chapter 18.

In 1961, with a new administration in charge of the federal government, a conscious set of decisions transformed Washington into a major, arguably primary player in sub-state economic development. It played that role until the middle 1970s. In these few years the feds played their most substantial role, ever, in American sub-state economic development. In so doing, Washington, not alone by any means, changed the course of our two ships. It starts with John Fitzgerald Kennedy—and his brother Robert.

THE KENNEDY YEARS

When voters woke up on November 9, 1960 the Democrats had won control of the presidency, Senate and House—a sort of hat-trick for politics. Kennedy garnered 49.7 percent of the vote to Nixon’s 49.6 percent. However it went, the election passed the baton to the World War II “greatest” generation. The priorities and values that slipped into federal policy during JFK’s administration built onto FDR’s New Deal a hard-fought Cold War prosperity and an American economy and society transitioning into unknown territory. JFK’s theme, “the New Frontier,” talked about space, science, geographic-focused poverty (West Virginia). He assembled a cabinet and network of advisors since described as the “best and the brightest”; it was an administration dominated by Ivy League academic experts. With glamour, grace, sophistication and a young family, he presided over an administration portrayed as “Camelot.”

As a public policy issue, poverty ranked high by the early 1960s. Oscar Lewis’s Five Families (1959) and Michael Harrington’s The Other America (1962) blazed new ground. Lewis’s work described a “culture of poverty,” asserting that the poor were not kept poor solely by institutions and discrimination, but by a culture that socialized members into a value system that led to “wrong” decisions. Socialization in a poor family carried within it the risk of being inculcated into a value system that perpetuated poverty. This poverty cycle had to be broken, the value system changed, if poverty was to be cured. Harrington picked up on Lewis; his book discovered an “invisible land of the poor” isolated in rural areas and in urban slums. Kennedy read Harrington’s book and appointed him to his administration:

The poor are invisible … people who lack education and skill, who have bad health, poor housing, low levels of aspiration and high levels of mental distress … And if one problem is solved, and the others are left constant, there is little gain. [Needed to reverse poverty] was a broad program of] remedial action—a comprehensive assault on poverty. (Isserman, 2009)

Kennedy’s most significant economic development legislation—the 1961 Area Development Act and the 1962 Manpower Development and Training Act (MDTA)—proved important ED innovations. Workforce had been a federally led ED strategy, but Kennedy’s MDTA departed from earlier federal manpower/labor programs, shifting from concern with national defense and unemployment to structural poverty, job creation and economic revitalization in geographically depressed areas. Kennedy’s first major sub-state ED initiative was not manpower, however, but area-wide or regional economic development. Kennedy started down a path that shifted away from FDR’s Tennessee Valley Authority (TVA) to federally financed ED tools (revolving loans) infrastructure, public facilities, urban renewal and, yes, manpower training.

Area Development Act (1961)

The New Deal linked infrastructure and public works to job creation. War production federal assistance included attempts to include small business and counter “worker shortage and surplus” areas, but post-WWII industrial decentralization (industry relocation and preferred war contracts) presented new opportunities and problems for linking federal defense spending to jobs. The first conscious postwar example was the Defense Manpower Policy Number Four (DMP No. 4), whose intent was to “channel all government spending into the areas hardest hit by economic troubles” (Lotchin, 1993, p. 58). DMP No. 4, unexpectedly, got sandbagged by auto and textile industry unemployment, and Secretary of Defense Charles Wilson channeled it to Detroit, Massachusetts and Connecticut—the latter two alone received five and one and a half times respectively more defense contracts than the five southern states charged with piracy (Lotchin, 1993, pp. 60–61). Accordingly, DMP No. 4 got caught up in the earlier described politics of industrial decentralization.

After 1956, concern for distressed geographies with high levels of unemployment shifted to the Senate Committee on Labor and Public Welfare (Miernyk, 1965, pp. 165–72). Led by Illinois Senator Paul Douglas, hearings/joint reports on lowincome families revealed that low-income, depressed regions were scattered throughout the nation. This triggered five bills calling for an independent “Depressed Areas Administration” (a cheerful, charming name). The bills empowered the feds to make loans to businesses expanding or relocating to “labor surplus areas.” Also included were funds for individual retraining (vocational schools). Senate/House support was hard to come by, however. Douglas dogged the issue, submitting bills each year through 1961.

Kennedy was deeply affected by West Virginia’s pervasive rural poverty. Having committed to depressed area revitalization, Kennedy embraced Douglas’s Senate bill—leading to passage of the 1961 Area Redevelopment Act (ARA). ARA broke with previous federal public works programs, shifting away from past goals and broadening federal redevelopment initiatives into manpower; direct job-creating loans to private corporations; utilizing public facilities-based renewal projects to provide infrastructure and jobs; and, in general, injecting the Department of Commerce into rural economic development. The approach was bi-modal: it continued Privatist strategies such as infrastructure and business assistance/attraction with CD people-focused workforce programs.

In the rural areas, as in the urban slums … community development … require[s] a coordinated multifunctional approach—the preparation and adoption of comprehensive plans for attacking simultaneously a wide variety of community shortcomings; the mobilization of the resources of many agencies … new leadership and more extensive citizen participation. (Sundquist, 1969, p. 131)

ARA certainly reflected New Deal programs such as the TVA. It was the first postwar federal geographically targeted ED program, located in the Department of Commerce (a subject of considerable controversy). Opposition, largely from northern politicians and labor unions, especially the Textile Workers of America, was substantial and never abated during the program’s existence.¹ The US Chamber of Commerce opposed the program, and a widespread perception in the South that ARA facilitated the civil rights movement limited its support and effectiveness. Many communities were uncomfortable being characterized as “distressed.” The United States Department of Agriculture (USDA), uncooperative at first, eventually assisted in facilitating “rural development committees.”

Although ARA included both urban and rural counties, the program was the first non-USDA rural, extra-infrastructure job-creating initiative. In that ARA included a small retraining Department of Labor (DOL) program, it extended a federal toe into the manpower–workforce policy area. Providing hints of a future “creative federalism,” ARA authorized grants direct to localities for infrastructure (public facilities), including water, street and sewer improvements as well as business loans: one-third of ARA appropriation—reflecting a belief that depressed areas’ lack of capital was a primary barrier to economic growth.² Urban renewal projects qualified for infrastructure assistance. ARA financed 316 projects that claimed creating 40,000 jobs (Roth et al., 2002, p. 2). The secretary designed 300 rural counties in addition to 230 rural counties in the USDA Rural Development Program. By 1964, designated counties doubled to nearly 1000.³ Appropriations, however, remained unchanged; in 1963 funding terminated completely. Many, maybe most, of the designated counties did not meet legislative criteria. The program’s sun set in 1965.

One can trace the evolution of the Economic Development Administration (EDA’s) infamous Overall Economic Development Plan (OEDP) from the Area Redevelopment Act. James Cobb asserted that ARA prompted formation of many southern local industrial development corporations (Cobb, 1993a, p. 53).⁴ ARA loans required a local match, and the Local Industrial Development Corporation (LIDC) offered a convenient structural vehicle with which to participate in ARA programs. Even in those states that provided match at the state level, LIDCs were a useful local monitor and responsible entity. Given that nearly 1000 counties submitted applications, ARA’s incentive to form LIDCs was likely not confined to the South. It is a guess only, but ARA may have stimulated county-level EDOs in local economic development.

ARA firmly embedded a notion characteristic of future federal loan programs: that federal aid should not shift jobs and firms—redistribute pepperoni on pizza slices so to speak. Any employment created from the Act’s funding or projects could not “transfer jobs from one area of the United States to another.” From the depressed regions’ perspective, creating jobs in an area of such demonstrated need is necessary and desirable—even if they derive from shifted jobs and relocated firms. For others, however, usually those in the Policy World or the losing jurisdiction, legitimate job creation required net new jobs. Interestingly, shifting workers through “voluntary” relocation from a labor surplus area is not. Worker mobility has always been legitimate, and arguably a primary workforce strategy—even with public funds.

Typically, labor surplus areas are victims of structural change, and areas and their residents that are hurt by structural change are frequently unable as well as unwilling to relocate:

Some workers … do not respond to the pull of market forces. This is not always because workers are unwilling to move, but also because they recognize that age and lack of education or training [and occupational experience] limit their chances of finding employment elsewhere … Home ownership, attachment to friends … family … and community are often the cause. (Miernyk, 1965, p. 170)

These concerns are timeless and support place-based economic development efforts such as ARA.

Public Works Acceleration Act (1962)

This little-known legislation, approved in May 1962 after hard negotiation with Congress, connects New Deal programs linking workforce housing to public work construction as a sub-state unemployment strategy. The Kennedy initiative, based on the 1946 Employment Act, hoped to achieve Keynesian “full employment.” The Act granted authority to allocate construction funds for federal facilities and direct grants to state/local governments (50–75 percent match) for public facilities in (ARA) redevelopment areas or communities with high unemployment. Eligible construction projects had to be “substantially completed” within a year (shovel-ready meant something in the good old days). Water, sewer plants, streets, public buildings and recreation facilities were the chief beneficiaries.

Kennedy intended the Act to be countercyclical, to “revitalize the economy by a general expansion of public construction,” and the Act could be thought of as a pilot program for federal (physical) countercyclical involvement in sub-state jurisdictional economic bases. The $400 million approved in 1962 ($500 million in 1963) was a pittance, however, doing little to relieve local unemployment, address local public facility needs or achieve full employment. Still, the 1962 Act exposed issues associated with achieving full employment through a public works strategy. The Act also had its “darker” side in that one could also see it as an initiative, visible to city voters, that the federal government was doing its part to alleviate the 1962 recession.

Kennedy was concerned whether full employment could fully ameliorate the all-too-evident reality of structural unemployment and area-wide depression: “We could have a great boom and still have [high structural] unemployment” (Freeman, 1965,1975). Addressing structural or chronic problem areas had subtly entered into ED policy. Economists of the period were dismissive of public works as a full employment strategy. Their principal criticism of public works was that it was “too slow in starting and too late in ending” (Freeman, 1965, p. 175). The public works classic of the era, McKean and Taylor’s Public Works and Employment from the Local Government Point of View, concluded that “Even allowing for the full effect of the multiplier and pump priming, … a program to stabilize state and local public works would influence the economy to an insignificant degree” (McKean and Taylor, 1955, p. v). Public works, however, was the preferred strategy of the local politician; the voter could see and touch public works and it was proof their community was getting its share. As a presidential election strategy, public works directly connected the President to the local community resolving its problems.

The key issue of whether public works was a timely solution to local unemployment focused on whether anything like “shovel-ready” (the term was not used in the 1960s) was realistic and desirable. Shovel-ready seemingly required advanced planning, it was believed, that went miles beyond blueprints, site engineering and cost minimization, into controversial questions that included: evaluation of alternatives; whether the facility should be built at all; and who would benefit (or not). Plans touched off competing ideologies and partisanship, and the result of a plan was often the need for more plans. Long before NIMBY became our profession’s mascot, it was questioned whether shovel-ready was a realistic concept.

To make matters more difficult, public works as a strategy to create local employment raised issues of whether public works could hire unskilled workers in volume, or rather by nature required skilled workers to construct facilities in a timely and quality-acceptable manner. Construction, by its nature, is less wage and salary driven than site acquisition, equipment and materials driven. Most of a construction budget was consumed by non-wage expenses, and the required adoption of the Davis–Bacon Act (1931) meant that skilled labor costs would be sufficiently high to preclude lower-skill employment in volume. It was these factors, indeed, that had severely punished NIRA’s 1933 housing and slum removal program. Thus it was evident, even by the time of JFK, that if one wanted to get income into the hands of the unemployed, the faster and more direct method was “work relief”—i.e. welfare or unemployment assistance (Freeman, 1965, pp. 179–92).

Public works as a federal sub-state economic development strategy to achieve full employment or to relieve high unemployment was by the early 1960s regarded as at best uncertain, and likely to be unsuccessful in addressing unemployment. As a “political” ED strategy, federal public works had some merit—but its practical effects on unemployment, skills training or addressing local public facility need was unremarkable. There is one huge qualification to this observation: if the goal of public works shifts away from unemployment mitigation or skills training to, say, simple facilitation of a desired public work (a sewer plant, community center, safe bridge) then a federal public works program may indeed have merit.

1962 Manpower Development and Training Act (MDTA)

MDTA marked the formal debut of contemporary federal manpower/workforce policy. ARA had touched on training for the unemployed—pioneering federal payment of a subsidy to the unemployed worker in a training program. This was important because, at the time, most states did not allow the unemployed to receive unemployment benefits in a training program; 21 states did—Massachusetts (and DC) were pioneers (Murray, 1965, p. 75). Government-assisted worker training need not be linked only to the unemployed. General “industrial” education can be traced to 1820 Boston when trade instruction was introduced into high schools. In 1880 St. Louis Manual Training School (connected to Washington University) became the model for high school manual training. The National Society for Promotion of Industrial Education was formed in 1906.

The federal government has a long tradition of providing training-related programs. The 1862 Morrill Land Grant Act (teachers’ colleges) may have been the first entry, but the Smith–Hughes Act (1917) facilitated vocational education in agriculture, industry and home economics, while the 1933 Wagner–Peyser Act and a long string of subsequent federal programs demonstrate with certainty a federal commitment to manpower. The US Office of Vocational Rehabilitation has been involved with training workers with disabilities for jobs since the 1920s. As late as 1958, the National Defense Education Act authorized training for skilled technicians. In 1961 over 3.85 million were enrolled in vocational education (Somers, 1965, p. 228). Wisconsin may have been the first state to embrace apprenticeship training (1915 State Industrial Commission), but the federal Bureau of Apprenticeship and Training (1937) worked with unions, vocational schools and private employers. During the World War II the Training within Industry section of the Office of Production Management disseminated “best practice” materials, with a focus on supervisors.

State (and local) involvement in training beyond vocational education “have been crash programs for specific groups of displaced workers or for specific jobs in individual establishments; … relatively small … hampered by inadequate appropriations” (Somers, 1965, pp. 229–30)—or specifically linked to receiving welfare of unemployment benefits (Chicago and Milwaukee). By 1961, 21 states allowed unemployment benefits to be paid while receiving training. The first “full-fledged,” reasonably funded state program for training the unemployed was in 1957 Pennsylvania. The law required high schools to offer courses for the unemployed; by 1960 nearly 2000 unemployed were enrolled. In 1961 West Virginia and Ohio followed Pennsylvania’s example (Somers, 1965, pp. 229–30).

The Ford Foundation established its National Manpower Council in 1951. Over the decade, the Council asserted that there was no shortage of manpower, but rather a greater need to improve upon the quality of that manpower. To that end, it published a significant report in 1955, Improving the Work Skills of the Nation. The report advocated changes in the educational system, curricula, two-year college training and that business and government ought to prioritize involvement into this new policy area. The best level from which to confront these issues was the community. The fear was that skill-driven unemployment would result in structural unemployment—with an increasingly large percentage of the American workforce permanently unemployed or underemployed.

[I]n an increasingly technical age, the expanding employment occupations were those that placed a premium upon well-educated and highly skilled applicants; simultaneously, job opportunities for those without these qualifications were disappearing rapidly … The remedies … were remedial education and specialized job training. (Briggs Jr., 2016)

The Department of Labor in 1954 created by administrative order the Office of Manpower Administration and revamped its renamed Bureau of Apprenticeship and Training. The BLS produced datasets on the readjustment of industries and communities affected by automation. It also published the Occupational Outlook Handbook and a special study, Manpower Needs of the Sixties. In the last years of the Eisenhower administration, our old friends Senator Paul Douglas and Senator Joseph Clark developed proposals that led to the Vocational Retraining Act of 1961—still primarily focused on educational institutions and adjusting unemployment compensation to allow for training and retraining. Eligibility for retraining problems was limited.

Arthur Goldberg, Kennedy’s Secretary of Labor, introduced the DOL to the issue. His goal was to move beyond vocational education. In April 1961 Goldberg created the DOL Office of Automation and Manpower. The Bureau of the Budget was not only supportive of a new program, but also a key staff member, Michael March, assumed leadership. Working with Clark and a network of state/local/school organizations, in 1961 a new proposal was formalized into the bill that became MDTA. With divided union reaction, the bill faced a number of cross-currents, but was approved in February 1962.

MDTA authorized a three-year program for workers displaced by technology, and a training allowance for unemployed workers. Local public and private agencies were eligible to receive funds to identify and provide training to upgrade the skills of displaced workers. No formal link was made to actual job creation. Up to 52 weeks of training was authorized. MDTA created new pools of funds that motivated states to develop workforce EDOs eligible for DOL programs. Demonstration projects, research and on the job training (OJT) solutions over the next few years expanded the program. The federal government had entered into skills training, separate from educational and vocational training, and had thus pioneered an economic development approach to workforce training. The Department of Labor housed the program and assumed leadership over manpower–workforce policy.

By the early 1960s the civil rights movement revealed longstanding discriminatory employment practices that limited black workers to the lowest-paid and lowest-skilled employment. Manpower and training programs were tasked to reduce poverty and confront Great Migration Big City disruption. A string of subsequent federal legislation played a desperate game of catch-up with what was called a “manpower programmatic revolution.” In 1963 the Vocational Education Act was amended yet again, and was followed by the Great Society’s revolutionary Economic Opportunity Act of 1964, and then by the 1967 Social Security Act. By the end of the 1960s there were at least 30 separate federal training programs—an entirely new manpower/workforce system was in operation.