ECONOMIC BASE SURVEY of the POTOMAC RIVER SERVICE AREA £ * Ti TH UNiVE.' Prepared for the Corps of Engineers U.S. Army Engineer District Washington, D.C. U.S. Department of Commerce Office of Business Economics Economic Base Survey Of The Potomac River Service Area PREPARED FOR THE CORPS OF ENGINEERS U.S. ARMY ENGINEER DISTRICT WASHINGTON, D.C. U.S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1961 For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. Price 55 cents U.S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS Washington 25. D.C. Letter of Transmittal October 31, 1960. There is transmitted herewith the Potomac Economic Base Survey. This report is designed to provide basic economic guides and bench- marks for use in the Corps of Engineers' extensive study of the water requirements and resource development of the Potomac River Service Area. We have utilized the analysis of the national economy developed in the previous study of the Delaware area, undertaken for a similar purpose. The basic assumptions concerning national economic growth are the same as were employed in our earlier report. Otherwise, the material has been brought up to date and related to developments and circumstances of the Potomac Basin. To make the results useful as a general guide to the study of the Corps of Engineers, economic measures related to water use are es- sential. The major ones were developed especially for this study. The data have been used to obtain results which we regard as realistic guides, tempered as they are by the particular characteristics of the region under study. We reiterate in the interest of clarity what we said earlier in the Delaware report, namely, that the limitations of a study extending so far into the future should be kept in mind but not overstressed. Early understanding of what was feasible was reached, and our report furnishes benchmark guides along the line of this agreement. In the progress of our work we have consulted, and obtained the cooperation of, the agencies mentioned in the accompanying ac- knowledgment statement. Although benefiting from the assistance of others, this Office assumes the responsibility for the contents of this report, including the analytical presentation and findings. M. Joseph Meehan, Director. Corps of Engineers, U.S. Army, Office of the District Engineer, Washington District, Washington 25, D.C. HI Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://archive.org/details/economicbasesurvOOunit Acknowledgments In the preparation of this Economic Base Survey the Office of Business Economics placed heavy demands upon selected staff mem- bers, and also had the benefit of cooperation of a number of Federal and State agencies. Louis J. Paradiso, Assistant Director and Chief Statistician, was in general charge of the statistical research for the project. C. A. R. Ward well, Chief of the Current Business Analysis Division, and Robert E. Graham, Chief of the Income Section of the National Income Di- vision, were responsible for the development of the basic measures of the Potomac Basin Area. All took an active part in the numerous interagency conferences which contributed to the closeness of under- standing and cooperation that has characterized the Potomac River project as a whole. These individuals established and maintained the channels with State and local agencies through which a great deal of highly useful material was developed for the Economic Base Survey. Mr. Wardwell's chief assistant throughout the project was Cecelia W. Craig, who participated in all stages of the analysis and carried out the major portion of the statistical work dealing with population, households, and employment. In the preparation of the special per- sonal income estimates for the Potomac Basin, Mr. Graham was aided by Edwin J. Coleman and Edward A. Trott. Dorothy Anne Fisher also contributed to the preparation of the historical series on personal income; in addition she was mainly responsible for carrying out the statistical work involved in the projections of total and per capita in- come for the area. The graphic presentations were prepared by Billy Jo Dawkins and John A. Miskell. The Bureau of the Census was responsible for the basic data underlying the projections of national population and the correspond- ing projections of households in this report. It also provided the special estimates of population by counties, of households, and com- ponents of population change by subregions for 1955, 1957, and 1958, as well as certain preliminary information from the 1960 Census of Population. Most of these data were prepared by Jacob S. Siegel, Chief of the Population Estimates and Projections Section of the Population Division, to whom particular acknowledgment is due. Mr. Siegel was also very helpful in furnishing additional information and advice relative to problems of population change and projection. The reliability of the historical series on personal income and employment for the Potomac region was enhanced by the cooperation of the various agencies of the District of Columbia, Maryland, Pennsyl- vania, Virginia, and West Virginia in providing special tabulations of data. The cooperation of these governmental agencies in furnishing needed series thus contributed to the improvement of the projections themselves. Special acknowledgment is due to the employment se- curity agencies of the several States in the area. They provided valuable payroll and employment statistics, classified according to industry for each county under the State unemployment insurance programs. Among the other Federal agencies from which we received help, various officials of the U.S. Department of Agriculture were generous with their cooperation. Special acknowledgment is due to Mr. Kenneth Nobe of the Agricultural Research Service of the U.S. Department of Agriculture for furnishing us with projections of the farm labor force by counties at intervals through the period ending with 2010. Finally, the Office of Business Economics wishes to express its appreciation of the hearty cooperation of the Washington District Corps of Engineers at all stages in facilitating the progress of our work on this Economic Base Survey. VI Contents Page Letter of Transmittal Ill Acknowledgments V Table of Contents VII List of Tables VII List of Charts VIII Introduction 10 Summary Review 5 Chapter I. Expansion of the American Economy 11 Chapter II. Past and Future Growth of the Potomac River Service Area 23 Chapter III. Population Growth in the Potomac River Service Area 45 Chapter IV. Pattern of Employment Growth in the Potomac River Service Area 53 Chapter V. Sources and Methods Used in Preparing Basic Measures 61 Appendix: Supplemental Statistical Tables and Notes 80 LIST OF TABLES Table Page 1 United States-Summary of Projections: 1965, 1985, and 2010 5 2 Potomac River Service Area— Summary of Projections: 1965, 1985, and 2010 7 3 Potomac River Service Area— Summary of Projections of Personal Income for subregions: 1965, 1985, and 2010 8 4 Potomac River Service Area— Summary of Projections of Population and Employment for Subregions: 1965, 1985, and 2010 9 5 United States— Gross National Product, Personal Income, Employment, and Population— Historical Data 15 6 United States— Employment Projections by Industries: 1965, 1985, and 2010 17 7 Potomac River Service Area— Personal Income Estimates by Subregions, 1929-57 26 8 Potomac River Service Area— Personal Income Projections by Subregions in Constant Dollars, 1965-2010 26 9 Potomac River Service Area— Per Capita Personal Income Estimates by Subregions, 1929-57 28 10 Potomac River Service Area— Per Capita Personal Income Projections by Subregions in Constant Dollars, 1965-2010 28 11 Potomac River Service Area— Population by Subregions, 1930-60 28 12 Potomac River Service Area— Population Projections by Subregions, 1965-2010 29 13 Potomac River Service Area— Employment by Subregions, 1930-57 29 14 Potomac River Service Area— Employment Projections by Subregions, 1965-2010 29 15 Income Changes in the Potomac River Service Area by Industry and by Major Type, Percent Increase, 1929—57 30 VII Table Page 16 Changes in Total Personal Income in the Potomac River Service Area, Selected Years, 1929-57 30 17 Sources of Personal Income in the Potomac River Service Area: Percent Distribution by Type of Income, 1929 32 18 Sources of Personal Income in the Potomac River Service Area: Percent Distribution by Type of Income, 1957 32 19 Sources of Civilian Earnings in the Potomac River Service Area: Percent Distribution by Industry, 1929 33 20 Sources of Civilian Earnings in the Potomac River Service Area: Percent Distribution by Industry, 1957 33 21 Economic Dimensions of the Potomac River Service Area, 1957 37 22 Changes in Per Capita Personal Income in the Potomac River Service Area, Selected Years, 1929-57 37 23 United States— Personal Income by Type, Selected Years, 1929-57 40 24 Potomac River Service Area— Personal Income by Type, Selected Years, 1929-57 40 25 Downstream Area— Personal Income by Type, Selected Years, 1929-57 41 26 Washington Metropolitan Area— Personal Income by Type, Selected Years, 1929-57 41 27 Piedmont Area— Personal Income by Type, Selected Years, 1929-57 42 28 Great Valley Area— Personal Income by Type, Selected Years, 1929-57 42 29 Appalachian Area— Personal Income by Type, Selected Years, 1929-57 44 30 Potomac RiveT Service Area— Population by Subregions, 1870-1960 46 31 Potomac River Service Area— Population Growth Relative to the United States, 1870-1960 46 32 Potomac River Service Area— Population by Subregions, 1930-60 47 33 Potomac River Service Area— Population Projections by Subregions, 1965-2010 50 34 Potomac River Service Area— Components of Population Change, 1940 to 1950 50 35 Potomac River Service Area— Components of Population Change, 1950 to 1957 50 36 Potomac River Service Area— Population— Relative Distribution by Subregions, 1870-1960 51 37 Potomac River Service Area— Number of Households by Subregions, 1930-57 52 38 Potomac River Service Area— Projections of the Number of Households by Subregions, 1965-2010 52 39 Potomac River Service Area— Employment by Subregions, 1930—57 55 40 Potomac River Service Area— Employment Projections by Subregions, 1965-2010 55 41 Potomac River Service Area— Employment by Industries, 1930-57 56 42 Potomac River Service Area— Employment Projections by Industries, 1965-2010 56 43 Potomac River Service Area— Employment Pattern, April 1930 57 44 Potomac River Service Area— Employment Pattern, April 1940 57 45 Potomac River Service Area— Employment Pattern, April 1950 58 46 Potomac River Service Area— Employment Pattern, Annual Average 1950 58 47 Potomac River Service Area— Employment Pattern, Annual Average 1957 59 VIII APPENDIX TABLES Table Page 1 United States— Gross National Product, Personal Income, Employment, and Population, 1909-39 81 2 United States— Major Components of Gross National Product, 1909-59 82 3 United States— Projection V of the Total Population by Broad Age Groups 83 4 United States— Projection AA of Population by Broad Age Groups 83 5 United States— Projection A of Population by Broad Age Groups 84 6 United States— Projection B of Population by Broad Age Groups 84 7 United States— Projection C of Population by Broad Age Groups 85 8 United States— Illustrative Projections of the Population, 1965-2010, Series I to IV 85 9 Potomac River Service Area— Population by Counties, 1930-60 86 10 Potomac River Service Area— Number of Households by Counties, 1930-50 87 LIST OF CHARTS Figure Page 1 Map of the Potomac River Service Area by Regions X 2 Economic Growth of the United States, 1909-59 12 3 Expansion in the Major Segments of the Gross National Product, 1909-59 19 4 Growth of National Income by Industry, 1929-57 21 5 Potomac River Service Area: Economic Dimensions, Past and Projected 24 6 Economic Trends in the United States and Potomac River Service Area— Growth of Personal Income and Its Components 27 7 Sources of Income, 1957: Comparative Distribution of Civilian Earnings in the United States and the Potomac River Service Area 31 8 Personal Income in the Potomac River Service Area as Percent of the United States Total 34 9 Potomac River Service Area: Personal Income per Capita Compared with U.S. Average, 1957 36 10 Long Term Growth in Personal Income: Potomac River Service Area and Subregions, 1929 to 1957 38 11 Long Term Growth in Per Capita Personal Income: Potomac River Service Area and Subregions, 1929 to 1957 39 12 Income Growth Rates— Past and Projected: United States and Potomac River Service Area 43 13 Population of the United States and the Potomac River Service Area 48 14 Population of the Potomac River Service Area by Subregions 49 DC Ml 3 s < v.; 3 6 HI a > < UJ 6 5 -a = § B S 5 S JJ E cm. < Z < u. •- y < UJ 0£ < ■=1 _!2 i o < 5 < oc 1— I.U UJ UJ* U cc s t— > •0 • J fri z z Ci at > O < Z o > til ;o | o- pi -£ o c o u.S z o z < z o > c en o c **; < U. U M I U < < £ % J> O o H Q o» pa z >- z |■ — a 5 S» * 3 1 Uo ec < S o C ■s. a. H j: a II .Sit: w z i 5 £ z J s 5 « ». E — > I S S .£ E . x i o a a. os = 5 z 5 * Introduction This report comprises the results of a basic economic survey of the Potomac River Service Area designed to furnish guides for ap- praising its future growth in relation to water requirements. It is based upon the same techniques and national pattern of growth earlier developed in the Delaware Basin study, adapted to this regional analysis. The need for water is dependent upon the volume and types of economic activity within an area and the size of its population. More specifically, increasing domestic consumption of water is a function of population and economic growth, the latter being the prime factor in the growing water use per capita. The rise in industrial water use is governed mainly by changes in the relative importance and growth rates of various industries which are large users of water, by technologi- cal changes and shifts in product output. Physical activity measures, with some exceptions, are not available by regions. To portray the overall economic growth of the Potomac Valley— one embodying not only the effects of industrial operations but also all the other activities— personal income estimates were de- veloped for the Potomac Basin and its subregions. These conform to the official Office of Business Economics concept of the United States personal income series which measures income annually by States. Related factors of growth bearing on water requirements were also measured— population, households, and total employment including employment in individual major industry groups some of which are important users of water. We have based our estimates of future growth on the fact that the past growth trend for the Nation has been at a fairly steady rate, aside from cyclical variations and war periods. Hence the basic sta- tistical measures of expansion of the national economy have been em- ployed as benchmarks. It would appear that such broad and inclusive measures of ac- tivity can serve as a reliable guide for estimating the national require- ments for water. While this general hypothesis cannot be thoroughly tested for past periods because of lack of sufficient historical data on water consumption, nevertheless, it seems clear that this relationship must be quite close. Personal income is used for regional measure- ment, as this bears a direct relationship to output. Area covered. The 36 counties and 7 independent cities com- prising the Potomac River Service Area are grouped into the 5 sub- POTOMAC RIVER SERVICE AREA regions determined by the Washington District Engineer. These subregions are outlined in figure 1. Their makeup resulted from a consideration of various factors such as physiographic features, ad- ministrative considerations, and data availability. The Washington Metropolitan Area was a natural unit for many reasons, outstanding among which were the facts that it includes the national capital and a dense population comprising almost two-thirds of all persons in the entire Potomac Valley. The eight Maryland and Virginia counties in the Downstream Area were a logical unit inasmuch as their streams all largely drain into the Potomac estuary below Washington. The three subregions draining into the Potomac above Washing- ton were differentiated chiefly by their physiographic features, the Appalachian being largely mountainous, the Great Valley consisting mainly of the Shenandoah and Cumberland Valleys, and the Piedmont comprising the portion of the basin stretching southeasterly from the foot of the Blue Ridge Mountains to the Washington Metropolitan Area. NATURE OF PROJECTIONS A primary consideration in the development of the regional pro- jections of the comparative growth of the Potomac and its subregions was the progress of the Nation. Changes in the economic activity of a region are influenced fundamentally by the course of the Nation's overall economy. The same basic forces which make for national growth or for cyclical swings affect in important degree the activity of a region, although frequently there are significant departures among different areas. The projections for the Potomac Basin were tied to projections of national economic activity through the use of the broad measures of gross national product, personal income, employment, and population with allowance made for certain variant tendencies ob- servable in the past in the relationship of the Potomac to national totals. Just as the Potomac River Service Area has grown in the past along with the national economy— though at differential rates which vary from period to period— the subregions have progressed at varying rates in relation to each other and to the national average. In deriving the estimates, careful consideration was given to the factors which produced differential growth in the past, and to such others as might have an influence in altering the future relations of the subregions of the valley. The basic assumptions underlying the projections, there- INTRODUCTION fore, encompass both those made in the projections of the national economy and others which are pertinent to the Potomac Basin and its subregions. Standards used. The estimates of future growth given in this report are not forecasts or predictions, although in our judgment they do represent reasonable estimates of growth which, under assumed conditions, may be utilized for the basic purpose of the water survey. They should be thought of not as precise figures for particular years, but as magnitudes that could be expected to prevail— at least for the nearer years— under conditions of generally full national employment in which the Potomac Basin would share in accordance with past performance and observed tendencies to vary therefrom. As an integral part of the procedure, it was thought important to ensure the maintenance of internal consistency among the various assumptions and projections. The projections were examined from various points of view and in relation to each other. For example, personal income projections were analyzed for their implication as to trends of per capita and per employee income, and the population projections were related to the employment estimates. To the extent practicable we consulted with various agencies- such as the Departments of the Interior, Defense, Agriculture, and Health, Education, and Welfare— to determine whether or not there were any knowable factors likely to be operative in the future which would materially influence the projections. Examples of such possible influences are changes in technology, trends in land use, and plans for location of Federal establishments. This procedure was utilized so that all such factors might be considered specifically. In general, it may be said that the limited evidence adduced as to new factors or developments which might be forthcoming did not result in any im- portant changes in the overall analysis or projections, though it did modify specific parts. In short, the estimates are derived from a series of what we con- sider to be realistic assumptions, and from extensions of past differential trends and relationships modified as appeared warranted. If our as- sumptions do not materialize, or if the relationships are altered in the future, then the actual developments could differ materially from those projected here. Assumption of growth. The projections for future years are based on the fundamental assumption that the forces which have produced our dynamic, expanding national economy in the past will continue to exert a similar influence in the future on the total and its major parts. The national output in the past 50 years has increased at an average rate of 3 percent per year, and our simple assumption is that the POTOMAC RIVER SERVICE AREA forces operating now and in the period ahead should permit us to do as well in the future. All the projections, both nationally and regional- ly, are consistent with this result which we regard as a reasonable basis for the programing for resource development. It is not possible, of course, to foresee a full range of economic developments and changes which in the period ahead may modify the trends significantly. New production techniques may produce results beyond those embodied in our calculations, and the introduction of new goods and services may have a multiplier effect on demand beyond that implied in the assumptions of the present projections. But such changes are part of our history, and their results are embodied in the Nation's past performance. It is difficult to discern in the historical growth of the national economy any discrete breaks, other than those associated with cyclical business movements or war periods. From regions to subareas. Trends for the United States and the Potomac River Service Area as a whole provide a satisfactory basis for appraising the probable pattern of future developments, but for the subregions they are less reliable guides to the future. This is under- standable if only because developments as they occur will have more of an impact on the smaller than on the larger entity. Thus, in the history of particular geographic areas and industries, discrete breaks are more visible than in the case of larger groupings or the Nation as a whole, and such changes may be expected to occur in the future. The projections involve a span of 50 years. The years 1965 and 1985 were selected as convenient intermediate points that can be help- ful to numerous private and public agencies in considering their long- term programs. It will be necessary, of course, as time unfolds, to review these projections in the light of the actual economic trends as they develop, and to make such modifications as may be indicated. Such reevalu- ations might be made, for example, at 5-year intervals. Both the sponsors of this Economic Base Survey and the Office of Business Economics have been mindful of the manifold uses to which these results may be applied. Depending upon the focus of interest, more specialized relationships may be derived for use in com- munity and area development programs. These may involve local versus national market potentials or industrial growth, as well as the impact of business expansion upon local resources and facilities. This regional economic analysis of the Potomac River Service Area and our previous report on the larger Delaware River Service Area, may perhaps stimulate similar action in other regions for which as yet no such survey has been undertaken. Summary Review The recent comparative growth of the United States and the Potomac River Service Area— measured in broad terms of output, employment, and population— and the future growth as projected over the next half century are summarized in tables 1 to 4. The major findings derive from an intensive analysis of the economic growth of the Potomac Basin relative to the United States economy over the last three decades, and from basic assumptions as to the future. The Office of Business Economics has developed a measure to evaluate the progress of the United States economy over the last half century. This is the total of the gross national product, which covers all types of output. This all-inclusive output measure has increased over that period at an average rate of 3 percent per year— equivalent to a doubling of production every 23 years. This trend is illustrated in figure 2 on page 12. Most of this expansion can be traced to an increased productivity, arising primarily from technological and managerial progress and a high rate of capital formation, along with the steady development of natural resources, a growing labor force, and constant advances in the education and skills of the working population. The mobility of our labor force has also contributed, by shifting workers into activities in which they could be more productive, and so have the economies of large scale production. Table 1— United States '-Summary of Projections: 1965, 1985, and 2010 Actual Projections 1955 1957 1959 1955 1957 1959 1965 1985 2010 (Billion current dollars) (Billions of 1957 dollars) Gross national product 397.5 306.6 442.8 348.7 482.1 380.7 425.5 321.0 442.8 348.7 463.7 366.4 570 450 1.060 845 2,300 Personal income 1,800 (Current dollars) (1957 dollars) Gross national product per capita Personal income per capita 2,405 1.869 2,586 2,052 2,724 2,166 2,574 1,957 2,586 2,052, 2,620 2,084 2,900 2,300 4,000 3,200 6,200 4.900 (Millions) Population Number of households 165.3 48.0 66.0 171.2 49.8 67.8 177.0 51.6 68.1 195 57 76 267 80 105 370 117 Employment 151 • Excludes Alaska and Hawaii. 6 POTOMAC RIVER SERVICE AREA Operating in a favorable natural and institutional environment, these forces have brought about an average annual advance in output per man-hour of more than 2 percent taking the national economy as a whole. Progress has been marked not only in manufacturing, mining, agriculture, and other commodity-producing industries, but also in transportation, distribution, and the manifold industries pro- viding services to consumers, to business enterprises, and to govern- ment. The other factor in the growth of output has been the increasing total of man-hours worked. Population growth and the movement of women from housework to production for the market have both con- tributed to this expansion. These influences lifting aggregate man- hours have in the past been partially offset by the decision of Americans to take part of the gains of higher productivity in the form of shorter working hours rather than more goods and services. Economic progress has not, to be sure, been steady or uninter- rupted. Long-term forces have often, over shorter periods, been ob- scured or overridden by cyclical developments or wars. But we may expect that the same fundamental forces that have contributed to ex- pansion in the past will continue to operate in the future, though we may expect also a varying impact upon particular parts of the economy. Differential growth of regions has been the history of the past and is entirely consistent with the more regular long-term growth of the national economy. The Basic Pattern of Expansion The past rate of progress in the United States economy is an im- pressive one; our projections in this report afford a summary view of the future growth that can reasonably be expected if this growth is carried forward. All of the projections in this report are based upon the assumption of a high-employment economy; where dollars are in- volved, they are all stated in constant prices in terms of 1957 purchasing power. The gross national product in 1957 amounted to $443 billion. In these same prices, the annual rate in the second quarter of 1960 was $479 billion. On the assumption of the future growth trend con- forming to the historical pattern, the 1965 total is $570 billion, rising in the next two decades to more than $1,000 billion by 1985 and to more than $2,000 billion at the terminal date a half century hence. The personal income estimates, keyed into the assumed growth pat- tern, show per capita purchasing power rising from about $2,000 in SUMMARY REVIEW 1957 and a little more than $2,100 in 1960, to $2,300 in 1965, to around $3,200 in 1985, and to nearly $5,000 by 2010. The population projections presented in this report represent in general a medium growth— neither the highest nor the lowest— on the basis of the historical trend. The national population (excluding Alaska and Hawaii) is projected to rise from 179 million as of April 1, 1960 (preliminary 1960 Census computation) to 195 million in 1965, to over 265 million in 1985, and a quarter century later to reach 370 million by 2010. The growth of employment over the years ahead is keyed into the increases in the national product and into the output per worker. From 68 million in 1957, and an average of 69 million in the January- September 1960 period, total employment is estimated to rise to 76 million by 1965, to 105 million by 1985, and finally to reach some 150 million in 2010. As discussed in the next chapter, the output and income which we have projected could be achieved by somewhat dif- ferent combinations of population and employment from the figures set forth in the accompanying tables. The number of households is expected to increase at a little higher rate than the growth of population. This stems from the expected de- cline in the average number of persons per household. From about Table 2— Potomac River Service Area— Summary of Projections: 1965, 1985, and 2010 Personal income Population and households: Population Households Employment: All industries, total Commodity-producing industries, total Agriculture Nonagricultural commodity-producing in dustrics Manufacturing, total Food and kindred products Chemicals and allied products All metals and metal manufactures All other manufactures All other commodity-producing indus- tries Noncommodity-producing industries total Trade Government (Federal, State, and local) All other 2,280 600 800 880 POTOMAC RIVER SERVICE AREA 50 million in 1957 and 52 million in 1959, the Nation's household count is projected to rise to 80 million in 1985 and to 117 million by 2010. For the Potomac River Service Area, personal income is used as the most comprehensive available measure of economic activity. In the United States over past decades, personal income has grown at the same rate as the gross national product and may be used as a satisfactory substitute for the latter in measuring the economic growth of geo- graphic portions of the national economy where gross product figures are not available. Table 3.— Potomac River Service Area—Summary of Projections of Personal Income for Subregions: 1965, 1985, and 2010 Total Personal Income [Millions of 1957 dollars ] Actual 1957 Projections 1965 1985 2010 Potomac River Service Area 6,350 8,300 16,000 35 , 500 Downstream area 223 4,929 238 728 232 300 6,400 300 1,000 300 600 12,000 700 2,000 500 1 400 Washington Metropolitan area 26 000 Piedmont area 1 700 Great Valley area 5,000 Appalachian area 1,100 Per Capita Income [1957 dollars] Actual 1957 Projections 1965 1985 2010 Potomac River Service Area 2,246 1,241 2,689 1,234 1,625 1,339 2,500 1,400 2,900 1,500 2,000 1,700 3,200 1.900 3.600 2,200 2,800 2,200 4,900 Downstream area 3,300 Washington Metropolitan area 5.200 Piedmont area 3,700 Great Valley area 4,600 Appalachian area 3,200 According to this basic measure, the economy of the Potomac Basin spurted ahead of the national economy between 1929 and 1940 and since 1940 has grown at about the same pace as the United States economy. Per capita income in the Potomac Valley was one-tenth above the national average in 1929, climbed to one-third above it in 1940 and receded back to a level aarain one-tenth above it in 1957. The average annual rate of growth of personal income in real SUMMARY REVIEW terms over the 1929-57 period differed considerably among the sub- regions. The rate of increase for the entire Potomac Area was close to 414 percent a year, compared with the national average of 3 percent. The Washington Metropolitan, Downstream, and Great Valley Areas exceeded the national growth rate, the Piedmont almost matched it, and the Appalachian Area lagged substantially behind it. The projections of personal income for the Potomac River Service Area and its subregions are keyed into the national projections of personal income but take into account differential trends. The Potomac River Basin personal income total (in constant 1957 dollars) is proj- ected to grow at a rate somewhat higher than the national average rate but at a lesser rate than in recent decades. From $6 1/3 billion in 1957 the Basin's income expands to $16 billion in 1985 and to $35 billion if we extrapolate as far ahead as 2010. Income per capita for the valley as a whole is projected from $2,250 in 1957 to $3,200 in 1985 and up to around $4,900 in 2010. This indicates a rise in the average level of living and output per worker that can hardly fail to influence per capita domestic and industrial water consumption. Table 4— Potomac River Service Area— Summary of Projections of Population and Employment for Subregions: 1965, 1985, and 2010 Actual 1960 Projections 1965 1985 2010 (Thousands) Population Potomac River Service Area Downstream area Washington Metropolitan area Upstream area, total Piedmont area Great Valley area Appalachian area .997 190 ,969 838 201 463 174 3,290 4,950 7.300 210 300 420 2,180 3,370 5.000 900 1,280 1.880 220 310 450 495 720 1,080 185 250 350 1957 1965 1985 2010 (Thousands) Employment Potomac River Service Area Downstream area Washington Metropolitan area Upstream area, total Piedmont area Great Valley area Appalachian area 1,217 71 822 324 77 184 63 1.380 2.035 83 121 930 1,390 367 524 88 125 210 305 69 94 3,050 175 2,100 775 185 460 130 Of the projected growth of the Potomac Valley economy over the next half century, part of it will come from population expansion. For the past three decades, the Valley's population has grown faster 10 POTOMAC RIVER SERVICE AREA than that of the Nation. It is predicated to continue to grow some- what faster than the Nation over the next five decades, from 3 million in 1960 to nearly 5 million a quarter century hence, then to more than 7 million by 2010. Our survey indicates that this growth should be general throughout the valley, but varying in degree among the sub- regions. Most of the more than 4 million additional persons will very likely be concentrated in the Washington Metropolitan Area. The number of households in the Potomac Basin area, following the same general trend as in the Nation, is projected to show a some- what larger percentage future increase than the population. This relatively faster growth of households is ascribable, as already men- tioned, to the projected decline in the average number of persons per household. To the extent that the household is a basic unit of domestic water consumption, the higher growth rate of households is another indication of the increased demands that will be made upon the water resources of the Potomac Basin. The growth of population in the Valley will stem largely from expanded economic opportunities. Potomac River Service Area em- ployment has been rising faster than the national total since 1930. Based on an industry-by-industry and area-by-area appraisal of employ- ment differential growth rates relative to national averages, the projec- tions envisage that employment in the Potomac Basin will continue over the period ahead to grow at a somewhat higher rate than in the Nation as a whole, but with the rate progressively tapering off toward the national average. The number of persons engaged in economic activity in the Potomac area— 1.2 million in 1957— is projected to more than 2 million by 1985 and to some 3 million in 2010. At that terminal date, it is calculated that the Washington Metropolitan Area will account for two-thirds of the valley's total employment and that the three sub- regions upstream will account for the major portion of the remainder. Finally, in interpreting the significance for industrial water con- sumption of this increased employment in the Potomac Valley, it should be kept in mind that the average productivity of these workers will be moving up along a rising growth trend as in the past. It is assumed that productivity is roughly correlated with per capita real income or real output which is calculated to more than double by 2010 in the Potomac River Valley. Chapter I. Expansion of the American Economy A principal feature in the record of regional progress in the United States economy is the role played by national developments. While in- dividual areas evidence a high degree of special- ization—in heavy or light goods production, in farming, in foreign commerce, in financial trans- actions—the economies of the various regions are highly interdependent. They are linked to each other by a complex network of commodity and. service flows, producing a single national economy comprised of complementary interre- lated parts. When a specific national development is clearly pronounced and sustained over a period of time, its influence is generally transmitted in force to all areas of the Nation. It has not been possible, for example, for any one region to escape the impact of major cyclical swings in general business activity. The most pervasive of all long-term develop- ments affecting the national scene has been without doubt the persistent and strong growth tendency of the economy. All areas of the Nation have participated in this phenomenon— some in greater, some in lesser degree. Development of regional resources in turn has been one of the prime factors in the progress of the national economy. The foregoing central facts dictate the ap- proach adopted in this report for evaluating the economic potential of the Potomac River Serv- ice Area. It is our basic presumption that growth will continue to be a feature of the American economy over the next half century, and that the area will share in the overall expansion. While its share will depend, no doubt, on some factors which cannot now be foreseen, the record of the past suggests fairly well-defined trends in the relationships existing between this region and the Nation. With due allowance for special factors which have been at work, there is reason to expect that these past trends may be projected into the period ahead. This basic approach makes imperative an understanding of (1) the principal features of national growth in the past, and (2) the extent to which the Potomac River Service Area has shared in this growth. Chapters II, III, and IV will cover the latter aspect, as well as the future potential of the Area's development. This chapter first depicts national expansion over the past 25 to 50 years. It then sets forth the dimensions of the United States economy over the next half century on the assumption that approximately the same rate of progress is ex- tended. Projections based on a study of past national trends should not be regarded as fore- casts; they do, however, provide a meaningful framework within which national or sectional progress and growth potentials can be assayed. It must be stressed at the outset that the broad sweep of national growth represents a composite result evolving from shifting and at times highly variable influences which have been the historic feature of our dynamic free market economy. Abstracting from these temporary and changing phases of development, there emerges a picture of progress at a fairly steady rate. The very steadiness of this growth rate lends confidence to our procedure. Two further observations on the procedure may be made. First, our projections assume that the economy will be operating at or close to capacity in the periods for which they are pro- vided. Secondly, the growth potential assumed in the projections, being in line with long-term experience, is realistic and feasible and would afford our people a degree of well-being sub- stantially higher and more widely diffused than the record achievement of recent years. 11 12 POTOMAC RIVER SERVICE AREA Figure 2 The Economic Growth of the United States has averaged 3 percent a year Billions of Dollars (ratio scale) 800 600 400 200 100 \ 80 Gross National Product (in 1957 dollars) 60 40 i i I l l I l i ' i I I I L 1900 10 20 30 40 50 60 70 U. S. Department of Commerce, Office of Business Economics Data: See Table 5 & App. Table I EXPANSION OF AMERICAN ECONOMY 13 Measures of Progress On the national level, the most comprehensive measure of output is the gross national product. This represents the sum total of goods and serv- ices produced in the economy expressed in terms of market values. For purpose of analyzing growth trends, it is necessary to remove from this measure the effect of changing prices. The resulting "constant dollar" figures thus represent changes in the real values or physical quantities of goods and services. Gross national product (GNP) estimates are not available on a regional basis. However, an alternative comprehensive series— personal in- come—is available. This has proved to be an excellent measuring rod of regional develop- ments, showing as it does the income flow to individuals from all sources. For purposes of this survey, special estimates and analyses of personal income were prepared for the Potomac River Service Area and its subregions. It is thus possible to relate the trends for the Nation to the movements of real personal income in the component areas of the Potomac Basin. The Office of Business Economics estimates of constant-dollar gross national product and personal income permit a tracing of national economic activity over a half-century span. These establish an average annual growth of 3 percent —a rate which prevailed not only for the half- century as a whole, but also for the first 20 years and for the past three decades as well. The pic- ture is set forth in figure 2. It is worth stressing that we refer here to secular, or long-term, expansion. Over the short- run, the economic momentum has not been even. This fact is brought out in the chart which portrays the fluctuations of constant-dollar GNP in relation to the basic growth trend. Our analysis will focus mainly on develop- ments since 1929, the period for which statistical information on total output is most complete and reliable. We thereby have a time span sufficient for long-term perspective and analysis of growth. It may be noted in passing that the more we travel back into history, the greater chance exists that comparisons may be unduly affected by conditions not entirely relevant to the present or to projections into the future. Take, for example, the degree of industrializa- tion as mirrored in the shift from farm to non- farm activities. A century ago urban families made up less than one-fifth of the total popula- tion. By the late 1920's, the ratio had risen to somewhat less than three-fifths. In the succeeding three decades, however, urbanization slowed con- siderably and today the urban population is slightly above the 60 percent mark. Although we may expect some further relative expansion in urban population, it is very un- likely that the pace of change would be compar- able to that of the 19th century; it is more likely to resemble the changing environment as evolved in the last several decades. National Output and Income Measured in 1957 prices, gross national pro- duct grew from $194 billion in 1929 to $464 billion in 1959, an increase of $270 billion, or 139 percent. As we have stated earlier, a similar rate of growth was evident in the 1909-29 period. This impressive expansion of output and economic well-being was the product of a grow- ing population and labor force, increased avail- ability of natural resources and capital, and improvements in technology, managerial efficien- cy, and workers' skills. The Nation's population (excluding Alaska and Hawaii) reached 179 million in April 1960. This is 57 million, or 47 percent, more than at the end of the 1920's, and compares with a population of 76 million at the beginning of the century. There are corresponding increases in the labor force and in employment, with the latter rising from 48 million persons in 1929 to almost 69 million in April 1960. Per capita gross output amounted to $2,620 in 1959. Measured in dollars of comparable pur- chasing power, output per person was $1,590 in 1929. Since relative growth has been less in popu- lation and employment than in total production, it is clear that a major aspect of our improved standard of living has been a sharp expansion in output for a given input of effort. This in- crease in productivity lies at the heart of our economic progress. Use of Production Factors In a major sense it is not possible to quantify the vast array of underlying factors— many in- tangible—which have contributed to growth in the economy. Indirect evidence clearly points to the great importance of some of these. For ex- 14 POTOMAC RIVER SERVICE AREA ample, the proportion of our population attend- ing school has increased significantly. In addition, specialized training in production and management problems has been stepped up great- ly, and both industry and government have vastly expanded their programs of research and development. Without doubt a major influence in the in- creasing well-being of the people has been em- phasis placed by American business on the use of capital equipment. A special study by the Office of Business Economics of the relative changes in inputs of labor and capital in the production of manufactured goods helps to high- light the cooperative nature of the productive process. Manufacturing output in 1959 was 2% times that of 1929— a gain, it may be noted, considerably larger than for the economy as a whole. In the achievement of this expansion, total hours worked in manufacturing increased by two-fifths. At the same time, however, services supplied from capital invested in this industry were virtually doubled. This picture would no doubt be similar for other industries if adequate information were available to tell the story. There would, of course, be variations in the relative contribution of labor and capital to the expansion of output but the cooperative aspect involved in the pro- cess of growth would stand out in relief. This point must be borne in mind in considering future growth of the economy. An increase in both manpower and capital will be necessary to achieve in the future a record of growth com- parable with that of the past. Projection of the National Economy In the light of this record of growth, what is the national potential for the period ahead? In making projections of the size of the American economy, OBE is carrying on work that has been done in the past for more limited periods. In Markets After the War 1 we estab- lished in 1943 the size of the market that could be expected in the postwar period. This was generally recognized as a helpful guide for both business and government. At the suggestion of the Committee for Economic Development to the Department, a similar study looking towards the end of the Korean hostilities was made in 1952, and published under the title, Markets After the Defense Expansion. 1 The present report, like our preceding report on the Economic Base Survey of the Delaware River Service Area submitted 2 years ago, ex- tends our projections over a much longer period of time to meet the Corps of Engineers' request for a broad approximation of development of the economy looking toward the turn of the next century. This was stated to be needed for certain programing aspects of river development. In going so far beyond the present, everyone con- cerned recognized the limitations that are in- herent in trying to peer so far into the future and the limited usefulness of the end year of the period selected. But on the basis of the assumptions of growth along the line of the past, we have set forth a broad guideline to meet a requirement of meas- ures desired by the Corps of Engineers (table 1) . It was generally agreed that the calculations for the intermediate years would serve as useful guides, not only in connection with the Delaware and Potomac water surveys, but for other eco- nomic purposes as well. Looking at the projections for the more proximate years, we find that— abstracting from cyclical variations and changes in prices— gross national product would reflect an increase in output approaching three-fourths by 1975 and more than doubled a quarter of a century hence. The potential advance in the Nation's stand- ard of living may be seen in the calculated rise in per capita personal real income earlier set forth in the summary of this report, and detailed in the tabular presentation of assumed growth. By 1985, the figure if realized would represent an increase of one-half. Employment would be greatly increased if these potentials are realized. We place the num- ber of persons at work in 1965 in excess of 75 million compared with an average of 68 million in 1959, and by 1985 employment could be some 35 to 40 million above recent levels (table 6) . It might be noted that our projected employ- ment represents but one of several patterns consistent with an overall growth rate of 3 per- cent. For example, a rise in productivity greater 1 U.S. Department of Commerce, Markets After the War, printed as Senate Document No. 40 (78th Congress, 1st Session, U.S. Government Printing Office, Washington, 1943. 2 U.S. Department of Commerce, Markets After the Defense Expansion, U.S. Government Printing Office, Washington, 1952. EXPANSION OF AMERICAN ECONOMY 15 than that which has occurred in the past would permit achievement of the projected gross na- tional product with a lesser increase in man- power requirements and a correspondingly greater amount of leisure time for the popula- tion. On the other hand, should future produc- tivity not keep pace with the measured trend, the output projection nonetheless could still be achieved through a different pattern of utiliza- tion of the labor potential. To arrive at the employment projections ac- tually used, reliance was placed on past re- lationships of labor force participation of the population. Labor force and employment were assumed to rise in line with the larger popula- tion, with due allowance for what appear to be long-term tendencies at work in the economy. With respect to the population projections themselves, the range of possible estimates is wid- ened as the period under consideration becomes more remote. For the longer term view, past history has provided numerous instances where population projections have been rendered in- valid by shifts in underlying factors determining growth. For the most part, difficulties in the way of population projections for die United States arise from changes in fertility rates. Mortality statistics have pointed to a fairly well defined pattern of moderate and steady improvement in the life span, and net immigration trends may be assumed on the basis of what appear to be fairly predictable national policies in this respect. Though there is a wide range of possibilities in population growth, it may be noted that the effects of variation on the output projected in this report are not likely to be nearly so great as might be implied. This consideration stems Table 5.— United States— Gross National Product, Personal Income, Employment, and Population— Historical Data Year Gross national product Personal income Employment (annual average) Population (July i) 1870 Billions of j 957 dollars Millions Millions 39 9 1880 50 3 1890 63 1 1900 76 1 1910 113.1 133.8 193 9 1758 221.9 258.2 297.9 327.4 3515 345. 5 305.4 305.0 316.6 316.5 343.4 370.8 384.2 401.4 393.9 425.5 435.3 442.8 434.7 463.7 92.4 1920 106.5 1929 144.4 135.7 165. 3 188.9 215. 9 240.1 2451 242.7 240.4 233.5 242.7 243.4 263.7 277.1 288.7 300.6 300.0 321.0 340.2 348.7 349.8 366.4 47.9 45-7 48.1 52.0 57.7 63.5 65. 4 64.2 58.7 59 6 60.8 60.3 61.4 63.9 64.6 65. 5 64.2 66.0 67.6 67.8 66.6 68.1 121 9 1930 123 2 1940 132 1 1941 1942 133-4 134 9 1943 136 7 1944 1945 138.4 139 9 1946 141 4 1947 144 1 1948 146 6 1949 149 2 1950 151 7 1951 154.4 157.0 159 6 1952 1953 1954 1955 162.4 165.3 168 2 1956 1957 171 2 1958 174 1 1959 177.0 16 POTOMAC RIVER SERVICE AREA from the fact that the size and composition of the labor force— and hence the level of projected employment— over the next several decades will be determined in large part by the number and age of persons now living. Changes in fertility rates might, therefore, affect the total population to a much greater extent than they would the labor force or employment. A word might be added concerning the longer term population projection. The figure that we have used is roughly in line with past long-term developments, and may be thought of as a median number. While some may regard it as conservative, the estimate has a primary advan- tage, we feel, for growth projection purposes in that moderate deviations can be tolerated within the range of possible variations in other eco- nomic developments. Thus, a somewhat lower (or higher) population estimate could eventu- ate, yet be offset in economic impact by a higher (or lower) intensity of operations not out of line with past experience. Use of more extreme projections would involve more tenuous alterations in other variables in the light of the experiences of the past. STRUCTURAL CHANGES IN THE ECONOMY The foregoing section has pointed up the tre- mendous growth potential of the United States economy, showing the progressively expanded economic dimensions of the Nation, given a state of future progress promised by past performance and the technological horizon. At this point it might be helpful to refer once more to the background of the past, several features of which have relevance for expectations concerning future growth. Growth in the last half century has been accompanied by pronounced shifts in the dis- position of output among broad groups of users and in the industrial composition of production. The proportionate shares of gross national pro- duct absorbed by current consumer, business, and government purchases differ significantly from those of 25 years ago, as well as from those pre- vailing in the early part of the century. Government has greatly increased its relative share of output; this has been reflected in a reduced proportion going directly to consumers —a reduction accomplished through increased payment of taxes. The government outlays, of course, have in part benefited consumers di- rectly, as in the case of schools. Farm output, while up substantially, has not kept pace with the overall trend. Other industrial changes have likewise been far-reaching, and of varying in- tensity at different stages of development. Yet despite these underlying shifting patterns of demand and supply conditions, the economy maintained a steady long-term rate of growth not only for the earlier years of the past half century but for more recent intervals as well. Short-term variations were at times temporarily discouraging, as in the depression of the 1930's.. or beyond even optimistic expectations as in periods of war emergencies. Particular note should be directed to the variability of these short-term developments in order adequately to assess the deviations from trend in the light of more permanent forces in operation. Expanded Role of Government in Economy The principal shift in demand forces over the past quarter century has centered in the greatly expanded role of government. Total government outlays for goods and services amounted to about $98 billion in 1959, or 20 percent of gross na- tional product. These expenditures were more than four times those of 1929 in dollars of con- stant purchasing power. The sharp increase in government's share of total output between 1929 and 1959 was far more striking than that for the two preceding decades when government expenditures in real terms rose from 7 percent of GNP in 1909 to 10 percent in 1929. Virtually all of the increase in the relative im- portance of government demand since 1929 has stemmed from enlarged national defense require- ments. Total Federal expenditures on goods and services amounted to $54 billion in 1959, com- pared with a little more than $1 billion in 1929. Of the 1959 total, $46 billion-or 86 percent- came under the heading of national defense, and these outlays approximated one-tenth of aggre- gate national output. Civilian-type functions of government— at the Federal, State, and local levels— claim at the pres- ent time a share of gross national product not significantly different from that taken three dec- ades ago. By far the major part of these func- tions is supplied by State and local governments, whose combined expenditures on goods and serv- EXPANSION OF AMERICAN ECONOMY 17 ices are equivalent to 9 percent of the total na- tional product. Consumer Market Dominant One While by far the most significant change over time in the structure of demand has been asso- ciated with the performance of government, the consumer is still the dominant force in the market place. In 1959, close to two-thirds of total output was channeled through consumer markets to satisfy the everyday needs of our population and to add to the general well-being. The consumers' share was down somewhat from 1929, as a counterpart of the enhanced role of government. The transfer of resources involved in the relative shift from direct con- sumer purchasing to government services was accomplished through a sharp increase in Fed- eral revenues— from a 2y 2 percent equivalent of GNP in 1929 to 12 percent in 1959. Structural changes were also evident within the broad range of consumer demands, yet given the vast magnitude of long-term growth perhaps the outstanding feature of consumption patterns was the tendency toward stability. Expenditures for consumer durable goods amounted to nearly 10 percent of GNP in 1959— a slightly higher ratio in real terms than in 1929. In dollars of constant purchasing power, consumer spending on services accounted for one-fourth of aggregate output in 1959, a moderately lower portion than in 1929. The ratio to GNP of nondurable goods purchased in 1959 fell a little from the 35 per- cent share established in 1929. The share of consumer demand was reduced to a somewhat greater extent in terms of dollars of the current purchasing power actually pre- vailing in 1929 and in 1959. Thus measured, all major markets— for durable and nondurable goods and for services— felt the impact of the relative shift in consumer spending, although durable goods demand expanded at a somewhat faster pace than demand for nondurables and services. It must, of course, be reemphasized that over this period, real consumption— both in the ag- gregate and on a per capita basis— expanded sharply. Total real consumption gained at an an- nual rate of 2^4 percent. It should also be noted that while the pace of consumer demand in total and for major groups was steadily upward, the more detailed types of product and service re- quirements varied substantially over the years. Table 6.— United States *— Employment Projections by [Thousands] Industries: 1965 , 1985, and 2010 Actual Projections 1950 1957 1965 1985 2010 All industries, total 61,398 27,646 7.497 20,149 15,584 1.589 700 5.904 7.391 4.565 33,752 11.756 7.584 14,412 67,809 28,407 6,222 22,185 17,089 1,544 858 7,485 7.202 5,096 39,402 13,044 9,938 16,420 76,000 32,300 5.800 26,500 20,100 1,710 1,050 9,150 8.190 6,400 43,700 14,500 11,000 18,200 105,000 42,000 4,800 37,200 28,500 2,260 1,800 13,850 10.590 8,700 63,000 21,400 14.400 27,200 151,000 Commodity producing industries, total 59.000 Agriculture 4,000 Nonagricultural commodity- Manufacturing, total Food and kindred products. Chemicals and allied prod- ucts 55.000 42,500 3,200 3,300 All metals and metal man- ufacturers 21,600 All other commo dity-produc- ing industries 14,400 12,500 Noncommodity-producing indus- tries, total 92,000 32,000 Government (Federal, State, and local) 19,000 All other 41,000 * Excludes Alaska and Hawaii. 18 POTOMAC RIVER SERVICE AREA Thus, for example, expenditures associated with use of the automobile rose at a rate much above average, whereas consumer expenditures for clothing and related items increased at a less- than-average pace. High Investment Fosters Progress Possibly the most important single influence contributing to the expansion of average well- being in the Nation has been the persistent long- term growth of the Nation's stock of capital goods. We have noted earlier, for example, that capital in manufacturing doubled from 1929 to the present. The process by which the Nation adds to its supply of fixed equipment involves, on the one hand, heavy investment demand by business firms and, on the other, savers providing a flow of purchasing power which is channeled to the capital markets. Over the long-run investment and saving have evidenced a tendency to remain in a fairly stable relationship to total output but in the short-run business investment demands have tended to be rather volatile. Thus during the last year or so, business fixed investment has been below the record pace set in 1957. In 1959, this demand by business was $44 billion. These outlays represented 9 percent of gross national product, a proportion below the 1 1 percent that prevailed in 1909, 1929, and 1957. While aggregate fixed investment demand has changed little relative to the total gross prod- uct over the long-term, substantial differences have occurred in the composition of this de- mand. Most striking has been the tendency for business firms to increase emphasis on new equipment; expenditures for plant facilities have risen at a slower rate, a feature of the intensified use of machinery and equipment in our recent economic development. Patterns of Industrial Activity Changes in market demand just reviewed have their counterparts in the industrial composition of output. This is conveniently summarized in the pattern of income as it originated in the various industries. Reflecting the already described expansion, income derived from government— consisting of the earnings of employees— rose from about 6 percent of national income in 1929 to 12 percent in 1959. There was an offsetting reduction in the relative share of income earned in farming over this period as farm activity rose at a less than average pace. Income generated on the farm contributed roughly a tenth to total na- tional income in 1929, compared with about 4 percent in 1959. This relative shift from farming activity, as alluded to previously, has been proceeding steadily for many generations. The decline ac- tually involved a movement to urban areas and to industrial occupations with a consequent re- duction in the number of farm families. After allowance for this trend, the well-being of the average farm family has been relatively well- maintained. The varying pace of government, farm, and nonfarm activity is depicted in gross national product terms in figure 3. It may be noted that the trend in activity for the private nonfarm sector of the economy broadly traces the same pattern as that for the economy as a whole. As measured by the industrial breakdown of national income, basic changes have occurred within the private nonfarm economy. In sum- mary fashion, here are the more significant: (1) Income originating in manufacturing has risen relative to the total, from about 30 percent in 1929 to 36 percent in 1959. This is a continuation of the trend under way since the start of the process of industrializa- tion of the economy. Broadly speaking, the gain in manufacturing reflected the increased importance of durable goods production— basic metal, machinery, automobiles, and aircraft-although such rapidly growing industries as chemicals and paper products also contributed to the higher than average growth of manufacturing ac- tivity. (2) In contrast to the relative gain in man- ufacturing the share of income earned in fi- nance and in transportation fell substantially, from 17 percent and 9 percent, respectively, of total private nonfarm income earned in 1929 to 12 percent and 5 percent in 1959. The decline in finance reflects in major part the lagging tendency in rental and interest in- comes. The reduced share of income associated with transportation activity reflects for the most part the loss in relative position of the railroads, which have seen traffic diverted not EXPANSION OF AMERICAN ECONOMY 19 Figure 3 Expansion in Major Segments of the Gross National Product Billions of 1957 Dollars (ratio scale) 800 1 600 400 Private Nonfatm GNP ,^^*"^ 200 ^V /^^ 100 80 60 40 Farm GNP / V / 20 " .^rsJ^r^ TO 8 6 - ^"^ Government 4 2 1 1 1 1 1 1 ! 1 I 1 1 19 00 10 20 30 40 50 6* ) U. S. Department of Commerce, Office of Business Economics Data: See App. Table 2 20 POTOMAC RIVER SERVICE AREA only to other business types in the field but also to the passenger car owner who has in- creasingly tended to use his own rather than the common carrier mode of travel. (3) Among other groups, the shifts in rela- tive shares of income were not so striking. The distribution industries— retail and wholesale trade— show a moderate gain from 1929 to 1959. This group in the aggregate provides one of the largest flows of income in the economy, accounting for one-fifth of the total originating in the private nonfarm sector. The service industries— exceeded in size only by manufacturing and trade— accounted for about 14 percent of the private nonfarm total in 1959, nearly equal to their 1929 portion. The communications and other public util- ity groupings expanded by about one-fifth their share of private nonfarm output over this same period, from the 1929 figure of about 4 percent. So much for the broad structural changes in the economy, and their relation to the problems associated with considering prospects for growth. We turn now to short-run fluctuations, discus- sion of which is necessary for a rounded picture. SHORT-RUN VARIABILITY IN OUTPUT-A CAUTION Having stressed the even pace of long-term growth in the economy despite major structural changes in activity and demand, we feel that some caution is necessary with respect to the swings in activity which may occur over the short-run. Of prime importance in assessing fu- ture trends is the recognition of the variability of these short-term changes, and hence of the inadvisability of placing special emphasis on such changes for the long-term sweep of events. This caution does not have direct relevance to programing of resource development requiring a long period for fruition, but it is significant in relation to other uses to which this base sur- vey information may be put. Wide variations in short-term activity were most notably associated with wars, severe de- pressions, and the subsequent recoveries. By way of example, during the 1930's there was virtually no net increase in real GNP. On the other hand, production expanded at exceptional rates dur- ing World War I and II. The impact of the earlier of these conflicts on the economy was comparatively short-lived and not so striking as in the case of the Second World War. When the United States entered World War I the economy was operating at a high rate with litde slack in available utilization of re- sources, and the growth in total output was far less than the longer and more extensive mobiliza- tion of World War II. Prior to December 1941, substantial excess capacity existed, and as the war continued pressures mounted to expand out- put well beyond normal limits. These facts explain the virtually unprecedented effort which was called forth. During the period from 1939 to the peak of the war effort in 1944, total out- put of goods and services rose at an exceptionally rapid rate. Other fluctuations may be noted in figure 2. Production expanded at a moderate pace from 1909 to 1913, receded temporarily in 1914-15, and again moved forward up to the entry of the United States in World War I. Following this conflict there was a sharp contraction in 1920-21 far greater than any in the post- World War II period. But recovery from this recession was rapid and production moved higher with but minor interruptions from 1922 to 1929. Developments of Past Decade The period subsequent to 1945 may be thought to provide us with a fairly up-to-date picture of expansion which could help in assessing the long-run prospect. However, a brief review of postwar developments will highlight the fact that this period is probably not only too short an interval for the study of growth, but it was affected by exceptional circumstances which are not especially relevant in analysis of the more permanent forces at work. One of the outstanding features of the last decade was the almost continuous pressure to- ward expansion. Except for brief intervals— short- ly after the end of World War II, during 1949, 1954, and 1958— the labor force was employed as fully as feasible for a highly dynamic economy. Over most of this period inflationary forces stemming in part from the war and in part from subsequent developments engaged attention. Rising prices and incomes, buttressed by excep- tional liquidity conditions which followed from wartime restrictions on normal spending habits, provided a general setting of prosperity which was conducive to forging ahead to new highs. EXPANSION OF AMERICAN ECONOMY 21 Figure 4 Growth of National Income By Industry Percent Increase, 1929 to 1957 500 400 300 200 100 NONAGRICULTURAL PRIVATE INDUSTRIES 1929 U. S. Department of Commerce, Office of Business Economics . Manufacturing ■ Construction Communications & Public Utilities ^Trade TOTAL Services Mining 'Transportation ' Finance & Real Estate 1957 22 POTOMAC RIVER SERVICE AREA But note that even in such conditions expansion was far from uniform in the various segments of the economy. After a temporary let-up as the war ended and reconversion got under way, output ex- panded sharply in 1947 and 1948. Growth was interrupted in 1949 but again resumed in 1950 and accelerated in the period of Korean hos- tilities. With almost no interruption the economy shifted from the pressures of this conflict to more normal demands, and output reached new peaks in 1953. Following the short-lived reces- sion of 1954, expansion was resumed and main- tained up to the cyclical peak of the summer of 1957. The subsequent downturn was again brief and by early 1959, the economy had moved on to new high ground. Following the temporary unsettlement caused by the steel shutdown, the gross national product attained the $500 billion level in early 1960. Throughout this period the pace of activity varied from small year-to-year declines in 1949, 1954, and 1958, to expansion exceeding for par- ticular years the "normal" long-term growth. This performance was not unique, nor is it in- consistent with the steady growth pattern over time. For the postwar period as a whole, the ex- pansion of output was well above the long-term "normal," but is figured from a relatively low base. Most of this better-than-average rate of gain occurred in the highly special circumstances of the first part of the period, when reconversion was accomplished and backlogs of business and consumer demands were worked off. It was only during the second half of the pe- riod, when the demands were filled and other special influences inherited from the great de- pression and the war years had largely spent their force, that the economy moved on a path more consistent with long-term trends. From National to Regional It is from this general review of the national economy that we proceed to an analysis of the Potomac area and its subregions. How has this area fared over time, and to what degree are variations from the national pattern evident? What is the potential of this region which now accounts for less than 2 percent of the Nation's population and income? The answers have been set forth in chapters II, III, and IV, the under- lying material for which has been developed especially for the purposes of this report. Chapter II. Past and Future Economic Growth The economic potential of the Potomac River Service Area as presented in this chapter is the product of the interaction of regional trends and national developments. It was arrived at through a two-stage procedure. The first stage required a projection of the volume and composition of economic activity that would be expected to prevail nationally under given assumptions. This national pattern exerts a major influence on the level of regional economic activity. Developments in the national economy over the past half century were dis- cussed in chapter I in order to establish the basis of national projections. The second part of the projection technique adopted required an estimate of the share of the national economy represented by the Po- tomac River Service Area at specified future times. It was believed that such an estimate for the future could best be derived through care- ful study of past changes in the area's economy, including detailed analysis of shifts in the sources of income both by industry and by type. Analysis of historical shifts in the proportion of gross national product received in the Po- tomac area since 1929, or even earlier, would have afforded treatment of the area parallel to that given the Nation. But, a measure of gross national product is not available on a geographic basis; nor is it feasible to construct such an aggregate for local areas. Personal income, however, can be measured geographically, and a close and generally con- stant relationship between that series and gross national product has prevailed over the long run. In particular, it has been found that per- sonal income nationally exhibits the same 3 percent average annual growth rate that char- acterizes the secular trend of gross national prod- uct. It is on the basis of this relationship that the income received by persons offers a link whereby the rate of economic growth in the Nation can be tied to that of an area, both his- torically and for the future. The Personal Income Measure Personal income is thus the major tool used in describing the economy of the Potomac River Service Area. It is the most comprehensive meas- ure of economic activity that can be prepared on a geographic basis, and provides an excel- lent yardstick for charting an area's growth. Personal income is the current income re- ceived by residents of an area from all sources. It is measured before deduction of income and other direct personal taxes, but after deduction of individuals' contributions to social security, government retirement, and other social insur- ance programs. It covers the income received by residents of an area from business establishments, Federal and State and local governments, and all other sources. All forms of income flowing to persons are included— wages and salaries, various types of supplementary earnings termed "other labor in- come," the net incomes of owners of unin- corporated business (including farms) , net rental income, dividends, interest, and government and business "transfer payments" (consisting in gen- eral of disbursements to individuals for which no services are rendered currently, such as un- employment benefits, relief, and veterans' pen- sions) . The comprehensiveness of the personal income measure is evident also through comparison with population and employment. Unlike these latter measures, it reflects the average earnings (including productivity) of the labor force, re- turns on investment, and transfer payments. Per- sonal income, it is clear, qualifies as a broad gage both of economic activity and consumer purchasing power. 23 24 POTOMAC RIVER SERVICE AREA Figure 5 Potomac River Service Area Economic Dimensions— Past and Projected. Billions of 1957 Dollars REAL PERSONAL INCOME 40 20 ■ - m ■ i B2SSH ■§■ ■H—AHB.. Millions 20 10 POPULATION 1957 Dollars 8,000 4,000 PER CAPITA REAL INCOME - ■ ■■ I 1929 1957 1965 1985 2010 U. S. Department of Commerce, Office of Business Economics Data: See Tables 8, 10, 11 & 12 PAST AND FUTURE ECONOMIC GROWTH 25 Official estimates of personal income by States are prepared annually by the Office of Business Economics, in a record now extending back to 1929. These are set forth in a major report published as a special supplement to the Survey of Current Business. 1 This volume contains a complete and detailed description of the State series, covering concepts, definitions, and meth- ods of estimation, as well as a large amount of statistical information on sources of income in each State. The estimates contained in this base book are updated each year in the August issue of the Survey. However, this official series does not encompass estimates for local areas or for geographic segments smaller than the State. Accordingly, in order to obtain a personal in- come series for use in the economic survey of the Potomac River Service Area, we constructed a set of special estimates. Their preparation was based upon the techniques and methods devel- oped for the Economic Base Survey of the Dela- ware River Service Area. Their preparation was a detailed and complex procedure requiring con- siderable time and personnel, with much effort expended in assembling the maximum amount of reliable statistical information feasible. In this task, we were aided materially by the generous cooperation of numerous State agencies. Their assistance permitted the exploitation of many local sources of information. The personal income figures used in this sur- vey, then, are special estimates designed to be used as an analytical tool in projecting the area's economy into the future. Because they are being presented for the first time as part of this eco- nomic study, the following principal facts con- cerning them are set forth. (1) The primary aim in preparing the per- sonal income estimates was to obtain informa- tion on the service area. However, within States, the county is the primary unit for which local- area statistical data are generally collected. In view of this, we made estimates of personal in- come on a county basis and then grouped them according to the five subareas of the Potomac delineated in the map on page X. Although the county is the basic unit used, estimates of personal income are not presented here in that detail for several reasons. First, for 1 Charles F. Schwartz and Robert E. Graham, Jr., Personal Income by States Since 1929, U.S. Government Printing Office, Washington 25, D.C., 1956. a number of components the most satisfactory data on which to base an estimate were available for metropolitan areas or for groups of counties. Extension of estimates based on these larger areas to an individual county level would have reduced their reliability below an acceptable minimum. Secondly, income estimates for indi- vidual counties are not shown because of the lack of requisite data for making adjustments to take account of commuting of workers. Some income components (wages and salaries, in par- ticular) are measured at point of disbursement (place of work) , while others (property income for example) are estimated on a residence basis. Where workers reside in one county and work in another, personal income is estimated partly on a "where-received" basis and partly on a "where-earned" concept. Data necessary to con- vert the measure wholly to either of the two definitions are lacking. This problem is "solved" by reason of the fact that geographic subareas are delineated so that commuting across area lines is at a minimum. This procedure precludes the publication of meaningful estimates of in- come by counties. (2) The income estimates for the subregions of the Potomac area cover the years 1929, 1940, 1950, 1955, and 1957. A longer span over which to observe relationships between the local areas and the Nation was desired, but the quality of basic data falls off so sharply back of 1929 that we did not consider it feasible to extend the estimates to earlier years. A similar situation prevails in the official State income series, even though data for estimating purposes are gen- erally more accurate and plentiful on a State than on a local-area basis. However, the years 1929 and 1957 encompass a span long enough for the identification and measurement of secular trend. In addition, the three interspersed benchmarks, 1940, 1950, and 1955, provide valuable reference points for veri- fying the economic growth of the Potomac River Service Area within the period. It should be noted that the years for which we constructed personal income estimates are peacetime years of high level activity, although 1940 must be qualified in this regard. Thus, in these years we have a good selection of observa- tions. Most other years within the overall period would have been unsatisfactory or less suitable for trend measurement because of cyclical fac- tors, war, or other unique considerations. 26 POTOMAC RIVER SERVICE AREA (3) In addition to the basic figures on total and per capita income, the estimates are pre- pared in sufficient detail to show income by type and by major industrial source. This detail is shown in tables 23 through 29 for the Nation, the Potomac River Service Area and each of its five subregions. There are two parts to each table. The upper section contains a breakdown of personal income by type of income— wages and salaries, pro- prietors' income, property income, etc. The lower portion presents an industrial distribution of a large segment of total income— approxi- mately 80 percent. This segment— termed civilian earnings— includes the combined total of wages and salaries, other labor income, and net income of proprietors' in each industry. Civilian earn- ings exclude property income, transfer payments, personal contributions for social insurance (a deduction) , and military payrolls. The first three items are excluded because no industrial break- down of them is available. Military pay is ex- cluded on technical grounds. Despite the "partial" nature of the civilian earnings meas- ure, it qualifies as an excellent indicator of the industrial composition of an area's economy. These industrial and type-of-income data con- stitute fundamental information on the structure of the economy of each subregion, both current- ly and historically. They provide a basis for understanding past trends in income and for projecting them into the future. (4) The special, local-area income estimates prepared for this economic survey conform di- rectly to State personal income, a major aggre- gate in OBE's national income and product accounts. Both statistically and conceptually, the State series and Potomac Area estimates are in complete agreement. In fact, the State totals of the various income components provide the statistical framework used in preparing detailed breakdowns of personal income by subareas. Essentially, our procedure was to subdivide the State total of each of about 100 components of personal income in Maryland, Virginia, West Virginia, and Pennsylvania into estimates of the amounts received by residents of local areas (counties) . The component estimates were them Table 8.— Potomac River Service Area— Personal Income Projections by Subregions in Constant Dollars, 1965-2010 [Millions of 1957 dollars] 1965 1985 2010 United States 450,000 8,300 300 6,400 300 1.000 300 845,000 16.000 600 12,000 700 2,000 500 1,800,000 Potomac River Service Area. Downstream area Washington Metropol- itan area 35.500 1,400 26,000 Piedmont area 1.700 Appalachian area 5,000 1,100 Note.— Details do not add to total due to rounding. summed for each area. Income for the District of Columbia, available from the official State personal income series, was incorporated direcdy into the estimates. The county totals were re- combined into the five economically meaningful subregions of the Potomac River Service Area. The income estimates were constructed in the carefully detailed procedure outlined in chapter V. The description of methods given there pre- sents not only a record of procedure but pro- vides, in addition, information useful to research Table 7 .—Potomac River Service Area- [M -Personal Income Estimates by Subregions, 1929—57 illions of dollars] 1929 1940 1950 1955 1957 United States 85.661 1,098 38 768 61 155 76 78,522 1,436 43 1,100 56 158 79 225.473 4.125 144 3.166 166 477 171 306,598 5,642 204 4.370 214 658 196 348.724 Potomac River Service Area 6,350 Downstream area 223 Washington Metropolitan area Piedmont area 4,929 238 Great Valley area 728 Appalachian area 232 PAST AND FUTURE ECONOMIC GROWTH 27 Figure 6 Economic Trends in United States and Potomac River Service Area Growth of Personal Income and Its Components PERSONAL INCOME, TOTAL Civilian Earnings: Government Manufacturing Construction Wholesale & Retail Trade Services Finance, Ins., & Real Estate Transportation & Public Utilities Mining Farming Property Income Percent Increase, 1929 to 1957 100 200 300 400 500 600 700 United States Potomac River Service Area J L J L U. S. Department of Commerce, Office of Business Economics Data: See Table 1 5 28 POTOMAC RIVER SERVICE AREA Table 9.— Potomac River Service Area— Per Capita Personal Income Estimates by Subregions, 1929—57 [Dollars] 1929 1940 1950 1955 1957 United States 703 770 386 1,151 413 448 454 595 804 407 1.136 359 427 426 1,491 1,742 1,064 2,163 962 1.157 930 1,869 2,079 1,247 2,483 1.144 1.529 1,132 2,052 Potomac River Service Area 2,246 Downstream area 1,241 Piedmont area 2.689 1,234 Great Valley area 1.625 Appalachian area 1.339 workers, administrators, and others who use our personal income figures. Estimates and Projections— a Summary The personal income series described above, was projected to 1965, 1985, and 2010 for the Table 10.— Potomac River Service Area— per Capita Personal Income Projections by Subregions in Constant Dollars, 1965-2010 [In 1957 dollars] 2010 United States Potomac River Service Area Downstream area Washington Metropol- itan area Piedmont area Great Valley area Appalachian area 1965 1985 2,300 3,100 2,500 3,200 1,400 1,900 2,900 3,600 1,500 2,200 2,000 2,800 1,700 2.200 4,900 4,900 3,300 5,200 3,700 4,500 3.200 Potomac River Service Area as a whole and for each of its five subregions. These projections are expressed in terms of the key measures of total personal income and per capita personal income. Projections of population and employment, dis- cussed in chapters III and IV, are included to bring together in one place a comprehensive, summary economic picture. Tables 7 through 14 constitute the statistical heart of this economic study. They show our full set of summary measures-historically and projected— for the United States, the Potomac River Service Area, and the subregions. The tables are arranged in pairs, with each pair re- lating to one of four basic measures. In every case, the first table of the pair presents back-year data, and the second sets forth the projections. The historical tables relating to income, employ- ment, and population cover the specified years from 1929 to 1957. Summary Highlights— Present and Future In 1957, the 2.8 million residents of the Po- tomac River Service Area provided a labor force of 1.2 million people and received $614 billion of personal income. On a per capita basis this amounted to $2,246— a figure one-tenth higher than the national average. By 1985, the projected figures show a $16 bil- lion income flow (in constant 1957 dollars) in the Potomac area as a whole— a volume 2i/£ times that prevailing in 1957; average incomes in real Table 11.— Potomac River Service Area— Population by Subregions, 1930-60 [Thousands] 1930 1940 1950 1960» United States 122,775 1.432 672 99 147 345 168 131,669 1,785 968 106 156 369 185 150,697 2,369 1,464 135 173 413 184 178,400 Potomac River Service Area 2,997 Washington Metropolitan area 1,969 Downstream area 190 Piedmont area 201 Great Valley area 463 Appalachian area 174 p preliminary PAST AND FUTURE ECONOMIC GROWTH 29 terms equal $3,200— two-fifths above their pres- ent level; and population totals nearly 5 million of which 2 million are employed. This growth is portrayed in figure 5. Table 12.— Potomac River Service Area— Population by Subregions, 1965-2010 [Thousands] 1965 1985 2010 United States 195,000 3.290 2.180 210 220 495 185 267,000 4,950 3,370 300 310 720 250 370,000 Potomac River Service Area. Washington Metropol- itan area 7,300 5,000 Piedmont area 420 450 Great Valley area Appalachian area 1,080 350 Over the longer span to 2010, continued in- creases in all major aggregates are projected. By 2010, the personal income flow is calculated at $35 billion (in constant 1957 dollars) for the entire Potomac Valley; average incomes are esti- mated at nearly $5,000— more than double their present level; the projections call for a resident population of more than 7 million and total employment of 3 million. Expansion in income, population, and em- ployment is anticipated throughout the area. In general, the subregions for which the largest gains in total income are projected are also those in which the greatest population growth is fore- seen. Accordingly, relative increases in real per capita income show considerable uniformity. Evaluation of Projections Evaluation of the degree of expansion out- lined in the above projections is useful on two counts. It can provide analytically significant in- formation relative to the future economic de- velopment of the Potomac River Service Area; in addition, consideration of the projections is essential in order to weigh the validity of our approach. The first step in such an evaluation involves a comparison of anticipated economic growth with that actually achieved in past periods. The projected annual rate of income expansion for the Potomac area over the next 50 years is a little better than that anticipated for the Nation —Sy 3 percent annual increase in the area as com- pared with 3 percent nationally. Contrasted with this somewhat better-than- average projected rate is the area's unusually favorable economic experience of the past quarter of a century. From 1929 to 1957, aggre- gate income in the Potomac area increased 4^4 times in current dollars while on a national basis the volume rose threefold. In real terms, these gains represented annual growth rates of ap- Table 14 .—Potomac River Service Area— Employment Projections by Subregions, 1965-2010 [Thousands] United States Potomac River Service Area. Washington Metropol- itan area Downstream area Piedmont area Great Valley area Appalachian area 1965 1985 76,000 105.000 1.380 2.035 930 1.390 83 121 88 125 210 305 69 94 2010 151.000 3.050 2.100 175 185 460 130 proximately 4i/^ percent for the Potomac area and 3 percent for the Nation. If, as pointed out earlier in this chapter, the economic projections derived here are based Table 13.— Potomac River Service Area— Employment by Subregions, 1930—57 [Thousands] Census dates Annual April 1930 April 1940 April 1950 1950 1957 United States 48,833 584 316 35 53 122 57 45.166 697 428 38 53 124 55 57.222 992 666 51 65 153 57 61,398 1,064 716 55 69 164 61 67,809 Potomac River Service Area 1.217 Washington Metropolitan area Downstream area 822 71 Piedmont area 77 Great Valley area 184 Appalachian area 63 30 POTOMAC RIVER SERVICE AREA essentially on an extension of past differentials in rates of growth between the region and the Nation, explanation is required for the substan- tial modification made in these relationships. That a reduction in the area's annual growth rate from 4i/<> percent to 3y 3 percent— when rela- tive growth nationally holds constant at 3 per- cent—is in line with past developments is demon- strated below. First, the economic projections of total and per capita income set forth above are the product of two major forces. The first consists of national developments which, because of area differences in income structure, have a differential impact on regional economic growth. The second deter- mining force is the secular trend characterizing major industries of the area. By secular trend is meant the tendency for an area to receive an increased or decreased percentage share of the national total of income disbursed by an in- dustry. Income composition explains much regarding relative economic growth in the Potomac area, both past and projected. As seen from table 18 and figure 7, there are two major differences between the economic makeup of the area and that of the Nation. Government payrolls account for three times as large a proportion of income in the Potomac area as they do in the Nation. Conversely, earnings of persons in manufacturing are three times more important an income source in the Nation. From 1929 to 1957, earnings disbursed by government expanded sevenfold in the area in contrast to an increase of 5i/£ times nationally. Further, in both the area and the Nation, the relative rise in income paid out by government surpassed that of any other industry by a large Table 13.— Income Changes in the Potomac River Service Area by Industry and by Major Type— Percent Increase, 1929-57 Total income. . . . Civilian earnings: All industries. . . . Farms Mining Construction Manufacturing. . . Trade Finance Transportation, communication, and utilities. . . Services Government Property income Transfer payments. . . . United States 307 331 100 206 417 418 344 255 251 293 553 133 1,348 Potomac River Service area 478 497 54 185 640 481 573 529 403 432 690 234 1,495 Downstream area 482 376 32 ( l ) 807 494 926 667 343 389 876 234 1,500 Washington Metropolitan 542 573 -1 C 1 ) 602 404 624 561 474 469 686 260 ,533 Piedmont area 292 299 39 500 767 527 473 309 342 288 797 145 1,247 Great Valley 371 401 80 218 732 710 412 440 348 312 733 177 1,416 Appalachian area 207 212 65 24 906 237 294 270 179 71 497 72 52 1 Data in base year insufficient for meaningful computation. Table 16.— Changes in Total Personal Income in the Potomac River Service Area, Selected Years, 1929-57 Percent of United States Percent increase 1929 1940 1950 1955 1957 1929 to 1957 1940 to 1957 1950 to 1957 United States 100.00 1.28 .04 .90 .07 .18 .09 100.00 1.83 .05 1.40 .07 .20 .10 100.00 1.83 .06 1.40 .07 .21 .08 100.00 1.84 .07 1.43 .07 .21 .06 100.00 1.83 .06 1.42 .07 .21 .07 307 478 482 542 292 371 207 344 342 419 348 325 361 194 55 Potomac River Service Area 54 Downstream area 55 Washington Metropolitian area. . . Piedmont area 56 43 Great Valley area 53 36 PAST AND FUTURE ECONOMIC GROWTH 31 Figure 7 Sources of Income, 1957 Comparative Distribution of Civilian Earnings in United States and Potomac River Service Area Percent 100 ► 80 ► 60 ► 40 ► 20 ► Earnings of Persons in: OTHER INDUSTRIES MANUFACTURING GOVERNMENT UNITED STATES U. S. Deportment of Commerce, Office of Business Economic*' POTOMAC RIVER SERVICE AREA Data: See Table 20 32 POTOMAC RIVER SERVICE AREA Table 17 .—Sources of Personal Income in the Potomac River Service Area: Percent Distribution by Type of Income, 1929 Total income Wages and salaries Other labor income Total Private Government United States 100.0 100.0 100.0 100.0 100.0 100.0 100.0 58.7 60.9 54.8 63.5 48.4 53.9 61.7 53- 39.8 350 36.6 43.2 47.5 56.4 5.7 21.0 19.8 26.9 51 6.4 5.3 0.7 Potomac River Service Area .6 Downstream area .3 Washington Metropolitan area Piedmont area .6 .3 Great Valley area .5 Appalachian area .7 Proprietors' income Property income Transfer payments Less: Persona! contributions for social insurance Total Farm Nonfarm United States 17.3 14.6 30.8 10.3 31.2 23.7 18.5 7.0 5.3 21.9 .5 23.0 16.1 9.4 10.3 9.3 8.9 9.8 8.2 7,6 9.1 21.8 22.2 12.3 23. 9 18.1 20.2 17.4 1.7 2.3 2.1 2.4 2.5 2.0 2.0 0.2 Potomac River Service Service Area Downstream area .6 .3 Washington Metropolitan area Piedmont area .7 .3 Great Valley area .3 Appalachian area .3 Table 18.— Sources of Personal Income in the Potomac River Service Area: Percent Distribution by Type of Income, 1957 Total income Wages and salaries Other labor income Total Private Government United States 100.0 100.0 100.0 100.0 100.0 100.0 100.0 67.8 72.8 78.4 73.6 66.2 69.2 68.6 57.0 39.7 32.2 35. 9 53.7 57.3 58.3 10.8 33.1 46.2 37.7 12.5 11.9 10.3 2.6 Potomac River Service Area 1.2 Downstream area .9 Washington Metropolitan area Piedmont area 1.0 1.9 Great Valley area 2.2 Appalachian area 2.0 Proprietors' income Property income Transfer payments Less: Personal contributions for social insurance Total Farm Nonfarm United States 12.8 9.4 10.5 8.5 14.8 12.7 12.2 3-4 1.3 4.3 .1 7.2 5.9 4.9 9.4 8.1 6.2 8.4 7.6 6.8 7.3 12.5 12.8 7.0 13.4 11.3 11.9 9.8 6.2 6.5 5.7 6.2 8.5 6.5 9.8 1.9 Potomac River Service Area 2.7 Downstream area 2.6 Washington Metropolitan area Piedmont area 2.8 2.7 Great Valley area 2.4 Appalachian area 2.3 PAST AND FUTURE ECONOMIC GROWTH 33 Table 19.— Sources of Civilian Earnings in the Potomac River Service Area: Percent Distribution by Industry, 1929 AH industries Farms Mining Construc- tion Manufac- turing Trade United States 100.0 100.0 100.0 100.0 100.0 100.0 100.0 11.1 9.7 358 1.4 39.7 27.3 139 2.4 .7 ( ! ) ( l ) .2 1.4 5.4 56 53 4.6 6.1 3.7 3.4 2.6 25. 7 10.2 6.0 5.2 17.6 22.1 28.4 18.9 Potomac River Service Area 15- Downstream area 76 Washington Metropolitan area .... Piedmont area 16.2 10.5 Great Valley area 150 11.8 1 Less than 0.05 percent. Finance Transportation, communication, and utilities Service Government Other United States 5.7 3.7 1.0 4.5 2.3 2.1 1.6 10.1 9.4 4.6 8.8 7.4 8.8 19.0 13. 18.9 14.9 22.6 10.7 10.9 9.5 7.0 26.3 16.2 34.8 6.0 7.8 6.2 0.3 Potomac River Service Area .9 Downstream area 8.9 Washington Metropolitan area Piedmont area .4 2.1 Great Valley area .9 Appalachian area 13 Table 20.— Sources of Civilian Earnings in the Potomac River Service Area: Percent Distribution by Industry, 1957 All industries Farms Mining Construc- tion Manufac- turing Trade United States 100.0 100.0 100.0 100.0 100.0 100.0 100.0 5.2 2.5 9.9 .2 13.8 9.8 7.4 1.7 .3 .2 .1 .3 .9 2.2 6.7 6.5 8.8 6.4 8.1 5.7 8.5 30.9 99 7.4 3.9 27.6 35.8 30.7 19 5 16 9 Downstream area 16.4 Washington Metropolitan area Piedmont area 17.4 15 1 Great Valley area 15.3 Appalachian area 14 9 Finance Transportation, communication, and utilities Service Government Other United States 4.7 3.9 1.6 4.4 2.3 2.2 1.9 8.2 7.9 4.3 7.5 8.2 7.9 17.0 11.9 16.8 15.3 19.1 10.5 90 5.2 10.7 34.8 33.2 40.6 13.5 13.0 11.9 0.3 .4 Downstream area 2.8 Washington Metropolitan area Piedmont area .4 .6 Great Valley area .4 Appalachian area .3 34 POTOMAC RIVER SERVICE AREA Figure 8 Persona! Income in the Potomac River Service Area as a Percent of United States Total Percen 2.00 Potomac River f Service Area f Washington f mm n mm ■■ ™" ■" mm ' ^T f*" am ~~ Metropolitan Area y 1.00 (i|il|1 , H „ II iiiM»i«»"M««M«mHn«"«nHnMMi MII1 , All Other Areas 1 1 1 1 1930 1940 1950 1960 U. S. Deportment of Commerce, Office of Business Economics Data: See Vabie 1 6 PAST AND FUTURE ECONOMIC GROWTH 35 margin. Thus, though government has been a strongly buoyant element in the income flow of both the Nation and the Potomac area, its impact on overall income growth has been of far greater proportions in the area. Because our projections envisage for the next half century a relative increase in government payrolls somewhat less than in most other major income sources, the exceptional importance of government employment in the Potomac area will likely be a force tending to reduce the fu- ture pace of overall economic growth here some- what below the average rate that prevailed for the 1929-57 span as a whole. In addition, our projections assume a future growth of above-average proportions in the man- ufacturing industry. And, although recent de- velopments indicate that the Potomac area will probably share fully in any growth experienced in this pace-setting component of the American economy, the comparatively small role of fac- tory earnings in the Potomac area income struc- ture means that total income growth here will receive less-than-average stimulus from this source. Thus economic developments in man- ufactures constitute a second force tending to cut into the margin by which economic expan- sion in the Area has exceeded that in the Nation since 1929. In summary, on the basis of the assumptions attaching to this study, the two industries which together account for about two-fifths of all per- sonal income in the Potomac area as well as in the Nation, are both expected to operate in the future so as to bring the relative growth rate of the whole and the part closer together. The second factor to be considered in ap- praising the downward taper with which we have modified the area's historical uptrend in economic growth relates to the course and nature of the past secular trend in major industries. Figure 8 shows clearly the general path of relative income growth from 1929 to 1957. It is evident that all of the sizable increase in the share of the Nation's income accruing to resi- dents of the Potomac area since 1929 occurred during the 1930's. Since the end of that decade, the pace of income expansion in the area has no more than matched that in the Nation. In light of this development, then, the "no-trend" (relative to the Nation) movement that our assumptions have introduced into the projections really accords with events over most of the period for which an empirical measure could be constructed. Analysis of factors behind the differential ex- perience of the Potomac area before and after 1940 sheds further light on this matter. Such an analysis can be made from the data in table 16. In the Potomac area, most income sources rose from 1929 to 1940 under the stimulus of a near doubling of government payrolls and pop- ulation gain of one-fourth. As a result, total income increased almost one-third. Nationally, government payrolls expanded nearly as much as in the Potomac area but their lesser weight in the Nation's income structure was such that the gain in this source was more than counter-balanced by the cyclical downturn that characterized most flows in the private sec- tor. Accordingly, individual incomes in the United States declined almost one-tenth from 1929 to 1940. In both of the next two periods, 1940-50 and 1950-57, government continued to expand and provide the main force underlying economic growth in the Potomac. But, in contrast to the depression-dominated 1930's, the next two dec- ades witnessed large gains in most industrial sectors of the national economy. As a result, economic growth in the Potomac proceeded at a rate paralleling that for the Nation generally. Perhaps a more relevant view of the Potomac area's above-average income growth over the 28 years covered by this report is to consider the large step-up in governmental activities during the early portions of the period, essentially a re- action to the sharp drop in the private economy, as a random, nonrecurring element in the region's economic growth. In this context, the area may be characterized as a "no-trend" region in which economic growth proceeds at a pace approximating that in the Nation generally. Economic Characteristics of the Subregions The foregoing discussion has centered on the Potomac River Area as a whole. However, a major part of the assignment by the Corps of Engineers was to extend the economic survey- including projections— to the subregions of the area. Such geographic extension adds flexibility to the study. Persons and organizations whose interests cover only a portion of the service area 36 POTOMAC RIVER SERVICE AREA Figure 9 Personal Income Per Capita Compared With U. S. Average, 1957 Dollars 3,000 • U.S. Average 2,000 • 1,000 • / / / y y / / U. S. Department of Commerce, Office of Business Economics Data: See Table 9 PAST AND FUTURE ECONOMIC GROWTH 37 are able to find a geographic area more nearly matching their needs than that encompassing the entire service area. Accordingly, all historical estimates and projections were made for each of the five subregions. In preparation of the estimates and projections for the subregions, the methods outlined for the area as a whole were used. Of particular interest is the fact that closely similar figures resulted from projections made for the entire area and from the sum of the separate projections for the subregions. Despite the close statistical agree- ment, the projections for the subregions must be accorded a distinctly lower order of prob- ability, with the reasonableness of each projec- tion probably varying directly with the size of the subarea. The following sections present highlights that are discernible on a subregional basis, but which tend to be masked when the area is examined. Table 21 summarizes the wide disparity in the economic size and characteristics of the in- dividual subregions of the Potomac area. The Washington Metropolitan area accounts for almost four-fifths of personal income in the Potomac region, with just over one-tenth going to residents of the Great Valley section. The remaining one-tenth accrues in approximately equal proportions to the other 3 subregions. The great differences in economic size of the subregions reflects mainly variations in number of residents and consequent size of labor force. However, differences in prevailing per capita incomes are sizable. The Potomac River Service Area as a whole is characterized by a per capita income level one-tenth higher than the national figure. This relative is a composite of the high average in the Metropolitan area and die lower averages in the other sections. In the District of Columbia area, per capita incomes exceed the national average by one-third; in the Great Val- ley, they are one-fifth below the national figure; while, in the remaining three subregions, per capita income generally falls short of the na- tional mark by more than one-third. There are substantial differences in the eco- nomic structures of the five subregions. The in- come composition of the Metropolitan area counties is much like that of the Potomac area as a whole, a reflection of the large weight of the Metropolitan subregion in the overall serv- ice area. As has already been noted the chief dis- tinguishing features of income composition in Table 21.— Economic Dimensions of the Potomac River Service Area, 1957 Personal income Amount (millions) Percent of U.S. income Per capita income Amount (dollars) Percent of U.S. average United States Potomac River Service Area Downstream area Washington Metropolitan area Piedmont area Great Valley area Appalachian area 348,724 6,350 223 4,929 238 728 232 100.00 1.82 .06 1.41 .07 .21 .07 2,052 2,246 1,241 2,689 1,234 1,625 1.339 100 109 60 131 60 79 65 Table 22.— Changes in Per Capita Personal Income in the Potomac River Service Area: Selected Years, 1929-57 Percent of United States Percent increase 1929 1940 1950 1955 1957 1929- 1957 1940- 1957 1950- 1957 United States 100 110 55 164 59 64 64 100 135 68 191 60 72 72 100 117 71 145 64 78 62 100 112 67 134 62 82 61 100 110 61 132 60 80 66 192 192 222 134 199 263 195 245 179 205 137 244 280 214 38 Potomac River Service Area 29 Downstream area 17 Washington Metropolitan area. . . . Piedmont area 24 28 Great Valley area 40 Appalachian area 44 38 POTOMAC RIVER SERVICE AREA Figure 10 Long-Term Growth in Personal Income Potomac River Service Area and Sub-Regions UNITED STATES Potomac River Service Area Washington Metropolitan Area Downstream Area Great Valley Area Piedmont Area Appalachian Area Percent Increase, 1929 to 1957 200 400 600 "i r mmm Sub-Regions I 1 ■ '-"»•-• '■' -*-ir WmBmm 1 ^^M U. S. Department of Commerce, Office of Business Economics Dotoi See Table 1 6 PAST AND FUTURE ECONOMIC GROWTH 39 Figure II Long-Term Growth in Per Capita Personal Income Potomac River Service Area and Sub-Regions Percent Increase, 1929 to 1957 100 200 300 UNITED STATES Potomac River Service Area Great Valley Area Downstream Area Piedmont Area Appalachian Area Washington Metropolitan Area Sub-Regions wmmmb m U. S. Department of Commerce, Office of Business Economics Data: See Table 2 2 40 POTOMAC RIVER SERVICE AREA Table 23.— United States— Personal Income by Type: Selected Years, 1929-57 [Millions of dollars] 1929 1940 1950 1955 1957 Personal income By Type Wages and salaries Other labor income Proprietors' income Farm Nonf arm Property income Transfer payments Less: Personal contributions for social insurance Civilian earnings * By Industry Farms Mining Contract construction Manufacturing Wholesale ana retail trade Finance, insurance, and real estate Transportation, communications, and public utilities Services Government Other 85 50 14 5 8 18 1 65 7 1 3 16 12 3 6 661 319 561 759 968 791 666 ,496 139 ,380 ,259 ,594 670 820 ,367 751 ,591 ,518 ,629 181 78,522 49,656 687 13,010 4,568 8,442 12,709 3.114 656 62,851 5.603 1,367 2,444 16.320 12,920 2,892 5,579 7,706 7,847 173 225.473 145,092 3.823 36,140 13.285 22,855 28,308 14,969 2,858 180,945 16,020 3,567 10,736 52.870 37,926 7,031 15.167 20,062 16,999 567 306,598 208,039 7,136 41,421 11,767 29,654 37.690 17,471 5.155 248.663 14.487 4,224 16,357 77,221 49,646 11,361 20,277 28.335 25.913 842 348,724 235.884 9.140 44.457 11,780 32,677 44,110 21,837 6.703 281.491 14,543 4.880 18.958 87.116 54.894 13.300 23.106 33.495 30.231 968 1 Consist of wages and salaries, other labor income, and proprietors' income. Table 24.— Potomac River Service Area— Personal Income by Type: Selected Years, 1929-57 [Millions of dollars] 1929 1940 1950 1955 1957 Personal income By Type Wages and salaries Other labor income Proprietors' income Farm Nonfarm Property income Transfer payments Less: Personal contributions for social insurance Civilian earnings ' By Industry Farms Mining Contract construction Manufacturing Wholesale and retail trade Finance, insurance, and real estate Transportation, communications, and public utilities Services Government Other 1.097.8 668.1 6.3 160.3 58.4 101.9 243.6 25-7 6.1 815.7 79.3 5.4 42.9 83.1 122.6 30.0 76.3 153.9 214.5 7.7 1.435.7 980.3 14.0 164.0 40.8 123.2 240.3 50.8 13. 6 1,121.9 58.0 5.2 66.6 106.0 179.2 38.6 82.4 171.8 408.6 5.7 4,124.9 2,910.9 35.1 435.5 109.5 326.1 537.5 288.6 82.7 3,146.4 147.9 10.4 207.3 3056 552.9 105.0 246.2 445.7 1,110.2 15.1 5.642.1 4.1276 58.4 559.9 104.3 4556 699. 5 332.8 136.1 4,325.6 142.4 13.4 276.8 436.4 735.3 170.8 327.3 678.6 1,523.4 21.0 6,350.1 4,624.8 78.4 596.6 83.8 512.8 812.5 409.8 172.1 4,870.8 121.9 15.4 317.4 482.9 825.2 188.7 384.1 819.5 1.694.0 21.8 1 Consist of wage and salary disbursements, other labor income, and proprietors' income. PAST AND FUTURE ECONOMIC GROWTH 41 Table 25 —Downstream Area— Personal Income by Type: Selected Years, 1929-57 [Millions of dollars] 1929 1940 1950 1955 1957 Personal income By Type Wages and salaries Other labor income Proprietors' income Farm Nonfarm Property income Transfer payments Less: Personal contributions for social insurance Civilian earnings ' By Industry Farms Mining Contract construction Manufacturing Wholesale ana retail trade Finance, insurance, and real estate Transportation, communications, and public utilities Services Government Other 43.1 29.9 .2 8.2 5.6 2.6 3.8 1.3 .2 31.6 7.9 ( 2 ) 2.6 2.4 2.8 .3 1.2 4.3 8.9 1.2 143. 9 203.8 01.4 158.5 .8 1.5 24.4 23.7 16.6 11.5 7.7 12.3 9.2 14.5 10.6 10.2 2.4 4.6 87.5 129.2 21.2 16.0 .1 .1 6.9 12.0 7.0 9.4 11.7 19.9 .9 1.8 3.3 5.0 11.9 16.3 22.5 45. 1 2.0 3.5 222.8 174.6 2.1 23. 5 9.6 13.9 15.7 12.8 5.8 1439 14.3 .3 12.7 10.7 23. 6 2.3 6.2 22.0 47.8 4.0 1 Consist of wage and salary disbursements, other labor income, and proprietors' income. 2 Less than $50,000. Table 26.— Washington Metropolitan Area— Personal Income by Type: Selected Years, 1929—57 [Millions of dollars] 1929 1940 1950 1955 1957 Personal income By Type Wages and salaries Other labor income Proprietors' income Farm Nonfarm , Property income , Transfer payments Less: Personal contributions for social insurance. Civilian earnings * By Industry Farms Mining Contract construction Manufacturing Wholesale and retail trade Finance, insurance, and real estate Transportation, communications, and public utilities Services Government Other 768.3 487.7 4.6 78.8 3.9 74.9 183.4 18.8 5.0 556.0 7.9 .2 34.0 28.8 90.0 24.9 49.2 125.4 193.4 2.2 1,099.8 768.6 11.6 101.1 3.8 97.3 191.0 38.2 10.8 825.9 6.8 .5 55-7 32.4 142.6 34.5 56.9 146.9 373.2 3.4 3,166.4 2,291.9 23.4 265.7 9.4 256.2 435.4 218.3 68.3 2,390.9 15.6 2.6 171.1 90.1 438.1 93.4 176.3 379.2 1,013.8 10.7 4.370.2 3.253.8 37.5 372.5 3-4 369.1 564.2 250.1 107.9 3,313.1 8.7 4.6 220.0 131.8 580.3 151.4 239.8 590.9 1,371.4 14.2 4.928.7 3.629.3 51.1 417.4 2.5 414.8 660.6 307.0 136.6 3,741.8 7.8 5.0 238.8 145.1 651.8 164.7 282.2 713.4 1.5192 13.8 1 Consist of wage and salary disbursements, other labor income, and proprietors' income. 42 POTOMAC RIVER SERVICE AREA Table 27 —Piedmont Area— Personal Income by Type: Selected Years, 1929-57 [Millions of dollars] 1929 1940 1950 1955 1957 Personal income By Type Wages and salaries Other labor income Proprietors' income Farm Nonfarm Property income Transfer payments Less: Fersonal contributions for social insurance. . . . Civilian earnings ' By Industry Farms Mining Contract construction Manufacturing Whosesale ana retail trade Finance, insurance, and real estate Transportation, communications, and public utilities Services Government Other 60.8 29.4 .2 19.0 14.0 5.0 11.0 15 .2 48.4 19.2 .1 1.8 8.5 5.1 1.1 36 5.2 2.9 1.0 56.1 166.0 213.8 30.5 97.6 139.0 .4 1.8 3.6 13.8 37.2 36.7 9.3 23.7 20.5 4.5 13.5 16.2 9.3 19.4 23.5 2.5 12.4 16.1 .5 2.4 5.2 44.5 135.2 174.9 13.9 33-4 30.2 .1 .4 .4 1.7 7.8 12.2 99 33.7 46.6 5.9 18.5 26.0 .8 2.1 3.6 33 9.4 13.7 4.2 12.4 17.9 4.4 16.6 23.3 .3 .8 1.0 238.5 157.9 4.6 35.2 17.1 18.1 27.0 20.2 6.4 193.1 26.7 .6 156 53.3 29.2 4.5 15. 9 20.2 26.0 1.2 1 Consist of wage and salary disbursements, other labor income, and proprietors' income. Table 28.— Great Valley Area— Personal Income by Type: Selected Years, 1929-57 [Millions of dollars] 1929 1940 1950 1955 1957 Personal income By Type Wages and salaries Other labor income Proprietors' income Farm Nonfarm Property income Transfer payments Less: Personal contributions for social insurance. . . . Civilian earnings l By Industry Farms Mining Contract construction Manufacturing Wholesale and retail trade Finance, insurance, and real estate Transportation, communications, and public utilities Services Government Other 154.6 83.3 .8 36.6 24.9 11.7 31.2 3.1 .4 120.1 32.8 1.7 4.1 26.6 18.0 2.5 10.6 13.1 9.4 1.1 157.7 98.3 1.1 28.9 16.3 12.6 252 5.4 13 127.5 22. 1 5 37. 20. 2 11 11 151 .8 477.2 3H.9 6.6 79.6 44.4 35.2 54.7 31.0 6.5 394.7 59.7 3.4 17.1 133.5 64.8 6.7 33.8 33.2 41.3 1.2 658.3 446.5 12.1 98.9 555 43. 4 77.2 37.6 14.0 549.1 71.3 50 24.8 199.2 84.4 11.1 40.3 45.1 66.1 1.8 727.7 503.7 16.0 92.3 43.2 49.1 86.5 47.0 17.8 601.8 591 5.4 34.1 215.4 92.2 13.5 47.5 54.0 78.3 2.2 1 Consist of wage and salary disbursements, other labor income, and proprietors' income. PAST AND FUTURE ECONOMIC GROWTH 43 Pfgure 12 Income Growth Rates — Past and Projected in the United States and the Potomac River Service Area UNITED STATES Potomac River Service Area Washington Metropolitan Area Downstream Area Great Valley Area Piedmont Area Appalachian Area Percent Growth (constant dollars, compounded annually) 2 4 I I 1929 TO 1957 1957 TO 2010 U. S. Department of Commerce, Office of Business Economics 44 POTOMAC RIVER SERVICE AREA the service area as a whole, and, hence, in the District of Columbia Metropolitan area, are the unusually large importance of government and the much smaller role of manufactures. To these may be added a third— the near absence of agri- culture from the income flow. The major economic aspects of the other sub- regions may also be described in terms of the relative importance of government, manufac- turing, and agriculture. In the three subregions to the north of the Metropolitan area government bulks only a little larger as an income source than in the country generally. Instead, the principal industry in the Piedmont, Great Valley, and Appalachian areas is manufacturing. In each of them, income from this industry accounts for roughly one-third of civilian earnings— a proportion matching that in the Nation. Also, agriculture is considerably more important in these sections than in the country as a whole. In the Downstream area, the princi- pal distinguishing features are the importance of government and farming as income sources. Comparisons by subregions of projected rates of growth with the calculated historical pace of economic development, shown in figure 12, re- veal a number of interesting points. 1. Projected growth rates for the Downstream area and the Washington Metropolitan area are significantly smaller than those experienced in the past. In each instance, however, the projected pace matches or exceeds that foreseen for the Nation. 2. For the Piedmont and Appalachian sub- regions, a substantial increase in relative eco- nomic expansion is projected. 3. For the Great Valley, the pace of economic growth projected for the future is the same as that which has obtained over the past three decades. Bases for past and future differentials in rates of gain among the five subregions of the Po- tomac can be ascertained through detailed study of the various tables presented in this chapter. Table 29.— Appalachian Area— Personal Income by Type, Selected Years, 1929—57 [Millions of dollars] 1929 1940 1950 1955 1957 Personal income By Type Wages and salaries Other labor income Proprietors' income Farm Nonfarm Property income Transfer payments Less: Personal contributions for social insurance Civilian earnings l By Industry Farms Mining Contract construction Manufacturing Wholesale and retail trade Finance, insurance, and real estate Transportation, communications, and public utilities Services Government Other 75.8 46.8 .5 14.0 7.1 6.9 13.2 1.5 .2 61.0 8.5 3.3 1.6 17.3 7.2 1.0 11.6 5.8 3-8 79.0 52.9 .7 12.0 5.8 6.2 10.9 3.4 .8 65.3 7.0 3.0 1.2 24.2 7.9 4.5 7.0 .1 171.4 108.1 2.5 28.7 15.3 13.4 18.9 16.3 3.1 138.1 18.0 4.0 4.4 41.3 19.7 1.9 23.3 8.9 16.1 .3 196.0 129.7 36 28.1 13-4 14.6 20.0 18.9 4.3 159.4 16.2 3.4 7.9 49.4 24.7 2.9 28.6 8.4 17.5 .5 232.3 159.4 4.6 28 3 11.3 17.0 22.7 22.8 5.4 190.1 14.0 4.1 16.1 58.3 28.4 3.7 32.4 9.9 22.7 .6 1 Consist of wage and salary disbursements, other labor income, and proprietors' income. Chapter 111. Population Growth Sn the Potomac River Service Area The Potomac River Service Area, consisting of 36 counties and 7 independent cities includ- ing the District of Columbia, has a land area of 16,118 square miles. It is larger than the Potomac drainage basin proper which covers 14,500 square miles because some of the county units which served as the basis for economic data collection extended over into contiguous drainage areas. According to tabulations from the 1960 census, this river basin contains 3 mil- lion persons. After the census of 1 870, each successive decen- nial census down to and including 1930 showed that the population of the Potomac Basin was growing, but less rapidly than the Nation. Dur- ing these six decades, the chief characteristics of national economic expansion were westward migration and increasing industrialization; while populaton and industry in the Potomac Valley expanded they did not keep pace with the na- tional average rate of growth. But 1930 marked a turning point. Thereafter, the growth of pop- ulation in the Potomac Valley has exceeded the national average rate. For the purpose of broad summarization, it is convenient to divide the Potomac River Service Area into three parts: the Washington Metro- politan area or region II; the area downstream from the Washington Metropolitan area or region I; and the upstream part, which includes the Piedmont, Great Valley, and Appalachian areas. In 1870, the Washington Metropolitan area contained only slightly more than one-quarter of the Potomac Basin's total population; about one-eighth lived in the downstream portion while six-tenths of the total dwelt in the upstream portion which covers three-quarters of the total expanse of the Potomac River Service Area. Since 1870, population has grown at different rates in these three segments. Because growth has been most rapid in the Washington Metro- politan area, that region's share of the basin's total population has steadily increased; by 1930 its population amounted to 47 percent of the total and for the first time matched the number living in the area upstream. By 1960, the Metro- politan area contained just slightly less than two-thirds of the Potomac Basin's total popula- tion while the whole upstream segment held 28 percent. Until 1910, the growth rate of the Washington Metropolitan region lagged behind the national average growth rate. But World War I sparked an expansion of the Federal Government estab- lishments centered there which served as the stimulus of an accelerated population growth which has exceeded the national average rate throughout the ensuing half century to 1960. After 1930, as the Metropolitan area's share of the Potomac Basin's total population expanded to one-half and beyond, the accelerated growth of this subregion was sufficient to lift the growth rate of the entire Potomac Valley above the national average rate notwithstanding that the growth rate of the upstream portion continued to lag behind the national average right into 1960. Since 1940 the rate of growth in the down- stream area has slightly exceeded the national average but has not equaled that of the Metro- politan area. The differential population growth rates for the five separate areas and their rela- tion to the United States growth are shown in tables 30 to 32. For the period since 1940, population growth can be analyzed into its two components of natural increase and net migration. For the 1940-50 decade, the population of the Potomac River Service Area expanded 584,000, of which natural increase (net excess of births over deaths) and net in-migration each accounted for about one-half. Estimates for the period 1950—57 indicate that net in-migration had slowed somewhat from the pace of the previous 45 46 POTOMAC RIVER SERVICE AREA Table 30 — Potomac River Service Area— Population by Subregions, 1870—1960 [Thousands] United States Potomac River Service Area Downstream area Washington Met- ropolitan area 1870 38.558 50.156 62,948 75.995 91,972 105.711 122,775 131,669 150,697 178.400 711 850 931 1,040 1,140 1.301 1,432 1.785 2,369 2,997 85 98 94 103 103 105 99 106 135 190 203 1880 262 1890 319 1900 379 1910 1920 445 572 1930 672 1940 968 1950 1,464 I960 «> 1.969 Upstream area, total Piedmont area Great Valley area Appalachian area 1870 423 490 519 558 592 624 661 711 769 837 127 138 139 142 142 142 147 156 173 201 217 253 268 285 303 323 345 369 413 463 78 1880 100 1890 113 1900 131 1910 147 1920 159 1930 168 1940 185 1950 184 1960» 174 Preliminary. Table 31. -Potomac River Service Area— Population Growth Compared to the United States, 1870-1960 [Average percent growth per decade] United States Potomac River Service Area Downstream area Washington Met- ropolitan area 1870-1880 30.08 25-50 20.73 21.02 14.94 16.15 7.24 14.45 18.38 1964 9.52 11.71 9.57 14.11 10.12 24.61 34.88 26.47 15.91 —4.64 10.39 —.90 2.40 —5.71 6.71 27.54 40.32 29.20 1880-1890 21.47 1890-1900 18.72 1900-1910 17.50 1910-1920 28.42 1920-1930 17.54 1930-1940 44.00 1940-1950 5125 1950-1960 34.46 Upstream area, total Piedmont area Great Valley area Appalachian area 1870-1880 1580 5.87 763 6.03 5.38 5.93 7.56 8.24 8.84 7.94 .79 2.57 —.09 —.10 3-73 5. 90 10.54 16.29 16.26 5.88 6.59 6.22 6.56 6.96 6.96 11.71 12.11 27.30 1880-1890 12.86 1890-1900 16. 30 1900-1910. 12.26 1910-1920 1920-1930 8.23 5. 68 1930-1940 10.26 1940-1950 —.60 1950-1960 —5.75 POPULATION GROWTH 47 decade but was still responsible for more than one-quarter of the population growth in this period. Comparison of the components of population change in the entire Nation with those in the Potomac River Service Area highlights the im- portance of net in-migration in the recent growth of the Potomac River Service Area. However, it is evident that the rate of natural increase in the Potomac River Service Area has also been somewhat higher than in the Nation as a whole in recent years. Data are not yet available to bring this comparison up to 1960. tion in any subregion its growth rate relative to the national growth rate of that component; this determination was made upon the basis of its differential growth over the past quarter cen- tury and an analysis of the factors that might act to alter that differential growth in the period ahead. The chief factor underlying population migra- tion is the attraction of economic opportunity. The net in-migration that has so stimulated the growth of the Potomac Valley shown by the fig- ures below is chiefly ascribable to the job oppor- tunities that existed here. Hence the projected 1940 population 1940-50 natural increase 1940-50 net in-migration 1950 population 1950 population 1950-57 natural increase 1950-57 net in-migration 1957 population 1 Excludes armed forces overseas. United States Potomac Rive Number ■ Service Area Number percent of pop. percent of pop. (thousands) at start (thousands ) 1,785 at start 131,669 100.0 100.0 17.666 13.4 295 16.5 1,362 1.0 289 16.2 1 150,697 114.4 2,369 132.7 150,697 100.0 2,369 100.0 17,952 11.9 327 13.8 1,642 1.1 131 5.5 •170,295 113. 2,827 119.3 PROJECTIONS OF FUTURE GROWTH As we present our estimates of the future population growth of the Potomac River Serv- ice Area, we should like to emphasize that the basic problem was to develop methods for re- lating the growth of this valley to the projected growth of the national economy as outlined in the preceding chapters. This was done by judging for each separately projected element of popula- employment growth, outlined in chapter IV, has been used as the basis for our estimates of pop- ulation growth in the Potomac River Service Area to 2010. Given the projections of employ- ment in the Potomac River Service Area and its subregions, we have obtained projections of fu- ture population growth by estimating the most reasonable future course of the employment- population ratio in the valley as a whole and in each of its subregions. The projections indicate a population expan- sion in the Potomac Valley of roughly 2 million Table 32.— Potomac River Service Area— Population by Subregions, 1930-60 [Thousands] United States Potomac River Service Area Downstream area Washington Metropolitan area Upstream area, total Piedmont area Great Valley area Appalachian area p Preliminary. 1930 122,775 1,432 99 672 660 147 345 168 1940 131,669 1.785 106 968 710 156 369 185 1950 150,697 2.369 135 1.464 770 173 413 184 1960 p 178.400 2.997 190 1.969 838 201 463 174 48 POTOMAC RIVER SERVICE AREA Figure 73 Population United States and Potomac River Service Area Millions (ratio scale) 400 200 100 50 20 10 5 .5 United States -O Pofomac River Service Area »-o' ,o- I ' i I I I L_L _L JL 1900 10 20 30 40 50 60 65 U. S. Department of Commerce, Office of Business Economics 85 2010 Data: See Tables 1, 2, & 30 POPULATION GROWTH 49 Figure 14 ion Potomac River Service Area Sub-Regions Thousands (ratio scale) 5,000 4,000 3,000 2,000 1,000 500 400 300 200 100 50 Washington Metropolitan Area Appalachian Area •••• m Sfifi »»• ««•' Piedmont Area Downstream Area 1 I I 1900 10 20 30 40 50 60 75 U. S. Department of Commerce, Office of Business Economics Data: See Table 30 50 POTOMAC RIVER SERVICE AREA persons by 1985, an increase of two-thirds over the present number. This projected rate for the valley exceeds the comparable figure for the country as a whole (a gain of one-half) by a substantial margin. Table 33.— Potomac River Service Area— Population Projections by Subregions, 1965-2010 [Thousands] 2010 United States Potomac River Service Area. Downstream area Washington Metropol- itan area Upstream area, total Piedmont area Great Valley area. . Appalachian area... 1965 1985 195.000 267.000 3,290 4,950 210 300 2,180 3,370 900 1,280 220 310 495 720 185 250 370,000 7.300 420 5,000 1.880 450 1,080 350 Within the Potomac Valley, the largest pop- ulation growth, both in absolute and relative terms, is projected for the Washington Metro- politan area. For this subregion, the projections show a population rise of nearly three-fourths by 1985. In each of the other parts of the valley, projected rates of population growth from 1960 to 1985 held an increase of roughly one-half. By 2010, the projections indicate a growth in the Potomac Valley somewhat in excess of 4 mil- lion persons— a relative expansion of li/2 times the 1960 total. As in the case of the shorter period— 1960-85— the largest population gain is projected for the Washington Metropolitan area. In the other four subregions, their projected 2010 population ranges from double to 2% times their present 1960 size. The population of the entire area upstream is expected to expand by somewhat more than 1 million. The estimate for the Downstream area represents an added one-quarter million people. In none of the subregions of the Potomac Valley do the projected population differential growth rates represent simply the continuation of those experienced during the 1930-60 period. In the case of the Washington Metropolitan area, for example, the average 1930-60 growth rate of about two-fifths per decade was based on the rapid expansion of Federal Government establishments that occurred during the depres- sion of the thirties, World War II, the Korean war, and the cold war of the fifties. The pro- jected average decade growth rate for this area is about one-half of that in the 1930-60 decades. Likewise, the growth of the Downstream area which was markedly stimulated by the expansion of Federal military establishments there in the recent period, was cut back by about one-third. Upstream the reverse is true. All three areas that drain into the Potomac above the Wash- ington Metropolitan area are projected to grow at faster rates in the next half century than in the three decades just passed. The sharp en- hancement of the growth rate in the Piedmont area arises chiefly from the fact that this area is supplemental to both the Washington and Baltimore metropolitan areas. One illustration of the influence exerted by metropolitan growth on adjacent areas is the location of the new Dulles International Airport in Loudoun County and the economic expansion that has started Table 34.— Potomac River Service Area— Components of Population Change [Thousands] 1940 to 1950 Components of change Net change Natural increase Net_ migration Potomac River Service Area. . Downstream area Washington Metropol- itan area 584 29 496 60 17 44 —1 295 20 185 92 16 49 27 289 10 311 Upstream area, total Piedmont area Great Valley area. . . Appalachian area... -32 1 — 5 —28 Table 35.— Potomac River Service Area— Components of Population Change [Thousands] Potomac River Service Area. Downstream area Washington Metropol- itan area Upstream area, total.. . . Piedmont area Great Valley area. . Appalachian area... 1950 to 1957 Components of change Net change 458 44 369 45 21 35 —11 Natural increase 315 20 223 72 16 41 15 Net migration 143 24 146 —27 5 —6 —26 POPULATION GROWTH 51 spreading out from there. Frederick, Maryland, in the northern part of the Piedmont area is at the junction of two main routes to the west on the interstate highway network from Washing- ton and Baltimore. Its growth can hardly fail to be accelerated as industry and trade extend outward from these metropolitan areas along major transportation routes. The accelerated growth rate of the Great Val- ley, the most populous of the upstream areas, is chiefly ascribable to the projected continuation of its employment expansion at a somewhat higher rate than the national average in the period ahead and at roughly the same rate as that projected for the Washington Metropolitan area. But population growth in the Great Val- ley is projected at a somewhat slower rate than in the Washington Metropolitan area because the employment-population ratio is assumed to continue moving upward in the Great Valley and downward in the Washington area. The Appalachian area offered a most difficult projection problem. Due to changes affecting the markets for some of its major commodities, espe- cially coal, employment in its commodity- pro- ducing industries was one-fifth less in 1957 than it had been in 1930. As late as 1959 Cumberland, its largest city, was designated as a distressed labor market area by the U.S. Department of Labor. Because of the unfavorable outlook for job opportunities, population out-migration be- tween 1940 and 1957 was estimated to total 53,000 or about 29 percent of the 1940 popula- tion figure. The preliminary 1960 census popula- tion count for the area is 174,000 compared to 185,000 in 1940. We judged it unrealistic to assume a continua- tion of such unfavorable developments through- out the next half century. Our analysis of em- ployment trends in this area indicated a decided improvement in job opportunities in the future as compared with the marked lag that charac- terized the 1940-57 period. Our population pro- jection, therefore, is based upon the assumption that employment opportunities will develop at a rate which would support population growth at the average rate of natural increase that pre- vailed in this area from 1940 to 1957 and that accordingly there would be no net out-migra- tion. At that rate of natural increase, with no further net out-migration, the population would climb back to its 1940 level by 1965. HOUSEHOLDS The number of households in the Potomac River Service Area is projected to rise over the next half century at a somewhat higher rate than the population. This results from a pro- jected decline in the average number of persons living in a household. In the Nation as a whole, •the projections assume a decline during the next half century of about one-tenth from the 1950 level of 3.52 persons. In the Potomac River Serv- ice Area the decline is estimated to be of approxi- mately the same magnitude. This future shrinkage in the number of per- sons per household results from two basic as- sumptions underlying our projections of the na- tional economy into the period ahead. One is the decline in the birth rate assumed to begin cur- rently and to continue until a rate nearly one- Table 36.— Potomac River Service Area—Populat ion: Relative Distribution by Subregions, 1870-1960 [Subregions as percentages of Potomac River Service Area Totals] Potomac River Washington Service Downstream Metropolitan Upstream area, Piedmont Great Valley Appalachian Area area area total area area area 1870.... 100.0 11.9 28.6 59.5 17.9 30.6 11.0 1880. . . . 100.0 11.5 30.9 57.6 16.2 29.7 11.7 1890. . . . 100.0 10.1 34.2 55.7 14.9 28.7 12.1 1900.... 100.0 9.9 36.4 53.7 13.7 27.4 12.6 1910.... 100.0 9.0 39.1 51.9 12.5 26.6 12.9 1920.... 100.0 8.1 44.0 48.0 10.9 24.8 12.2 1930. . . . 100.0 6.9 46.9 46.1 10.3 24.1 11.7 1940. . . . 100.0 5.9 54.2 39.8 8.7 20.7 10.4 1950.... 100.0 5.7 61.8 32.5 7.3 17.4 7.8 I960*... 100.0 6.3 65. 7 28.0 6.7 15.4 5.8 » Preliminary. 52 POTOMAC RIVER SERVICE AREA third lower than the current rate is reached by 2010. The other is a postulated continued rise in the standard of living of the average Amer- ican family as measured by our projections of per capita personal income which more than double by 2010. Such an advance in income would permit more families to have their own separate dwelling or a smaller percentage of families living doubled up. From 644,000 in 1950, the number of house- holds in the Potomac Basin is calculated to in- crease to 1,370,000 by 1985 and to 2,190,000 by 2010. Most of the increase would occur in the Washington Metropolitan area where households are estimated to nearly quadruple in number from 400,000 in 1950 to 1.5 million in 2010. The growth rate varies somewhat among the sub- regions of the Potomac River Service Area, de- pending upon the projected increases in per capita personal income and the projected pop- ulation. Between 1950 and 2010, the number of households is estimated to triple, more or less, in the Downstream, Piedmont, and Great Valley areas. In the Appalachian area, the number would be a little more than double. Table 38.— Potomac River Service Area— Projection of the Number of Households by Subregions, 1965—2010 [Thousands] 2010 United States Potomac River Service Area. Downstream area Washington Metropol- itan area Upstream area, total... . Piedmont area Great Valley area. . Appalachian area... 1965 1985 57.000 80,000 890 1,370 53 78 585 922 252 370 60 87 140 211 52 72 117.000 2,190 115 1,505 570 135 330 105 Table 37 — Potomac River Service Area— Number of Households by Subregions, 1930-57 [Thousands] 1930 1940 1950 1957 United States Potomac River Service Area Downstream area Washington Metropolitan area Upstream area, total Piedmont area Great Valley area Appalachian area 29.905 343 21 169 152 35 80 37 34,855 448 23 250 175 39 92 44 42,858 644 32 405 207 45 112 50 49.543 789 43 519 227 53 124 50 Chapter IV. Pattern in the Potomac Employment Growth ervice Area Over the last quarter century, the economy of the Potomac Basin has increased its output at a faster rate than in the rest of the Nation. This is evidenced by the higher rates of growth of personal income and employment in the Po- tomac compared with the corresponding national averages. The result of our analysis of the many individual components of personal income and aggregate employment in the PRSA is an out- look for continuation of its growth at a rate faster than that projected for the Nation over the next half century. However, the projected rate of gain is slower than it has been since 1929 or 1930 and its margin of difference over the national average growth rate gradually dimin- ishes. This chapter outlines the outlook for economic opportunities in the Potomac River Service Area. The economy of the Potomac Valley as a whole is substantially different from the rest of the Nation. Its most unique characteristic is the unusually low proportion of total output con- sisting of commodity production and the strik- ingly high proportion derived from noncom- modity or service-type industries. In 1957, employment in all commodity-producing in- dustries comprised two-fifths of total employment in the Nation compared with one-quarter in the PRSA. In commodity production, the Potomac Val- ley has much smaller proportions of agriculture and manufacturing than the national average but about the same aggregate proportion of other commodity-producing industries (forestry and fishing, mining, and construction) . In the noncommodity-producing industries, the PRSA has somewhat smaller fractions of its total em- ployment engaged in trade, utilities, and various other services than does the Nation as a whole but 2i/2 times as large a proportion employed in Federal, State, and local governments. It is assumed that these unique features of the Potomac's economy will continue to charac- terize the valley throughout the half century ahead. However, our projections imply that em- ployment in private industry will increase rela- tively faster than employment in Federal, State, and local governments so that government em- ployment in the aggregate will shrink as a pro- portion of the total, somewhat more so in the PRSA than in the rest of the United States. Evidence indicating the continuation of rela- tively faster growth in the Potomac than in the Percentage Distribution of Employment by Major Industry Groups Alllndustrics, total All commodity-producing industries Agriculture Nonagricultural commodities Manufacturing AH other commodity industries All noncommodity-producing industries, total. Trade All governments All other Petomac Rivir United States Service Area mi 2010 mi 20/0 100 100 100 100 42 39 26 25 9 3 6 1 33 36 20 24 25 28 13 16 ft 8 7 8 58 61 74 75 19 21 16 20 15 13 36 26 24 27 22 29 53 54 POTOMAC RIVER SERVICE AREA Nation as a whole applies to most major in- dustries but there are exceptions other than government. In agriculture, we adopted the rates of change for the various subregions of the Potomac Valley projected by the U.S. Depart- ment of Agriculture. These envisage a slightly higher rate of shrinkage in agricultural employ- ment in the PRSA than in the rest of the Nation. For most other major commodity-producing in- dustries we projected faster rates of growth than those for the Nation, particularly so for manu- facturing industries in the aggregate. The 1958 Census of Manufactures showed that the growth rate of factory employment in the PRSA between the censuses of 1954 and 1958 was substantially faster than the national average rate. Among the individual manufacturing industries that we studied separately, the food, chemical, and metal (including all metal manufactures) industries would, according to our projections, contribute the most to the Potomac's manufacturing expan- sion in the decades ahead. Of the 0.8 million increase in total employ- ment projected for the Potomac River area by 1985 and the further increase of 1 million by 2010, the commodity-producing industries ac- count for one-fourth. The remainder accrues to the noncommodity-producing industries with trade, the utilities, and other service industries expanding most. Government employment is as- sumed to show the smallest relative growth among noncommodity-producing industries. Employment by Subregions The uniquely high proportion of noncom- modity-producing industries in the Potomac River Service Area is entirely ascribable to the Washington Metropolitan and Downstream areas. This becomes evident as soon as the eco- nomic patterns of the five areas are examined separately. The concentration of Federal Gov- ernment establishments in these two areas pro- duces a high proportion of service-type industries in the whole PRSA compared with the national average. But the Metropolitan and Downstream areas are also unique in having such small por- tions of their total employment in manufac- turing—much below the national average in both cases. In agriculture, the exceptionally small frac- tion of total employment in 1957 engaged in agriculture in the Washington Metropolitan area is solely responsible for pulling the entire PRSA share of agricultural employment below the national average. In all four of the other areas the portions of total employment in agri- culture are well above that of the Nation. The projections imply that through 2010 these areas would continue to have relatively larger frac- tions in farming than the national average. Percentage Distribution of Employment by Major Industry Groups, 1957 United States All industries, total 100 All commodity-producing industries 42 Agriculture 9 Nonagricultural commodity industries 33 Manufacturing 25 All other commodity industries 8 All noncommodity-producing industries 58 Trade 19 Federal, State, and local governments 15 All other 24 Upstream area, total All industries, total 100 All commodity-producing industries 49 Agriculture 15 Nonagricultural commodity industries 34 Manufacturing 25 All other commodity industries 9 All noncommodity-producing industries 51 Trade 17 Federal, State, and local governments 12 All other 22 Potomac River Washington Metropolitan Service Downstream Area area area 100 100 100 26 34 15 6 15 1 20 19 14 13 10 8 7 10 6 74 66 85 16 11 17 36 45 45 22 10 23 Piedmont Great Valley Appalachian area area area 100 100 100 52 50 46 18 14 16 34 36 30 24 27 21 10 9 9 48 50 54 15 17 16 12 12 12 21 21 26 PATTERN OF EMPLOYMENT GROWTH 55 The economy of the three upstream areas as a whole is almost evenly balanced between com- modity-producing and service-type industries. It more nearly resembles the national average pattern rather than the economies of the two subregions downstream from which it differs markedly. The upstream part of the PRSA has about the same proportion of total employment engaged in manufacturing and other nonagricul- tural commodity-producing industries as does the Nation. But because of the relatively greater importance of agriculture, the portion of em- ployment in the service-type industries, especial- ly government, is below the national average. Total employment in the Washington Metro- politan area is estimated to expand to 1.4 mil- lion by 1985 and to 2.1 million by the year 2010. This outlook is based on continued growth pro- jected at higher rates in most of the major in- dustries in the area relative to the Nation as a whole. Agriculture and government are the two outstanding exceptions— the former actually de- clining and the latter merely keeping pace with the national average rate of expansion for total Federal, State, and local government employ- ment. With private employment growing faster —especially the nonfarm commodity-producing industries led by manufacturing, accompanied by expansion at a little slower rate in trade, utilities, and other service industries— the area's economy displays a pattern which is somewhat more di- versified and less concentrated in public employ- ment in the future. However, the noncommodity- producing industries continue to maintain their dominance as the largest employing group as compared with the commodity-producing in- dustries. Although the rate at which we have projected employment growth in this area is sharply less than the rate which prevailed here from 1930 to 1957, the estimates nevertheless imply that job opportunities would continue to expand faster in the Washington Metropolitan area than elsewhere in the Potomac Basin. The projected rate of employment growth in the Downstream area was also cut back well below the recent rate where it was sparked by the expansion of Federal military establishments between 1940 and 1957. It was assumed that Table 40.— Potomac River Service Area— Employment Projections by Subregions, 1965-2010 [Thousands] United States Potomac River Service Area. Downstream area Washington Metropol- itan area Upstream area, total Piedmont area Great Valley area. . Appalachian area. . . 2010 151.000 3.050 175 2.100 775 185 460 130 government employment in this area would slow from its recent growth rate and merely keep pace with the national average rate in the period ahead. Because government employment here accounted for nearly half of the total in 1957, this cutback resulted in damping down the growth of the area's entire economy. However, private employment in most major industry groups is projected at growth rates well above their national averages. This is particularly the case in trade, utilities, and other service-type in- dustries whose expansion has recently been very vigorous in this subregion. In the Piedmont area, total employment is projected ahead at about the same differential rate above the national average as that which Table 39 — Potomac River Service Area— Employment by Sul [Thousands] 'regions, 1930-57 Census dates Annual Averages Apr. 1930 Apr. 1940 Apr. 1950 1950 1957 United States 48,833 584 35 316 232 53 122 57 45.166 697 38 428 232 53 124 55 57.222 992 51 666 275 65 153 57 61,398 1.064 55 716 294 69 164 61 67,809 1.217 71 822 Upstream area, total 324 77 Great Valley area 184 Appalachian area 63 56 POTOMAC RIVER SERVICE AREA prevailed between 1930 and 1957. With the ex- ception of agriculture, for which the projected reduction is relatively the sharpest in the entire Potomac Valley, the employment growth is a concerted forward movement embracing virtually all major nonagricultural industry groups. This subregion is unique in that it currently has over half of its total employment engaged in com- modity-producing industries— a share much above the national average. By 2010, however, the pro- jected decline in agriculture along with the slightly faster rates of growth projected for the service-type industries reduces the proportion of workers engaged in commodity production well below half. The Great Valley is another subregion with an unusually large proportion of commodity- producing industries— they currently include al- most exactly half of the total employment. Here, too, the employment growth is projected at ap- proximately the same differential above the na- tional average growth rate that was manifested over the period from 1930 to 1957. Agriculture and government are the two major exceptions to the otherwise broadly concerted expansion movement. Employment in agriculture in this area is estimated to fall relatively less than in any other area in the Potomac Valley and also less than in the Nation as a whole. With one- third of the land area in the PRSA, it had about two-fifths of the Potomac Valley's total agricul- tural employment in 1958; by 2010 it is estimated to be not much less than one-half of the PRSA total. Table 42.— Potomac River Service Area— Employment Projections by Industries, 1965-2010 [Thousands] Annual Average 1965 1985 2010 All industries, total 1.380 380 63 317 200 18 13 59 110 117 1,000 230 460 310 2,035 525 49 476 310 26 20 106 158 166 1,510 375 600 535 3,050 Commodity-producing indus- tries, total 770 Agriculture 41 Nonagricultural commod- ity-p r o d u c i n g indus- tries 729 Manufacturing, total. . . Food and kindred products 475 38 Chemicals and allied products 35 All metals and metal manufactures All other manufac- tures 170 232 All other commodity- producing industries Noncommodity-producing in- dustries, total 254 2,280 Trade 600 Government (Federal, 800 880 The area's nonagricultural commodity in- dustries have been projected at vigorous growth rates higher than the corresponding national average rates. The estimates imply that, by 2010, the Great Valley area will have a larger share of its total employment engaged in commodity production than in any other subregion and in the Nation as a whole. It is the only area that currently has, and over the next half century will have, a larger proportion of its total em- Table 41.— Potomac River Service Area— Employment by Industries, 1930-57 [Thousands] Census dates Apr. 1930 Apr. 1940 Apr. 1950 Annual averages 1950 1957 All industries, total Commodity-producing industries, total Agriculture Nonagricultural commodity-producing industries Manufacturing, total Food and kindred products Chemicals and allied products All metals and metal manufactures All other manufactures All other commodity-producing industries. . . . Noncommodity-producing industries, total Trade Government (Federal, State, and local) All other 583.7 239.2 100.2 139.0 84.4 7.9 7.0 12.6 56.9 54.6 344.5 65. 1 72.7 206.6 697.3 229.8 82.4 147.4 91.5 9.7 12.4 16.2 53.2 55.9 467.5 99.3 131.9 236.3 991.6 267.8 68.8 199.0 121.6 13-5 13.0 23.3 71.8 77.4 723.9 150.7 260.6 312.6 ,064 283 75 208 130 15 14 25 76 78 781 168 395 218 1,217 311 68 243 154 15 12 43 84 89 906 197 443 266 PATTERN OF EMPLOYMENT GROWTH 57 ployment in manufacturing industries than the rest of the United States. The Great Valley's noncommodity industries as a group are also projected to grow at rates above the national average notwithstanding that employment there by Federal, State, and local governments is assumed to grow a little more slowly than the national average. Trade, utilities, and other service industries promise, upon the basis of recent trends, to move ahead with vigor- Table 43.— Potomac River Service Area— Employment Pattern, April 1930 [Thousands] United States, total Potomac River Service Area Down- stream area Washing- ton Metropol- itan area Up- stream area, total Piedmont area Great Valley area Appala- chian area All industries, total Commodity-producing industries, total Agriculture Nonagricultural commodity- producing industries Manufacturing, total Food and kindred products Chemicals and allied products All metals and metal manufactures All other manufac- tures All other commodity- producing industries. . . Noncommodity-producing indus- tries, total Trade Government (Federal, State, and local).. All other 48,833 26,423 10,482 15,941 11,498 907 621 2.717 7,253 4,443 22,409 6,114 1.342 14,954 584 239 100 139 84 7 13 56 55 345 65 73 207 35 24 17 7 2 1 1 5 12 2 3 7 316 71 13 58 32 3 2 4 23 26 245 42 66 137 232 145 70 74 50 4 5 33 24 88 21 4 63 53 34 20 14 10 1 1 19 4 1 14 122 74 36 38 27 2 1 5 19 11 48 12 2 34 57 37 14 22 14 1 4 2 7 21 5 1 15 Table 44— Potomac River Service Area— Employment Pattern, April 1940 [Thousands] United States, total Potomac River Service Area Down- stream area Washing- ton Metropel- itan area Up- stream area, total Piedmont area Great Valley area 45166 697 38 428 231 53 124 22,018 8.372 230 82 21 14 73 10 135 58 32 17 71 29 13.645 10.573 147 91 7 3 63 31 77 57 15 11 41 31 1,094 10 4 5 1 3 440 12 1 1 11 3 3,496 16 10 6 1 5 5.543 53 2 16 35 9 20 3.072 56 4 32 20 4 10 23.149 7,539 467 99 17 3 355 68 96 28 21 6 53 16 1.753 13.856 132 236 6 8 121 166 5 63 1 14 3 34 Appala- chian All industries, total Commodity-producing industries, total Agriculture Nonagricultural commodity- producing industries Manufacturing, total Food and kindred products Chemicals and allied products All metals and metal manufactures All other manufac- tures All other commodity- producing industries. . Noncommodity-producing indus- tries, total Trade Government (Federal, State, and local) All other 55 33 11 21 15 6 6 22 6 1 14 58 POTOMAC RIVER SERVICE AREA ous growth rates higher than in the Nation as a whole. In sum, our projections for the Great Valley's economy imply that total employment will expand at a rate only slightly less than that of the Washington Metropolitan area and well above that of the Nation. The Appalachian area, as was pointed out in the preceding chapter, presented the most diffi- cult projection problem. It was the only one of the five subregions in the PRSA where total employment in the period from 1930 to 1957 grew less rapidly than in the entire United States. Furthermore, employment in the commodity- producing industry group, which accounted for Table 45 — Potomac River Service Area— Employment Pattern, April 1950 [Thousands] All industries, total Commodity-producing industries, total Agriculture Nonagricultural commodity- producing industries Manufacturing, total. . . . Food and kindred products Chemicals and allied products All metals and metal manufactures All other manufac- tures All other commodity- producing industries... Noncommodity-producing indus- tries, total Trade Government (Federal, State, and local) All other United States, total 57,222 25,950 6,885 19,065 14,576 1,399 659 5,439 7,079 4,489 31.272 10,548 3,471 17,253 Potomac River Service Area 992 268 69 199 122 14 13 23 72 77 724 151 261 313 Down- stream area 51 2.'. 11 11 5 1 2 2 30 5 15 10 Washing- ton Metropol- itan area 666 101 9 92 45 5 1 11 28 47 565 105 234 226 Up- stream area, total 274 145 49 96 71 7 11 12 41 25 129 41 11 77 Piedmont area 65 36 14 22 15 2 2 11 7 29 9 3 17 Great Valley area 153 80 25 55 42 4 6 9 23 13 72 24 7 42 Appala- chian 57 29 10 19 13 1 5 7 6 28 2 18 Table 46.— Potomac River Service Area— Employment Pattern, Annual Average, 1950 [Thousands] Washing- United Potomac Down- ton Up- Great Appala- States, River stream Metropo- stream Piedmont Valley chian total Service Area area litan area area, total area area area All industries, total 61,398 1.064 55 716 294 69 164 61 Commodity-producing industries, 27,646 7,497 283 75 23 12 105 9 155 54 38 15 86 27 31 Agriculture 11 Nonagricultural commodity- producing industries 20,149 208 11 96 101 23 59 20 Manufacturing, total 15,584 130 6 48 76 17 45 14 Food and kindred products 1,589 15 1 6 8 2 5 1 Chemicals and allied products 700 14 2 1 11 6 5 All metals and metal 5,904 25 12 13 2 10 All other manufac- tures 7,391 76 3 29 44 13 24 8 All other commodity- producing industries. . . . 4,565 78 6 48 25 6 13 5 Noncommodity-producing indus- tries, total 33,752 11,756 781 168 32 5 610 117 139 46 31 10 78 27 30 9 Government (Federal, State, and local) 7,584 395 22 341 32 7 18 6 All other 14,412 218 5 152 61 14 33 14 PATTERN OF EMPLOYMENT GROWTH 59 nearly two-thirds of total employment in 1930 and nearly one-half in 1957, actually declined 20 percent over that quarter century. This decline was ascribable to the importance in the Appa- lachian's economy of industries undergoing downward readjustment such as agriculture and coal mining, and shifts occurring in certain of the area's leading manufacturing industries, par- ticularly metals and chemicals. The shrinkage of employment in the commodity-producing in- dustries was more than offset, however, by in- creased employment in the service-type indus- tries, which nevertheless continued to expand although at rates somewhat less than the national average growth rates. Hence, total employment in the Appalachian maintained a gradual up- trend to 1957. It did not seem reasonable to us to project a continuation of this recent, rather discouraging trend over the next half century. Although a further decline in farm employment is expected, coal mining is already so thoroughly deflated that little further shrinkage can occur in that industry and should in any event be at least offset by expansion of other types of mining such as stone, sand, and gravel. The Census of Manufactures showed that employment in man- ufacturing in the area increased from the 1954 census to the 1958 census at a rate well above the national average. This seemed to us to indi- cate a change in the trend and to warrant the projection of manufacturing employment growth in the period ahead at a rate not much slower than the national average. In construction, also, the employment estimates used imply a growth at approximately the national average rate. With regard to the service-type industries, a recent development that promised to accelerate their growth trend was the location of a new Federal defense establishment in the Appa- lachian area. The growth rate of the subregion's noncommodity-producing industries as an aggre- gate in the period since 1930 has been only slightly less than the national average rate. The location in the area of the new Federal estab- lishment and the possibility that there might be others in the future, seemed to justify a projec- tion over the next half century of employment growth in the service-type industries at a rate approximately equal to the national average. All of this resulted in an estimated total em- ployment in the area half again as high in 1985 as the 1957 figure, and double the 1957 volume by 2010. The implied rates of growth are below the projected national average rates but well above those that for the past quarter of a century prevailed in the Appalachian area. Table 47 — Potomac River Service Area— Employment Pattern, Annual Average, 1957 [Thousands] United States, Potomac River Down- stream Washing- ton Metropol- Up- stream Piedmont Great Valley total Service Area area itan area area, total area area 67,809 1.217 71 822 324 77 184 28,407 6,222 311 68 24 10 126 8 160 49 40 14 91 25 22,185 17,089 243 154 14 7 118 66 111 82 26 18 66 50 1,544 15 1 6 9 2 6 858 12 2 1 9 6 7.485 43 22 20 4 16 7,202 84 4 37 44 12 22 5,096 89 7 52 30 8 16 39,402 13,044 906 197 47 8 696 136 163 53 37 11 93 32 9,938 16,420 443 266 32 7 373 188 39 72 9 16 22 39 Appala- chian All industries, total Commodity-producing industries, total Agriculture Nonagricultural commodity- producing industries Manufacturing, total. . . . Food and kindred products Chemicals and allied products All metals and metal manufacturers .... All other manufac- tures All other commodity- producing industries. . . Noncommodity-producing indus- tries, total Trade Government (Federal, State, and local) All other 63 29 10 19 13 1 3 1 34 10 7 17 Chapter V. Sources and Methods used in Preparing Basic Measures This is the second regional survey that the Office of Business Economics has made for an area representing a part of a State. Extensive use was made of the techniques developed in the earlier survey of the Delaware River Service Area. These techniques and the assembly of data from a wide variety of sources have been spelled out in this section so that users may know how the measures were put together. We regard this as a useful guide to others who may wish to do similar studies of other regions. This chapter describes the sources and meth- ods underlying the economic measures used in this survey. They include personal income, pop- ulation, and employment. The following ex- planatory notes describe both the historical series and the projections. Major guides were developed for the Potomac Service Area and for the subregions which were delineated for purposes of this study. Data were prepared for the District of Columbia and 36 counties and 6 independent cities in the area, including those in the Potomac River Basin and the relatively nearby counties which are either present or potential users of the Potomac River waters. Availability of basic data required for our measurements was an important factor in determining the grouping of counties. PERSONAL INCOME ESTIMATES Personal income, the most comprehensive measure of economic activity that can be pre- pared on a geographic basis, provides a yardstick for charting the past growth, and future po- tential, of the Potomac River Service Area. It is a gage of both economic activity and purchasing power. Official estimates of personal income on a less- than-national basis are limited to those prepared annually by the Office of Business Economics for the 50 States and the District of Columbia. The first task in making the economic survey of the Potomac River Service Area, therefore, was to prepare estimates of personal income for the subregions which had been delineated. This was a complex and technical task. A large body of economic information on metropolitan areas, cities, counties, and other local areas is available from government and business sources. These data fall generally into one of two classes. They are part of the factual array collected in the periodic industrial and population censuses of the Federal Government; or, they are by-product type material such as the tabulations made by State Unemployment Insurance (UI) agencies of wages and salaries disbursed in each county of a State by employers in industries covered by State UI laws. Although the quantity of data relevant to the measurement of personal income by counties is large, two serious deficiencies limit their usabil- ity for income estimation. Certain sizable gaps exist in data coverage. For example, information on county or other local-area distribution of income from dividends, interest, and rents is very sparse. Similarly, little direct information on the net income of self-employed persons is available at the county level. Secondly, and apart from gaps in coverage, such information on economic activities as is recorded on a county basis is not done within the framework of a coordinated statistical pro- gram designed for income measurement. For the most part, reported statistical information is not directly or wholly suitable for this purpose and must be processed to adjust for differences in definition and scope. Local-area income measure- ment therefore becomes a twofold task: As- sembling data from a multiplicity of sources and 61 in a 62 then adapting them, through estimation, m a. step-by-step buildup of aggregate income from component flows. MAIN STATISTICAL APPROACH Several main aspects of the statistical approach used may be noted. Relatively little use is made of income reports of individuals. Instead, reliance is placed on records of business and government which show disbursements made to persons. This approach, it is felt, makes for significantly greater accuracy. The local-area estimates prepared in this study are tied directly to the Department of Commerce official estimates of personal income by States. That is, the State total for each income component as taken from the official State in- come series is broken down or allocated to the various counties of the State in accordance with each county's proportionate share of some re- lated series available on a county basis. This allocation procedure makes for greater accuracy in the county estimates because most compo- nents of personal income can be estimated more accurately for States than for smaller geographic areas. Also, it permits the utilization of numer- ous related series of data which do not "match" the basic series to be allocated in some respect such as definition or coverage. Estimates based on direct, comprehensive data are generally more accurate than those based on indirect allo- cators and the direct approach has been used wherever possible. It should not be overlooked, however, that in numerous instances the State total of a component to be allocated has been derived from the same basic data sources as the allocating series. In such cases, there is no essen- tial difference in accuracy between the State and local-area estimates. The allocation procedure is carried out in de- tail. Separate estimates are made for each of more than 100 components of income and total personal income is derived by summing the indi- vidual series. This detailed approach accom- plishes three main purposes. It permits the maximum utilization of all available sources of information and thus minimizes errors that would stem from the estimation of broad com- ponents on the basis of data differing in scope or internal composition. Secondly, the detailed approach brings into play the potent factor of "offsetting errors." The tendency for errors in underlying components to compensate in the POTOMAC RIVER SERVICE AREA totals is a phenomenon observed repeatedly in the field of income estimation when a detailed, careful statistical procedure is followed. Finally, a concomitant result of the use of a detailed allocation method is that it yields a considerable quantity of analytically useful in- formation with regard to sources of income in local areas. It is recognized, of course, that a sub- stantial amount of the industrial detail that stems from use of the allocation procedure is not sufficiently reliable to warrant separate anal- ysis. Rather, this detail should be viewed as worksheet entries in the buildup of larger and more reliable income components. Nevertheless, a detailed statistical approach has the merit of providing more usable analytical information than would any other feasible approach. Closely related to the aspect of industrial de- tail is that of geographic detail. Estimates of the various income components were made on a county basis to the extent possible. Figures for the separate counties were then grouped into the five subregions chosen for presentation in the survey. Although counties formed the basic "building blocks," estimates are not shown for these units. The absence of county figures stems from two factors. First, for a number of components, the most satisfactory data on which to base an esti- mate were available for metropolitan areas or for groups of counties. In such instances ex- tension of geographic detail to the county level was sacrificed in favor of greater accuracy in the overall estimates. In elaboration of this point, it may be noted that whereas certain of the detailed income estimates must be classed as statistically unreliable on a county basis, they appear to rate as tolerably satisfactory when the county figures are grouped into area totals. Secondly, income estimates for individual counties are not shown because of the lack of requisite data for making adjustments to take account of commuting of workers across county lines. Certain income components (wages and salaries, in particular) are measured at the point of disbursement (place of work) , while others (property income, for example) are estimated on a residential basis. Where workers reside in one county and work in another, personal in- come as estimated for those counties is partly on a "where-received" basis and partly on a "where-earned" concept. Data suitable to con- vert personal income wholly to either of the two SOURCES AND METHODS 63 definitions are lacking. Accordingly, the com- muter problem is "solved" by grouping counties into geographic areas so that commuting across area lines is at a minimum. This solution pre- cludes the publishing of meaningful estimates for individual counties. Before turning to a description of sources and methods of estimation, the question of reliability may be noted. It has been made evident that the figures on personal income are estimates, and therefore subject to error. Some of the com- ponents entering into the total are highly ac- curate while others are quite weak. In neither case can a mathematical measure of reliability be attached to the figures. The fact that the reliability of the county income estimates is not subject to quantitative evaluation stems from a number of factors. The basic data entering the estimates vary in quality or accuracy; they differ in suitability for use in income estimation; and the characteristics of a given series of data may change over time. Also operating against the calculation of overall meas- ures of reliability is the variety of statistical techniques and assumptions that must be used in processing and adjusting the basic data for income measurement. In view of these conditions, it is apparent that local-area income estimates must be eval- uated in terms of their adjusted adequacy for the particular purpose at hand. DERIVATION OF THE ESTIMATES The following summary of sources and meth- ods underlying each of the main elements of personal income has a twofold purpose: It pro- vides a means of assessing reliability; and, it serves to acquaint users with the specific content of the personal income estimates. It should be noted that the methods and procedures outlined below relate generally to the subareas of the Potomac River Service Area, excluding the District of Columbia. A compre- hensive description of the details and derivation of personal income flows in the District of Co- lumbia may be found in "Personal Income by States Since 1929," a supplement to the Survey of Current Business, monthly magazine of the Department of Commerce. 1 This State Income 1 Copies of the supplement are available from the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C., or from any Department of Commerce Field Office at $1.50 each. bulletin contains a full description of the per- sonal income series in terms of definitions and of sources of data and methods of estimation for the 48 States including the District of Columbia. The income figures assembled here for the sub- regions of the Potomac accord exactly with the State estimates in concept and definition. To the extent possible, the sources of data and esti- mating techniques used in allocating national totals to the States were used to further apportion State totals to the counties. Hence, the State In- come bulletin will provide a basic reference for those wishing a fuller description of personal income and its derivation than that set forth here. WAGES AND SALARIES Wage and salary disbursements account for about 70 percent of all personal income in the Potomac River Service Area. Estimates of this segment are more complete and reliable than those for any other major type of income. Be- cause of their sizable weight in the total income flow, they impart a large measure of reliability to the overall estimates of personal income. For the years since 1950, estimates of wages and salaries have been prepared for about 40 individual industries. For 1940 and 1929, the number for which separate estimates were made was reduced to 15. In the following presentation derivation of the payroll figures is discussed in two parts. The first includes industries covered by State unem- ployment insurance (UI) programs. The second group consists of industries not covered by UI and for which other data sources— some direct, others indirect— were relied upon. Social Security Coverage The most important source of statistical in- formation on payrolls for the period of the past two decades has been the data collected under State UI programs. Except as subsequently noted, each State of the Potomac Basin furnished county tabulations by detailed industries (ap- proximately 75) of wage and salary disburse- ments made by firms coming under its UI laws. These data formed the basis of the 1940, 1950. 1955, and 1957 payroll estimates for industries making up 45 percent of all wages and salaries paid in the Potomac Basin. 64 POTOMAC RIVER SERVICE AREA The reporting systems that have developed under the State UI laws are comprehensive and employ regular, compulsory reporting by em- ployers. The accuracy and completeness of re- ported data is enhanced further by the fact that each "covered" firm is required to maintain a list of employees and their wages individually. Because of the nature of the reporting systems, then, the UI data approach the ideal for income estimation, and county wage and salary disburse- ments in industries based on these data are con- sidered quite reliable. Despite the overall adequacy that characterize UI tabulations generally, the figures as reported by the individual States do not constitute a measure of total payrolls. Instead, estimation is required to fill data gaps. In Virginia and West Virginia establishments with less than eight em- ployees 2 are exempt from mandatory UI cov- erage. Satisfactory estimates of payrolls in these relatively small firms were derived from tabula- tions of the Bureau of Old-Age and Survivors Insurance (BOASI) and added to the UI fig- ures. Unemployment insurance covers firms without regard to size in Pennsylvania, Mary- land and the District of Columbia. More serious limitations marked UI informa- tion in Pennsylvania and West Virginia. In Pennsylvania, county tabulations were available for only one quarter of the year. Accordingly, the Pennsylvania State total of payrolls in each industry covered by the UI program was dis- tributed to counties in 1957 in proportion to Ul-reported payrolls in the first quarter of 1957. This procedure was repeated for 1955 using the sum of the 1955 and 1956 first quarter figures as an allocator. For 1950, UI data for the first quarter of 1949 were used as an allocator, while for 1940 the UI distributor related to the third quarter of that year. In West Virginia, county tabulations of UI data were not furnished for detailed industries but only for seven broad industry divisions and the overall total. Moreover, no UI data were obtained for years prior to 1950. In addition to these gaps in social security coverage or tabulations, numerous minor de- ficiencies exist in all States. As an example, there is the problem of classifying both geographically (by counties) and industrially payrolls left un- allocated by UI. Again, allowance must be made 'Beginning in 1956, the UI program in both Virginia and West Virginia covers establishments with four or more employees. for certain segments of various industries which are outside the scope of the State UI laws. These include federally chartered credit unions, Fed- eral Reserve Banks, electric railways, carrier affiliates in the industry services allied to trans- portation, insurance solicitors on commission basis, and employees' tips. In some instances, payrolls of these industrial segments could be estimated by counties quite readily. In others the task was difficult and the results less satis- factory. In the absence of UI data, a special procedure was necessary to prepare the 1940 estimates for West Virginia. Accordingly, extrapolation by one of three general types was used to extend the 1950 Ul-based figures back a decade. County estimates of payrolls in mining, construction, finance, insurance, and real estate were moved from 1950 to 1940 by changes in special aggre- gates constructed for this particular purpose. These extrapolators were derived for 1940 and 1950 as the product of the number of the labor force in each industry and average wages in re- tail and wholesale trade combined. Number of workers in the labor force were taken from the 1940 and 1950 censuses of population. Average wages by counties were computed for 1950 from Ul-reported payrolls and employment in trade. These county averages were extended to 1940 by relative changes in average wages in trade be- tween 1948 and 1939 as calculated from the Census of Business for each of those years. County payrolls in 1940 in the transportation, communication, and public utilities industries (excluding railroad and water transportation) were derived in the same manner as for mining, construction, etc., with one minor variation. Average wages used in the extrapolation reflected those in trade and manufacturing combined in- stead of in trade alone. County estimates of wages and salaries in West Virginia manufactures in 1950 (based on UI) were extended to 1947 by changes in factory payrolls as shown in County Business Patterns for 1947 and 1951. The resulting county figures for 1947 were then extrapolated to 1940 by total manufacturing payrolls as shown in the 1939 and 1947 Census of Manufactures. A procedure similar to the above was followed for trade and for selected service industries ex- cept that the 1950 figures were moved first to 1948 by data from County Business Patterns and then to 1940 by figures reported in the 1939 and 1948 Census of Business. SOURCES AND METHODS 65 In the absence of State UI data prior to 1938, special methods of estimation were required to extend "covered" wages and salaries from 1940 to 1929. These methods are set forth below in summary fashion. For wholesale and retail trade and for manu- facturing, county estimates of wages and salaries in 1940 were extrapolated to 1929 by changes in payroll disbursements reported in the 1929 and 1939 censuses covering these industrial sectors. The manufacturing data required two types of adjustments. Some estimation was necessary to obtain figures for certain of the less industrial- ized counties. In addition, only selected compo- nents of factory payrolls were used in the extrapolator as there is some question regarding comparability of data reported by the Census of Manufactures for 1939 with those reported for earlier years. This stems from the fact that the 1939 census was the first to call for informa- tion relating to all employees in manufacturing establishments, including those engaged wholly or chiefly in distribution, construction, and other nonmanufacturing activities. As the extent to which such employees were covered in earlier censuses cannot be ascertained, components in- cluding wages and salaries paid them were ex- cluded from the extrapolating series in both 1929 and 1939. The availability of census data for trade and manufacturing on a county basis in 1929 and 1939 gives a solid statistical basis to the county estimates of "covered" payrolls in 1929. To- gether wages and salaries in trade and manu- facturing account for over one-fourth of all wage and salary disbursements in the Potomac Basin in 1929. County payroll figures in 1940 for construc- tion, transportation (excluding water and rail- road) , and the "covered" service industries were extended to 1929 by the product of persons in the labor force in the corresponding industry and average wages. Numbers of persons were ob- tained from the 1930 and 1940 Census of Popula- tion. Average earnings refer to the manufac- turing and trade industries and were computed from the industrial censuses of 1939 and 1929. The final two "covered" industries are mining, and finance, insurance, and real estate. The 1940 estimates for these were moved to 1929 by county changes in the total number of persons engaged in these industries in 1930 and 1940 as reported in the censuses of population for those years. Noncovered Industries County estimates of wages and salaries are prepared for each of 12 industries, or types of employment, not covered by UI data. These include farms; Federal, State, and local govern- ments; railroads; private households; profession- al and related services (including medical and other health services, nonprofit membership organizations, n.e.c, and educational services, n.e.c.) ; water transportation; agricultural serv- ices; and forestry and fisheries. The formulation of estimates for each of these industries is cov- ered in the following sections. The only gen- eralization with regard to reliability that can be applied to the "noncovered" group as a whole is that payroll estimates for this group are less accurate than those for "covered" industries. Exceptions to even this broad statement will be noted below. Government. Benchmark estimates of govern- ment wage and salary disbursements in each Potomac Basin county in 1950 were prepared from data in the 1950 Census of Population. A county allocator for each of the four States in the Basin was prepared as follows. Preliminary estimates of total government payroll disburse- ments in the State and each of its standard metropolitan areas (SMAs) were computed as the product of number of employees and esti- mated average earnings. Data on number of em- ployees were reported for each State, county, and SMA by the census. Average earnings in 1949 (assumed to be the same in relative terms in 1950) for the State and each SMA were de- rived through calculation of arithmetic means from census data showing the distribution of government employees by total-income size classes. Such income distributions were not avail- able for counties. Accordingly, the combined total for all counties not part of an SMA was derived by subtraction of the estimated SMA figures from the State total. This residual was allocated among counties in accordance with the number of government workers in each county as reported in the census. The estimates derived in the foregoing man- ner for 1950 are considered to be of a high order of reliability. This judgment is based on the fact that nearly four-fifths of total government pay- rolls in the Potomac area in 1950 was based on reported income data while only about 20 per- cent rested on a distribution of a residual based on numbers of government workers. 66 POTOMAC RIVER SERVICE AREA The 1950 figures were extended to 1955-57 and to 1929 and 1940 by means of a specially constructed extrapolator. This series represents the piecing together of information from numer- ous and diverse sources. County distributions of wage and salary disbursements were derived for (1) Federal government agencies, (2) State gov- ernment agencies, (3) counties, (4) cities, and (5) special districts (such as school, sewage, or transportation districts) . The Federal segment of the extrapolating series for government payrolls incorporates the following direct data. A county distribution of Federal civilian wages and salaries and employ- ment in the first quarter of 1956 became avail- able with the extension of UI coverage to Federal workers. The 1956 payroll distribution was used to allocate State payrolls in 1955, while UI re- ported data gave a distinct measure for 1957. These, in turn, were extended to 1950 by changes in Federal civilian employment. As noted, the number of workers in 1955 (actually 1956) were obtained from UI. Employment in 1950 was taken from a report on Federal Civilian Employment made by the Joint Committee on Reduction of Nonessential Federal Expenditures (Byrd Committee) to the Congress of the United States in 1950. For 1940 and 1929, distributions of Federal postal employees were obtained from the decen- nial censuses of 1930 and 1940 and used to allo- cate State totals of Post Office payrolls. Other segments of Federal civilian wages and salaries were extended from 1950 by changes in popula- tion except that from 1950 to 1940 changes in wages and salaries paid civilian employees of the Defense Department were assumed to parallel changes in military strength. Information on the county distribution of State government payrolls was limited. County distributions of State government employment in 1950 were derived by subtracting from total government employment as reported by the cen- sus estimated employment of all governmental units other than those at the State level. The 1950 relative county distributions were altered in accordance with population changes between 1929, 1940, 1950, 1955, and 1957. Employment was used to allocate State totals of State govern- ment payrolls to counties. County distributions of the combined payroll of counties, cities and special districts in 1957 were prepared from data in the 1957 Census of Governments. These distributions were extended back by the sum of the individual series described below. Wages and salaries disbursed by county gov- ernments in 1929 and 1940 were based on pay- roll data from the 1932 and 1942 Census of Government. Estimates for 1950, 1955 and 1957 were derived by extrapolation of the 1940 figures forward by county changes in population. Estimated payrolls of most cities in 1940, 1950, 1955 and 1957 were obtained from census re- ports. Figures for the smallest cities were based on population. A series for 1929 was constructed from expenditure data contained in the 1932 Census of Governments. Wages and salaries disbursed by special dis- tricts in 1950 were based chiefly on census re- ports. For 1929, census-reported data on expendi- tures in 1932 were used. Figures for 1940 were derived by straight-line interpolation between 1932 and 1940. Estimates for 1955 and 1957 rested on an extrapolation of the 1950 figures by population. Direct data on military pay disbursements are not available. Accordingly, county estimates were derived via military strength. In 1940, 1950, 1955, and 1957 military payrolls were allocated in two parts. State totals of cash pay and pay in kind (clothing and food) received directly by military personnel were distributed among counties in proportion to military strength by county of duty station. State totals of allotments of pay made by military personnel to their de- pendents were allocated to counties by the sum of civilian population and military strength with each weighted equally. Military pay in 1929 was distributed among counties in the same relative proportion as was estimated for 1940. For 1940 it was necessary to allocate a special component of government payrolls which was not present in any other year covered by this study— wages and salaries of persons on work- relief projects. These were distributed in accord- ance with the numbers of persons on work-relief in each county as reported by the 1940 Census of Population. Agriculture. County wages and salaries in farming are measured by allocating the State totals of farm wages, as estimated annually by the U.S. Department of Agriculture, according to the county distributions of cash farm wages reported in the quinquennial censuses of agricul- ture. The essential assumption here is that farm SOURCES AND METHODS 67 wages paid in kind are distributed among the counties of State in proportion to cash wages. This assumption is of minor importance on two counts. First farm wages in kind account for only a small part of total farm wages. Second, farm wages are of below-average importance as a source of income in most sections of the Potomac Basin. Other private "noncovered" industries. For the remaining "noncovered" industries in the private sector, county estimates of wages and salaries are based largely on data from the decen- nial censuses of population. Because the sources of data and methods of estimation are common to all industries discussed in this section, the following description applies equally to the de- rivation of county payroll disbursements in rail- roads, private households, medical and other health services, nonprofit membership organiza- tions, private educational services, water trans- portation, and forestry and fisheries. For these industries, benchmark distributions of county payroll disbursements in 1950 were prepared. This was done by allocating the De- partment of Commerce State total for individual industries among counties in accordance with the pattern exhibited by a preliminary estimate based on information in the 1950 Census of Population. The preliminary series for each industry was prepared as the product of the number of private wage and salary workers in each county and estimates taken to reflect differentials in average earnings. The number of private employees in each State of the Potomac Basin and in each SMA of 100,000 or more population was tab- ulated directly from the 1950 Census of Popula- tion. For counties outside of SMAs, however, the employment figures in noncovered industries re- flected the total labor force and not simply private employees. This county distribution was used to allocate the residual number of private wage earners calculated as the difference between the total number in the State and the number in SMAs. Differentials in average earnings of persons in each "noncovered" industry were based on the 1950 Census of Population, through calcula- tion of arithmetic means from data showing the distribution of persons by total-income size classes. Such averages could be computed only for the State as a whole and for each SMA of 250,000 or more population. An estimate of av- erage earnings in the combined areas outside of SMAs was computed from the residual yielded by the subtraction of SMA figures from State totals. This residual average was used to repre- sent each county lying outside an SMA. In assessing the reliability of the 1950 bench- mark estimates for noncovered industries, it should be noted that although a relatively indi- rect estimating technique was used for a number of counties, these were the less urbanized areas. The benchmark estimates of wages and salaries in the various noncovered industries in 1950 were extended to 1955 and 1957 as follows: Private household payrolls were moved forward by changes in wages and salaries in personal services (a covered industry) . Nonprofit mem- bership organizations were extrapolated by UI data which covered a substantial portion of the industry. The remaining noncovered industries were extended by changes in population. The 1950 county estimates were moved back to 1940, industry by industry, by an extrapolating series derived as the product of number of private wage and salary workers and average wages in some related "covered" industry. The derivation of the employment series for 1950 has been described; figures on employment in 1940 were obtained from the 1940 Census of Population in a directly comparable manner. Average wages in 1940 and 1950 were computed from UI or census data for the industry selected as most relevant to the noncovered industry. The 1940 figures for noncovered industries were extrapolated to 1929 by changes in the labor force of the appropriate industry as re- ported in the 1930 and 1940 Census of Popula- tion. Miscellaneous industries. This last category of wages and salaries consists of two industries: Agricultural and similar service establishments and rest of the world. No data satisfactory for estimating their distributions by counties are available, but these industries are both minor industries quantitatively. Together they totaled only $17 million in 1957. Payrolls disbursed by agricultural services establishments were allocated among counties of the Potomac area in proportion to the distri- bution of the net income of farm operators (described below) . The "rest of the world" component of wages and salaries represents payments received by United States residents in this country from international organizations (such as UN) and foreign governments. All of this item in the 68 POTOMAC RIVER SERVICE AREA Potomac Basin is assigned to the District of Columbia Metropolitan area. PROPRIETORS' INCOME Proprietors' income measures the net business earnings of owners of unincorporated enterprises, consisting almost entirely of sole proprietorships and partnerships but including also producers' cooperatives and other numerically minor forms of noncorporate business. Farmers, independent professional practitioners (such as physicians, dentists, and lawyers) , entrepreneurs in nonfarm business, and others in a self-employment status are included in the scope of proprietors' income. Measurement of this aggregate is considerably more difficult (and less accurate) than is that of wages and salaries. Contrary to the relative abundance of data in the area of payroll estima- tion, little direct information is available for proprietors' income. Such data as do exist are those contained in the 1950 Census of Popula- tion—the first census to provide information along this line. These data serve as the principal base of a series that is believed to furnish a fairly good approximation of the comparative importance of noncorporate business income in the various county or subarea totals. Estimates for years other than 1950 are based largely on indirect information and hence their accuracy is significantly reduced. Two broad segments of proprietors' income may be differentiated with respect to source material and methods used— nonfarm proprie- tors' income and net farm income. The method- ology used for each is summarized below. Nonfarm Proprietors' Income County estimates of nonfarm proprietors' in- come are derived in two steps. First, a bench- mark distribution measuring net income in all nonfarm industries combined was prepared for 1950 from data collected in the 1950 Census of Population. An extrapolating series by which the 1950 benchmark was extended to other years was prepared as the sum of separate estimates for each eight industries. The 1950 benchmark. A county distribution of nonfarm proprietors' income in 1950 was ob- tained by allocating the total for each State in accordance with the distribution of county esti- mates constructed from the 1950 Census of Population. This distributing series was derived by first computing aggregate income of all proprietors (farm and nonfarm) for the States, each stand- ard metropolitan area, and all other counties combined— the last computed simply as the dif- ference between the State total and that of all SMAs taken together. Farm proprietors' income, estimated in a manner directly paralleling that for all proprietors' income, was deducted from the all-proprietors' series. This gave estimates of nonfarm proprietors' income for each State, each SMA, and for all non-SMA counties combined. The last total was broken down to individual counties in accordance with a relative distribu- tion of the number of nonfarm proprietors (total self-employed minus farmers) in each county with numbers weighted by OASI average annual wages and salaries of all employees in covered industries. Average payrolls were calcu- lated from data in County Business Patterns, a joint publication of the Departments of Com- merce and of Health, Education, and Welfare. For the Potomac Service Area as a whole, self- employment income of nonfarm proprietors living in SMAs, for which the estimates are most accurate, accounted for about four-fifths of the total. The extrapolating series. County estimates of the income of nonfarm businesses in 1955 and 1957 were obtained as follows: OASI data from County Business Patterns on employment and earnings of firms with fewer than eight em- ployees were used to make estimates of "small firm" payrolls for eight industry groups in 1951 and 1956. The percent increases in these small firm estimates were applied to the 1950 nonfarm proprietors' income benchmark estimates. The allocating series thus obtained were used to dis- tribute the 1955 and 1957 SPI State estimates for these eight industry groups to the individual counties. The 1929 and 1940 nonfarm proprietors' in- come estimates were obtained by extrapolating the 1950 benchmark backward by UI payroll series for individual industries. Farm Proprietors' Income Local area estimates of the net income of farm proprietors are equal to (and derived statistically as) the gross income of farmers minus their total expenses of production. As in the case of nonfarm proprietors' income, the central feature of the farm income esti- SOURCES AND METHODS mating procedure is the allocation of independ- ent State totals to counties by means of the most relevant information available. The principal source of local data on farm businesses is the quinquennial censuses of agriculture. It will be noted that whereas local-area income estimates were prepared for 1929, 1940, 1950, 1955, and 1957, the data in the censuses generally related to 1929, 1939, 1949, and 1954. These slight dif- ferences in timing were ignored. Despite the large amount of information col- lected in the various agricultural censuses, there are substantial gaps in data from the standpoint of estimating net farm income on a local-area basis. While the farm income estimates are thus subject to a wide margin of error, the effect of this on the personal income totals is slight throughout most of the Potomac area because of the comparative unimportance of agriculture as a source of income. Gross farm income. This component covers the following separately estimated items: (1) Cash receipts from farm marketings of crops and livestock, (2) the value (positive or negative) of the change in inventories of crops and live- stock, (3) payments to farmers under the Gov- ernment's soil conservation and related pro- grams, (4) the value of food and fuel produced and consumed on farms, and (5) the gross rental value of farm dwellings. Farmers' cash receipts from marketings were distributed among counties according to the value of products reported by the census of agri- culture as either sold or traded. No local-area data are available to measure the current value of the physical change in farmers' inventories over the year (included in net farm income in order to secure a measure of current income, and not simply of net re- ceipts) . Accordingly, the State totals of the value of farm inventory change were allocated with the State totals of cash receipts. County distributions of food and fuel pro- duced and consumed by farm families were taken directly from the census of agriculture for 1929 and 1939. The figures for the latter year were extended to 1950 by changes in the rural farm population as given in the 1940 and 1950 Census of Population. The 1950 relative distribution was held constant for 1955 and 1957. Payments made to farmers by the Federal Gov- ernment for their participation in farm pro- grams in 1940, 1950, and 1955 and 1957 were obtained from the U.S. Department of Agricul- 69 ture by counties. There was no such item in 1929. The gross rental value of farm dwellings is an imputed item of income rather than a cash flow. It was estimated by distributing State totals on the basis of data measuring or reflecting the value of farm dwellings in each county. Figures for this item in 1929 were taken directly from the 1930 Census of Agriculture. A series reflect- ing county differentials in the value of farm dwellings in 1940 was estimated by multiplying the average value of owner-occupied farm homes and the total number of rural farm homes as reported for each county in the 1940 Census of Agriculture. This distribution was extended to 1950 in accordance with county-by-county changes in series calculated for both 1940 and 1950 as the product of the number of farm dwelling units and the average value of owner- occupied rural nonfarm units in each of those years. In the absence of more relevant informa- tion the estimated distributions of gross rental value of farm dwellings in 1950 were used to allocate the 1955 and 1957 State totals of this item. Since the expenses associated with farm dwellings are included with other farm expenses, only the net rental value of farm dwellings be- comes an element of farm proprietors' income. Farm production expenses. County estimates of the expense side of the farm income account are made for about 40 separate items. Nearly all county data used in the allocation of produc- tion expenses were obtained from the quinquen- nial censuses of agriculture. This information varies in terms of adequacy for use in county income estimation. Items such as hired labor and feed purchased are reported directly by the census. Because their scope and content as de- fined by the census is the same or closely similar to their definition as used in county income measurement, the county estimates resulting from their use are quite reliable. Unfortunately such expenses comprise a relatively small pro- portion of total production expenses. Other items reported in the census are related to some explicit expense item in the income series. These include data on the value of farm buildings, machinery, and equipment. These value series are used to distribute the independ- ently estimated State totals of depreciation. Po- tential errors in a depreciation series based on total value as of a given date are large for ob- vious reasons. Farm mortgage interest affords still another 70 POTOMAC RIVER SERVICE AREA illustration of a situation comparable to that for depreciation. The interest item of farm cost is reported in the census of agriculture for indi- vidual counties. But, it covers only a selected group of farm operators and the data are avail- able for only 2 years— 1929 and 1939. Here the reliability of the county estimates depends on the degree to which the group of farm operators surveyed (farms operated by full owners owning no other farm land) is representative, county by county, of all farm operators paying mortgage interest. The method of estimation underlying a final group of production expenses is illustrated by estimates of the costs of operating motor vehicles and net rents paid to landlords living on farms. For neither of these is any really relevant in- formation available on which to construct county distributions. For both, a physical measure is the only factual underpinning of the estimate. In the case of motor vehicles some data on num- bers of vehicles are available, while the net rents series rests on tabulations of the number of acres of farm land rented to and from others. County estimates of these and similar expense items must be regarded as subject to sizable error. On balance, then, farm production expenses on a county basis are subject to larger error than the items of gross income. Further compounding this weakness is the fact that net farm income, as the statistical residual between gross income and production expenses, is subject to greater percentage error than the aggregates from which it is derived. As already observed, however, farm income in the Potomac Basin is of generally insufficient magnitude to introduce significant error into the estimates. PROPERTY INCOME Property income consists of dividends, per- sonal interest income, and rental income of per- sons. In 1957 these three together totaled $800 million, or 13 percent of the personal income flow in the Potomac River area. In 1929, they accounted for 22 percent. Paucity of county data on property income flows constitutes a particularly acute problem in the field of local-area income estimation. This situation has required the use of indirect meth- ods of estimation and has resulted in compara- tively weak— probably the weakest of the major components— estimates of rents, dividends, and interest for small areas. This generalization holds true for the esti- mates of property income made for the Potomac River area. The county estimates of property income for the Potomac area were derived as the sum of estimates for the following components: imputed rents and all other property income (dividends, interest and monetary rents) combined. Imputed Rental Value of Dwellings Nationally, imputed rents measure the net in- come accruing to nonfarm residents in their capacity as homeowners. It equals the gross rental value of owner-occupied nonfarm houses less the actual expenses incurred in home owner- ship. A similar imputation for farm dwellings is included in the estimates of farm income. Imputed rents are included in personal income in order to give comparable treatment to rented and owner-occupied houses. Its inclusion pre- vents any change in the personal income aggre- gate from a mere shift in housing practices of renting versus owning. County estimates of imputed net rental value were prepared by allocating the State totals by the market value of owner-occupied nonfarm homes as computed from census of housing re- ports. Estimated market value was prepared for 1929, 1940, and 1950 by multiplying the number of owner-occupied nonfarm homes in each county by average value. Both numbers of houses and average values were taken from the 15th, 16th, and 17th Censuses of Housing, with some adjustments in the two series to secure comparability. Figures for 1950 were extended to 1955 and 1957 by changes in population. Dividends, Interest, and Monetary Rents County estimates of dividends, interest, and monetary rents received by residents of the Potomac River Service Area in 1950, 1955, and 1957, were based on state experience. Per capita earnings and per capita property income, less imputed rents, were calculated for several years, for the 48 States and the District of Columbia. A regression line was fitted to these State data and an estimating equation computed. Per capita earnings were determined for the relevant counties of the Potomac Service Area and preliminary estimates of per capita property income were read off for each of the counties. SOURCES AND METHODS 71 The product of these per capitas and the popula- tion in 1950, 1955, and 1957 provided county series for allocating the State totals of property income. Estimates for 1929 were prepared by allocating the State totals of these three items according to the amount of these items reported by residents of each county on their 1934 Federal income tax returns. County estimates for 1940 were derived by interpolation between the 1929 and 1950 fig- ures on the basis of population. OTHER COMPONENTS This final section describes how the estimates for the three remaining components of personal income were made. These include: Other labor income, Transfer payments, and Personal contri- butions for social insurance. The last is a "nega- tive" component since the contributions made by individuals under social security and similar programs are excluded from personal income, by handling them as a separate deduction item. Other Labor Income This category consists of supplementary types of labor income paid out or accruing to persons in the current period. These comprise employer contributions to private pension, health, and welfare funds; compensation for injuries; pay of military reservists; and a number of minor items consisting of directors' fees, jury and witness fees, and marriage fees of justices of the peace. Other labor income is a relatively small compo- nent of personal income, forming only slightly more than 1 percent of the Potomac River area's total in 1957. As employer contributions to private pension, health, and welfare funds amount to about two- thirds of the other labor income total, the re- liability of the county estimates of this major income share depend very largely on the ac- curacy of the employer contribution item. These contributions have been measured on a county basis according to the residence of employees for whom they have been made. That is, the geo- graphic breakdown of this item is intended to reflect the amounts contributed by employers on behalf of individuals residing in each of the counties. While such a concept is clear and meaning- ful, statistical data by which to implement it are lacking. Given this lack of direct data, employer contributions under private pension and related plans have been estimated in the county series by allocating State totals on the basis of pay- rolls. Because the ratio of employer contribu- tions to wages and salaries differ widely by in- dustries, this allocation has been carried out in considerable industry detail. A similar procedure was utilized for estimating compensation for in- juries and directors' fees. The remaining items of other labor income together account for less than one-eighth of the total. They have been apportioned to the coun- ties in terms of total population, civilian popula- tion, or veteran population, according to the series deemed most appropriate and available. Transfer Payments Transfer payments consist in general of dis- bursements made to individuals by government or business for which no services are rendered currently. Major examples of government trans- fers include unemployment benefits and relief payments. A principal category of business trans- fers consists of corporate gifts to nonprofit in- stitutions (in personal income nonprofit institu- tions are considered as persons) . Transfers among persons (a gift from one person to an- other or a contribution from an individual to a church, for example) are excluded as they are canceling when viewed from the standpoint of the economy as a whole. The estimates of total transfer payments rep resent the summation of approximately 45 sepa- rate series. Some were obtained through a process of detailed data collection. Others were estimated by means of allocators which vary considerably, both in directness and relevancy. Currently, directly-reported data underlie the estimates of individual items that in combina- tion account for a little more than half of total transfers. In general, these estimates are based on reports of disbursements obtained from the fiscal records of administering government agencies. Moreover, good indirect allocators were available for large segments of the remaining transfers. An example of this is the county dis- tributions of veterans of World War II which were used to apportion certain of the veterans' payments. Transfer payments for which the sta- tistical basis is weak comprise only a small part of total transfers and an almost negligible fraction of total personal income. 72 POTOMAC RIVER SERVICE AREA The estimates of transfers for the current pe- riod are much more reliable than those of earlier years, when direct data provided an underpin- ning for only about 5 percent of the transfer component. Partly offsetting this lesser reliability, however, is the fact that in 1929 transfers ac- counted for less than 3 percent of total income in the Potomac River Basin Area. The following sections provide a brief sum- mary of the sources of data and methods of estimation underlying the principal transfers or groups of transfers. Federal Government transfers. Federal Gov- ernment transfer payments account for three- fourths of total transfers. Two items are singled out for discussion because of the sources of data used. The others are grouped because of the gen- eral similarity of methodology. Benefit payments under the old-age and sur- vivors insurance program form the major ele- ment of Federal transfers. County tabulations of disbursements made under this program in Feb- ruary of 1950 and December of 1956, were obtained from the Social Security Administra- tion. These distributions were used to allocate the State totals of this item to the counties; 1940 was allocated by population. The program, of course, was not in operation in 1929. State unemployment insurance benefits, an- other major component of Federal transfers, were distributed by counties in proportion to wage and salary disbursements reported under the State unemployment insurance program in Penn- sylvania. In Maryland, Virginia, and West Vir- ginia, the county distributions were based on benefit payments or number of claims filed. Benefits paid railroad employees during periods of unemployment were allocated by railroad payrolls. Federal disbursements to government em- ployees (civilian and military) and to veterans are allocated according to one of three methods. Retirement payments to Federal civilian em- ployees were distributed by counties in accord- ance with payrolls and employment in all years. Transfer payments to military personnel and to veterans were distributed by the estimated county distribution of veterans in 1950, 1955, and 1957, and by civilian population in 1929 and 1940. Other Federal transfers generally were allocated by civilian population, with modifications made in the pattern when data permitted. State and local government transfers. This group of transfer payments was estimated as the sum of figures for six separate components. These include direct relief payments, State and local government retirement benefits, public foster home care payments to nonprofit institutions, and State payments to veterans. By far the largest of the individual programs is direct relief, which constitutes approximately two-fifths of State and local government trans- fers. County tabulations of disbursements made in December of 1940, 1950, 1955 and 1957 for the various relief programs were provided by the Social Security Administration. For all States, the relative county distributions reported for 1940 were held constant for 1929. The other transfer items in the State and local category generally were allocated among coun- ties in accordance with the relative distributions of population— total, civilian, children, or vet- erans' as appeared appropriate for die item con- cerned—or of wages and salaries disbursed in some related activity. An important exception to this generalization is provided by the re- ported county distributions of State bonuses to veterans of World War II in Pennsylvania. As this particular component bulked large in the flow of transfers in this State in one or more years, the accuracy of the estimates of over-all transfers is increased significantly by use of these reported figures. Business transfers. Business transfer payments represent disbursements (cash or product) to persons by the business system made other than as payments for participation in production. They include corporate gifts to nonprofit insti- tutions, consumer bad debts, cash prizes, un- recovered thefts from business of cash and capital assets, and personal injury payments from busi- ness to persons other than employees. There are little direct data on business trans- fers even on a national basis. By geographic areas information is totally lacking. Accordingly, the State totals of the various items (statistically weak themselves) were distributed to counties by indirect measures. Corporate gifts to non- profit institutions were allocated by civilian population; consumer bad debts by sales in re- tail trade; and the remaining items by total wages and salaries. Personal Contributions for Social Insurance Contributions made by individuals under the SOURCES AND METHODS various social insurance programs are excluded from personal income by handling them as an explicit deduction item. Payments by both em- ployees and self-employed are included in the series. The employee portion covers contributions for old-age and survivors insurance, State un- employment insurance, railroad retirement in- surance, cash sickness compensation, and Federal and State and local public employee retirement systems, as well as premium payments for gov- ernment life insurance. Contributions of the self-employed relate to old-age and survivors insurance. Personal contributions for social insurance have increased very substantially over the past quarter of a century. In 1929 such contributions in the Potomac area amounted to $6.1 million; by 1957 they totaled $172.1 million. As no direct data on individuals' contributions for social insurance are available, the general procedure was to allocate State totals to the counties on the basis of payrolls in the relevant category of employment. For several of the pro- grams, population or military strength was used. Measures of the three types of programs in ef- fect in 1929, consisting of Federal civilian re- tirement systems, State and local retirement systems, and government life insurance, were obtained by allocating the State totals of these programs by the 1930 population. The item in 1929 accounted for only a fraction of 1 percent of personal income in the Potomac area. Estimates of the contributions made under the seven programs in effect during the period 1940-57 were handled in the following manner. Old-age and survivors insurance, State unem- ployment insurance, and cash sickness-compen- sation funds were allocated to the counties on the basis of total private wage and salary dis- bursements. State totals of government retire- ment systems, both Federal and State and local, and of railroad retirement insurance were dis- tributed among the counties by total civilian government wages and salaries and railroad wages and salaries, respectively. The remaining social insurance programs (government life insurance for the years 1940, 1950, 1955, and 1957 and national service life insurance for 1950, 1955, and 1957) were al- located to counties in two parts; the civilian components were distributed by civilian popula- tion, and the military counterpart of the pro- grams by military strength. 73 PERSONAL INCOME PROJECTIONS National projections of personal income for 1965, 1985, and 2010 were derived from projec- tions of gross national product in those years. In this procedure, the national estimates of per- sonal income for the period since 1929 were divided into three major components— farm, government, and private nonfarm, and each seg- ment was related to the relevant component of gross national product. Relationships between comparable components of GNP and personal income were extended to 1965, 1985, and 2010 on the basis of established trends. As a check on the figures derived in parts, the national total of personal income was ex- tended on the basis of the historical relationship between this total and gross national product as determined from a graphic regression analysis. The projections so derived coincided closely with those obtained by the more detailed approach. In development of the projections of personal income for the area and subregions, the na- tional totals for 1965, 1985, and 2010 were fust subdivided into components, by industry and type of income. This breakdown of the projected totals was based upon analysis of shifts in the national pattern of income composition since 1929. The estimates of personal income in the Potomac area as a whole and in each subregion in 1929, 1940, 1950, 1955, and 1957 were then broken into the same industrial and type of income components as were the national projec- tions of personal income. For the area and each subregion, these components were expressed as a percentage of the corresponding national fig- ures. The percentage shares were analyzed, with those for 1940 generally discounted because of cyclical considerations, and were extended to 1965, 1985, and 2010 in accordance with the historical trends that characterized them over the period back to 1929. It was assumed that beginning around 1985 the historical trend in the rate of growth of each component in the various subregions would begin to move grad- ually toward the national average. By income components, the shares for the Potomac area and each subregion were applied to the appropriate national totals and the results summed to obtain projected total personal in- come. 74 POTOMAC RIVER SERVICE AREA GROSS NATIONAL PRODUCT The development of the National Income and Product Accounts for the United States has been described in detail in a number of volumes published by the Office of Business Economics. For those desiring to review the sources and methods, as well as definitions, underlying these national economic measures, reference should be made to "U.S. Income and Output" and the preceding volume "National Income, 1954 Edition." 3 This section treats simply of the projections of gross national product, utilized in the develop- ment of chapter I, and the associated employ- ment figures. The derivation of the employment and population figures is covered in following sections since many of these data were assembled for purposes of this report. The projections set forth in our report are derived from an assumption of high volume out- put for the years used as compass points. Since trends in the agricultural, government, and private nonfarm parts of the economy are some- what different, the gross national product esti- mate was evaluated by handling each of these segments separately. Further shrinkage in the proportion of total output and employment in agriculture is as- sumed in our projections. This is based essen- tially upon an extension of the Department of Agriculture projection of the demand for farm products in 1975 and 1980. In the calculation of farm gross national product, it is assumed that production per worker on the farm would in- crease at the rate of 2y 2 percent annually to 1975 and at a 2 percent annual rate thereafter. Moderate growth was assumed for government employment and product and, since we had no basis for estimating the size of the armed forces in the future, we simply carried in our tables a number approximating the present level. This does not have any appreciable effect upon the projected growth of national output. Federal civilian government employment was assumed to show a smaller relative rise than total population. The increase for State and local government employment was set at about the same rate as that of the population, although it 'These volumes, Supplements to Office of Business Economies' Survey of Current Business, may be obtained from the Government Printing Office, Washington, D.C., or from any of the Field Service Offices of the U.S. De- partment of Commerce for $1.50 each. is recognized that in the past the rate of growth has been somewhat more than this. Employment in private nonagiicultural in- dustries was derived from the evaluation of past trends, the labor force and the calculations made for agriculture and government. In the projec- tion of private nonfarm gross national product, the past rate of output growth per worker of li/2 percent per year was accepted as a reason- able approximation. EMPLOYMENT The Historical Data The census of population, in the reports deal- ing with occupations, was the only source avail- able for historical employment data by counties, classified by major industries and reaching back to 1930. Therefore, all the employment data in this report for 1930, 1940, and April 1950, except the all-industry national totals shown in table 1 and the 1950 data in table 6, are taken from the United States Census of Population for those years. All employment data other than the United States all-industry totals for 1955 and for all subsequent years, are extrapolations based on the 1950 Census of Population. Since they are based on the definition of employment and the industrial classifications used in the census of population, they are generally different from, and not comparable with, data derived from State government agencies for the same areas. In addition, they include proprietors of unin- corporated business and other self-employed per- sons, all of whom are excluded from employ- ment statistics of State agencies, and govern- ment employees who were also generally ex- cluded prior to 1956. Finally, the data taken from or based on the census of population re- flect the place of residence of employed persons rather than place of work, which determines the geographic classification of workers included in employment statistics originating in State agencies. Employment data for the Potomac River Service Area and its subregions subsequent to the 1950 Census of Population were obtained by for- ward extrapolation of the April 1950 Census of Population employment statistics by means of data from local sources. The basic statistical procedure employed to maintain comparability SOURCES AND METHODS 75 between employment data from the population censuses of 1930, 1940 and 1950 and employment data of subsequent years, was to calculate the percentage that employment in any given in- dustry in any subregion was of the correspond- ing United States total for that industry. Changes in a subregion's percentage share of the national total of an industry from one period to another showed whether that local industry was gaining or losing relative to the industry's growth and by what rate of change. In compiling employment data for periods after April 1950, two major steps were required, one dealing with national industry employment totals and the other with local or subregional employment data. Step one was to raise national employment totals from the level of the April 1950 Census of Population to the 1950 monthly average employment level as measured by the Census Bureau's Monthly Report on the Labor Force. In the case of the United States all-in- dustry employment total, the upward adjust- ment amounted to about 3,400,000. Nearly 2.5 million of this adjustment was attributable to the difference between the April 1950 Census of Population employment total and the April 1950 Monthly Report on the Labor Force civilian employment total, a difference arising from dif- ferent concepts, definitions, and methods of measuring employment used in compiling the two sets of statistics. One such difference, for example, was that of coverage; armed forces overseas were excluded from the census of pop- ulation employment total but included in the Monthly Report on the Labor Force figure. The remainder of the 3.4 million upward adjustment was ascribable to the sharp rise in business ac- tivity from April 1950 to the end of the year, a rise which contributed substantially to the higher level of the 1950 monthly average employment. Monthly averages of national employment totals for individual industries for 1950 and sub- sequent years were derived by distributing the annual averages of total nonagricultural em- ployment reported in the Monthly Report on the Labor Force among the various nonagricul- tural industries. For 1950 and each later year, a percentage distribution of total nonagricultural employment by individual industries was com- puted from the data measuring the number of persons engaged in production published in the Office of Business Economics' volume, "U.S. In- come and Output," table VI— 16. When the an- nual average figure of total nonagricultural employment from the Monthly Report on the Labor Force was multiplied by this percentage distribution, comparable national employment totals for the several individual industries were obtained. Step two in extrapolating employment figures forward from the April 1950 Census of Popula- tion involved the computation of local employ- ment in individual industries in the various sub- regions. Figures of monthly average employment in the individual industries in each subregion for the year 1950 were computed by multiplying the corresponding national employment totals, industry by industry, derived as explained above, by the subregion's percentage share of the na- tional total as calculated from the April 1950 Census of Population tabulation. Comparable local individual industry employment data for subsequent years were computed by multiplying the national industry employment totals by the subregion's percentage share as indicated by local employment data. The most important source of such local employment data for years after 1950 was the reports by the States of Mary- land, Pennsylvania, Virginia, and West Virginia and by the District of Columbia on employment in industries covered by the state unemployment compensation systems. Additional local employ- ment data were obtained from various intermit- tent reports entitled: COUNTY BUSINESS PATTERNS published jointly by the U.S. De- partments of Commerce and Health, Education and Welfare. Data from this source showed em- ployment in the first quarter of the year in industries covered by the Old-Age and Suvivors Insurance Program. For the Washington, D.C. Metropolitan area employment data by industry were available from the Bureau of Labor Sta- tistics of the U.S. Department of Labor. The 1954 and 1958 Censuses of Agriculture, Business, and Manufactures were also utilized as sources for very helpful local data. From the foregoing discussion of the methods of extrapolating employment data forward from the 1950 Census of Population, the reader should be alerted to the fact that there is not complete comparability between the data from the 1930, 1940, and 1950 Censuses of Population and the annual averages of monthly data for 1950 and subsequent years. The biggest differ- ence between the two sets of figures for employ- ment in an individual industry occurs in the 76 POTOMAC RIVER SERVICE AREA government category. In the census of popula- tion, where employment by industry was de- termined largely on an occupational basis, the tabulation of government employment was very incomplete (only about half of the total) be- cause it included only those employees of Fed- eral, State, and local governments engaged in "public administration." Thus many professional persons employed in government were classi- fied in the service industries as doctors, teachers, engineers, etc., while employees in an establish- ment such as the Naval Gun Factory were in- cluded under manufacturing. In the annual average employment data for 1950 and subse- quent years, the count of government employ- ment is much larger because it includes all government employees whatever their occupation including, as already noted, armed forces over- seas. Employment Projections Employment projections for the Potomac River Service Area and its subregions were de- rived in three steps. First, the all-industry em- ployment total for the United States was projected ahead. Next, the projected national all-industry employment total for each year was distributed among the individual major indus- try groups. Finally, employment projections for each of the subregions for each industry group were derived by projecting each subregion's share of the national employment total in a given industry. Projection of the United States all-industry total. The projection of United States total em- ployment was based upon the projections of the national output and population. The connecting links between these two factors are the projected labor force average participation rate and the average output per worker. Our assumptions as to the growth rates of productivity per worker have already been stated in the section discussing the projections of the gross national product. Labor force projections of varying sizes for the same future period could be based upon the same population projections if different patterns of labor force participation rates by age and by sex were used. The Census Bureau has published four different projections of labor force partici- pation rates for the years 1960, 1965, 1970, and 1975 (Current Population Reports, Labor Force Series P-50, No. 69) . The differences among these four alternative patterns of labor force participation arise chiefly from the differing assumptions underlying the projections with regard to the outstanding his- torical trends that have developed since 1920 (the earliest date for which labor force participa- tion rates are available) . Those basic historical trends are: first, the steady decline in the male participation rate, as relatively more young men attend school or college and as relatively more older men retire sooner than formerly was the case; and second, the steady rise in the female participation rate as relatively more women in all age groups above 19 years seek employment outside the home. The rise has been particularly striking in the middle age groups, where the female participation rate nearly doubled be- tween 1920 and 1950. The difference between the highest and low- est participation rate patterns in the census re- port referred to above becomes substantial when projected to 1975, the highest projection averag- ing over all age groups 4.4 percent larger than the lowest; if these same projections were ex- tended to the year 2010, the difference would be considerably larger. The highest projected rate pattern, Projection II, maintained through 1975 the average annual rate of change in the labor force participation rates that occurred between 1950 and 1955. The lowest projected rate pat- tern, Projection IV, held all participation rates constant at their 1955 levels through 1975. For our labor force participation rate projec- tion, we chose a modification of Census Bureau Projection I through 1975. This rate pattern as modified by OBE assumes a continued decline in the male average participation rate from 1955 levels to 1980 largely as a result of lower par- ticipation by males of school and college age and those 55 years old and over; after 1980, the rates for individual age groups remain constant until 2010. Broadly speaking, the rate pattern used assumes the continuation until 1980 of the his- torical decline in the male participation rate. The resulting average rate in the terminal year is about midway between the highest and the lowest of the Census Bureau's projections for 1975. Labor force participation by females, accord- ing to our assumption, also continues its historic, i.e., upward trend until 1980. Thereafter, how- ever, we have assumed that the factors governing female entry into the labor force would reverse the trend and lower female participation to SOURCES AND METHODS 77 around 1955 levels by 2010. Among the factors expected to bring about this reversal are the marked rise anticipated in average family in- come and the growing need for additional edu- cation and training that will be required of women seeking jobs outside the home. The re- sulting average female participation rate in the terminal year of our survey approximated the lowest of the Census Bureau's projections for 1975. The average participation rate for both sexes in 2010, weighted according to the num- bers expected in the various age groups, would be about 214 percent below the 1955 figure. We appreciate that the employment total re- sulting from the application of this labor force participation rate pattern to the population pro- jections and from an allowance for frictional unemployment, might be considered by some to be a conservative figure for the year 2010. We believe, however, that the figure used is consist- ent with the much higher level of output per person which we assume will prevail at that time, and with the higher educational and train- ing requirements associated with higher pro- ductivity. Projection of national employment by major industry groups. After the United States all- industry employment totals had been projected, the total for each year was distributed among the individual major industry groups shown sep- arately by two different methods used to check each other. The first of these procedures to distribute the projections of total national employment among the individual industry groups was to project a pattern of demand for the goods and services produced by them. For example, the population projections coupled with per capita food and nonfood agricultural material requirements yielded the projected demand for the products of agriculture. The government segment was assumed to shrink somewhat as a portion of the total on the ground that defense requirements would not expand as rapidly as civilian activities. Demand for the total private nonfarm output was assumed to absorb the available labor not utilized in agriculture and government. Since demand for the farm and government segments was assumed to shrink somewhat the share of demand for private nonfarm output was assumed to expand. Based on all the evidence available as to their recent trends, output per person engaged in each of the above broad industry groupings was then projected ahead. From the estimates of productivity per person and estimates of demand or output requirements, the employment projec- tions of those industry groups were then computed. Demand patterns were also projected for vari- ous private nonagricultural industries for which employment projections were to be shown sep- arately because of their importance in the Po- tomac River Service Area. For each such industry output per person engaged in production was also projected ahead on the basis of indicated trends. The employment distribution was then derived from the projected output requirements and productivity per person employed. National employment totals for major indi- vidual nonagricultural industries obtained by the foregoing procedure were then compared with those derived from a second method. This was based on a study of the historical trend of the ratio of employment in each industry group to total nonagricultural employment. After con- sideration of all the information available to us relevant to the growth trends of the various industry groups, each industry's ratio was pro- jected ahead and applied to the projected na- tional total of nonagricultural employment. In the case of the three manufacturing industries selected for separate projection because of their importance in the Potomac River Service Area, the ratio of their employment to total manu- facturing employment was the ratio projected ahead. The alternative patterns of individual in- dustry employment obtained by these two meth- ods were compared. A single pattern of employ- ment in the various industries was then derived which seemed to us, in the light of the relative advantages and limitations of the alternative methods, to be the most reasonable distribution of nonagricultural employment among the vari- ous industry groups. The resulting employment figures are shown in table 6. Potomac River Service Area Projections. Em- ployment projections in the Potomac River Service Area were determined by a combination of two procedures. Both were based upon the same underlying method, i.e., the measurement and projection of the differential growth rate of an industry in a given area relative to that of the same industry in the Nation as a whole. One procedure was to make separate projec- 78 POTOMAC RIVER SERVICE AREA tions for the individual industries or industry groups in each subregion by measuring and projecting their individual differential growth rates relative to the corresponding national in- dustry employment total. The advantage of this method was that it enabled us to bring more types of information to bear upon the future outlook and to weigh their relative importance. The other procedure was to measure and project the differential growth rate of the all-industry employment total in the given subregion relative to total United States employment. This method had the advantage of enabling us to judge the economic outlook as a whole, unobscured by the divergent and sometimes conflicting trends of individual industries. The two sets of projections were then placed side by side and reexamined with the objective of merging them into a single set of projections based on the most reasonable features from both approaches. POPULATION The Bureau of the Census is the source of all the historical population data used in this survey as well as the projections of United States pop- ulation. Since the Census Bureau has long col- lected and analyzed population data, the Corps of Engineers naturally looked to it for the basic underpinning of the population figures used in the water resource development survey. How- ever, the projections of population in the Po- tomac River Service Area were made by the Office of Business Economics upon the basis of its survey of job opportunities as outlined above. Initially, the Census Bureau provided the Of- fice of Business Economics four alternative pro- jections of the United States population, based upon different fertility assumptions. These four series were extensions to the year 2010 of those already published by the Bureau of the Census through the year 1975. They are designated as projections AA, A, B, and C in the tables in- cluded in the appendix. Between the highest of the four projections, the AA series, and the lowest, the C series, there is a wide range. The other two series, designated as A and B, provide estimates falling between the two extremes. At the time the Office of Business Economics prepared the Economic Base Survey of the Dela- ware River Service Area for the Corps of Engi- neers, it was decided to use an intermediate projection of United States population which did not correspond precisely with any of these four. The intermediate population projection actually used as the basis of the economic base survey of the Delaware River Service Area and also this economic base survey of the Potomac River Service Area (Series "V") was furnished us by the Bureau of the Census in accordance with our specifications, although we modified it slightly in the later years of the period. This national population projection is based upon the assumption that fertility rates, starting from a level just slightly higher than the average level that has actually prevailed for the period 1955- 59, inclusive (which was the highest of the last half century) , would decline in roughly linear fashion to the 1942-44 level by the 1990-95 period and then remain constant at that level. This assumed a reduction of somewhat more than one-fourth from the current high level of fertility. The death rate estimates provide for moderate declines through the projection period. Net im- migration from abroad is projected at a constant amount of 1.2 million for each 5-year period. The five alternative patterns of United States population growth classified according to sex and broad age groups are shown in appendix tables 3 through 7. Recently the Census Bureau has published four new series of projections of the Nation's population to the year 1980 based upon later demographic trends. These are designated Series I, II, III, and IV. Series I projects the highest population growth; Series II, III, and IV are progressively lower. The difference between these later projections by the Census Bureau and the previous ones is chiefly in the assumption of considerably higher rates of fertility. The na- tional population projections the Office of Busi- ness Economics has used in this report corre- spond fairly closely with Series III throughout the entire half century. Considering the decline in fertility from the 1957 peak level that has already occurred, we believe there is as yet no clear evidence that the high fertility rate assump- tions underlying Series I and II are more likely to prevail than the assumptions underlying the Series "V" population projections which we have used, nor are we disposed to switch to the low fertility rates assumed in Series IV. These more recent population projections are shown in ap- pendix table 8. SOURCES AND METHODS 79 HOUSEHOLDS The Bureau of the Census was the source of all the historical data on the number of house- holds in the United States and in the Potomac River Service Area. It also furnished us with projections of the number of persons per house- hold through the year 2010 which we applied to the population projections of Series "V" to de- rive the projections of the number of households in the United States in 1965, 1985, and 2010. As in the case of population, the Census Bureau initially submitted four alternative household projection patterns for the United States based on the Series AA, A, B, and C pop- ulation projections. These were extensions to 2010 of the projections shown in the publication "Projections of the Number of Households and Families, 1960 to 1975" (see Current Population Reports, Population Characteristics, Series P-20, No. 69) . Subsequently, a fifth alternative set of household projections was furnished us by the Census Bureau based on the fifth alternative series of population projections. This fifth series of household projections was the source of the projected numbers of persons per household which we applied to our Series "V" population projections to derive the projections of the num- ber of households in the United States over the coming half century. The number of households by definition coin- cides with the number of occupied dwelling units. The occupants of a dwelling unit may vary from a husband-wife family to a single individual. The method used by the Census Bureau to project the number of households in the United States was to apply age-sex-specific household status rates to the projected popula- tion classified according to sex and age. The projections of the number of households in the Potomac River Service Area and its sub- regions were made by the Office of Business Economics. The method used was to project for each subregion the number of persons per house- hold and to divide this number into the popula- tion projected for that subregion. Not only are the numbers of persons per household in the Potomac River Valley signif- icantly higher than in the Nation as a whole but they vary considerably among the five sub- regions. The variations in the number of persons per household were, however, found to be cor- related with per capita income and with the labor force participation rate. These relation- ships were the basis for the projections of num- bers of persons per household in the individual subregions. In all of the projections of national totals of households, the number of persons per house- hold declines substantially over the next half century chiefly because of the declines assumed in the birth rates. The amount of decline in a given series thus depends upon the assumed de- cline in fertility from current levels in the corre- sponding projected population series. The projected national totals of households which we have used in this report corresponding to the Series "V" population projections, reflect a re- duction of about one-tenth in the average num- ber per household by the year 2010. Appendix SUPPLEMENTAL STATISTICAL TABLES AND EXPLANATORY NOTES ON TABLES (including Sources of Data for Tables 1-47) 82 POTOMAC RIVER SERVICE AREA Appendix Table 1.— United States— Gross National Product, Personal Income, Employment, and Population, 1909-39 Year Gross national product ' Personal income 2 Employment 3 (annual avg.) Population 4 (>iy i) Billions of mi dollars 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 110.7 113.1 116.6 123.2 124.5 119.2 116.9 127.7 127.8 144.2 142.9 133.8 123. 5 142.0 159. 5 1594 172.7 185. 5 185.2 183. 4 193. 9 1758 162.8 138.1 135 149. 1641 186.4 197.1 188.6 203.6 144.4 135- 7 130.1 112.1 109.6 117.0 129. 145.5 1512 143.8 154. 5 Milll 47.9 45.7 42.7 39.2 390 41.2 42 44 46 44 46.1 Millions 90.5 92.4 93.9 95.3 97.2 99.1 100.5 102.0 103.4 104.6 105.1 106.5 108.5 110.1 112.0 114.1 115.8 117.4 119.0 120.5 121.9 123. 2 124.1 124.9 125.7 126.5 127.4 128.2 129.0 130 1310 1 Source: U.S. Department of Commerce, Office of Busi- ness Economics. Estimates for the years prior to 1929 are derived from different sources and by different methods from the regularly published series. They incorporate a great deal of painstaking research, undertaken in the course of a long succession of private and governmental studies. Nevertheless, their quality necessarily reflects the less developed state of the country's economic statistics in that earlier period— in respect both to the variety and reliability of the data available. 3 Personal Income: Continental United States. Source: VS. Department of Commerce, Office of Business Eco- nomics. Totals are the annual series on State personal income translated to a constant 1957 dollar basis by the deflator implicit in the Department of Commerce esti- mates of constant-dollar personal consumption expendi- tures. 3 Employment: Source: Beginning 1940, U.S. Depart- ment of Commerce, Bureau of the Census. Years prior to 1940 were constructed by U.S. Department of Labor, Bureau of Labor Statistics, to provide a historical series comparable in concept to the estimates issued by the Bureau of the Census beginning that year. Employment as tabulated here represents employed civilians and mem- bers of the armed forces. 'Population: Total United States (including armed forces overseas). Source: U.S. Department of Commerce, Bureau of the Census. Note.— Data subsequent to 1939 have been presented in table 5. APPENDIX 83 Appendix Table 2.— United States— Major Components of Gross National Product, 1909-57 [Billions of 1957 dollars] Year 1909. 1910. 1911. 1912. 1913. 1914. 1915. 1916. 1917. 1918. 1919. 1920. 1921. 1922. 1923. 1924. 1925. 1926. 1927. 1928. 1929. 1930. 1931. 1932. 1933. 1934. 1935. 1936. 1937. 1938. 1939. 1940. 1941. 1942. 1943. 1944. 1945. 1946. 1947. 1948. 1949. 1950. 1951. 1952. 1953. 1954. 1955. 1956. 1957. 1958. 1959. Gross national product 1 110.7 113.1 116.6 123.2 124.5 119.2 116.9 127.7 127.8 144.2 142.9 133.8 123. 5 142.0 159.5 159. 4 172.7 182.5 182.2 183.4 193.9 175.8 162.8 138.1 135. 1490 164.1 186.4 197.1 188.6 203.6 221.9 258.2 297.9 327.4 351.5 345. 5 305.4 305.0 316.6 316.5 343.4 370.8 384.2 401.4 393.9 425.5 435.3 442.8 434.7 463.7 Farm 13.3 13.6 12.7 15.2 12.8 14.0 15.9 13.6 15.1 138 14.5 14.6 13.0 14.0 150 14.2 15.8 14.9 15.8 14.9 15.4 14.3 16.6 15.6 15.2 12.7 15.5 13.0 16.9 16.7 16.6 16.2 17.4 18.9 17.4 17.8 16.8 17.0 15.7 17.8 17.0 17.9 16.7 17.4 18.0 18.8 19. 8 19.4 19.4 20.2 20.0 Government Private nonfarm 5.8 91.6 6.1 93.4 6.3 97.6 6.5 101.5 6.8 104.9 7.1 98.1 7.4 936 7.6 106.5 9.8 102.9 19.5 110.9 13. 5 114.9 10.0 109.2 9.9 100.6 9.6 118.4 9.8 134.7 10.2 1350 10.6 146.3 10.9 156.7 11.3 1551 11.5 157.0 11.9 166.6 12.5 149.0 12.7 133.5 12.4 110.1 13.6 106.2 16.0 120.3 17.1 131. 5 20.2 153.2 18.8 161.4 20.5 1514 20.6 166.4 20.6 185.1 25.7 215.1 37.4 241.6 58.5 251.5 67.6 266.1 66.3 262.4 34.8 253.6 26.5 262.8 26.6 272.2 27.8 271.7 28.8 296.7 358 318.3 38.6 328.2 38.2 345.2 37.6 337.5 37.5 368.2 38.4 377.5 38.9 384. 5 39.2 3753 39.6 404.1 1 See appendix table 1. 84 POTOMAC RIVER SERVICE AREA Appendix Table 3.— United States— Projection V of the Total Population by Broad Age Groups [Millions] Age BOTH SEXES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over MALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over FEMALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over 1955 1965 1985 2010 165 49 58 45 14 82 25 29 22 7 83 24 29 23 7 195 61 65 51 18 96 31 33 25 8 99 30 32 27 10 267 80 103 57 27 132 41 52 28 11 135 39 51 29 16 370 100 139 98 33 184 51 70 49 14 186 49 68 50 19 Source: U.S. Department of Commerce, Bureau of the Census and Office of Business Economics. This projection, Census Series "V," as adjusted by the Office of Business Economics, was used in the body of the report. It assumes that fertility rates starting from a level just slightly higher than the average level of the period 1955-59 inclusive, would decline in roughly linear fashion to the 1942-44 level by the 1990-95 period and then remain constant at that level. Appendix Table 4.— United States— Projection AA of Population by Broad Age Groups [Millions] Age BOTH SEXES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over MALES All ages Under 15 years 15-uader 40 years 40-under 65 years 65 years and over FEMALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over 1955 1965 1985 2010 165 49 58 45 14 82 25 29 22 6 83 24 29 23 7 193 60 65 51 17 96 31 33 25 98 29 32 27 10 275 91 103 56 25 136 47 52 27 10 139 45 51 29 15 441 144 169 97 31 220 70 83 49 13 221 74 86 48 18 Note.— These figures represent extensions of AA series of projections for 1975 published in Bureau of Census Series P-25, No. 123. Projections assume that the AA (1954-55) fertility level assumed for the 1970-75 period declines gradually to the A (1950-53) level by 2005-10. Projected mortality rates allow for declines in mortality. Net immigration from abroad assumed to number 1.2 million for each 5-year period. APPENDIX 85 Appendix Table 5— United States— Projection A of Population by Broad Age Groups [Millions] Age BOTH SEXES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over MALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over FEMALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over , 1955 1965 1985 2010 165 49 58 45 14 82 25 29 22 6 83 24 29 23 7 190 57 65 51 17 94 29 33 25 7 96 28 32 26 10 262 83 98 56 25 129 43 50 27 10 133 41 48 29 15 407 130 153 92 31 203 67 78 45 13 204 63 75 47 18 Note.— These figures represent extensions of the A series of projections for 1975 published in Bureau of Census Series P-25, No. 123. Projections assume that the A (1950- 53) fertility level assumed for the 1970-75 period remains constant throughout the projection period. Projected mortality rates allow for declines in mortality. Net im- migration from abroad assumed to number 1.2 million for each 5-year period. Appendix Table 6.— United States— Projection B of Population by Broad Age Groups [Millions] Age BOTH SEXES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over MALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over FEMALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over 1955 1965 1985 2010 165 49 58 45 14 82 25 29 22 6 83 24 29 23 7 190 57 65 51 17 94 29 32 25 96 28 32 27 10 239 62 96 56 25 117 32 49 27 10 121 30 47 29 15 307 74 111 91 31 152 38 56 45 13 155 36 55 46 18 Note.— These figures represent extensions of the B series of projections for 1975 published in Bureau of Census Series P-25, No. 123. Projections assume that the C (1940- 42) fertility level assumed for the 1970-75 period remains constant throughout the rest of the projection period. Projected mortality rates allow for declines in mortality. Net immigration from abroad assumed to number 1.2 million for each 5-year period. 86 POTOMAC RIVER SERVICE AREA Appendix Table 7.— United States— Projection C of Population by Broad Age Groups [Millions] Age BOTH SEXES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over MALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over FEMALES All ages Under 15 years 15-under 40 years 40-under 65 years 65 years and over 1955 1965 1985 2010 165 186 229 289 49 53 59 69 56 65 90 104 45 51 56 85 14 17 25 31 82 92 113 143 25 27 30 35 29 32 45 53 22 25 27 42 6 8 10 13 83 94 117 146 24 26 29 34 29 32 44 51 23 27 29 43 7 10 15 18 Note.— These figures represent extensions of the C series of projections for 1975 published in Bureau of Census Series P-25, No. 123. Projections assume that the C (1940- 42) fertility level assumed for the 1970-75 period remains constant throughout the rest of the projection period. Projected mortality rates allow for declines in mortality. Net immigration from abroad assumed to number 1.2 million for each 5-year period. Appendix Table 8.— United States— Illustrative Projections of the Population, 1965 to 2010 [Millions] Year Series I Series II Series III Series IV 1965 1985 2010. 199 304 508 196 287 459 194 266 379 192 247 328 Source: U.S. Department of Commerce. These pro- jections are later than and supersede the AA, A, B and C series shown in the preceding tables. Projections through 1980 published in CURRENT POPULATION REPORTS, Population Estimates, Series P-25, No. 187, November 10, 1958; comparable projections for 1985, Bureau of the Census. Data for 2010 are estimates of OBE based on the explicit assumptions shown below. The specific fertility assumptions are as follows: Series I From 1958 to 1975-80, fertility averages 10 percent above the 1955-57 average level; then fertility declines to the 1949-51 level by 2005- 10. Series II Fertility remains constant at the 1955-57 aver- age level to 1975-80, then declines to the 1949-51 level by 2010. Series III From the 1955-57 average level, fertility de- clines to the 1949-51 level by 1965-70 and remains constant at that level for a decade; from the 1975-80 period fertility then declines to the 1942-44 level by 2005-10. Series IV Fertility declines from the 1955—57 average level to the 1942-44 level by 1965-70, then re- mains constant at that level throughout the remainder of the projection period. Only one series on mortality is incorporated in all four population projections. This assumes moderate declines in mortality to the end of this century. Net immigration from abroad was assumed to be constant at 300,000 per year for all four scries. APPENDIX 87 Appendix Table 9.— Potomac River Service Area— Population by Counties, 1930—60 [Thousands] 1930 1940 1950 1960 Potomac River Service Area, total Downstream area Tidewater portion Maryland : St. Marys Virginia segment King George Northumberland Westmoreland Washington Metropolitan Area Supplement "B" portion.. Maryland : Charles Virginia segment Fauquier Prince William Stafford Washington Metropolitan area Maryland segment Montgomery Prince Georges Virginia segment Arlington Fairfax Alexandria City Falls Church City District of Columbia Piedmont area Washington Metropolitan Area Supplement "A" portion. Maryland segment Carroll Frederick Virginia : Loudoun Pennsylvania: Adams Great Valley area Shenandoah River Basin portion , Virginia segment Augusta Clarke Page Rockingham Shenandoah Warren Harrisonburg City Staunton City Waynesboro City West Virginia segment Jefferson Area south of Potomac portion Virginia segment Frederick Winchester City West Virginia segment Berkeley Morgan Maryland : Washington Pennsylvania : Franklin Appalachian area North Branch Potomac portion Maryland segment Allegany Garrett West Virginia : Mineral South Branch Potomac portion West Virginia segment Grant Hampshire Hardy Pendleton Pennsylvania : Fulton 1,432.2 99.3 40.1 15.2 24.9 5.3 11.1 8.5 59.2 16.2 43.1 21.1 14.0 8.1 672.2 109.3 49.2 60.1 76.0 26.6 25.3 24.1 i 486.9 147.4 110.3 90.4 36.0 54.4 19.9 37.1 345.2 153. 9 138.1 38.2 7.2 14.9 29.7 20.7 8.3 7.2 12.0 2 15.8 15.8 60.5 24.0 13.2 10.9 36.4 28.0 8.4 65.9 65. 168.1 119.1 99.0 79.1 19.9 20.1 39.8 39.8 8.4 11.8 9.8 9.7 9.2 1,784.6 106.0 40.0 14. 6 25.4 5.4 10.5 9.5 65.9 17.6 48.3 21.0 17.7 9.5 968.0 173. 4 83. 9 89. 5 131.5 57.0 40.9 33.5 i 663.1 156.1 116.7 96.4 39.1 57.3 20.3 39.4 369.3 167.2 150.4 42.8 7.2 14.9 31.3 20.9 11.4 8.8 13. 3 2 16.8 16.8 63. 9 26.1 14.0 12.1 37.8 29.0 8.7 68.8 69.4 185.3 1312 109.0 87.0 22.0 22.2 43.5 43.5 8.8 13.0 10.8 10.9 10.7 2,368.5 1352 56.0 291 26.9 6.7 10.0 10.1 79.2 23.4 55.8 21.2 22.6 11.9 1,464.1 358.6 164.4 194.2 303.3 135.4 98.6 61.8 7.5 802.2 172 128 107 44 62 21 44 412.5 187.7 170.5 34.2 7.1 152 351 21.2 14.8 10.8 19.9 12.4 17.2 17.2 70.0 31.4 17.5 13.8 38.6 30.4 8.3 78.9 75.9 184.2 133.1 110.8 89.6 21.3 22.3 40.7 40.7 8.8 12.6 10.0 9.3 10.4 ,996.6 190.1 67.0 38.9 28.2 7.1 10.1 10.9 123.1 32.6 90.5 238 50.0 16.7 ,969.0 695.1 338.7 356.4 527.0 163.9 262.5 90.4 10.2 747.0 200.7 149.0 124.7 52.6 72.1 24.3 51-7 462.6 205.9 187.3 36.7 7.9 15.6 40.5 21.6 14.7 11.9 22.7 15-7 18.6 18.6 79.2 36.9 21.9 15.1 42.2 33.9 8.4 90.2 87.3 174.2 126.4 104.1 83-8 20.3 22.3 37.3 37.3 8.3 11.7 9.3 8.1 10.5 1 Included in Fairfax County. 2 Included in Augusta County. 88 POTOMAC RIVER SERVICE AREA Appendix Table 10.— Potomac River Service Area— Number of Households by Counties, 1930-50 [Thousands] Potomac River Service Area, total Downstream area Tidewater portion Maryland: St. Marys. . . . Virginia segment King George Northumberland. . . . Westmoreland Washington Metropolitan Area Supplement "B" portion. . . Maryland: Charles Virginia segment Fauquier Prince William Stafford Washington Metropolitan area Maryland segment Montgomery Prince Georges Virginia segment Arlington Fairfax Alexandria City Falls Church City District of Columbia Piedmont area Washington Metropolitan Area Supplement "A" portion... Maryland segment Carroll Frederick Virginia: Loudoun Pennsylvania: Adams , April 1930 342.6 21.1 12.6 3.3 9.2 4.5 2.9 1.8 168.9 25.4 11.8 13.6 18.0 6.5 5.6 5.9 i 125.6 35.1 25 21 8 12 4, 9. April 1940 447.9 23 14.0 3.8 10.2 4.9 32 2.1 250.0 43.1 21 21 33 15 1734 38.8 28.6 23.8 9.5 14.3 4.8 10.2 April 1950 644.1 32.4 13. 3 6.3 7.0 1.7 2.7 2.6 19.1 55 13.6 5.3 5.2 3.1 405.1 95 45 50 85 40 24 18 2 224 45.1 331 27.8 11.3 16.5 5.3 12.1 Great Valley area Shenandoah River Basin por tion Virginia segment Augusta Clarke Page Rockingham Shenandoah Warren Harrisonburg City. . Staunton City Waynesboro City. . . West Virginia segment. . . Jefferson Area south of Potomac por- tion Virginia segment Frederick Winchester City. . . . West Virginia segment. . Berkeley Morgan Maryland: Washington Pennsylvania: Franklin Appalachian Area North Branch Potomac por- tion Maryland segment Allegany Garrett West Virginia: Mineral. . South Branch Potomac por- tion West Virginia segment. . . Grant Hampshire Hardy Pendleton Pennsylvania: Fulton April April 1930 1940 80.2 916 34.3 39.8 30.6 35.7 8.1 9.9 1.6 1.8 3.3 3.5 6.6 7.3 5.0 5.3 19 2.7 1.7 2.3 2.4 2.9 i i 3.7 4.1 3-7 4.1 14.3 16.4 5-8 6.7 3.0 3.4 2.7 3.3 8.5 9.7 6.6 7.5 1.9 2.2 15.8 17.7 15.8 17.8 37.3 44.4 26.8 32.3 22.3 26.8 18.1 21.8 4.2 5.0 4.5 5.5 8.4 9.5 8.4 9.5 1.8 2.0 2.7 3.0 1.0 2.3 1.9 2.2 2.2 2.6 April 1950 111.8 48.7 44.1 8.3 1.9 4.0 9.0 5.8 3.9 2.9 4.9 3.4 4.6 4.6 19.7 8.8 4.6 4.2 10.9 8.6 2.3 22.3 21.1 49.6 36.9 30.9 25-4 5.4 6.1 10.0 10.0 2.2 3.2 2.5 2.1 2.7 1 Included in Fairfax County in 1930 and 1940. 'Included in Augusta County in 1930 and 1940. Source: U.S. Department of Commerce, Bureau of the Census. EXPLANATORY NOTES TO THE TABLES General note to all tables Data may not add to totals due to rounding. General note to all tables showing United States totals United States totals exclude Alaska and Hawaii. Table 1 Gross National Product and Personal Income Source: U.S. Department of Commerce, Office of Busi- ness Economics. Personal income is income received by residents in the United States, and per capita figures are computed using July 1 estimates of the resident popula- tion excluding armed forces overseas. Population Source: U.S. Department of Commerce, Office of Busi- ness Economics. Estimates of midyear population for 1955, 1957, and 1959 are based on information supplied by the Bureau of the Census derived from preliminary data from the 1960 Census of Population. Projections are based on the Series "V" population projection. See chapter V: Sources and Methods Used in Preparing Basic Measures, section on population. Households Source: U.S. Department of Commerce, Bureau of the Census. Data for 1955, 1957, and 1959, as of July 1, inter- polation of published figures. Projections, made by the Office of Business Economics, are based on the Series "V" population projection and are explained in chapter V: Sources and Methods Used in Preparing Basic Measures, section on households. Employment Source: U.S. Department of Commerce. Historical data: Bureau of the Census. Projections: Office of Business Eco- nomics. Data reflect total employment including armed forces overseas. Table 2 Personal Income Source: U.S. Department of Commerce, Office of Busi- ness Economics. See chapter V: Sources and Methods Used in Preparing Basic Measures, section on personal income. Population Source: U.S. Department of Commerce. 1957 data, from the Bureau of the Census, are for resident population, ex- cluding armed forces overseas. Projections, from the Office of Business Economics, represent total population, as no attempt was made to estimate armed forces overseas. Households Source: U.S. Department of Commerce. The July 1, 1957 figure is from the Bureau of the Census. Projections: Office of Business Economics. Employment Source: U.S. Department of Commerce, Office of Busi- ness Economics. Armed Forces Overseas These are excluded from the 1957 data. In the pro- jections, however, no attempt was made to estimate the size of armed forces overseas; hence they are implicitly included. Whenever armed forces overseas are included in the employment total, they are also included in the noncommodity-producing industry group and in the gov- ernment segment. Agriculture 1957 data and projections based on percentage changes in the farm labor force from 1950 to each year shown, made by the U.S. Department of Agriculture, Agricultural Research Service Technical Report entitled: An Analysis of Recent Changes and Probable Future Trends in the Agricultural Economy of the Potomac River Basin; June 1960. Table 3 Source: U.S. Department of Commerce, Office of Busi- ness Economics. Table 4 Population Source: U.S. Department of Commerce. 1960 data, from the Bureau of the Census, are preliminary returns from the 1960 Census of Population and include resident popu- lation only, excluding armed forces overseas. Projections, by the Office of Business Economics, represent total popu- lation as no attempt was made to estimate armed forces overseas. Employment Source: U.S. Department of Commerce, Office of Busi- ness Economics. (See note on employment for table 2 relative to armed forces overseas.) Table 5 Gross National Product Source: U.S. Department of Commerce, Office of Busi- ness Economics. Personal Income Source: U.S. Department of Commerce, Office of Busi- ness Economics. Employment Source: Years 1940 to date, U.S. Department of Com- merce, Bureau of the Census. Years prior to 1940 compiled by the U.S. Department of Labor, Bureau of Labor Sta- tistics, to provide a comparable series for earlier years. These employment data follow the concepts and defini- tions of the Monthly Report on the Labor Force and represent civilian employment and members of the armed forces wherever stationed. Population Source: U.S. Department of Commerce, Bureau of the Census. Population figures are as of July 1 of each year; they include the resident population and, beginning in 1940, armed forces overseas. Table 6 Source: U.S. Department of Commerce, Office of Busi- ness Economics. See chapter V: Sources and Methods Used in Preparing Basic Measures, section on employment. The data for 1950 and 1957 are annual averages measuring total employment, including armed forces overseas, ad- justed to the concepts of the Monthly Report on the Labor Force; thus the 1950 data will differ from the April 1950 Census of Population employment figures. 89 90 POTOMAC RIVER SERVICE AREA Tables 7-10 See chapter V, sections on income. Tables 11-12 See notes for tables 9 and 10. Tables 13-14 See notes for tables 39 and 40. Tables 15-29 See chapter V, sections on income. Tables 30, 31, and 32 Source: U.S. Department of Commerce. Decennial popu- lation data are from the Census of Population; the United States total for 1870 is an adjusted census estimate. Decade growth rates were computed by the Office of Business Economics. Data cover resident population only, excluding armed forces overseas. 1960 data are preliminary. Table 33 Source: U.S. Department of Commerce, Office of Busi- ness Economics. Data include armed forces overseas. See section on population in chapter V. Tables 34 and 35 Source: U.S. Department of Commerce, Bureau of the Census. Table 36 Source: U.S. Department of Commerce, Office of Busi- ness Economics. Data in this table are based on data in table 7, but percentages were computed from unrounded figures. Tables 37 and 38 Source: U.S. Department of Commerce. Data for 1930, 1940, and 1950 as of April 1, are from the Census of Popu- lation. Data for 1957 are mid-year estimates prepared by the Bureau of the Census. The projections were made by the Office of Business Economics. The projected United States totals were based on population projections and projections of the number of persons per household by the Bureau of thr. Census to correspond with the Series "V" population projections. All regional projections were made by the Office of. Business Economics. Tables AND 40 Source: U.S. Department of Commerce. Data for April 1930, April 1940, and April 1950 are from the Census of Population for those years. The annual averages for 1950 and 1957 and the projections were prepared by the Office of Business Economics. For their derivation, see chapter V: Sources and Methods Used in Preparing Basic Measures, section on employment. The Census data for 1930, 1940, and 1950 exclude, and the annual averages for 1950 and 1957 and all projections include, armed forces overseas. Tables 41 and 42 Source: U.S. Department of Commerce. Data for April 1930, April 1940 and April 1950 are from the census of population. Annual aveiage data for 1950 and 1957 and the projections through 2010 were prepared by the Office of Business Economics. Their derivation is explained in chapter V: Sources and Methods Used in Preparing Basic Measures, section on employment. Attention is called to the difference in definition and concept between govern- ment employment data in the April 1950 Census of Popu- lation and in annual average data for 1950 and subse- quent years. This is also explained in the reference in chapter V. Table 43 Source: U.S. Census of Population, 1930. Table 44 Source: U.S. Census of Population, 1940. Table 45 Source: U.S. Census of Population, 1950. The numbers of armed forces personnel stationed in the various areas have been added to the census data covering civilian employment; they are included in the all-industry totals, in the noncommodity-producing industry total, and in the government employment figures. Tables 46 and 47 Source: U.S. Department of Commerce, Office of Busi- ness Economics. For an explanation of the derivation of these data, see chapter V: Sources and Methods Used in Preparing Basic Measures, section on employment. ■& U.S. GOVERNMENT PRINTING OFFICE: 1861 607074 ,jTMtNT Qf Co f NAriONAt ■BALANCE Of ■ k ^ [INCOME ^PAYMENTS t* C 0/ " »«/$, NESS tco^' PENN STATE UNIVERSITY LIBRARIES ADDQD71EfiTM3M A Supplement to the Survey of Current Business \ RSOMAL YSTAT SINCE 1929 • FIRST COMPREHENSIVE ACCOUNT OF THE WIDELY USED STATE INCOME SERIES • PERSONAL INCOME BY STATE, BY TYPE, AND BY INDUSTRY— SINCE 1929 • ANALYSIS OF GEOGRAPHIC INCOME CHANGES • PROCEDURES AND DEFINITIONS THIS 1957 VOLUME — 229 pages, quarto, illustrated, $1.50 — is available from the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C., as well as at all Field Offices of the U.S. Department of Commerce.