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[Reprinted From AFL-CIO News, Aug. 16, 1969]

MEANY'S STATEMENT ON NIXON MESSAGES

AFL-CIO Pres. George Meany made the following comment on Pres. Nixon's messages on "Welfare Reform" and "Manpower Training" sent to the Congress: The President has forcefully turned the public's attention toward a major problem in America and has established laudable goals for his Administration. This itself merits commendation.

The AFL-CIO is deeply concerned for those in America who live in poverty and do not enjoy the nation's general affluence. We have long shared, and vigorously pressed, the view that the nation's existing welfare system is grossly deficient and in need of comprehensive reform.

We only wish that the President's proposals met that need and would accomplish a substantial and lasting improvement in the condition of the nation's poor. Unfortunately, they do not.

The Presidential messages recognize the problems confronting the nation, but suggest solutions that fall far short of the need.

If Congress were to accept the proposed new structures, it would have to vastly increase the sums requested, for no adequate solutions are possible at a bargainbasement price tag.

NEEDS OF LOW-WAGE WORKERS IGNORED

But even the structures will fail for they make no provision for the basic need-decent jobs and living wages for those working at the bottom of the economic ladder. Instead of forcing America's worst employers to pay a realistic minimum wage, it is proposed that the taxpayer support those employers who pay substandard wages. Certainly the government must not subsidize employers who pay less than a living wage with public money raised through taxes.

The President proposes to substitute "work" for "welfare" in American life and, to that end, would train presently untrained workers for jobs that just do not exist. The President here is relying on the private sector at the very point the private sector is least able to perform. It is the government that must be the employer of last resort and on that subject the President's proposal is absolutely silent. In our judgment, it does not serve the nation or its people, to train the unemployed for jobs that do not exist.

Finally, the President's proposal fails because it relies on the states to do everything but finance their own programs. Without let or hindrance, he would give federal tax dollars to the states, when it is the policies of many of the states that have led to the so-called "welfare problem."

The "Welfare Reform" message proposes a $1,600 Federal payment for a family of four. This is barely $30 a week per family-more than 50 percent below the official government poverty level. The program would by no means guarantee that "children in any state can have at least the minimum essentials of life." While $1,600 for a four-person family would help some of the most deprived welfare recipients in 10 states where such families receive even less, there is no incentive for other states to raise welfare payments above present levels.

SUBSIDIES FOR EMPLOYEERS OPPOSED

The "Welfare Reform" program also would supplement, to a limited extent the wages of under-employed workers or those exploited by unconscionable employers paying sub-minimum wages. The AFL-CIO vigorously opposes the use of Federal funds to subsidize the employers of cheap labor. Decent wages are the obligation of the employer, not of the taxpayer who finances such subsidies.

The President could have provided direct benefits to the working poor by joining the AFL-CIO in its call for extended coverage of the Fair Labor Standards Act and a $2 hourly minimum wage. These improvements, alone, would bring at least eight million Americans out of poverty.

"The Welfare Reform" message provides for the declaration method of determining eligibility for welfare payments, thus eliminating degrading and timewasting detailed investigations by local welfare agencies. It would eliminate the cruel requirement, practiced in about half the states, that the father must leave his family in order to qualify the mother and children for welfare payments. It provides an expansion, though inadequate, of manpower training for some welfare recipients and day care for their children. We have advocated and endorse those longoverdue steps.

An analysis of the welfare proposal as a whole, however, convinces the AFLCIO that while the program's aims are laudatory, it represents a far cry from the President's goal of "a full opportunity for every American to share the bounty of this rich land." The overwhelming majority of underemployed and unemployed Americans do seek the dignity of decent jobs with decent pay. The overwhelming majority of working Americans do seek an end to mounting welfare rolls. Contrary to popular conception, the nation's welfare rolls today cover fewer than 100,000 able-bodied men.

9 MILLION POOR NOT HELPED

Benefits from the welfare program would go almost exclusively to families with children. The AFL-CIO shares the President's concern with the poverty of children and their parents, but we are equally concerned with the widespread malnutrition, ill health and deprivation of millions of adult Americans. These too are a national concern. Yet the proposals would not help over 9 million poor peoplemost of the poor without children plus many families with children whose current payments would not be increased.

Living standards of many recipients would actually be lowered since the proposal appears to bar these recipients from food stamps they now receive.

The AFL-CIO strongly favors a federalized welfare system with national standards. Under such a program, unemployed persons who can't work and their families should, on the basis of their need, receive payments which would be sufficient to lift them out of poverty.

But this is not the full answer to poverty. Most poor people could get out of poverty if they could get jobs at decent wages or, if no longer able to work, their social insurance payments-unemployment insurance, workmen's compensation or old age, survivors and disability insurance—were raised to an adequate level. In short, the welfare proposal does not even begin to meet squarely the basic poverty problem this nationl faces The program will do nothing to expand real job opportunities at decent wages for the poor who can work and want to do so. The President has proposed that able-bodied adult welfare recipients, except mothers with pre-school children, be required to participate in work and training programs. But the proposal recommends only a minimal increase in job training and no plan for adding to available jobs.

WITHOUT MORE TRAINING-A MOCKERY

Without greatly expanded training opportunities leading to useful jobs at decent wages, the work and training requirement in the program will only be a mockery to both welfare recipients and the nation's taxpayers.

Before issuing his welfare proposals, the President said he would favor an increase in social security benefits of only 7 percent, less than the rise in living costs since the last social security increase. To lift millions of the elderly and other social security beneficiaries out of poverty, social security payments should be raised 50 percent and the minimum benefit should be set at $100 a month.

Most people forced to rely on unemployment insurance or workmen's compensation payments are in poverty. Yet the President has thus far rejected the imperative need for federal action to modernize these basic social insurance programs. Legislation should be promptly enacted to provide federal standardrequiring adequate unemployment insurance and workmen's compensation payments.

In addition to measures directly aimed at providing adequate incomes for workers and those relying on job-related social insurance payments, many supplemental programs will help the poor to move out of poverty. Such programs all in need of expansion-include comprehensive housing, transportation, health, day care, and other social services.

For the remaining poor who are unable to work and have no social insurance entitlement, America needs a federal welfare program providing decent incomes. Payments based on need should be adequate to provide living standards with dignity for all who must depend on them.

The cost of such welfare payments will be well within America's capacity if the nation does not substitute welfare payments for jobs at fair wages for those

who can work.

It is this unrecognized need for jobs-employment with good pay and the honest opportunity for advancement-that must be considered a key weakness in both the "Welfare Reform" and "Manpower Training" messages. Unfortu nately, the two proposals fail to provide this basic ingredient.

Like the welfare proposal, the manpower message outlines a training mechanism but suggests no plan-and provides no funds-for turning a trainee into a job holder.

The manpower message assumes that only a lack of training prevents the unemployed and underemployed from successfully joining the workforce. Economic conditions do not support this assumption.

As the AFL-CIO Executive Council declared in New York, Aug. 7, 1969: "The highest interest rates in 100 years are leading to a collapse of home construction, cutbacks in production and rising unemployment. As a result, the risk of recession grows daily."

NO PROPOSALS FOR MORE JOBS

The council also noted: "Unemployment is inching up-from 3.3 percent of the labor force in the first three months of 1969 to 3.5 percent in the second threemonth period and 3.6 percent in July. This increase is concentrated among unskilled workers."

In the face of this rising unemployment rate, the proposed manpower training program ignores the increasing threat to the jobs of the poor and disadvantaged workers who have just found a place in industry. There are no proposals to expand jobs in either the private or public sector.

The AFL-CIO has long maintained that public service employment provides the best avenue for those who cannot find a place in the private sector of our economy. At least three studies have amply documented the substantial number of job openings in the public sector that would be available if there were sufficient funds at the local and state levels.

Nor are these jobs of the leaf-raking variety. Opportunities exist in such areas as: anti-pollution enforcement, educational institutions, general administration, health and hospitals, highway and traffic control, libraries, police, fire, recreation and sanitation.

The Commission on Technology, Auomation & Economic Progress estimated in 1966 that 5.3 million new jobs could be created through public service employment. An OEO study by Greenleigh Associates suggested 4.3 million such jobs. And a 1969 study by the Upjohn Institute indicated that the mayors of 130 cities with populations over 100,000 could use another 280,000 persons on municipal payrolls immediately.

If America is to help the poor and find jobs for the unemployed, why not use federal funds to improve the quality of essential community services? Unfortunately, the "Manpower Training" message includes no such component. There can be training for public service occupations, but there is no provision for the funding of payroll needs.

INSUFFICIENT EMPHASIS ON UPGRADING

Nor does the message include sufficient emphasis on upgrading. Such upgrading would perform a twofold purpose. It would provide a ladder for presently employed workers seeking advancement from low-paying, entry level jobs, and it would provide entry level openings for the unemployed who could likewise look to future advancement.

These glaring weaknesses in the proposed manpower legislation force the AFL-CIO to view the President's program as little more than an administrative reorganization of the existing structure. In simplest terms, the proposal creates no new jobs and provides no new funds. It does lump present programs under a Labor Dept. Umbrella, but then turns actual operations over to the states.

The AFL-CIO is convinced that placing major responsibility for the unemployment problems of the poor and disadvantaged in the hands of the states-through a block grant system-is a serious mistake. The problems of employment and unemployment are complex and national in scope. The individual states have no mechanisms for coping with these problems. The workforce is highly mobile. Joblessness and underemployment require national solution, not 50 different approaches.

Under the proposed program, the key operating agency will be the state employment service. The past record of many of these state agencies does not suggest they will aggressively press for either job placement or job development for the poor or members of minority groups.

Any decentralized manpower program must result in severe inequities at the expense of the unemployed worker seeking to prepare himself for entrance into

the job market. Under the proposed legislation, for example, there will be a substantial differential in the wage allowances payable to those enrolled in various state manpower programs. The proposed allowance will not be based on national standards, but upon a formula determined by a state's average wage rates covered by unemployment compensation. As such, two workers in different states will receive widely different allowances for the identical job training.

The AFL-CIO has consistently favored a comprehensive national manpower program based on a federalized employment service to meet the needs of workers and employers in an economy where activities cut across state and local boundaries. The AFL-CIO has urged creation of a massive public service employment program; greater emphasis on upgrading workers who are presently employed; and job-training programs that are directed toward existing jobs paying decent wages. These essential elements of a comprehensive national manpower program are either entirely missing or present in only limited degree in the "Manpower Training" message.

For these reasons, the AFL-CIO continues to strongly support the legislation proposed by Congressman James G. O'Hara, H.R. 11620, and similar bills cosponsored by over 100 members of the House. These bills recognize the urgent needs of America's disadvantaged and minority workers. They meet the required standards for a strong comprehensive national manpower program.

As the AFL-CIO Executive Council said on Feb. 21, 1969, in its statement entitled "Toward Eliminating Poverty," we are well aware that there is no single, simple answer to poverty, but there are solutions. These solutions are to be found in the creation of productive jobs at decent wages, social insurance providing adequate benefits, and a federal welfare program that brings dignity to its recipients.

Pres. Nixon's welfare and manpower proposals acknowledge some of these goals. Unfortunately, the proposals fall far short-in both direction and need-if America is to move toward their attainment.

Senator NELSON. As our first witness we welcome today the Secretary of Labor, Mr. Shultz.

First, I believe Senator Prouty, who has a markup session with another committee, would like to make an opening statement.

Senator PROUTY. Thank you, Mr. Chairman.

I am glad to note that we are opening hearings today on the administration's proposed comprehensive manpower development and training legislation, S. 2838. As you know, I am a cosponsor of this measure which was introduced by my friend, the senior Senator from New York, on August 12.

It also gives me great pleasure to welcome this able and distinguished Secretary of Labor, Mr. George Shultz, as the initial witness to testify before our committee on this matter.

Unfortunately, the press of other Senate business prevents me from remaining here to listen to the testimony, because I have just temporarily left a Commerce Committee executive session to which I must return where we are marking up highway safety and railroad tax equalization bills.

I have not as yet read the Secretary's prepared statement, as it was not delivered to my office until last evening after I had gone home, but I intend to study his testimony closely.

The concepts underlying the approach to manpower problems and national manpower policies embodied in the administration's bill are very commendable.

The objectives of coordinating the many manpower programs enacted or developed administratively during the last several years, through the creation of a comprehensive manpower services system under which the Secretary of Labor will provide guidelines and national priorities, review and approve State plans, and evaluate the performance of State-administered manpower programs are highly desirable.

The complementing provisions, requiring agreement by the Secretary of Health, Education, and Welfare concerning programs traditionally the responsibility of his department and the vesting of authority in the Governors and local governments of our States, also merit our general approval.

I, therefore, strongly endorse the administration's desire to enact legislation which will eliminate duplication and overlap of functions and which will provide more effective and direct utilization of our capability to deliver adequate training and meaningful employment to our unemployed and underemployed citizens.

I agree that these goals can be accomplished most expeditiously— and perhaps only-by consolidating all manpower training programs and supportive services through the creation of a network of State agencies to plan and administer, under Federal guidelines, training programs designed to meet the manpower needs and priorities within each particular State.

Whether it is called the now federalism or given some other name, I am firmly convinced that the administration's approach is by far the best way to establish this type of constructive and dynamic Federal-State partnership-and I emphasize partnership, not merely a relationship which we must have if we are to eliminate or at least greatly reduce our educational, training, employment, and poverty problems during the 1970's.

Thank you, Mr. Chairman.

Senator NELSON. Thank you, Senator Prouty.

Mr. Secretary, I have an opening statement which will raise some questions, and perhaps you will be able to address them during the course of your testimony.

Today the Subcommittee on Employment, Manpower, and Poverty begins hearings on S. 2838, the administration's proposed Manpower Act of 1969, as introduced by Senator Javits of New York.

I would like to begin by welcoming the distinguished Secretary of Labor, Mr. George Shultz, who shall be our first witness.

The work that you and your colleagues have devoted to this piece of legislation, and the effort you are making to pull our numerous manpower programs into order are appreciated by the committee. We look forward to hearing your testimony today and in the future as we consider together what direction to take in matters relating to employment and manpower.

The committee sees the consideration of the proposed Manpower Act of 1969 as an occasion to take a hard look at where we have been and to consider manpower policy for the 1970's.

The committee is sympathetic with the concept of the proposed legislation, that is, to bring order and clarity to a series of programs that have grown up since the passage of the Manpower Development and Training Act (MDTA) in 1962.

Several attempts have been made in that direction, as you know. Notably the development of the concentrated employment program in 1967 to focus scarce resources in our most poverty stricken areas, and to administer programs at the local level with the participation of the people from those neighborhoods.

Having said that, let me mention some areas in which the committee will have questions.

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