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 expeditiouslyand 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.

First, it is timely to look at the overall adequacy of our efforts. Since 1961 the Federal investment in manpower programs has risen from $245 million to $2.2 billion, and the number of people served to about 1 million. Yet, with a labor force of 80 million and unemployment and underemployment standing right now somewhere around. the 7-million figure, these programs are clearly inadequate.

A second area of questioning is around the issue of job creation. How many jobs do we need? How many jobs is the private economy generating? The public service field? Jobs for whom? Until these questions are answered it seems to me a rational discussion of our performance in manpower will be difficult.

The dramatic rise in spending for manpower programs obscures the fact that they are still far too small. But the most crushing criticism of our training programs is that they are often simply revolving doors, with men shuffled in from the cold of unemployment through a few warm weeks of job training and out into the cold again for lack of an adequate job supply.

While feeling some pride in the growth of appropriations for manpower programs it would be wise to note that in 1939 we spent 2.8 percent of our gross national product providing useful jobs for those unabsorbed by the labor market. The comparable figure in fiscal year 1968 was one-tenth of 1 percent. So that 30 years has seen a rather significant decline.

The jobs in the business sector (JOBS) program was set up as a partial answer to such criticisms. By providing Federal support directly to private industry the program is designed to offer immediate employment and a setting for training that has the best chance of being successful.

We are enthusiastic about the promise of the JOBS program. We hope to go into its success in meeting that promise in some detail.

We are very concerned, of course, as everyone is and I know you are too-about rising unemployment. We do not believe a situation. in which 3 million Americans are seeking work and not finding it is acceptable. We are particularly concerned about the effect of unemployment-now at 4 percent-on programs like JOBS that depend on work in the private sector.

I am wondering if during the course of your testimony, Mr. Secretary, you might specify to the committee what you believe would be the upper limit that would be considered acceptable, although none of us like to use that term "acceptable" unemployment, and whether unemployment, in your judgment, is likely to rise further.

If so, would not a 4.5-, or 5-percent unemployment rate be a catastrophe for the job training programs that we are now considering. The administration's bill would make State and local elected officials primarily responsible for the operation of manpower programs that have in past years, by and large, been administered directly by the Department of Labor through local sponsors.

Detailed questions will emerge as this hearing progresses, but I would like to begin by setting out a number of areas of concern.

The first concerns the role envisaged for the Employment Service under the proposed legislation.

In a letter last August to the General Accounting Office, Assistant Secretary of Labor Leo R. Wertz states:

The operational concept of CEP is to provide service to the individual person. The operational concept of the employment service has been to serve the employer by sending him the employees he wants.

If the effect of this legislation would be to transfer operational responsibility for the manpower programs to the 50 State employment services, we would want to know what steps, and with what assurance of success, the Department plans to shift the focus of an agency that in the past has been neither equipped, staffed, nor directed to deal effectively with the problems of the poor, unemployed, and underemployed.

Second, the success of the proposed design depends on having both clear, agreed criteria by which to judge program design and effectiveness, and the power to enforce that judgement. The subcommittee wants to know what specific criteria will be applied to test program quality, what specific experience about successful program design has been learned from the billions of dollars spent since 1962.

The safeguards in the legislation to assure quality in State programs depend on the relationship of the Governor and the Secretary of Labor. First, the Secretary of Labor has the authority to disapprove a State plan, and second, the amount of money flowing through the States would be initially 25 percent of Federal manpower appropriations, then 66% percent, and finally full funding through the States.

Each step in this progression requires approval by the Secretary of Labor. There is great concern that the relationship between a Cabinet Secretary and a Governor is such that the plan may be politically unworkable. What assurances can the Secretary give the committee on this matter?

Finally, the Subcommittee on Employment, Manpower, and Poverty has for some years been convinced that a crucial element in improving the life situation of people living in poverty areas is to give them a measure of control over those decisions that affect their lives. The concentrated employment program, although not conceived by this committee, was written into law as part of the Economic Opportunity Act Amendments of 1967.

In that act a crucial role was spelled out for local community-based organizations in the design and delivery of manpower services. The committee will want to know what the administration's stand on the issue of community participation is, and how it would be affected by the passage of this bill.

This is the first of what this subcommittee intends to be a thorough set of hearings into all the questions raised thus far. We hope to hear again from the administration. We will hear tomorrow from some representatives of community organizations.

We hope to bring in distinguished manpower economists. Much of our effort will be devoted to a series of hearings at the local level in all parts of the Nation. We hope that officials of State and local government, community representatives, urban and rural, businessmen, and concerned citizens will help this committee draw up a balance sheet on past experience, examine the wisdom of the approach suggested in the administration's legislation, and look into the promise of federally supported public service employment.

I am in particular interested, as I know many other Members of Congress are, in the concept of public service employment.

I am the author of the original amendment to the Economic Opportunity Act from which the highly successful Operation Mainstream program derived. My staff is now drawing up a bill that would make possible a reasonable start toward those public service employment goals agreed to by every major commission that has ever looked into the related problems of employment and poverty.

When that bill is introduced we would appreciate the administration's comments on it. But we are especially interested in taking that bill to local communities where the potential and the problems associated with public service employment can be spelled out.

After several months of careful consideration the committee hopes to be in a position to bring out a manpower act based on a detailed examination of our past experience, taking into consideration the Nation's long-range manpower needs and goals-for all workers, not just the poor-and making a start toward a reasonable public service employment plan.

We look forward to cooperation with the administration and with officials and community representatives from cities and rural areas all across the Nation in this effort.

Does the Senator from New York have a statement?
Senator JAVITS. Yes.

Mr. Chairman, I have the honor to be the sponsor of the administration's bill. I shall speak only momentarily. I consider the work done by Secretary Shultz, aided by Assistant Secretary Weber, as proposed by the administration, to show real initiative, to have outstanding vision and originality.

I consider the primary concepts of the bill to be stimulating community action through incentives, and a computerized job bank for which the chariman and I and others have been contending for so long.

I call attention to the standard of 4%1⁄2 percent, something we tried very hard on the Joint Economic Committee to discover from another Secretary without success, as being the administration's appraisal of a figure beyond which would be considered an unusual bulge in unemployment.

I am very sympathetic to our chairman's view on public employment. I think with roughly 10 percent of American workers in some form of government work this is a critically important area. I think it is of a piece with the basic welfare payment standard which the President has now initiated, and which I consider an historic first, just as is this manpower bill.

There will be many questions. I am very hopeful, Mr. Chairman, as has been the tradition of our committee, that the majority and the minority will be able to get together on a manpower bill.

From what I have heard the chairman say, Mr. Secretary, I believe that will be the ultimate result. I shall certainly try to contribute to it and join in a thorough exploration of the matter."

I would like to end as I began, with emphasis on the fact that, having spent my political life striving for initiatives on the part of my party where I disagree, I am very frank about the disagreement, but where I agree and where I think initiative is being shown, I want to be among the first to signal its presence-I feel that initiative has certainly been shown in this manpower bill.

Thank you, Mr. Chairman.

Senator NELSON. Thank you, Senator.

Senator Mondale?

Senator MONDALE. I have no opening statement.

Senator NELSON. Mr. Secretary, we are pleased to have you today, and you may proceed to present your statement in any fashion you desire. I assume if there are questions from the committee as you go along that you have no objection to being interrupted.

Mr. SHULTZ. I am agreeable to that.

Senator NELSON. Go ahead.

STATEMENT OF HON. GEORGE SHULTZ, SECRETARY OF LABOR, ACCOMPANIED BY ARNOLD R. WEBER, ASSISTANT SECRETARY FOR MANPOWER; AND MALCOLM LOVELL, JR., MANPOWER ADMINISTRATOR

Secretary SHULTZ. First, I would like to introduce Assistant Secretary Weber on my right, and Mr. Lovell, Manpower Administrator, on my left. These two gentlemen have worked on this legislation in detail, and they are experienced with the programs we have, and so I am sure their ideas will be interesting to you.

Senator NELSON. The committee welcomes you here today. Mr. Weber has testified very helpfully and creatively before the committee in the past, and we are pleased to have him, and I would like to say that he and Mr. Lovell may interject anything that would be helpful to the record as we go along, if the Secretary will permit them to. Secretary SHULTZ. I was almost tempted to say that we run an open shop in the Labor Department. [Laughter.]

Everybody always pitches in. Let me also say at the outset, Mr. Chairman, that I welcome the spirit of your remarks, both your notion of the field of manpower as something which is evolving, and which we are learning, and I am sure we still have a lot to learn."

What we are really talking about here is the next step in the process of evolution of our work in the manpower area.

I also welcome the very probing questions that you have raised, and some of them, I think, are answered in my prepared statement. Others, I am sure, you will want to return to, and we will do our best to provide answers.

I welcome the opportunity to discuss with you the proposed Manpower Training Act of 1969. Through this legislation we hope to lay the foundation for a comprehensive national manpower system-one that can serve the needs of the individual and afford the States and localities a major role in manpower planning and program administration.

The Manpower Training Act is evolutionary in the sense that it reflects a careful review of our experience with the policies and procedures that have guided national manpower training efforts over the past 8 years. At the same time the proposed legislation consciously seeks to break new ground by giving meaning to the concept of the "New Federalism" in a program area where heretofore administrative authority and control over resources have been centralized in Washington.

The Manpower Training Act does not contemplate an abdication of Federal responsibility. Instead, it creates a framework for a constructive partnership between Federal, State, and local governments.