to the capacity of administering agencies to carry out the large, comprehensive and complex program envisioned in this act, we would point out that during the first half of 1967 one-third of the nation's total unemployment was located in 15 metropolitan areas, and that over one-quarter of the nation's non-white unemployment was in 9 central cities. These figures suggest that the program (at least initially) might well place special (if not exclusive) attention on selected "high return" areas. Such attention would allow for the rapid concentrated development of cadre who can then carry on programs in other areas, as well as offering an opportunity for immediate maximum impact. Consideration should be given in this regard to direct negotiations between the federal agencies and the major cities.

In considering administrative structure and problems note should be taken of the developments in the first year of funding of the "New Careers" program established under the Economic Opportunity Act Amendments of 1966 (Title IB, Section 123(a)(4)) administered by the Bureau of Work Training Programs, Department of Labor. The need for planning, for preparation of the "host" agency, for training of supervisors and middle-line personnel are made clear in the excellent new guidelines issued by Mark Battle, Administrator, BWTP, January, 1968. Also, the present New Careers programs have developed cadre who could be used in the expanded programs contemplated by the Act, as well as a potential training base for new programs, and models of programs and program components.

One cannot fully estimate the costs of a meaningful and effective program. We believe that the costs will decrease as the program is debugged and systematized, but we call attention to Herbert Bienstock's point that “We can expect that the human and social problems that need to be dealt with will be more costly as we move to lower levels of unemployment." (Bienstock, op cit.) But the benefits of turning tax-eaters into tax-payers is enormous.

While the evidence is not conclusive it does offer powerful impetus for carrying out training programs. An HEW study of 12,700 MDTA trainees indicated a return in gross earnings of $2.24 per year for each dollar invested in training, and that trainees repaid the cost of training in total Federal income tax alone in five years. ("Education and Training-Third Annual Report on Training Aetivities," 1965, U.S. Department of Health, Education and Welfare). Borus in a study of 373 Connecticut workers trained under MDTA found a cost-benefit ratio for the average trainee of between three and six and at least eleven for the government. Thus for every dollar spent by the government in training, three to six dollars of increased employee wages were produced and the government gained for every training dollar spent eleven dollars in reduced public costs (unemployment insurance, welfare, etc.) and taxes paid. (Michael E. Borus, "The Economic Effectiveness of Retraining the Unemployed," Yale Economic Essays, 1964.) And a study of 650 OJT trainees found an average net federal benefit-cost ratio of 3.28 to 1. ("Cost Effectiveness Analysis of On-The-Job and Institutional Training Courses." A Report to the Office of Manpower Policy, Evaluation and Research of the U.S. Department of Labor by Planning Research Corporation, Washington, D.C. June, 1967.)

No one needs to be reminded of the counter costs in physical and human devastation which are the alternative to effective and massive programs. Garth Mangum makes an important point when he writes, "Administration officials and members of Congress have been too impatient to await the results of new and existing programs and to allow for restructuring, the removal of negative elements, and finally, their expansion into effective programs. As a result, there has been excessive resort to gimmicks and attempts to devise instant policies for instant success." (Garth L. Mangum "Manpower Programs U.S.A.: An Inventory." New Generation, op cit.)

While we recognize the critical need to place special emphasis on those who are unemployed or persons who are of low-income (as does S. 3063, using "poor" as defined by OEO), we believe that the data presented by the Kerner Commission, the Detroit Study, and others indicates that we must also be concerned with those who are employed and even those whose dollar income puts them out of the "poverty" ranks. Without recommending specific language, and wanting to assure that the program does not follow the errors of MDTA in "creaming" its participants, we would urge that provision be made for the application of the benefits of this act—and especially the upgrading and advancement sections-to others than now provided for in Section 302. Such provision would be useful in itself and

also by upgrading present but low paid workers would open entry level positions for others.

S. 3063 wisely provides for a staging of employment. We believe that the higher starting rate of public sector participants is also wise and in keeping with the greater capacity of that sector quickly to absorb participants. Compared to the 300.000 participants provided for in S. 3063 in the first year, the Greenleigh Associates report estimates the potential for 469,000 jobs in the first year in the public service sector. (Loc sit.) In terms of jobs in the private sector there is the increased concern with the problems of poverty of many in the business community, the role which training and experience in public sector employment can have in preparing workers for private sector employment, and the multiplier effect on demand in the private sector which would be produced by the hiring of sizeable numbers of persons in the public and private sector.

S. 3063 is a good bill making an important contribution to our nation's manpower program and domestic welfare. We have offered suggestions which we believe improve the bill to:

1) tie the employment features of the bill more closely to the delivery of human welfare services (Sec. 102);

2) clarify the responsibilities of public sector sponsor's and for the use of the new personnel, preparation of supervisory staff, design of jobs to appeal to males, and emphasis on job advancement (Sec. 203);

3) emphasize the need for private sector employers to train supervisory personnel, emphasize job advancement, and provide supportive services (Sec. 203);

4) strengthen the participant evaluation role (Sec. 304);

5) increase its administrative effectiveness and ways to better assess its true costs;

6) serve the subemployed and malemployed; and

7) balance the respective roles of the public and private sectors.

SUPPLEMENTAL STATEMENT OF FRANK RIESSMAN, PH. D., DIRECTOR, NEW CAREERS DEVELOPMENT CENTER, NEW YORK UNIVERSITY, NEW YORK, N.Y. MEMORANDUM ON S. 3249 AND AMENDMENT (JAVITS BILL), "NATIONAL MANPOWER ACT OF 1968"

The bill (and its amendment) covers 6 main points, plus its funding. These are:

We will first describe the provisions, then comment on them with references, as appropriate, to the Clark bill (my emphasis throughout), and then offer testi mony suggestions (pages 7-8).

1. The "Statement of Purpose" gives new focus to MDTA from its original (1962) concern with the consequences of automation and technological change to concern them with unemployment and under-employment. Of interest is the description of the underemployed as having “substandard wages," "uncertainty of tenure," "little change for advancement," "low social status." The statement of purpose also makes a finding of manpower shortages, and "a huge need for additional public facilities ***" Policy is set stating that "private enterprise has the basic responsibility and maximum ability to provide job training and employment". Government effort should be first designed to encourage private effort; that "the residual responsibilities of Government" are to develop job opportunities in the public sector to fulfill critical needs and relieve employment; that there should be "some form of income maintenance" for the aged, infirm, disabled.

2. The "Job Vacancy and Labor Supply Information" section is designed to provide appropriate data on a national/state/local basis to link jobs with available manpower.

3. "Community Service Employment" is to 1) "meet severe problems of unemployment and under-employment", 2) "prepare such persons for jobs in the private sector", 3) "increase opportunities for local entrepeneurship", and 4) "meet critical national needs for community services".

Eligible participants are those who are "OEO" poor.

Money ($400 million in the first year and $500 million in the second) is allocated such that 40% is flatly granted to the states, with 60% to be allocated by the Secretary of Labor.

Eligible areas are to be those with "high concentrations or proportions of unemployed or low income persons", and includes all OEO "target areas".

A single prime sponsor, where existing the CAA, is to be designated to receive all federal funds for manpower programs in the designated area. Among the responsibilities of the "prime sponsor" is to "establish priorities among community service needs", and to provide participation of various groups in the planning. The local plans are to be coordinated into a state plan.

Funds under the program are to be used to: 1) "provide jobs immediately", 2) "provide placement services" for those involved in federal manpower and antipoverty programs, 3) to provide "further education, training and necessary supportive services *** based maintenance, transportation, health, family, day care, counseling, placement * *", and 4) to promote the establishment of local service companies ***"

These "local service companies", which would be aided by funded "service development organizations" (to provide technical assistance to the local groups). are designed to provide opportunities for local involvement.

Special emphasis is placed upon employment programs in public safety fields. Those who participate in this program are to be given priority for entrance in private sector training and employment opportunities.

4. An "Economic Opportunity Corporation" is established to 1) "be a central source of information and research", 2) "furnishing technical and financial assistance to private organizations *** in planning and carrying out" programs, 3) "development and implementation of governmental antipoverty programs" designed to encourage private sector efforts; 4) coordinate private efforts of "training programs and employment opportunities", 5) encourage business ventures; and 6) apply "modern business management techniques to the solution of social problems".

The corporation is to consist of 15 members, 5 appointed by the President and the other 10 elected by the members of the corporation which consists of persons who buy shares in the corporation or contribute to it.

5. The "Comptroller General" is to evaluate the program (a precedent set in the 1967 Amendment to the Economic Opportunity Act).

6. The "Tax Credit Plan" would give to employers of the "disadvantaged" (as defined by the Secretary) a sliding scale tax credit:

1) 75% of the first 6 months wages;

2) 50% of the second 6 months wages; and

3) 25% of the second year's wages.

An employer could choose either the tax-credit plan or the regular MDTA training funds, but not both.

7. "Funding" of the community service employment section would be $400 million (for 80,000 jobs), approximately $556 million for the private sector program (this assumes 150,000 jobs via the tax-credit route and 70,000 from on-the-job training, a different "mix" would mean a different federal cost), and $20 million for the Economic Opportunity Corporation.

COMMENT ON THE BILL

The "Statement of Purpose" is good including as it does the broad description of the underemployed (Sec. 101A), the linkage of manpower needs and service needs (Sec. 101B). However, we have some question about the heavy emphasis on the "basic responsibility" of private enterprise (Sec. 101C1), although we concur with the charge that government should aid private enterprise (Sec. 101C2), the "residual responsibility" of government (Sec. 101C3), and the income maintenance. The major role of the private sector should be to make productive and competitive employees of the disadvantaged.

The "Community Service Employment" program is good in its definition of purpose (Sec. 401), although its definition of "low-income" is too narrow as only "OEO" poor (Sec. 402 2). The administrative arrangements regarding the prime sponsor (Sec. 404, 409) are good, especially the provision for "establishing priori

ties of community service needs" (Sec. 409B) as preliminary to developing a manpower program. However, we think the state plan pattern (Sec. 410) too complicated and cumbersome, but in any case it should add consideration of the manpower situation in so far as public sector employment to Sec. 410 (a) (3) (A)(III) (page 19). The program's purposes (Sec. 405) are not as satisfactory as the Clark Bill, especially the absence of career advancement, although if provision of "maintenance" (Sec. 405B3) means a training stipend, it is a useful addition. The "local services companies" (Sec. 407) concept seems to be interesting, but is not very specific. The public safety part (Sec. 408A) is deficient in the lack of concern for entry of the special personnel into regular police employ. This deficiency is true throughout this title.

The "Economic Opportunity Corporation” in its technical assistance role appears to be useful; however, we would want to see more explicit policy guidelines for its operation.

The "Tax-Credit" plan appears to be useful, and we like the idea of "competitive" or "option-allowing" alternatives for private sector involvement. A danger, however, of the tax-credit plan-and indeed of any program without provisions to the contrary-is its tendency to “cream" and thus ignore “hard core" people.

"Funding": This provides funds for 80,000 public sector trainees as compared to Clark's 300,000 in the first year, and an estimated 220,000 private sector jobs (150,000 tax-credit and 70,000 on-job-training) as compared with Clark's first year 150,000.

SUGGESTIONS

1) Comment the statement of purpose as properly redirecting MDTA to today's needs. Also, for the linkage (as does Clark, but not as explicitly) of manpower needs and service needs. We have questions as to the weight given to private sector responsibility, and want to stress the need to make productive and competitive employees of the disadvantaged.

2) Referring the public sector, we think Clark's provisions are better, especially its emphasis on advancement and the details of the program (Clark Bill, Sec. 102), its richer funding, with the additions noted in the Clark testimony. Javits does offer a good suggestion on "establishing priorities of community service needs" (see 409B), which could be added to Clark Sec. 102. Also, some comment encouraging the "local service companies" might be added to Clark. What we are suggesting here then, is Clark plus our comments on it plus the above noted additions from Javits a good public service employment program. 3) The Economic Opportunity Corporation technical assistance role, the data collection on Section 106, and the evaluation function of the Comptroller General (with a caveat as to whether that is the best place to do such qualitative evaluation) appear to merit support.

4) As to the private sector, we think here that one might add to Clark's section, the tax credit plan of Javits.

In summary, we are urging an amalgam of the two bills with:

1) The Javits Statement of Purpose slightly amended as to private preeminence.

2) Clark on the public sector with the Javits additions.

3) Remaking of Clark on the private sector with Javits' tax credit addition but with a question as to the Economic Opportunity Corporations program (but not technical assistance) functions.

4) Inclusion of Javits data collection and national reporting and evaluation.

Senator CLARK. The subcommittee will stand in recess until Friday at 10 a.m., at which point we will hear from Mayor Walsh of Syraeuse, Mayor D'Alesandro of Baltimore, and Dr. Esser, executive director of the North Carolina Fund.

(Whereupon, at 12:55 p.m., the subcommittee recessed, to reconvene at 10 a.m., Friday, April 5, 1968.)