This is our real problem.

Secretary HODGSON. There are some limited provisions, I understand, for offsets of that kind.

Senator MAGNUSON. You are looking for the place where the job can be done. You could take Boeing as an example with all of this pool of skilled resources, where their bid is comparably as good as any other bid; the tipping point, when you put it on the scales, ought to be on how much unemployment is out in that area. We have not had much cooperation with the Defense Department on this yet.

There are two big contracts down there, pending now, that they are probably going to make a decision on in the next 2 weeks.

Whereas, two of the places out in this big pocket of unemployment, 16 percent in Pierce and King Counties, the Defense Department ought to take this into consideration.

The President has made the suggestion. I don't know whether it was a directive. They have some flexibility in this. A lot of contracts they can still negotiate.

Many of these contracts, no matter how you slice it, are pretty much cost-plus any way. Some of the things they just don't know what the cost would be in some of the new technological things.

AREAS OF GREATEST UNEMPLOYMENT

The Labor Department, I would think, would be very strong in their advocacy of that down at the Defense Department.

Secretary HODGSON. We are trying to concentrate on applying our ability and emphasis on these needy areas. Of the 10 areas with pockets of greatest unemployment in the country today, seven of them are on the west coast.

Senator MAGNUSON. You wouldn't suggest, nor would I suggest, that they put a contract in a place solely because there is unemployment in there, unless they could do the job. If they can do the job, it seems to me this ought to be the determining factor, or a very key factor in the decision.

I am hopeful that you will use your efforts in the Defense Department, GSA procurement and other places. You can buy supplies just as easy f.o.b. Seattle as you can San Francisco, just as cheaply and the same quality.

But we never have been able to get f.o.b. in Seattle. Too many of them live down there on the peninsula. They don't want to be changed. But I would think that this could be something that you could do now which would help the situation. I think you will find a sympathetic ear with Mr. Laird on this, if you push it. It will help your unemployment problem.

Secretary HODGSON. The extent to which this can be done, I think, is under constant examination. I know already there have been some procurement offsets, as they call them, to make judgments of this kind. What is happening at the present time, with regard to those two contracts you mentioned, I don't know.

Senator MAGNUSON. I hope you will urge the Defense Department on this. They have got R. & D. that could go into new technologies for weapons systems and things of that kind. Here is a bunch of people, a highly talented pool, that can do the work and they are out of work.

OCCUPATIONAL MOBILITY

Secretary HODGSON. When you step back and take a look at the problem as a whole, we have to realize one aspect of it; that is, that even if some of this is done, as you mentioned, the total pot of defense and space is not as big as it once was. A lot of people are going to have to move into the sectors of industry that they originally came from. So there is going to be some occupational mobility and some geographical mobility in connection with it.

Senator MAGNUSON. Mr. Secretary, there are some contracts that can be well done-I am not talking only about Seattle, it can be done in certain other pockets of high unemployment. I have never been a Cabinet member, but if I was down there in your spot, I would say to the Secretary of Defense some day, when it gets a little quiet, when I was through arguing about certain other things, "Why don't you send some of those contracts to these places-like Seattle, for instance?"

Secretary HODGSON. I think we have done it on a much more formal basis than that.

EFFECT OF IMPORTS

Senator COTTON. While you are getting the sympathetic ear of Mr. Laird, you might also try to get a little sympathy from Mr. Stans. I think we should have free trade. I don't want to see it one sided. As long as we are letting a country be flooded with foreign made goods from nations that won't let us send the same to them, when we are willing to compete, we should be ready to compete in the open market. Japan and Germany can flood us with automobiles and then not let us sell American automobiles to them when we are putting out a good product. We may lose all of our electronics and our radio and television industry simply because there is a wall put up against us. I think that anyone interested in the future employment of the American worker had better not forget to take that into consideration. Otherwise, there is no place for these people to go when they come out of defense employment into some other field.

ESTABLISHMENT OF COUNCIL ON INTERNATIONAL ECONOMIC POLICY

Secretary HODGSON. As you know, Senator, that is not only in Secretary Stans' backyard, but a number of other Cabinet officials. This is the reason why the President has established this new Council on International Economic Policy and brought in a new special assistant, Mr. Peterson, from Chicago, to develop a whole new thrust on this thing, so that we can set about to deal with these people on an even-steven basis.

Senator COTTON. I hope he means business, literally.

Senator MAGNUSON. I hope you can be as aggressive as possible on this.

The White House has said that this is a good idea to put these contracts where you have these unemployment pockets. But it doesn't often happen that way because the competition is keen. I understand that. But where they can do the job and there is great unemployment, they ought to get preference. I don't see any other answer to it. That is part of the responsibility of the Labor Department because your headache is jobs and unemployment in the whole country.

Secretary HODGSON. We have these areas circled on our chart. That is where we focus most of our attention.

DEFINITION OF UNEMPLOYMENT

Senator FONG. What are the criteria for determining who is unemployed, Mr. Secretary? When do you say a man is unemployed?

Secretary HODGSON. When he is asked two questions. One, “Are you working?" He says "No." He is asked the second question, "And are you looking for work?" And if he says "Yes," he is unemployed.

Senator FONG. I know people who would leave one job and have another job waiting, but they won't take a job. They go on vacation and they draw unemployment compensation.

Secretary HODGSON. That person is unemployed if he contends he is looking for another job.

Senator FONG. There are a lot of people like that. Is there a percentage on that?

Secretary HODGSON. I don't have any percentage figures. The percentage figure we quote as unemployed each month is done as the result of the kind of survey involving the two questions that I just mentioned.

Senator FONG. If they are unemployed by their own choice or volition when they can get a job, it doesn't hurt the economy, except if they draw unemployment compensation.

COMPLEXITY OF LABOR MARKET

Secretary HODGSON. The whole labor force is a complex and changing group. First, there are large numbers of people for whom the decision as to whether they work or not is a very personal thing: Women, some older people, some younger people, and others who for one reason or another don't feel that they could or should work.

This group changes from time to time. The size of the American work force is a fluctuating thing.

I would like to have Commissioner Moore, who has studied this matter considerably, comment a little further on that.

UNEMPLOYED HEADS OF HOUSEHOLDS

Mr. MOORE. I just wanted to refer to what the Secretary said earlier about the number of people who were unemployed or counted as unemployed, as he described it. But only one out of three of these unemployed people was the head of a household and thus responsible for the major support of the household. In about half of those families, the wife or some other family member had a job to help offset the loss. So that the number of individuals who are the sole source of support of their family and are unemployed is a very much smaller figure than the 5 million or so that are counted in the unemployment total. Senator FONG. The 2 percent, you could say, probably would represent heads of households?

Mr. MOORE. Exactly. And half of that, about 1 in 6 among the unemployed, are the sole source of support of their families.

63-792 0-71-pt. 1-4

Senator FONG. You find that, out of the 4 percent who are not heads of households, many are just seasonal workers who work so many weeks a season and then the rest of the time don't work, or they work part time and then quit and get unemployment compensation. Then when that unemployment compensation ceases, they go back looking for a job. There are many of those?

Mr. MOORE. Yes; that happens also.

DURATION OF UNEMPLOYMENT BENEFIT PAYMENTS

Senator FONG. How many weeks does a person need to work before he or she can get unemployment compensation?

Mr. LOVELL. It varies from State to State. Generally 26 weeks is needed for maximum benefits.

Senator FONG. Suppose I am out of work 26 weeks, how much would I receive for unemployment compensation?

Mr. LOVELL. Depending on the State, a lesser amount for a shorter period of time, the same amount for a shorter duration.

Senator FONG. For 26 weeks, can I get 26 weeks of unemployment compensation?

Mr. LOVELL. In some States, yes; probably most States.

ABUSES IN UNEMPLOYMENT BENEFITS PROGRAM

Senator FONG. Do you have some people who thrive on that, work half of the year and get half the year's pay without working?

Mr. LOVELL. Senator, in any program you have a few people who take advantage of it. But it would not be fair to say that most people are of that kind.

Senator FONG. How do you prevent it? Is there a way of preventing it, of cutting that down?

Mr. LOVELL. The administration of the unemployment insurance program over the last 35 years has developed into the unemployment insurance programs in terms of its administration I think is one of the more efficient, honest efforts of its kind. Certainly, there are abuses. But I think by and large that the abuses are minimal.

If an individual is available for work and there are jobs, he is referred to the job. If he doesn't accept it, he is disqualified from unemployment insurance. That does take place. I don't have on the top of my mind what percentage of people are disqualified. It is a fairly small group. But this system is in effect in every State. So if there are jobs which are appropriate jobs for those people, they are referred to and do not accept, or do not choose to apply for it, then they are disqualified.

But the unemployment insurance, too, pays, generally speaking, about 50 percent of the wage the individual could make if he was working.

So certainly, for the head of a family, unemployment insurance is hardly adequate. Certainly for some students, for some housewives, if a housewife has earned eligibility for unemployment insurance and she chooses to go back home anyway, many of these will continue to draw benefits as long as they are able.

Unless the employment service is very actively finding work for her, she will continue to draw it. I suppose that is a kind of advantage

taken of the system. I suppose in the case of some students that is so, too, although if they are not in the market, not seeking work, they are not eligible. They have to demonstrate that they are seeking work.

DIVERSITY IN STATE LAWS

Senator COTTON. Speaking about the diversity between States, and their provisions and their requirements, there is another aspect that did exist, I assume it still does. That is the matter of some States where people can quit their job and draw unemployment compensation.

Is that so?

Mr. LOVELL. Generally speaking, no. They have to be laid off. Different States have different interpretations I suppose of what that means in terms of whether the person was really laid off.

Senator COTTON. I remember a situation in my office of a very valuable employee who was doing a fine job, but became discontented and said she didn't find the job challenging enough, so she came in and told me she was going to quit. I urged her to stay and even offered her more compensation to stay. She said she wanted to do something else. She did quit and went up to New York. From time to time she would drop in the office and she was down here collecting. She would come down every week, or every 2 weeks, to collect unemployment compensation. I was dumbfounded. I didn't think that could happen. I was informed that the District of Columbia was one of the States that didn't require an applicant to show that they had been laid off or they lost their job.

Does that situation exist today?

DISQUALIFICATION FOR PAYMENTS

Secretary HODGSON. There are two kinds of situations. No. 1, the quitting of a job disqualifies them. No. 2, quitting a job will result in a period of penalty of 4 or 5 weeks that you cannot draw unemployment compensation. So that it may very well be that it was either the second kind of misinterpretation by those who administered her particular program as to what the reason for her leaving was. It could have been either of those two things.

Senator COTTON. You mean she might have represented that her leaving was involuntary and they just didn't check it?

Secretary HODGSON. That is right.

Senator FONG. If a person from my office quits and takes a long ride by automobile to Florida, then to California, by the time she reaches Hawaii, 6 weeks have elapsed. Can she then apply for compensation? She can get it?

Secretary HODGSON. I don't know what the Hawaiian law is. If the law is that there is a period of time that you are disqualified and it was less than 6 weeks, then she would. But in the State of California you are disqualified if you left your job and there was no opportunity to just merely pass a period of time before you are eligible. You were permanently disqualified.

Senator FONG. How many weeks in any of these States is the minimum that he or she has to work before she can get 1 day of unemployment compensation?

Secretary HODGSON. I would like to give you a chart listing the various periods of qualifications for all of the different States, and a

summary.