The Chair will declare a 5-minute recess.

[A brief recess was taken.]

Mr. DANIELS. The subcommittee will come to order.

Our next witness is Mr. Kenneth Young, assistant director of the Department of Legislation, AFL-CIO.

We welcome you, Mr. Young.

STATEMENT OF KENNETH YOUNG, ASSISTANT DIRECTOR,
DEPARTMENT OF LEGISLATION, AFL-CIO

Mr. YOUNG. Thank you, Mr. Chairman.

Because of your time situation, I will try to summarize some of my testimony, understanding that my testimony in full will go into the record.

Mr. DANIELS. Without objection, the statement of Mr. Young will. be incorporated in the record at this point.

[Mr. Young's prepared statement follows:]

STATEMENT BY KENNETH YOUNG, ASSISTANT DIRECTOR, DEPARTMENT OF LEGIS--LATION, AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS

Mr. Chairman, my name is Kenneth Young. I am assistant director of the AFL-CIO Department of Legislation and I am here, today, to express the support of the AFL-CIO for H.R. 11010. We also, of course, support H.R. 11011 with the exception of Section 502(a).

In preparing this testimony, Mr. Chairman, the AFL-CIO reviewed the statements we have presented to this committee over the years concerning the need for comprehensive manpower legislation and the importance of public service employment programs.

As we have stated time and again: "The AFL-CIO believes that the key issue to good manpower legislation is jobs-good jobs at decent wage levels for every American able to work-in order to achieve full employment in America.

"Manpower legislation that does not include job creation is not manpower legislation at all. It serves no real purpose other than to fool the public and frustrate the unemployed."

We also have made it clear that a comprehensive manpower program must be national in scope and that such a program must retain overall federal control of policy and direction while sharing administrations with state and local governments. We recognize that such a national program must have sufficient flexibility to allow the emphasis to be shifted from one type of program to another, depending on local conditions.

Further, we continuously have supported training as a means to help disadvantaged workers compete for available jobs. But, we also have warnedrepeatedly that training without job opportunities for those trained is a con game producing social dynamite.

Today, America's domestic economy is in terrible shape. While inflation runs rampant, unemployment is close to five percent with some 4.2 million would-be workers jobless. In addition, our economists estimate that some three-quarters to one million persons are among the "hidden" unemployed-those who have given up looking for a job because they don't think jobs are available and therefore don't get counted in official unemployment figures. We find another approximately 2.5 million underemployed persons defined by the Labor Department as working "less than full-time in the full-year for economic reasons." So, America has some seven to eight million workers who are unemployed or underemployed.

Just this last week, predictions of increased unemployment came from Herbert Stein, chairman of the President's Council of Economic Advisers, and other national economists. These economists all suggest that a slowdown in the national growth rate will produce a boost in joblessness.

Clearly, America does not enjoy a full employment economy, and conditions are expected to worsen. Our private and public sectors are not creating enough

jobs to meet our needs. It is for this reason that federally-financed public servic employment must be a key component in any national manpower program

It is interesting to note that the advocates of public service employment i have won a new convert. Gabriel Hauge, chairman of Manufacturers Hanover Trust Company and a White House economic adviser, shares this view. M: Hauge has suggested that some 500,000 disadvantaged workers could be give jobs at $7,000 a year at a cost of $3.5 billion. He declared: "Many jobs the need doing require little skill but in our technologically advanced system canno be justified economically in the private sector."

Mr. Chairman, having restated the AFL-CIO position on the need for job creation in effective manpower policy, let me turn to the legislation at hand H.R. 11010 and H.R. 11011 represent compromises that make no one-including the AFL-CIO-completely happy. This probably is the sign of a good compre mise. We congratulate you, Mr. Chairman, and the other members of your subcommittee who worked so diligently to produce bipartisan legislation at : time when such legislation is badly needed.

A reading of these two bills by anyone familiar with the struggles to develop new legislation since the unfortunate 1970 veto, reveals section after section that has been debated, reworded, and reworked in the last three years.

These two identical bills, with the exception of Section 502(a)-where there is an agreement to disagree-are the result.

It is the AFL-CIO's understanding, Mr. Chairman, that the purpose of the present hearings is to determine whether any proposed changes in the compromise legislation are mutually acceptable to its bipartisan sponsors. We assume that proposed amendments that are not acceptable will be opposed by all the sponsors in an effort to maintain the compromise agreement.

It is within this framework-again with the exception of Section 502(a)— that the AFL-CIO addresses its comments. But, first, the AFL-CIO would like to urge members of the committee to support Section 502 (a) as carried in H.R 11010.

We believe it is critically important for prime sponsors to know the level of Title II funds through-at least-Fiscal Year 1975. This, of course, is the direc tion taken by H.R. 11010 through its reservation of $500 million in the second year.

The demonstrated effectiveness of the Emergency Employment Act and the unfortunate decision of the Administration to phase this program out, raises serious questions about this same Administration's willingness to fund public service employment programs beyond its six month commitment of $250 million. Surely, if the "Statement of Purposes" of the "Comprehensive Manpower Act of 1973" is to have real meaning, those areas of the country most in need must get first priority.

I would remind members of the committee that Title II refers to areas of unemployment at seven percent or higher for three consecutive months (although the AFL-CIO would much prefer six percent) and gives "special consideration" to unemployed veterans who served in Korea or Indochina and to those persons who are "the most severely disadvantaged in terms of the length of time they have been unemployed and their prospects for finding employment

As the members of this committee know, the AFL-CIO sought a firm Title II funding commitment from the Administration for Fiscal Year 1975. The Administration refused to make such a commitment. Instead, it proposes a simple. second year authorization as spelled-out in Section 502 (a) of H.R. 11011. Authorizations, of courses, have a way of getting lost on the way to the Appropriations Committee-especially if no funds are requested in the President's budget.

If there is to be any predictability in respect to Title II-the type of predict ability essential to all manpower planning-the reservation contained in H.R. 11010 must be supported.

It is even harder to understand the Administration's objections to reserving funds for Title II, when-at its insistence-Section 209 was added to both bills. Section 209 makes it clear that Title II funds do not have to be used for public service employment, but also may be utilized for Title I and Title III-A programs. The AFL-CIO strongly opposes Section 209. Its effect is to establish Title II as a "bonus" for prime sponsors with eligible areas. Its inclusion invites sponsors to fund training programs when there are no jobs available. Supporters of this section argue that if an employer located in a Title II area, a prime

sponsor might wish to train residents of the area for these new jobs. This, it seems to us, would be an excellent use of Title I funds.

We believe that permitting Title II funds to be used for training is bad manpower policy. These funds, more than any other, should be used for job creation. The AFL-CIO also would point out that giving a prime sponsor the option of “jobs" or "training" can result in a political decision with racial overtones. A mayor, for example, could be subjected to considerable pressure to give public service jobs to his "constituency" under Title I while providing training to inner city residents who are Black or Spanish-speaking.

We would urge the committee to take another hard look at Section 209 and recognize that it is detrimental to the legislation's purpose. If, however, Section 209 must be maintained to hold the compromise, the AFL-CIO cannot understand the objection to reserving funds-in terms of priority needs-under Section 502 (a).

We also would suggest that if the training option is to be retained, Section 202(b) should be re-written so that the 90 percent limitation-in terms of funds used for training-applies to Section 109 allowances. In this way, at least, Title II funds will still provide direct benefit for the unemployed individual.

Turning, now, to public service employment under Title I, the AFL-CIO is glad to note the tie-in with Title II programs. It would make no sense to have two different type programs with varying provisions and standards. We would, however, strongly suggest that both unemployed and underemployed workers be eligible for Title I programs. It was our understanding that Title II would be limited to jobless persons, but we see no reason to carry this limitation over to Title I-nor did we think it was part of the compromise.

A key part of the compromise that the AFL-CIO fails to find in either H.R. 11010 or H.R. 11011 is a provision prohibiting the Secretary from disapproving any plan (under Title I) because of the percentage of funds devoted to public employment programs. It was our understanding that such a provision would be included under Section 106.

Mr. Chairman, the Administration's agreement not to limit public service employment funds under Title I was of major significance, as far as the AFL-CIO was concerned, in reaching the present compromise. We believe that the Labor Department has no objection to including this language in the legislation and assume that its omission from the two bills was a clerical error.

Now, Mr. Chairman, we would like to turn to some other provisions in the two bills. As the members of the committee know, the AFL-CIO-down through the years has emphasized the need for federal presence in comprehensive manpower legislation. We have been especially concerned over the method used by the Labor Department to approve the re-funding of a prime sponsor's plan. To put it bluntly, we wanted to make sure that this legislation does not permit a phase-out to no-strings-attached revenue sharing.

Section 103 makes it clear that there should be no automatic certification with its reference to "financial assistance for any fiscal year." Section 106 provides similar assurances. The AFL-CIO does not expect the Secretary to "hover over the shoulder of a prime sponsor," and we do not want to discourage sponsors from changing plans when experience or new conditions warrant, but we do expect the Secretary to carry out the intent of these two sections.

Labor-operated programs, we recognize, are eligible activities under Title I, can be funded by the Secretary with his Title I discretionary funds, or can be funded under Section 301. Labor's Job Corps programs are covered by Section 304. We would suggest, however, that the following sentence be added to Section 301: "The Secretary shall take into account the need for continued funding of programs of demonstrated effectiveness."

As I am sure the committee recognizes, labor-sponsored and supported programs are aimed at the disadvantaged including such groups as high school dropouts, youngsters from poverty neighborhoods, returning Vietnam veterans, and released convicts. In addition, the AFL-CIO supports the 117 Apprenticeship Outreach programs administered by Recruit Training Program, the AFL-CIO's Human Resources Development Institute, Urban League, Building Trades Council and other organizations as well as the various Job Corps programs operated by AFL-CIO affiliates.

HRDI's five-year record has demonstrated the effective manpower role that can be played by organized labor. We are confident that these programs will be continued and do not seek specific legislative reference.

The AFL-CIO, like other witnesses before this committee, is concerned about the allocation formula in Section 503(a). We agree with the testimony of the U.S. Conference of Mayors that "The inclusion of the factor of labor force misdirects manpower funds away from areas of need." The U.S. Conference of Mayors has suggested that the allocation formula be based on unemployment and adult poverty. The AFL-CIO would propose that underemployment be included as a third factor.

Given a shortage of funds, we recognize the validity of requests for a specific "hold harmless" provision. Unfortunately any long-term "hold harmless" provision would result in another misdirection of funds. We would propose that such a provision be of a strictly transitional nature.

We do strongly urge that the allocation formula beiow the state level be specific. The AFL-CIO recalls the problems with the original EEA allocations. There is no reason why the same factors used to determine state allocations should not be used-in the same manner-to determine funds for local sponsors. Such a provision would do a great deal to remove the uncertainty of funding levels.

In past years, the AFL-CIO has been in the midst of the dispute over prime sponsor population figures. Based on the experience under EEA, we had hoped that the 75,000 figure would be acceptable. The AFL-CIO recognizes the 100,000 figure in Section 102 as a compromise between those who wanted a lower cut-off and those who sought a higher number.

While we support the use of incentives and other encouragements to bring about intra-state coordination and the overlapping of duplicated services, we are glad to see that there can be no veto of a sponsor's plan unless it fails to meet requirements spelled-out in the legislation.

To cite an example, Mr. Chairman, the AFL-CIO has long called for the federalization of USES because many of the 50 state systems are unable to adequately serve the needs of unemployed and disadvantaged workers. For this reason, we want to make sure that local prime sponsors are not mandated to utilize state employment services.

There are a few other suggestions the AFL-CIO would like to bring to the attention of the committee.

(1) The word "transitional" should be defined in the committee report as it was defined in the EEA conference report.

(2) Section 106(b) (2) language needs a change. While the intent is good in providing a procedure for units of local government and other interested persons who believe a sponsor is not in compliance, the language is clumsy. As we read the provision, if a unit of local government makes a formal allegation, the Secretary "shall" determine whether the allegation is true. If other interested persons make an allegation, the Secretary “may” determine whether the allegation is true. We assume the Secretary's option is limited to whether there will be a hearing and not to whether he shall make a determination.

(3) The committee report should make it clear that, under Section 109, adjustments in training allowances "to reflect the special economic circumstances which exist in the area in which the program is to be carried on," refer to upward adjustments and not reductions.

(4) Section 108 contains an improper cross-reference. The funds available to the Secretary for the provision of these services should come from Section 503 (a), not Section 504 (a). These are Title I services, not Title II.

(5) Section 504 (b) provides the Secretary with 20 percent of Title II funds. These funds should be distributed on the basis of severity of unemployment and public service employment needs; not on other factors.

Finally, Mr. Chairman, the AFL-CIO is convinced that public service employment and comprehensive manpower legislation both are badly needed-and needed now. Unemployment, nationally, is still far too high. Unemployment among teenagers, among minority groups, in the inner cities and rural poverty areas, as well as for many other Americans, remains an unsolved critical problem.

The main goal of any manpower legislation must be to solve this problem by providing decent jobs for all those willing and able to work.

We are confident that the legislation this committee takes to the floor of the House will represent a major step in the right direction.

Mr. Chairman, attached to my testimony is a copy of the Manpower Resolution adopted at the AFL-CIO's recent 10th Constitutional Convention. I would appreciate having that resolution made a part of the record.

Thank you.

MANPOWER RESOLUTION

ADOPTED BY AFL-CIO 10TH CONSTITUTIONAL CONVENTION

The key to an effective manpower policy is job creation. Training services and improvements in the administration of manpower programs are important and necessary but they are not ends in themselves. Training must be followed by a job if it is to have any value. Administrative decentralization and flexibility are not substitutes for job creation and job development.

Full employment is the basic prerequisite for an effective and comprehensive national manpower policy. Sustained full employment can establish the economic environment for management to maintain adequate apprenticeship, training and upgrading efforts. Since most manpower training in the American economy is obtained on the job, full employment is the needed framework for adequate manpower training of the workforce.

When the regular job-creating channels in the economy, both private and public, do not create enough jobs, the federal government must provide sufficient funds for a large-scale public-service employment program. Such a program to create jobs for the unemployed and seriously under-employed would provide badly needed services in hospitals, schools, fire and police departments, recreational facilities, sanitation, pollution controls, and other state, local, and federal government facilities. It would help the unemployed and it would help financially hard-pressed state and local governments improve and increase their public services.

In the establishment of manpower programs, in both the private and public sectors, we insist on provision of adequate wage and working standards. Wages under these programs should be at least at the level of the federal minimum wage or the prevailing rate of pay for the occupation, whichever is higher. Manpower programs should not be used to subsidize low-wage, substandard employers and to undermine the wage and working conditions of other workers, to aid runaways, to subsidize high labor turnover or jobs which do not call for training before hire.

The AFL-CIO and its affiliates will maintain a close watch over the administration of manpower legislation and we will bring to the attention of Congress those actions which ignore the will and intent of Congress. We insist upon fulfillment of requirements in manpower legislation that labor organizations directly involved have ample opportunity to comment on proposals from manpower program agents.

National manpower policy must assure continued support, for labor unionsponsored programs such as Apprenticeship Outreach, on-the-job training, and the AFL-CIO's Human Resources Development Institute. And it must assure continuing opportunity for labor representation and labor participation in manpower planning at the state and local level.

The needed comprehensive national manpower policy would bring together all federally-supported manpower programs under a federal, centrally consolidated administration in the Department of Labor.

As part of such consolidation, we urge that the U.S. Employment Service be federalized. At present, there are 50 state systems. An effective, nationwide employment service should be established to meet the needs of workers and employers on a national basis.

Until federalization is accomplished, we urge that steps be taken immediately to strengthen the ability of the U.S. Employment Service to enforce higher standards of performance by state employment service agencies and to assure that the service will pattern its operations according to the needs of workers and employers, to match workers with job-openings and not be hemmed in by community and state boundaries.

A comprehensive national manpower program must be national in scope. It would retain overall federal control of policy and direction, while sharing administration of programs with state and local governments. It would assure a comprehensive approach and consolidation and coordination of all manpower activities under a central administration and, at the same time, retain such significant categorical programs as the Job Corps. In addition, it should have enough flexibility to allow the emphasis to be shifted from one type of program to another, as the situation might warrant; to give special manpower aid to depressed areas; to provide specialized training and job assistance to groups with special manpower needs; and to provide for a large-scale public-service employment program.