Mr. ROSENBLOOM. First let us look at what unemployment costs in direct governmental dollar outlays. At 14 percent, which is close to our current level, the monthly cost is $19.6 million or about $236 million a year, just for unemployment insurance, welfare benefits, and supplementary programs like medicaid, food stamps, and housing allowances. The real cost of unemployment is higher, of course, when we add the human opportunity lost and the cost of police, courts, and jails that can be attributed to crime caused by the lack of decent honest employment. It is harder, however, to put a hard dollar amount on these important social costs. If unemployment were reduced to 3 percent in Boston, in accordance with the goals of your bill, the direct governmental cost of unemployment would be only $4.2 million a month or about $50 million a year. That is, Mr. Chairman, a savings in direct Government costs of more than $185 million a year. The indirect savings would be great at well. Now let us look at the other side of the picture. How much would the local economy gain if there were full employment? The details appear in table II. At 14-percent unemployment the unemployed provide through their unemployment, welfare, and other benefits about $314 million multiplied into the economy and about $3.5 million in sales tax back to the State. If the unemployment level were 3 percent the people who would be working again would provide a $502 million boost to the economy and more than $17 million to the State in new taxes. That is, Mr. Chairman, an additional $188 million a year multiplied into the Boston economy. The information contained in the two tables can be combined to get a real picture of the cost of unemployment in Boston: the direct cost of $236 million a year in welfare and other benefits plus the opportunity cost of $188 million that could be going into the economy if these people were working. Thus, Mr. Chairman, unemployment at the current rate is costing about $425 million a year in Boston alone. That is staggering. Mr. Chairman, many people complain that a full employment program would be too expensive for the Federal Government. I think these figures show the reverse to be true. The current Federal policy of high unemployment is outrageously expensive. I believe it would be possible to demonstrate that a full employment policy could be implemented at close to the amount of money that is now being spent and lost on an unemployment policy. For example, the Federal Government could provide employment subsidies of up to $3,000 for every unemployed person given a job in the local economy and still spend only about half of what it is now being paid out in direct unemployment costs. If the Federal Government were the employer of last resort it could provide jobs to more than 31,000 people without spending any more than is spent now to cover the direct governmental outlays for unemployment. If 31.000 people were put to work they could do many useful things. They could work in hospitals as aides to patients and help the staff, working as air pollution inspectors, working as consumer investigators and working as park and street maintenance people. Mr. Chairman, I have just outlined the direct governmental costs and benefits of a full employment policy. The social and human benefits of full employment are even more important. Full employment would also bring with it the human dignity which Sam Adams and others struggled for in this very room 200 years ago. It would finally enable each and every American to pursue the promise of life, liberty, and happiness that was set forth by the men and women who met here 200 years ago. A full-employment policy would give us the resources to rebuild our cities and provide a decent and humane environment in which to live. And, Mr. Chairman, a full-employment policy would help immeasurably to lift the racial tensions that affect this and other cities. Mr. Chairman, you and your colleagues are to be congratulated for focusing attention on this most important problem. We hope for your sake and for ours that you are successful in moving the Congress and the administration to accept and implement a policy of full employment. Thank you very much, Mr. Chairman. [Applause.] Mr. HAWKINS. May I take this opportunity to express the appreciation of the subcommittee for the many courtesies that have been extended to the subcommittee while in the city of Boston. I hope you will convey that to the mayor. I think the statement which you presented is one of the best prepared ones that has ever been presented to the committee. I think it is excellent. I wonder if you would care to comment on the criticism that is often made, that is that full employment is inflationary and whether that problem should be dealt with in opposition to the achievement of full employment. Mr. ROSENBLOOм. Thank you, Mr. Chairman. I will convey your greetings to the mayor. We are delighted of course to have you. The conflict, I think, between inflation and unemployment has in my view been artificially engendered and artificially supported as an argument to avoid accepting responsibility for unemployment in this country and to avoid accepting responsibility for long-term planning. I have tried to point out in the closing portion of my remarks that the unemployment policy is very expensive but that a full employment policy might not be any more expensive than the policy that we now have. I think there is so much slack in the economy that we might very well move to a full employment policy without engendering dangerous inflation. Mr. HAWKINS. Would you be filling in gaps in manpower situations in Boston by introducing a supply of individuals in occupations that are in short supply? Mr. ROSENBLOOM. We have an oversupply of work that needs to be done, Mr. Chairman. We have tried through our employment services programs to close that gap. Mr. HAWKINS. On page 4 of the statement you say that approximately 31.000 people could be employed without spending any more than is now spent in unemployment outlays. Would you consider that putting 31.000 people to work obviously would have some impact on employment that would be created directly or indirectly by putting these people to work and therefore in effect might exceed the 50,000 persons that you estimate to be unemployed? Mr. ROSENBLOOM. I think it would be true, Mr. Chairman. I don't believe it would be necessary for the Federal Government to act as an employer of last resort for 31,000 people or a number approaching that if there were a firm commitment to a full employment policy. There are a variety of less expensive incentives that could be employed to reach full employment. We are spending so much money on unemployment that we could actually put 31,000 people to work in productive jobs in the city for the same amount of money. Mr. HAWKINS. Thank you. Mr. Buchanan? Mr. BUCHANAN. Thank you, Mr. Chairman. You mentioned in your statement the problem of job opportunities for higher skilled employment and the unemployed being concentrated among persons of lower skills. I wonder how much of a problem in Boston this is and how that might apply in terms of the need for training or retraining in support of what needs to be done to get a solution? Mr. ROSENBLOOM. Mr. Buchanan. I think it is a significant and growing problem. We are undergoing a tremendous change in the economy. The jobs available are changing more rapidly than the people we have to fill them. Retraining and training, of course, are essential parts of this problem. I would say that is one of our frustrations, the growing mismatch between the people and the jobs. We have a declining amount of funds available to us from the Federal Government for manpower training. Additional funds for manpower training would be very helpful to provide meaningful work for people for different skills. Mr. BUCHANAN. Assuming we made this commitment to full employment and assuming we did what is necessary with the Federal budget to implement that policy as to structure and organization, would you as a local official look toward CETA as being a better approach for employment service? Mr. ROSENBLOOM. On the question of whether the current CETA formula ought to be based on, Mondays and Wednesdays I like it and on Tuesdays and Thursdays I wish it would go away. On Fridays I am never sure. I don't have very firm advice as to specific implementations. The simpler you could establish it the better it would be. The more direct administrative policy the Congress could establish the more directly the goals of the Congress could be met. The more levels of bureaucracy you set up dilute the intent of the Congress and adds complexity and difficulty to the administration of the program. So I would just urge simplicity. Mr. BUCHANAN. I want to join the chairman in commending the graphic picture you have given us of the costs of unemployment over against the costs of achieving full employment. I don't know that anyone has presented quite so graphic a picture at our hearings. Mr. HAWKINS. Mr. Benitez. Mr. BENITEZ. No questions. Mr. HAWKINS. Mr. Moakley. Mr. MOAKLEY. I would like to ask one question. What is the extent of Boston's manpower training program? Mr. DUGGAN. Congressman, we have an allocation under title I of CETA for this year of 7.9 million. That money is used to fund community-based organizations. CETA title I money is used solely and exclusively for the economically disadvantaged and unemployed. This has been the strategy of the mayor's advisory council and the mayor himself. These programs under title I not title VI are designed to serve the structurally unemployed. What has exacerbated problems is that the State of the economy is such that there are great demands to use those funds to serve those who are unemployed as result of the economic crisis, rather than those who need it most, the structurally unemployed. Less and less of that money now goes to the cities and more and more goes to nonurban areas. As a result the problems get greater in the inner cities with less resources to work with. The challenge for those working with these problems is to work with less every year. Yet we have to do more because the obligations increase every year. Cities are the home of the poor. As long as they are the home of the poor they will attract people who need these services. No matter how good the economy is at any stage of development there will always be a significant category that we designate as "structurally unemployed," who will always need these services. These services are primarily programs to make them competitive in the labor market regardless of what the job creation situation is at any given time. It is hard enough to make the economically disadvantaged competitive in the labor market at a time when jobs are not scarce to begin with. That exacerbates the problem we are faced with. Mr. MOAKLEY. Thanks very much. Mr. HAWKINS. May I ask, to follow up Mr. Moakley's question about CETA, what is you anticipation of the situation if CETA is not extended beyond June of next year? What will be the impact if CETA is not extended or if it is reduced? Anticipating that there will be a reduction, in what way will this affect you in the city of Boston? Mr. ROSENBLOOM. It would have a significant negative effect. Mr. Chairman. We currently have 1,600 people employed in our title II and title VI programs. If title II and title VI are not continued at their current levels or if the program were ended completely in June that entire 1,600 people would be returned to the unemployment or general welfare fund rolls. We have an active placement program which tries to utilize the skills that we are giving our title II and title VI participants and make them available to the public and private market. But the private employment market is so soft, Mr. Chairman, that I fear if title II and title VI were discontinued that the people we now have employed in that program would be returned to the unemployment or the welfare rolls as a result of our losing them. There are a variety of very important social services and physical development services now going on in the city. They would come to a grinding halt. One improvement program is generating private investment. These are dependent on CETA. We hope it will be continued at its current level. As it is now we anticipate losing between 500 and 600 of our CETA slots over the course of the next year merely because of administrative reduction in our allocation. Mr. HAWKINS. Thank you. No further questions. I wish to thank both witnesses. Please extend to the mayor our thanks for the expressions of courtesy. Mr. ROSENBLOOM. Thank you, Mr. Chairman. Mr. HAWKINS. The next witness is Hon. Jack Backman, State senator. [Applause.] Mr. HAWKINS. Senator Backman, we do have your statement. It will be entered in the record in its entirety. You may proceed to deal with it as you so desire. [Prepared statement of Hon. Jack H. Backman follows:] PREPARED STATEMENT OF SENATOR JACK H. BACKMAN, CHAIRMAN OF THE NEED FOR A NATIONAL FULI EMPLOYMENT ACT THE Thank you for coming to Massachusetts and for the opportunity of our appearance before you. As Chairman of the Massachusetts Special Commission on Employment, we, too, have been groping with the same problems you are encountering. I am pleased to present to you for your records copies of our first and second interim reports which parallel in Massachusetts the testimony you are hearing all over the country of the national unemployment crisis. Back in June 1974, when national unemployment was at the five percent mark, Dr. Arthur F. Burns, Chairman of the Federal Reserve Board, stated that if unemployment went over six percent, a massive federal public service employment program would be required. Dr. Burns and the Federal Reserve Board can hardly be considered radical economists. In fact, their conservative outlook in a time of economic crisis has been severely criticized even by other conservative economic consultants. However, after Dr. Burns made his statement, the number of unemployed continued to increase at the rate of a half million a month nationally, and our banking, industrial and government leaders were dreaming pipe dreams that they would suddenly wake up and find the sickness of the economy had by miracle become well. Unfortunately, we find ourselves today with a national unemployment rate increased to eight percent. During this period in Massachusetts unemployment has almost doubled to fourteen percent in September 1975. In the core city of Boston, the unemployment rate for minority young people between the ages of 18 to 30 is 35 percent. It is now time-when our national economy continues to stagnate-finally to establish an economic plan for our nation to restore and enhance the quality of life for our nation. All Americans have an equal right to a decent, dignified and meaningful life. The concept of "rights," as evidenced in our Bill of Rights, recognizes the necessity of the government's commitment to provide those basic human needs that are not inevitably assured by any other force in society. In light of the high value our society places on work, the social stigma attached to those ablebodied persons not gainfully employed, and the avenue to socio-economic opportunity that is provided by good emply ment, the access to a job must be considered a right. A national full employment act must provide statutory recognition of the right of every unemployed person to a meaningful job opportunity commensurate with his physical and educational ability and development. The mechanism utilized in the legislation for stimulating manpower policies so as to increase job opportunities is a public service employment plan on a national scale. The method of public service employment attacks the dual failure presented by the inability of our private economy to employ all persons seeking work and our government's present incapability to provide other job opportunities or fully adequate public services. Public employment provides the government with an opportunity for administration and input as to whom will be employed and where their energies will be directed, thereby allowing for the hiring of unemployed and disadvantaged workers whose energies can be utilized to attack many of the problems facing our society. These job areas would include environment, health services, social services, housing, education and corrections. |