Senator TAFT. It is more true with the young.

Mr. THOMPSON. It is more true, certainly.

Senator TAFT. There is a need for youth differentials as proposed? Mr. THOMPSON. Yes; we see the youth differential as an inducement. to industry to hire young people. It is a very worthwhile inducement in a time when we have high unemployment among young people.

Senator TAFT. I would like to submit for the record an article from the Washington Post by Mr. Geoffrey H. Moore of January 21, which summarizes the teenage unemployment rate. Mr. Moore states that the unemployment rate is triple the national average.

I gather you think that it might become worse if we do not implement a youth differential of some kind?

Mr. THOMPSON. I think there is no question about it.

Senator TAFT. Mr. Chairman, I have also an opening prepared statement that I would like to submit for the record. I would also submit Mr. Moore's article from the Washington Post.

I have no further questions.

The CHAIRMAN. Thank you. They will be included in the record. [The article referred to by Senator Taft follows:]

[From the Washington Post, Jan. 21, 1973]

TEENS TOP THE JOBLESS

THEIR RATE IS TRIPLE THE NATIONAL AVERAGE-WHY?

(By Geoffrey H. Moore)

The risk of unemployment is not shared equally across the population. This was never more apparent than in 1972. In December, when the overall unemployment rate, after allowance for the usual seasonal variations, was 5.2 per cent, it was 16 per cent for teen-agers, more than per cent for young men and young women in their early twenties, more than 4 per cent for women and less than 3 per cent for men.

What underlies these wide differences? Are they persistent or is this something new? Has the economy supplied adequate employment opportunities for some groups but not for others? How shall we regard the overall unemployment rate in the light of these differences?

Some perspective on these questions can be gained by looking at an earlier year. Take, for this purpose, 1955. It is generally remembered as a prosperous one. The Korean war had ended and so had the recession of 1953-54. Output and employment were rising virorously. The unemployment rate fell to 4 per cent by mid-year, and the average for the year was 4.4 per cent.

In the early 1960s, when measures of the full employment level of the gross national product were developed by the Council of Economic Advisers, mid-1955 was taken as the base-point for the estimates. GNP in mid-1955 was considered to be at or very close to the full employment level.

Even in 1955, however, there were wide differences among the unemployment rates for different groups in the labor force. The teen-age rate was 11 per cent. For young men 20-24 years of age, the rate was nearly 8 per cent; and for young women, 6 per cent. Women 25 years and older experienced an unemployment rate of 4 per cent. For men 25 and over, who constituted three fifths of the labor force, the rate was 3.4 per cent.

During the next 17 years, the population and the labor force grew, but the growth rates differed widely among the different groups. The teen-age population grew by 80 per cent, men and women 20-24 by about 70 per cent, women 25 and over by 24 per cent, and men 25 and over by 17 per cent. In four of the five groups, the civilian labor force grew faster than the population. Only in the case of men 25 and over did the labor force grow less rapidly than the population of the group. Thus, by far the largest relative increases in both population and labor force took place among the groups that, in 1955, had the highest unemployment rates.

These large increases in the population and labor force of teen-agers, younger men and women, and adult women were accompanied by large increases in the number actually employed. In each case, employment rose faster than the population of the group, so the percentage of the population employed increased. Thus, the job market adapted to a very considerable extent to the shifts in the supply of different age-sex groups of workers. Overall, a larger proportion of the population was employed in December, 1972, (56 per cent) than in 1955 (55 per cent).

Nevertheless, the number of those without a job and seeking work-i.e., the unemployed-rose faster than the number employed, except for the slowest growing group, the men 25 and over. As a result, the rapidly growing groups now have higher unemployment rates than in 1955, while the largest and slowest growing group has a lower unemployment rate. Indeed, there were actually fewer men 25 and over unemployed at the end of 1972 than in 1955.

It appears, then, that for the largest group in the labor force, men 25 and over, the current employment situation is better than in the "full employment" year of 1955. More are employed and fewer unemployed. Is the employment situation for the other groups worse than it was in 1955?

The fact that more women, teen-agers and young men are employed relative to their population suggests that employment opportunities are not lacking, and the fact that more have work may be one of the factors inducing more to seek work.

Unemployment results not only from workers losing their jobs-it comes about also because workers seek better jobs, or seek jobs after a period of being out of the labor force, or seek jobs for the first time. When more people do this, it may be a sign of better rather than poorer employment conditions. The quit rate, for example, generally increases when employment conditions improve and workers see more job opportunities around. In manufacturing, in fact, the quit rate is higher now than it was in 1955.

The involuntary loss of a job is the dominant reason for unemployment only among men 25 and over. On an annual basis in 1972, 71 per cent were job losers. But job losers constituted only 19 per cent of unemployed teen-agers, 28 per cent of unemployed women 20-24, 45 per cent of unemployed men 20-24, and 45 per cent of unemployed women 25 and over. Because these groups were relatively less numerous in 1955, the proportion of job losers among the unemployed probably was higher then than now, and the job loser rate about the same as now, A rough check is provided by the insured unemployment rate because of the large overlap between job losers and the insured unemployed. The insured unemployment rate in 1955 was 3.5 per cent; in December, 1972, it was 3.2 per cent. In terms, then, of those who became unemployed because they lost their job, the current situation seems very similar to that in 1955.

The higher overall unemployment rates for women, younger men and teenagers in December, 1972, than in 1955 are not, therefore, altogether unambiguous. The rapid growth in their employment suggests there must have been substantial growth in job vacancies suitable to their capacities.

We can get a crude indication of the trend from the ratio of help-wanted ads to unemployment, which is now somewhat above the 1955 level. By this measure, vacancies have risen about as fast since 1955 as the overall level of unemployment, though not as rapidly as the unemployment of women and teen

agers.

The upshot seems to be that, whereas job opportunities for teen-agers, women, and young men have grown rapidly, the growth has not kept pace with the growth in the number of those who have entered the labor market. The extraordinary growth in the labor supply of these groups, therefore, has resulted in higher percentages unemployed.

These shifts, therefore, have tended to increase the disparities among the unemployment rates for different population groups. They also have lifted the overall unemployment rate.

The fact that the nation's unemployment rate in December, 1972, was 5.2 per cent, as compared with 4.4 per cent in 1955, is largely attributable to the changed composition of the labor force: groups with higher unemployment rates in both years are now a larger fraction of the labor force.

If the December, 1972, unemployment rates were weighted by the 1955 labor force proportions, the overall unemployment rate in December, 1972, would have been 4.5 per cent, or nearly the same as in 1955.

The CHAIRMAN. I would like to point out to you, Mr. Thompson, section 14(a) of the law. I think I will read it, because the law already reflects your concern in the situation where you have a new employee or an employee learning a new skill.

Let me read this to you. The law is very clear:

The secretary of Labor, to the extent necessary in order to prevent the dovetailing of opportunities for employment, shall be regulation or by orders provide for the employment of learners, of apprentices, and of messengers under special certificates issued pursuant to regulations of the Secretary, at such wages lower than the minimum wage applicable under section 6.

Mr. THOMPSON. Mr. Chairman, that is the section that we, in our testimony, suggested some reconsideration and relaxation of the certification part of it, because it is so involved.

The CHAIRMAN. Under regular procedures, this is open to his regulation and change of regulation. We are not dealing in any way with a change of the law. So what you addressed yourself to is law, and we are not changing that law.

Mr. THOMPSON. What we were suggesting in our testimony was that you ought to pursue changing that section of the law to make it more workable.

The CHAIRMAN. No; this is as broad as it can be. The Secretary has the authority under that law.

Mr. THOMPSON. That section in the law, it is my opinion, does not work like it should.

The CHAIRMAN. That is not our problem. We are not changing it. Mr. THOMPSON. Of course, with all due respect, we are suggesting that you do.

The CHAIRMAN. You are telling us that we ought to legislate for what you would consider a failure of the Secretary to make the law more responsive to the learner's needs?

Mr. THOMPSON. You might say that; yes, sir.

The CHAIRMAN. Well, we have enough to take on without telling the Secretary how to run his business.

Senator TAFT. S. 1725 would have that effect.

The CHAIRMAN. That is on the student certificate. This is not the student certificate.

Senator TAFT. Oh, I see.

The CHAIRMAN. Mr. Mittelman?

Mr. MITTELMAN. Mr. Thompson, touching on the youth differential are you aware of the fact that several States now have youth differentials in their minimum wage laws?

Mr. THOMPSON. I understand they do. I am not too familiar with them.

Mr. MITTELMAN. And in the case of New York, the State minimum wage law is $1.85, 25 cents higher than the present Federal minimum. Are you familiar with that fact?

Mr. THOMPSON. Yes, sir.

Mr. MITTELMAN. New York State has a youth differential applicable to basically all industries under which an employer may obtain a certificate just by submitting a simple application to the Department of Labor in the State pursuant to which he can obtain up to a 30 cent differential for 10 percent of his employees or two youths, whichever is greater.

Effectively in a covered industry, that permits him to pay the Federal minimum wage of $1.60, rather than the State minimum wage of $1.85. Do you have any information at all which would enable you to comment on the effectiveness of that provision in the New York State law in promoting youth employment opportunity?

Mr. THOMPSON. I am sure, Mr. Mittelman, you would be far more familiar with that than I would be. I would hope that it is a workable system. It sounds very similar to what we are advocating here.

Mr. MITTELMAN. It is very similar, and it has a minimum of redtape. Our latest information from the New York State Department of Labor is that out of 400,000 employers, only 12,000 have even applied for certificates under the State law since the $1.85 minimum went into effect, and of those 12,000, many have not used the certificates.

We have asked the Department of Labor and the State to make a survey to find out exactly how many of those certificates were used, and if not, why not.

This preliminary information might lead one to be somewhat skeptical as to the effectiveness of a youth differential of the type being discussed and that you are advocating.

Mr. THOMPSON. Taking your figures and I certainly have none to the contrary-where I come from, if you could create 12,000 jobs, youth or otherwise I would think that just the fact that you have possibly created 12.000 jobs for young people would be applauded rather than criticized.

I would hope that the program would provide more jobs. Certainly it hasn't caused any harm by creating that many jobs.

Senator JAVITS. The difficulty with the thesis is that in New York, we are employing 6 million people, and the question which Mr. Mittelman quite properly raises is whether it is worth all of the anguish and difficulty which we are having respecting organized labor's support for a minimum wage bill because of the youth differential when so small a fraction of the total employer population seems to be interested.

And the youth differential-the chamber has made a big point of this this has been one of the reasons why we have been blocked from a minimum wage bill for a year. I think it is very important whether the subject is really an academic one. There just aren't that many involved. What we have to decide is how critical the issue is in view of the fact that it is blocking a minimum wage for millions of workers. Mr. THOMPSON. Senator, with all due respect to New York, I am not certain that New York State, with the high level of income and the high level of prosperity that you have there, would necessarily be a good example for the rest of the country.

I am not sure that that experiment alone is enough to say this is an insignificant proposition. I would have to add that if I were one of those 12,000 people who got a job on account of this, I would consider it very significant, even though I might be one of 6 million

Senator JAVITS. Of course, we haven't any idea whether 12,000 would actually get jobs or what number it would be, except that is the aggregate of employers who

Senator TAFT. Senator, I would like to clear that up for the record. because there has been conflicting testimony as to whether or not this is 12,000 employers. It could be a great many more jobs than 12,000

jobs. If the Senator is as concerned with youth employment as I amit seems to me if it were only 12,000 jobs (the youth differential), is something that we ought to be considering.

Mr. THOMPSON. Senator, I didn't mean to say that it would simply be 12,000 jobs. I know you said 12,000 employers.

Senator JAVITS. Let's get the figures right-400,000 employers in New York. Only 3 percent of that total, or 12,000, have even sought any kind of a certificate in this field.

How many have used it or will use it, we cannot tell. That is only the number that have sought the certificates. You named the 12,000 job figure, we didn't. But we are pointing out, if I may just finishwe are pointing out that with so marginal a number of employers seemingly interested-and this has been, as I say, a very hotly deadlocked issue is it worth holding up the whole minimum wage operation, which is what has happened, on account of the youth differential? If Senator Taft and other Senators who feel as he does had not been trying hard for the youth differential-and I don't find any fault whatever, this is a deep conviction with him—and organized labor had not been so dedicated against the youth differential, we would have had a minimum wage bill last year.

All we are trying to ascertain is that what the lawyers call de minimus? Is it so minor a factor that it shouldn't block the minimum wage bill?

Mr. THOMPSON. I just simply picked the figure 12,000 since there were that many employers. If you just had one job per employer, you are talking about 12,000 jobs.

But I would respectfully suggest-I see on your agenda here that on Friday, Mr. George Meany is going to testify, and I would respect fully suggest that that question should be put to him.

Apparently they are holding up the legislation because of this de

minimus issue.

Senator JAVITS. They allege the employers are. But I would like to ask you a question. I will ask Mr. Meany to do the same. Would it be possible for you to submit to us by States the chamber's estimate of the extent to which a youth differential would be employed under present conditions?

In other words, suppose that the youth differential, like that contained, let us say, in Senator Taft's bill, were legislated. Or use the House bill, actually; use either one. But I will ask Mr. Meany to give us the same estimate by States, and then we will at least have some understanding of how-all I am trying to get at is the facts— how significant is this likely to be.

Mr. THOMPSON. Well, certainly we will undertake to do that. [The prepared statement of Mr. Thompson follows:]