MANPOWER DEVELOPMENT AND
TRAINING LEGISLATION, 1970

MONDAY, MAY 11, 1970

U.S. SENATE,

SUBCOMMITTEE ON EMPLOYMENT, MANPOWER AND POVERTY,

OF THE COMMITTEE ON LABOR AND PUBLIC WELFARE,

Washington, D.C.

The subcommittee met at 10:15 a.m., pursuant to notice, in room 4232, New Senate Office Building, Senator Gaylord Nelson (chairman of the subcommittee) presiding.

Present: Senators Nelson (presiding), Cranston, and Javits.

Staff members present: Robert O. Harris, staff director, and William R. Bechtel, professional staff member.

Senator NELSON. The committee welcomes this morning the distinguished Secretary of Labor, Mr. Shultz, and Assistant Secretary, Weber.

I apologize for having been 5 minutes late, Mr. Secretary. I know how busy you are.

I do have a brief opening statement and I wish to print that in the record. If there is something that the Secretary wants to respond to in it, fine.

I just wanted to make sure we had the record accurate.

STATEMENT BY HON. GAYLORD NELSON, A U.S. SENATOR
FROM THE STATE OF WISCONSIN

We are pleased to have an opportunity today to hear the testimony of the Secretary of Labor on the program known as JOBSJob Opportunities in the Business Sector. This program, begun just 2 years ago, has made a tremendous contribution in enlisting private American business firms in the difficult and challenging task of providing jobs for the hard-core disadvantaged. I am confident that committee members from both parties want to work conscientiously with the Labor Department and the National Alliance of Businessmen to make the program more successful in the future.

Certainly there is no longer any question that problems have been encountered in the JOBS program, problems comparable to those encountered in every other program which has sought to deal with the handicaps of the hard-core disadvantaged citizen.

Certainly we can face up to these problems, and seek constructive solutions, without raising the issue of partisanship. This program was established under President Johnson and continued and expanded by President Nixon. It appears that there are some good JOBS programs-and some bad programs-which were inaugurated both before and after Inauguration Day, 1969. The responsible course of action would be to seek out the sources of strength and weakness in this program, and take prompt corrective action. This is my sole desire.

A staff report published by this subcommittee has been made an issue. I do not think it is the real issue; however, I believe that the staff report must stand or fall on the facts developed in these hearings. If the conclusions contained on the staff report are supported by factual data and testimony, and if they do represent serious problems in the program, I assume corrective steps will be takenby the Labor Department, by the General Accounting Office, or by other appropriate agencies of the Government. This subcommittee does not see itself as a policeman for this program. I do think we can assume that if serious problems are brought to light, they will be speedily corrected.

The principal conclusion of the staff report is favorable. It mentions the historic achievement in enlisting 25,000 private firms in employing the disadvantaged.

The principal shortcoming of the JOBS program cited in the staff report is the vulnerability to recession.

This is a very serious problem, and one which is larger than just the JOBS program. I hope we can have some serious, nonpartisan discussion of it here today.

On March 24-about 6 weeks ago I wrote to the Secretary of Labor and expressed my concern about increasing unemployment. My letter was occasioned in part by a study the Labor Department had submitted to this committee outlining the impact on this country if unemployment should rise from 3.7 percent to 4.7 percent.

In that letter I noted that the Labor Department had budgeted $300 million for the JOBS program this year and $375 million for the coming year.

In view of the steady increase in unemployment, in that letter I said:

If the JOBS program does not appear at this stage to be the most effective program available to us to meet rising unemployment it would seem wise to reallocate these funds promptly to other programs.

Both my letter and the Secretary's response are printed on pages 139 and 140 of the staff report.

Certainly no one can interpret that inquiry as any kind of attack on the JOBS program.

Since my letter of March 24 and the Secretary's response of April 8, the Labor Department apparently has come around to the conclusion which I suggested and has decided to seek a reallocation.

I trust that the Labor Department will today present its proposals for reallocating money which it is now clear cannot be effectively used in the JOBS program, and we can begin to consider a very critical question :

How can our Federal manpower training programs be most effective in helping the victims of rising unemployment?

As the staff report states, the JOBS program was designed during a period of almost uniquely low unemployment. Much the same can be said for the proposed Manpower Training Act of 1969, which has

been under active consideration by this subcommittee since last fall. The training programs involved in the Manpower Training Act involve about 426,000 persons. These programs are important.

But since this bill was drafted, more than 1 million additional people have been thrown out of work.

• In terms of our manpower problems, we live in a different world today than we did in 1969.

We want the Labor Department's expert suggestions on what can and must be done to meet the problems of the world in which we live today-a world of 4.8 percent unemployment, which means some 4 million people, the highest since April 1965 and the most rapid monthly increase in a decade.

A few comments are needed on the discussion over the staff report. Mr. Weber's rebuttal, published in the appendix, makes a number of charges.

He accuses the staff report of quoting the manpower report of the President out of context. Actually, the staff report reprints the complete text of the portion of the manpower report of the President relating to the JOBS program.

He accuses the staff report of an error of arithmetic. He apparently based this on an uncorrected page proof; a typing error had been made in copying the number of persons hired under the JOBS program. It was an obvious error and was immediately corrected before Mr. Weber's letter was written. All of the information published in the report on page 4, which he claims is erroneous, is exactly correct and it comes from the Labor Department's own computer printout on the JOBS program for January 31, 1970.

He accuses the staff report of "paraphrasing the Negotiators Handbook" in a way that would lead a casual observer to think that the Labor Department negotiates contracts under a 30-minute rule. The report does not paraphrase the handbook; it quotes it directly. The quote was called to the attention of the staff by the General Accounting Office which made the exact same point in regard to the 30-minute rule in its own testimony here last Tuesday.

Most surprisingly of all, Mr. Weber accused the staff report of making a misleading statement on page 110. The letter printed in the appendix was converted to a press release by the Labor Department which says:

Page 110-a misleading statement that the total cost of supportive services in JOBS could be in excess of $5,200.

FACT: Maximum allowable costs for supportive services cannot exceed $1,055.50.

It is Mr. Weber's letter and the Labor Department press release which have made a misleading statement. The information on page 110 is exactly and precisely correct. It came directly from Pierce Quinlan, the Labor Department's director of the JOBS program. It lists exactly what payments a contractor can receive under the JOBS program, and gives the exact maximum payment per trainee, which is $5,213, according to Mr. Quinlan.

The testimony presented to the subcommittee on May 5 and 6 by the General Accounting Office and a number of other competent wit

nesses was clearly much more critical than anything found in the staff report.

I think it is obvious that prompt, corrective action is needed. We have three charts on display here today, which will be published in the record at this point. All are based on data supplied to the staff by the Labor Department. The chart, "People in JOBS Contract Program," gives data through January 31, 1970, as supplied by the Secretary on April 13. The chart, "Funds for JOBS," gives data through March 31, 1970, as supplied by Manpower Administrator Malcolm Lovell on April 15, 1970.