pounded the misreading of the Handbook does not mitigate the fact that the "30 minute rule" as stated in the majority staff report completely misconstrues both the substance and the spirit of the original materials.

As to the maximum amount that a contractor could receive for training an individual, it was the misleading inference, rather than the total dollar amounts, which is objected to. As pointed out in the Department's views appended to the report, the high figure could be attained only if other very specific conditions were also present. The total dollar amount quoted on page 110 describes a program involving training for a very highly skilled occupation and the full complement of supportive services. It strongly implies that the $5,200 quoted is available for the supportive services alone.

[Subcommittee staff comment: Reprinted below is the section of the staff report which the Labor Department charged was misleading. It is a point by point listing of all items for which a JOBS contractor may be reimbursed, and it is correct exactly as published. The information was supplied by the Labor Department. It does not imply in any way that the maximum payment of $5,200 is for supportive services alone.]

WAGES AND SERVICES FINANCED

Under the latest contract, the MA-6 contract, the Government offers the following incentives under the JOBS program:

The Government will pay one-half of a trainee's salary for a period of from 10 to 40 weeks, depending on the complexity of the job.

The Government will pay the entire wage during periods when the trainee is receiving job-related basic education, counseling, and orientation.

In addition, the Government will pay the full cost (up to certain established ceilings) of providing these services (job-related basic education, counseling, and orientation) plus the cost of:

(a) Transportation assistance

(b) Child care assistance

(c) Medical and dental treatment, if necessary

(d) Human relations training for the employer's supervisory personnel, plus an allowance for administrative costs.

For these items, a firm with a JOBS contract could receive up to $5,213 per trainee.

STATEMENT OF THE HON. GEORGE P. SHULTZ, SECRETARY, U.S. DEPARTMENT OF LABOR, ACCOMPANIED BY ARNOLD R. WEBER, ASSISTANT SECRETARY FOR MANPOWER

Secretary SHULTZ. I welcome the opportunity to meet with you today to discuss the job opportunities in the business sector (JOBS) program-a cooperative effort undertaken by the Federal Government and private industry to provide employment for the Nation's disadvantaged workers. In my remarks, I first want to review the evolution of JOBS so that you may appreciate the important role it plays in our overall manpower program. Second, I want to spell out the considerable achievements under this program. Finally, I will candidly discuss those problems which do confront us in JOBS and indicate the steps that we are taking to deal with them. The JOBS program is not perfect, but its deficiencies are best addressed in the light of its development and achievements. I hope to provide this perspective here today.

THE EVOLUTION OF JOBS

As you know, our modern national manpower program began with the enactment of the Manpower Development and Training Act (MDTA) in 1962. This legislation was initially aimed at helping the victims of structural unemployment. In response to this problem MDTA was designed to provide these jobless workers with occupational training in either an institutional setting or on the job. Both of these components of MDTA have effectively met the training needs of thousands of such unemployed workers. However, as the labor market tightened and the focus of our manpower programs shifted to the hard-core unemployed, certain limitations in the existing approaches became apparent.

One, where institutional training was utilized there was no assurance of a job. The individual entered a classroom rather than a workplace, and he assumed the status of a trainee rather than employee until the period of instruction was completed.

Two, absence of assured employment had a negative effect on motivation and the financial ability of the trainee to complete his

program.

Three, the vocational schools which provide institutional training are necessarily limited in the range of occupations and skills in which they can provide instruction.

To some extent, these limitations are met by the on-the-job training (OJT) component of MDTA. However, as originally implemented OJT suffered from other deficiencies. Employers who partic ipated in regular OJT projects tended to select the most qualified of the unemployed. This process of "creaming" seldom reached the hard core. The low cost of this training was attributable to the absence of remedial education and other supportive services. Thus the advantages of shifting manpower programs to the employer were diminished by largely passing over those workers most in need of help in acquiring occupational skills and finding a job.

The next wave of developments in our manpower policymaking commenced with the passage of the Economic Opportunity Act of 1964. New programs were developed which were geared to the specialized needs of persons with tenuous attachment to the labor force, individuals who were poorly educated, untrained, and typically members of racial and ethnic minorities. MDTA was designed to accommodate the needs of changing labor demand but had fallen short in serving the needs of this particular component of manpower supply. The antipoverty program brought the problem of a great underutilized human resource the poor to the Nation's attention. But its capacity to attain its objective was weakened by the lack of strong links to employment opportunities in the private sector.

On the basis of this extensive program experience, there was a clear need for a new program that would provide an effective bridge between the hard-coore worker and the requirements of the competi tive labor market. Here again the process was evolutionary. JOBS did not emerge full blown to answer this need. In 1967 Secretary Wirtz initiated a series of test programs to determine the best approach to enlisting private industry in the training and employment of the hard core.

The first major demonstration effort in this process was the MA-1 program started in July 1967. The Department contracted with six private firms and a public school system to provide different packages of manpower services to disadvantaged workers in 10 major cities. A second test progam-MA-2-was initiated in October 1967 in five urban slum areas. Greater emphasis was placed on the hiring of trainees by employers, the need for expanded financial support for each trainee was recognized and efforts were made to facilitate the contracting procedure.

Only after this initial phase of testing and evaluation was the National Alliance of Businessmen formed and the JOBS program launched in 50 major cities in January 1968. JOBS represented a major innovation in the development of manpower programs. First, it began with a job rather than a promise or hope of employment. Second, persons placed in these jobs would not receive stipends or training allowances, they would receive the firm's normal beginning wage. Third, the program was designed to provide work preparation in the broadest sense for the hard-core unemployed including counseling, basic education, health care, and related services. Finally, JOBS involved the support of the most enlightened segment of the business community within the organizational framework of the National Alliance of Businessmen (NAB).

Employers were encouraged to contract with Department of Labor for the extraordinary costs of training a disadvantaged person. Other employers wishing to participate at no cost to the Government could recruit eligible workers with the assistance of NAB, the local offices of the public employment service, or the concentrated employment program.

In January 1969, when this administration took office, we carefully reviewed the JOBS program and its progress to that date. We recognized that the program had suffered from the inevitable growing pains and consequences of experimentation. These early problems are exemplified by the fact that, of the 23 contracts with unsatisfactory performance cited in the majority staff report of this subcommittee 17 were executed before this administration took office. However, we strongly endorsed the basic concept of JOBS and determined to build upon this government-business partnership in assisting the disadvantaged worker to achieve gainful employment and personal dignity.

In the last year, we have taken the following steps to strengthen and expand this program:

1. We have broadened the contract program to permit JOBS emplovers to provide upgrading to employees who need assistance to move into jobs with greater responsibility.

2. We have enlarged the scope of the program to include private nonprofit firms as well as commercial enterprises.

3. In JOBS-70, the most recent contract series, we have made an effort to encourage smaller employers to participate in the program through a simplified consortium arrangement that permits modest advance payments, thus mitigating the problem of heavy startup

costs.

4. Finally, we extended the program from the original 50 metropolitan areas to 125 areas under MA-5 and, under JOBS-70, the program is now available nationwide.

I might add a fifth point. We have adapted the concept of JOBS, that is, immediate placement in a real job, followed by on-the-job training, to the public sector in the public service careers program which is designed to do in the public sector the same sort of thing that we are asking the private sector to do through the JOBS program.

Senator NELSON. Do you have specific examples, Mr. Secretary? Secretary SHULTZ. This is a program which is barely underway. As you know, we waited 8 months to get our appropriation from the Congress this year, and we had to wait to get that. That is just getting started, and we do have examples we can give subsequently. Senator NELSON. You will discuss that later?

Secretary SHULTZ. I will be happy to respond to your questions on that.

This discussion of the evolution of the JOBS program has not been presented to embellish the record. Rather, it demonstrates that JOBS has filled a major gap in the array of manpower programs. that it has tapped the resources and idealism of the private sector, that it has enjoyed the support of two administrations and that it has been the arena for continuous change and refinement.

Any assessment of the program should recognize these unique attributes.

ACHIEVEMENTS OF THE JOBS PROGRAM

I turn now to the achievements of the JOBS program. I have stated that the JOBS program has been successful. I think an objective reading of the record will bear out this conclusion.

Since actual program operations began in March 1968-a period of just over 2 years-over 432,000 disadvantaged persons have been hired under the JOBS program and nearly 53 percent of these workers are either still employed by the original firm or stayed on the original employer's payroll for at least 6 months. This effort has involved 25,000 firms throughout the country. A large percentage of these firms have hired and trained disadvantaged persons without the benefit of financial assistance from the Government. To date, over 70 percent of the hard-core unemployed persons hired have been recruited by firms under the noncontract phase of the JOBS program.

Also through the JOBS summer employment program, conducted by the National Alliance of Businessmen, more than 300,000 needy young people have found summer jobs during the past 2 years at no cost to the Government.

Now let me say a few words about the matter of statistics. The subcommittee's majority staff report indicated that there were certain deficiencies in this program's operating data. Since assuming responsibility for the JOBS program, we recognized that certain key information could not be recovered from the reporting system that had been in effect. The most notable gap was the inability of the system to distinguish persons who drop out from those who suc cessfully completed training under the contract program. Once these weaknesses were identified, we introduced new procedures which have considerably improved the reporting system.

Senator NELSON. Does this refer to the contract part?

Secretary SHULTZ. I am now talking about the contract part, and I will talk about the other part subsequently.

Effective February 1970, contract employers are required to report the following information with respect to persons hired under their - contracts: number hired cumulatively; number still in training; number dropping out before completing training; number successfully completing training and employed by the contractor as a regular employee; and number terminating employment with the employer.

The revamping of the data reporting system also includes new procedures that will enable our regional manpower offices to monitor more closely the current performance of individual JOBS contracts. We also hope to implement a followup system now in the experimental stage, which will enable us to track former enrollees to determine how they have fared since their participation in the program ended.

The problem of incomplete reporting in the noncontract phase of the JOBS program is also of concern to us. Clearly, any program that relies upon the voluntary efforts of businessmen will encounter some difficulty in eliciting a full response to a data reporting system. However, we are presently working with NAB to determine the most effective means of facilitiating the reporting system for noncontract employers.

Notwithstanding these difficulties, I believe that the available data are adequate to demonstrate that through the JOBS program, we are reaching the disadvantaged, with good jobs, and that turnover in the program has not been excessive. Let me examine each of these subjects, in turn.

Reaching the disadvantaged

Our present data provide considerable detail concerning the characteristics of employees in the program. While there may be individnal instances of employers not following program's hiring criteria, the following aggregate data, based on both the contract and noncontract phases of the program, clearly demonstrate that JOBS is reaching the disadvantaged.

I will itemize:

The average income for all participants prior to enrollment was $2432 while the average family size was 3.6 persons. The poverty level for this family size was $3,360 or almost $1,000 more than the average wage prior to enrollment.

Seventy-three percent of all employees were Negroes and an additional 16 percent came from other minority groups such as Mexican-Americans and Puerto Ricans. Thus a total of 90 percent of all JOBS employees are members of minority groups.

Approximately 50 percent of all JOBS employees are under age 22, the same age group as that of the Job Corps.

Seventy-three percent of JOBS trainees are male.

Sixteen percent of JOBS employees were receiving public assist