opportunity to learn English. Most employees in the program hoped to move on to a better job once their English became more proficient. In this way, the program at Merit enterprises was of benefit to foreign born workers.

Many Haitians and Puerto Ricans working at Merit were supporting families, but the families were not in the United States. The workers had come to the United States to earn money to send back to their families in the islands, where the low wages (by U.S. standards) were of much greater value.

Furthermore, many Puerto Ricans and Haitians in the program intended sooner or later, to return to their homelands. Some viewed their jobs as an undesirable situation to be endured for a limited. period, not a lifetime.

In November 1969 Merit Enterprises employed approximately 350 workers under the JOBS program. As of March 31, 1970, Merit Enterprises had laid off all but 14 of the employees under the program and further reductions were expected.

Were these layoffs a result of severe economic conditions alone? Apparently not. Merit's orders after the first of the year were lower than normal, but supervisory personnel at Merit also explained that the company had long had a seasonal production cycle and that layoffs after the Christmas production rush were normal. In fact when Merit began to layoff workers in late December, Mr. Fred Ashear, a plant manager at Merit, said that too many people had stayed on the job under the JOBS program. Not enough had quit, so they had to be released.

Merit Enterprises depends heavily on Christmas sales. Production begins to rise in spring, increases through the summer and reaches a peak in late fall. By the second week in December, production is slashed and remains very low until spring. Employment at Merit follows this production cycle.

How, one might ask, could Merit qualify for a JOBS contract, when one of the primary objectives of the program is to place trainees in permanent positions with a reasonable opportunity for advancement?

Of what value were the training, remedial education and counseling employees received, when they were laid off a few months after being hired?

The Merit JOBS contracts provided for 200 hours of job related basic education, day care payments to mothers, human relations training and job coaching. Since most employees in the program did not stay with the job from July 1969 until November 1969, it is unlikely that more than a few employees received more than 100 hours of JRBE, given the schedule of 5 hours of class a week, a schedule which was reduced to 4 hours a week in November, when production demands increased, and ended altogether in February 1970, although there were still workers in the program.

To my knowledge no payments for day care were ever made by Merit. The job coach system was in effect no more than 2 months. No more than four of the 10 specified human relations sessions were held.

If a man is to receive an attractive wage and be secure in his position, he must have a marketable skill. Most of the positions at Merit Enterprises, Morse Electro Products and the other companies with which American Learning Systems Co. has contracts are simple assembly jobs. Having worked for a year at such a job, an employee would still probably be earning less than $2 an hour with little hope for advancement.

A trainee in JOBS program may benefit from the counseling he receives, and remedial mathematics and English may raise his educational level, but if he does not learn a marketable skill, he is unlikely to benefit materially from the program. Without a skill he will still have only his two hands to sell in the job market, not something he has learned to do with them.

The target of the JOBS program is the hard-core unemployed. People in this group are typically members of a minority group, have a low level of education, lack job skills, and have a sporadic employment record, meaning that they would normally be excluded from the jobs which the JOBS program is intended to offer them an opportunity to obtain.

According to the National Alliance of Businessmen, several hundred thousand jobs have been found for the hard-core unemployed under the JOBS program.

Nowhere however have I seen an estimate of how many of these jobs would have been found and filled if the JOBS program had not existed. How many workers have been hired who would definitely not have been hired without the program?

If the workers hired under the JOBS program would not be hired by a company under normal circumstances, one would expect to find observable differences between the company's regular employees and those hired under the program.

At the companies with which American Learning Systems has contracts, contracts worth over $6 million with nine different companies whose JOBS contracts cover over 600 jobs, no significant differences could be found between the employees hired before the JOBS program had begun and those hired under the program.

Both the former and the latter were from the same racial and ethnic groups and had similar educational and economic characteristics.

If a company is being reimbursed for hiring and training workers whom it would normally hire, the reimbursement amounts to a Federal subsidy of the company. I doubt that this is what either the National Alliance of Businessmen or the Department of Labor had in mind when the JOBS program was set up.

Under the JOBS program, a business, which agrees to hire and train workers who would normally be considered unqualified can expect to incur additional expenses in training these workers, is reimbursed by the Department of Labor for these additional costs. Unfortunately, there appears to be too little attention paid to control and inspection of the programs by the Department of Labor to see what it is paying for.

To my knowledge there is little or no regular onsite inspection by the Department of Labor to see if the contracts are being fulfilled and to what extent the program is achieving its objectives.

During my 6 months at American Learning Systems, no official of the Department asked my teacher or counsel working for the company about the program, nor, to my knowledge did anyone from the Department question any of the trainees.

Since October 1969 or before, American Learning Systems Co. Inc. has had contracts with the Duralab Equipment Co. International Appliances Corp., Peter Pan Nursery Products Inc., and Scottex Corp.

Since October 1969 these companies and American Learning Systems, Inc. (through the manpower training consortium) have regularly billed the Department of Labor for employees filling the job slots in the contracts, yet as of April 16, 1970, no programs had been initiated with these companies by American Learning Systems.

At International Appliances Corp., and Peter Pan, a few workers had been interviewed. Otherwise American Learning teachers and counselors had had absolutely no contact with them. No physical exams had been given, no child care of transportation reimbursements paid, and no teaching, job related basic education, or counseling had been done at these companies.

The JOBS contract with Morse Electro Products became effective on September 1, 1969. The enrollees went to work before being interviewed by an American Learning Counselor. No orientation was done by American Learning, I have not seen a copy of the Morse contract, and do not know what additional services, if any, were stipulated.

However, no physical exams, child care payments, transportation reimbursements or human relations training sessions have been given to date.

The Morse contract included two job categories; Assemblers and Industrial Truck Operations. The factory has never had 20 industrial truck operators (as indicated in the training synopsis) but here the American Learning staff was told to make certain that male enrollees were assigned to these 20 slots, even though they were working as assemblers.

(The unit cost for reimbursement for industrial truck operators is higher than it is for assemblers.)

Following a layoff in mid-November 1969 the American Learning counselors were told to fill in the empty slots with place holders, workers who had not been interviewed and were not active in the program, but whose attendance was used to determine the number of billable days.

Classes at Morse did not begin until September 29, 1969. Trainees received only an hour of class per week for the first few weeks of October. (The contract calls for 290 hours of JRBE in 260 days).

Trainees are presently receiving 2 hours of class per week, but the foremen are becoming increasingly reluctant to release employees for the lines, so many classes are attended by only half the number of trainees required.

A JOBS contract with IBI Security Services was signed late in March. The effective date was said to be March 1, 1970. Yet in a discussion of the American leaning program with Mr. Jack Malin of IBI it was proposed by American Learning and agreed by IBI that

those employees hired by the company since February 15, 1970, would be included in the program.

A similar proposal, by which all employees hired since January 15, 1970, would be included in the program, was made by American Learning to Stelber Industries, in March 1970. However the Stelber contract has still not been approved.

As unlikely as it may seem, some of the companies undertaking jobs contracts with American Learning Systems do not know what the contracts call for. Company officials are often unfamiliar with the requirements for orientation, on the job training, job related basic education and counseling.

This ignorance of the terms of the contract could be explained, in part, by the fact that the consortium agreements are prepared by American Learning Systems, Co. Inc., and the Manpower Training Consortium, Inc., not by the participating companies.

What then may be said for the JOBS program? When a participating company offers training which teaches a worker a marketable skill, pays the worker a living wage, offers reasonable opportunities for advancement and job security, the program could be quite fruit

ful.

But there are probably not many companies which can offer such a program, even if they are reimbursed for some of the costs.

In the New York area there are now more than 6.000 skilled jobs which cannot be filled. New York Telephone Co.. Consolidated Edison, and the Metropolitan Transit Authority, among others, need skilled workers.

But the JOBS program, which attempts to put workers on the job as quickly as possible and does not offer full-time training, is insufficient to bridge the gap between the hard-core unemployed and the jobs cited above.

Yet these seem to be the only jobs which ofer good wages, security, and opportunities for advancement.

Senator NELSON. Thank you very much for your statement.

Mr. RUFFIN. Mr. Chairman, at this time, with your permission. I would like to read a statement submitted to the committee by Mr. Gerard Beitel.

He is a friend of mine and also worked for American Learning Corp.

Senator NELSON. Where is Mr. Beitel!

Mr. RUFFIN. I believe he is in New York.

Senator Netson. Did he ask you to submit the statement for him? Mr. RUFFIN. No, to the committee.

Senator Netsex. The stad tells me that the statement was sent directly to the committee, and he worked with you and would conay in your statement, is that correct !

Mr. EUFFIN. Yes.

Senator NELSON. I think we will insert it in the record following pour statements and we will avoid reading because we have à long list of witness tdir.

The statement of Mr. Beitel follows:

PREPARED STatement of GERARD B. BEITEL, FORMERLY EMPLOYED BY THE AMERICAN LEARNING SYSTEMS, INC.

Mr. Chairman, at the request of Mr. Robert Wegmann of your committee, I am making the following statement.

I was employed by American Learning Systems Co., Inc. from 10 November 1969 to 10 April 1970 as Assistant Director, Security Training Program. In this capacity I helped design the security training curriculum and program and then to implement that program into four training centers. I monitored the training program and provided some liaison with the Security companies with which we worked. I had no control over the operations of the various training centers, only insofar as it affected security proficiency. I had no contractual authority nor did I prepare any paperwork or billing invoices. (For a period of three weeks I did direct the center in Farmingdale, New York at which time I submitted supplementary reports regarding that center's activity).

While traveling from center to center, I received information from various employees that certain services required by contract were not being provided by American Learning Systems (i.e. Job Related Education, Special Counseling and Orientation). I was informed by employees of the East New York Center (it specialized in production oriented companies) that absolutely no services were being provided for a number of companies. Yet when checking with some administrative personnel, I learned that billing invoices had been forwarded to the Department of Labor and reimbursement subsequently received.

I brought this to the attention of a number of senior company officials, President, Vice President and Director of Operations, and was told that production schedules simply overruled release time during that period and that the trainees would ultimately receive all training time contracted. However, that period extended for somewhere in the neighborhood of six months.

Lawrence Warden, the Project Director of Manpower Training Consortium, Ine often inquired into the scheduling of the services. He told me he was informed by the Vice President, Mr. Charles Hope, not to worry about it.

I was also told by Francis Equale that a new contract for IBI Security Services was putting men into the program who had been with the company over a year... clearly in violation of the contract.

The above information is true to the best of my knowledge.

Senator NELSON. Thank you for coming such a long way to testify. The committee appreciates it very much.

Mr. RUFFIN. Thank you.

Senator NELSON. Our next witness is Mr. Henry Eschwege, associate director of the General Accounting Office.

STATEMENT OF HENRY ESCHWEGE, ASSOCIATE DIRECTOR, GAO, WASHINGTON, D.C., ON BEHALF OF THE GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY RAYMOND SCHMITT

Senator NELSON. It seems we have you appearing every day here. Do you each have a statement, or one statement?

Mr. ESCHWEGE. We just have one statement, Mr. Chairman. At the request of your Staff Director, Mr. Bechtel, the General Accounting Office interviewed officials of four companies involved in the JOBS program in New York City.

The purpose of the interviews was to get some indication as to the extent to which supportive services were being provided to employees of these companies by American Learning Systems, Inc., of New York City.

I have with me today Mr. Raymond Schmitt on my left, supervisory accountant of the General Accounting Office, who conducted these interviews, accompanied by Mr. William McGee of our New York regional office.