The concept of "equal opportunity" must apply in the first instance to the operations and personnel administration of the Employment Service itself. It is not sufficient, however, merely to reaffirm existing laws and policies as they relate to this agency. Instead, Employment Service personnel at every level must make a positive effort to understand and to cope with the special problems that confront members of racial minorities in the labor market. In addition, particular diligence should be exercised in helping these individuals to beneit from the various public and private programs that will enhance their employability. At the same time, the Employment Service can demonstrate its commitment to standards of equal opportunity by vigorously recruiting its own personnel from all groups of qualified persons.

TOWARD A NEW MANDATE

In the 32 years since the passage of the Wagner-Peyser Act, the Federal-State Employment Service has been asked to assume more and more of the responsibilities of a comprehensive manpower services center. This new role should now be affirmed and extended so that the Employment Service can respond to the changing economic environment with competence and imagination and so that the public will have a better understanding of this role. To achieve this objective. a variety of changes are recommended that will alter both existing concepts and administrative arrangements.

A SEPARATE EMPLOYMENT SERVICE

The recent addition of many new responsibilities has greatly modified the nature of the public Employment Service system. An examination of these responsibilities clearly indicates that the Employment Service is now a center for the administration of various manpower services rather than an adjunct to the unemployment insurance system.

However, the agency's effectiveness in assuming this expanded role has been limited by its close identification with the unemployment insurance system. Since 1935, the Federal-State offices have been charged with administering the eligibility test for unemployment benefits. While this has been, and remains, an important activity, its dominant position in the operations of the Employment Service had had several unfortunate consequences for the efficiency of the overall system.

LIMITATIONS CREATED BY INTEGRATION WITH THE UNEMPLOYMENT INSURANCE SYSTEM

Different personnel skills are required to operate a manpower services center from those needed for the administration of unemployment insurance laws. The latter essentially involves personnel well versed in the specific State unemploy ment insurance law, administrative rulings, and other details relevant to the effective administration of the program. In contrast, the provision of manpower services requires personnel who are expert in labor market organization and trends and who have considerable skill in aiding jobseekers to develop their ful occupational capabilities. In addition, manpower personnel must be able to work closely with employers and to become familiar with their problems as well as with the needs of other agencies that are active in the labor market. To the extent that the unemployment insurance functions demand the attention of Employment Service personnel, they will tend to inhibit the development of satisfactory manpower services.

In addition, the emphasis on unemployment insurance has created a pablic image of the Employment Service that obscures other, more positive elett of its overall program. This "image" has influenced the attitudes of potent ai clients on both the supply and demand sides of the labor market. Thus, t jobseekers who could benefit greatly from the services offered by the Eng ment Service office are reluctant to use these facilities because of the attached to the "unemployment office." Similarly, many employers have taken advantage of the Employment Service because they have felt that the pla ment and manpower functions have occupied a subordinate position in offices' operations.

Considerations such as these have already led the Employment Serv separate its activities from unemployment insurance in cities of 20 000

over. Furthermore several States, notably Arizona and Wisconsin, have completely separated the administration of the Employment Service from the operations of unemployment insurance.

We believe that this process should be extended to all States and to the national office.

We recognize that the Employment Service will continue to play an important role in the administration of the unemployment insurance system. This is especially true as it relates to the work test. Close working relationships between the two services are required for effective administration of the work test aspects of the claims certification process. However, it is important that the Employment Service should be a separate, identifiable organization whose overriding interests lie in the area of manpower services. This means that, insofar as possible, administrative arrangements of the Employment Service should be separated from the administration of unemployment insurance, apart from the work test. To attain this objective, several steps should be taken.

RECOMMENDATIONS FOR A SEPARATE EMPLOYMENT SERVICE

1. Administrative arrangements.-Separate administrative arrangements should be established for unemployment insurance and the manpower functions of the Employment Service at the Federal, State, and local levels. Some measures already have been adopted to achieve this end, but they should be strengthened and extended. There should be different executives for the two activities and each should have his own staff and line of authority, though reporting to an administrative head of an overall agency. This separation also means that the Employment Service should formulate its own policies to govern the selection of personnel, salary administration, and training requirements, and, as discussed subsequently, be financed independently of the Federal Unemployment Tax Act. Although some individual differences may exist among the States, the Federal agency should formulate basic requirements for the clear-cut administrative separation of unemployment insurance and the Employment Service.

2. Physical separation.-A concerted effort should be made to provide physically separate facilities for the Employment Service and for the administration of unemployment insurance. Again, some steps have been taken in this direction, but they must be strongly augmented. The ultimate goal should be the physical separation of all Employment Service offices from all facilities responsible for unemployment insurance with reasonable proximity maintained so as to minimize the inconvenience to claimants and jobseekers. In the short run, these two activities may still be serviced from the same office in those cases where small offices in sparsely populated areas are involved. A long-run program should be adopted, however, for consolidating these small offices, where feasible, as a preliminary to the establishment of separate facilities for unemployment insurance and the Employment Service. It may be that wider geographical areas could then be served by a single Employment Service office through the use of mobile teams who visit particular communities on a regularly scheduled basis. In this manner, the Employment Service will avoid excessive duplication of facilities while also achieving the desired separation from the administration of unemployment insurance.

SCOPE OF SERVICE AND RELATIONS WITH OTHER GROUPS

The public employment agency shares its functions in the labor market with a diversity of individuals and organizations, including school counselors, voluntary agencies, unions, employers and private labor market agencies, and other governmental groups. In the past, however, relations between the Employment Service and other groups in the labor market have not been well defined or understood. As a result, opportunities have been lost for constructive cooperation among the interested parties. To clarify this situation, these guidelines are recommended:

1. No arbitrary limits on clientele served.-No arbitrary limits should be placed upon the classes of clientele that may be served by the public Employment Service. If it is to function as an effective general-purpose manpower agency, it must be able to serve energetically all people who seek assistance in finding jobs. Because of the dynamic characteristics of the labor market today, any rigid definition of jurisdiction would impair the effectiveness of the Employment Service and also would deny aid to workers and employers who could not be adequately served by other private or public agencies.

2. Special services required.-In some cases, special efforts may be called for to reach out to people in need of specialized services to improve their employability. These specialized services include:

(a) Identifying these persons and providing special counseling services in order to determine their rehabilitative needs;

(b) Developing plans commensurate with individual needs, such as referral to another agency for remedial education, to institutional training or on-the-job training;

(c) Seeking employment opportunities of a special kind to accommodate the capabilities of persons in this group;

(d) Providing supportive followup services while they are on the job until they develop self-confidence in the employment relationship.

3. Need for flexibility and review.-The absence of any fixed designation of the clientele of the Employment Service does not mean that it will serve all groups equally or at all times. Normally, the Employment Service should direct most of its resources to jobseekers who are unemployed or who have special handicaps in the labor market. Also, in some cases, it will withdraw from certain areas where its objectives have been realized or where it is determined that another public or private agency can do a more effective job. The contraction or expansion of the operations of the Employment Service, therefore, should arise not from narrow bureaucratic considerations, but from an appreciation of its basic mission in a changing labor market and economy. In this respect, useful recommendations can and should be made by the advisory and review committee suggested elsewhere in this report.

4. Relationships with private groups.—We urge the Employment Service to explore all possible ways to develop a more effective two-way flow of information and contacts with those private employment agencies which offer valuable services to workers and employers in particular labor markets and which adhere to professional standards in their own placement activities.

5. Relationship with other Government groups. Recent Government programs for training, particularly of youth and low-income groups, have involved the establishment of separate placement agencies, creating excessive demands upon employers and uneconomic duplication of counseling and placement activities. While we recognize that special problems often require special treatment, we feel also that the implementation of all these programs requires effective coordination in dealing with both employers and jobseekers. The Employment Service has the potential, in view of its experience and facilities, to fulfill this coordinating role and it should equip itself to do so insofar as possible.

6. Special contracting arrangements.-There may be occasional special situations where it is appropriate for the Employment Service to contract out to other qualified agencies in the community for the provision of manpower services, such as special counseling, placement, or research activities. These agencies may possess specialized skills or special relations with certain clientele groups which make them better able to supply needed manpower services.

We therefore recommend that the Employment Service be given legislative authority to enter into contractual relations with nongovernment groups to supply specialized manpower services to certain clientele.

STRENGTHENING PERSONNEL IN THE FEDERAL-STATE EMPLOYMENT SERVICE SYSTEM

A critically important factor in strengthening the Employment Service is to improve the quality of personnel working in the system. While this has always been a problem, it has become more acute. The growing demands upon the Employment Service for comprehensive manpower services call for personnel with a more complex set of skills than previously required. To cite several examples: Employment Service counselors now select trainees for vocational training programs and work more intensively with the disadvantaged. Labor market analysts now have to provide more complete analyses of labor market conditions as a prerequisite for establishing training programs. Occupational analysts are more concerned with manpower requirements arising out of technological change. Local office managers are much more deeply involved in working with community groups to initiate and implement a variety of programs.

We believe that the needed improvement in the quality of personnel can be accomplished by (1) improving standards and raising salaries to attract and retain competent and qualified employees; (2) providing incentives for self

development through inservice and outservice training; and (3) enhancing employee advancement opportunities through facilitating movement among the States and between the States and the Federal Government. Changes in these areas should help make jobs in the Employment Service more attractive and provide the basis for more successful recruitment efforts.

EXISTING PROCEDURES FOR SALARY ADMINISTRATION

To put the problem of improving salaries into perspective, it is necessary to review briefly the existing method of salary administration. Under the WagnerPeyser Act and title III of the Social Security Act, grants are made to the States for administration of public employment offices where the State's unemployment insurance law is in compliance with required administrative standards. Among these is the requirement that personnel standards on a merit basis be established and maintained. These requirements are promulgated by the Secretary of Labor and are identical with others issued by Federal agencies carrying out grant-in-aid programs.

Under the merit system, each State agency is required to establish and maintain a classification and compensation plan for all positions which are not exempt. The State has final authority for levels and rates of pay but must comply with the comparability policy of the Federal Bureau of Employment Security. This policy is primarily a fiscal control to assure that State Employment Service salaries are in line with comparable positions in other departments of State government.

PROBLEMS OF SALARY ADMINISTRATION

This policy has adversely affected the levels of salaries for professional jobs in the Employment Service. One major problem is to determine what positions in State employment are comparable. Aside from clerical and secretarial positions, the job duties of Employment Service personnel are not generally comparable with other State government jobs. More importantly, it has tied Employment Service salaries to low State salary levels in many States. Salary data from the Division of State Merit Systems in the Department of Health, Education, and Welfare, reports of the Personnel Management Committee of the Interstate Conference of Employment Security Agencies, and studies by the national office all attest eloquently that Employment Service salaries are generally low when compared with salaries presently being paid outside of State government for comparable jobs. For example, a sample survey in 31 States in 1963 showed that nearly a third of State Employment Service interviewers were paid less than $5,000 a year. Furthermore, the low salaries are undoubtedly an important factor in the high turnover rates and the inability of the Employment Service to recruit and hold its share of the better college graduates and other qualified applicants. Nearly a third of the sample of interviewers had less than 3 years of service. Low starting salaries for employment interviewers in the States account for this. By January 1965, these starting salaries were still $4,500 or less in half of the States.

RECOMMENDATIONS FOR IMPROVEMENT OF SALARY ADMINISTRATION

In light of these facts, it is strongly recommended that steps be taken to make salaries more attractive for qualified personnel and, hence, more competitive. Both the Secretary of Labor and the State agencies have responsibilities to work toward achieving better salaries for Employment Service personnel. The following steps are essential.

1. Salary administration and personnel qualifications.—The general principle recommended is that higher salaries for Employment Service professional jobs such as counselors, interviewers, and labor market analysts, should be commensurate with the qualifications and standards for these positions prescribed by the Secretary of Labor. Present incumbents in these positions should have an opportunity to receive higher salaries when, and if, they can satisfy the revised requirements. Federal funds for higher salaries would be made available to those States which meet the higher qualifications, higher salaries requirements. The general salary improvements which the States make periodically would continue to be recognized in determining the Federal grants to the States for personnel salaries.

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The Secretary of Labor, according to a recent memorandum of the Office of the Solicitor, Department of Labor, has the authority to require the States to adopt minimum personnel qualifications for certain professional jobs in the Employment Service. On the basis of these new standards, the State agency would negotiate with either the Civil Service Commission or Merit System to revise salaries.

2. Salary levels and comparable jobs.—To assist the State agencies in these negotiations, the U.S. Employment Service must modify the policy of salary comparability for professional jobs to include other relevant factors, i.e., the salaries being paid for comparable jobs in the State, not only in the State government but also in other public and private employment as well. To emphasize the importance of adequate salaries for effective administration, the Wagner-Peyser Act should be amended to provide that salaries in the State Employment Service agencies be commensurate with those prevailing in the area for comparable jobs, especially in view of pending legislation, such as Senate bill S. 561. This bill specifically prohibits the use of Federal grants-in-aid for the payment of salaries "in excess of the regular salary standards applicable to State employees generally."

3. Followup on improvements.-If, after a period of 2 years, there has not been substantial and general implementation of these standards in a particular State, the Secretary of Labor would appoint a public review panel from among the members of the proposed national advisory and review committee to review the situation in the noncomplying State or States and report its findings to him. The Secretary could make the report public if he deemed necessary.

4. Starting salaries for Federal trainees.—Starting salaries should be raised. since the recruitment problem is related to the inadequate salaries being paid to Employment Service personnel. State salaries at the entry level are too low in many instances to make them attractive to young college graduates. To facilitate the recruitment of college graduates, and other qualified employees, the Federal Civil Service Commission should set up a classification entitled Employment Service Traince, relating the number of eligibles to the changing requirements of the Employment Service program. The salary of the trainee, who will be a Federal employee, would be at the entry professional level, which in many instances would be higher than the prevailing salary in the States. A well defined training program at the national and regional levels should be developed for these trainees. The Secretary of Labor should work out a cooperative relationship with the States to assign these trainees to State and local operations for a period of 2 years under the supervision and direction of the State Employment Service Director and paid by the national office. Afterwards, they will be reassigned in the national or regional office to a position commensurate with their ability and training, or, if preferred, they could transfer to the State if a mutually satisfactory arrangement could be worked out.

RECOMMENDATIONS FOR THE DEVELOPMENT OF HIGH QUALITY PERSONNEL Related to the above recommendations on salary and higher qualifications is the provision of opportunities for self-development. The following are recommended: 1. Training programs.—To improve the quality of personnel at all levels, the Secretary of Labor should require that each State's annual plan of operation include a well developed training program, including provisions for orientation, inservice and outservice training, tuition refund, and educational leave. The curricula for these training programs should include, among other subjects, courses in race relations and community relations and should also provide the opportunity for first-hand experience in interracial situations.

The plan will thus include the various approaches to training activities which the particular State deems best suited to its needs. If the State does not include such a plan for its training activities, no funds would be made available for training of Employment Service personnel.

2. Financing of training.-As a possible guideline for underwriting the cost of this training, the Secretary of Labor will allocate to each State a certain percentage of its grant for training purposes. The Secretary of Labor will also retain a certain percentage of the total amount appropriated by the Congress for Employment Service operations to underwrite the cost of training carried on by the national office on a national or regional basis.