Federal Government-and vesting complete authority, then, in the State government to deal with its manpower problems?

Dr. DOUGLASS. Mr. Chairman, I received these bills on Thursday afternoon, and have not had time, really, to consider them carefullynor am I a legislative expert.

So I must plead that I am not very well qualified to speak to some of the administrative questions that you have just raised.

I can read to you, briefly, two paragraphs from a portion of chapter 5 which summarize as best SCRC could its general attitude on this question.

I am reading from the first column on page 61:

At the moment, it is doubtful whether the Federal Government will allow any community manpower system to work.

May I say, parenthetically, that the previous page spells out in some more detail what we meant by "community manpower systems."

On the one hand, it has sponsored development of numerous locally based decision-making groups, such as the Community Action Agencies, Concentrated Employment Program agencies, and Model Cities.

On the other, it has continued to launch new programs which bypass these agencies. We doubt that the Federal Government can have it both ways. It must decide soon whether the complex of manpower and related programs is to operate as a national system, or whether those programs are to be treated as federally assisted community programs that must be molded by local leadership into community systems. Our vote is for the latter.

If community manpower systems are to evolve as the primary instruments of manpower policy, the uniformity in design of local programs which has been traditional must give way to flexibility. Local initiative in program design must be fostered. Federal agencies must preserve in the system a consultative role, offering their broader perspective and greater knowledge of local experiments freely, but they should abandon their rights of review and approval in all but exceptional cases.

The Federal right of veto would have to be held in reserve, of course, to guard against breakdowns or perversions of local planning systems, e.g., when effective minority group participation in the planning process can be assured only by Federal intervention.

Mr. DANIELS. You related in the course of your remarks that there are 1,200,000 people unemployed in southern California

Dr. DOUGLASS. Not unemployed-I meant 1,200,000 poor people. This includes children and old folks, as well as those within the productive years-whether employed or unemployed.

The criterion is that they are poor.

Mr. DANIELS. The gentleman from California, Mr. Hawkins, do you have any questions?

Mr. HAWKINS. Dr. Douglass, I am sure that there are many questions we could ask, but I would like to try to confine them to a few, if possible.

You spoke of the voluntary work incentive concept, and the family assistance plan. Would you elaborate on why you think that the voluntary incentive is more desirable than the present provision, which is in the proposal, to provide on a compulsory basis some form of employment as a condition of receiving assistance?

Dr. DOUGLASS. Yes. I think that- let me say now that I am expressing a personal view, and indeed, my answer to all of your questions must plead that I dare not speak for SCRC.

I think the two reasons why I would support a voluntary rather than compulsory system are first, a reason based upon my empirical evidence about the effect of various income maintenance programs on work incentives.

The other, I suppose, has to do with some questions about the rights of individuals. This can be placed in constitutional terms if one

wishes to.

The first point is the following: It is my understanding from the reading of recent literature that there is mounting evidence, particularly out of Mathematica's experiment in New Jersey, that there are more or less disincentives to work, where within the range of income maintenance that is being experimented with in New Jersey cities than we had originally supposed.

Both the Nixon welfare proposal and the Hineman proposal suggest, for example, relatively low floors on their income maintenance

programs.

And both suggest a 50-percent effective tax relief as outside income is earned.

Some of the mathematical experiments have involved such a 30percent rate and a range of guaranteed floors similar to those two proposals.

Their findings suggest, to my understanding, that there is relatively negligible work disincentive. If a person is qualified to work and has work opportunity, he will choose to work rather than not work--whether or not he is compelled to.

I think the constitutional question is spoken to on page 56 of the report-not in this context, but in the context of the WIN, the work incentive program, already legislated and in effect-complementing the AFDC program.

It says, in effect: "The most significant flaw in the WIN program is the compulsory rather than voluntary nature of participation in the program. The program clearly represents an infringement upon the freedom of welfare recipients. One important liberty sacrificed by the program is the freedom of the recipient to choose his own vocation. Since ultimate control of the WIN enrollee's employability plan and permanent placement in a job rests with a WIN administrative team, the WIN participant's ability to choose his vocation is largely circumscribed, if existent at all.

"Another of the program's infringements of liberty is a requirement that welfare recipients otherwise eligible, but with preschool children, leave their children in day-care centers while participating in WIN training. The right to bring up children clearly includes the right to care for one's children or the right to determine what kind of care they should receive.

"The WIN program, however, forces recipients with children to place them in State-run centers which may or may not be adequately run. The program thus stands in a constitutional shadow by compelling welfare recipients, as a condition of subsistence, to accept the judg ment and decisions of Government agencies and caseworkers in place of their own regarding their lives."

Mr. HAWKINS. Dr. Douglass, you read two of the paragraphs on page 61, but the third paragraph on that same page says:

"Thus SCRC essentially shares the spirit of the Nixon administration's proposed comprehensive Manpower Training Act."

Would you elaborate on what you mean by the "spirit"? Are you referring to the centralization concept?

Dr. DOUGLASS. Yes.

Mr. HAWKINS. When you speak of the spirit?

Dr. DOUGLASS. Yes. That act, I am aware, has many other characteristics.

Mr. HAWKINS. In other words, you are not in a sense endorsing in its entirety this particular proposal as compared with, let's say, the O'Hara bill, which does include

Dr. DOUGLASS. Yes.

Mr. HAWKINS (continuing). A comprehensive or public service program which you also endorse, in a sense, on another page.

Dr. DOUGLASS. Quite so. No, we are not endorsing the bill as such. Mr. HAWKINS. Now, you also referred to and made reference this morning to one of the chapters that deals with "Gilding the Ghetto," and indicated some reservation about black capitalism.

Dr. DOUGLASS. This is chapter 7, beginning on page 74, for the record.

Mr. HAWKINS. Thank you. There is another practice which is very current at this time for plants to be opened up in ghettos. Lockheed, for example, recently opened a branch in the Imperial Park in South Los Angeles-just a few days ago, this week, I think, in fact.

I think almost the same day that you made the report that the Aerojet Co. announced a new plan for the Aerojet Co.-the Watts Manufacturing Co.

These are branches of large companies that also have big plants in La Puente and Burbank, and other places.

In terms of this report, how would such practices be treated? Is it more desirable to concentrate on getting these branches located in the ghetto area? Would it be more desirable to persuade these companies to provide employment in their major plants along with housing and other services included?

Does the report address itself to that question, and does it take any position?

Dr. DOUGLASS. It doesn't address itself to that particular question. I might guess how the members of the committee would react to that, though.

I would guess that virtually all of them would endorse multiple plant operations in both suburban and central city for the large manufacturing firms-if this be desirable from a profitmaking point of view.

As you know, virtually all of the industry employers of major corporations which have recently located in the poor neighborhoods have done so under substantial Federal subsidization, either in the form of substantial forgiveness of tax or subsidy in land purchase, or whatever.

Our own guess probably would be that unless these very substantial subsidies from the Federal Government remain available, or perhaps even increased, it is rather unlikely that a substantial employment

base can be established in these inner city areas. There are some significant cost disadvantages to locating there.

In the absence of the subsidies, I might even hazard an offhand but indefensible notion that it may well be that there is no combination of incentives that will reverse the suburbanization of the job base in most metropolitan areas of the United States.

You can regard it, and you can create through subsidies, some reverse, but I think the economics of spatial location almost compels firms to locate in the fringe, rather than in the central city area.

Mr. HAWKINS. Then you would not automatically classify these practices of establishing these branch plants as "gilding the ghetto”? Dr. DOUGLASS. No; I would not.

Mr. HAWKINS. On page 4 of the report, under "Conclusions and Recommendations," you make this statement:

The problems of poverty are not soluble in the context of our present institutional arrangements.

Would you elaborate on what appears to be a rather comprehensive and profound statement?

Dr. DOUGLASS. Ambiguous statement? Inside the front cover this is elaborated somewhat. If I could refer you to the last paragraph there: "The SCRC is fully aware that the price tag on true reform is highvery high, indeed. It is denominated not only in billions of dollars, but also in the currency of uncertainty which accompanies introduction of any new or unfamiliar institutional pattern.

Most of us do not want the institutional arrangements with which we are familiar changed, especially if we have vested interests in the status quo. We would prefer, if we could, to avoid these costs. But we cannot avoid them, for the costs of doing nothing are higher still. Existing institutions which perpetuate unequal opportunity and isolate the poor produce inequity, injustice, and finally violence

and so on.

What we really have in mind, primarily, are the institutions of the existing income maintenance programs, the institutions of existing local job markets, and the institution of existing housing markets. A VOICE. Mr. Chairman, may we have one of those reports? Mr. DANIELS. I do not know if we have any extra copies. Mr. HAWKINS. They may be purchased.

Dr. DOUGLASS. Would you like me to answer her question?

Mr. DANIELS. You may.

Dr. DOUGLASS. These reports are for sale by the Huntley Book Store of the Claremont Colleges. The address is Claremont, Calif., the ZIP

code is 91711.

Mr. DANIELS. Thank you.

Mr. HAWKINS. Mr. Chairman, I have other questions, but I don't want to take all the time. Perhaps if we do have time.

Mr. SCHERLE. Well, I would like to yield to my colleague at this time to pursue his line of questioning. I think that they are very timely.

Mr. HAWKINS. Well, I will pursue it at least one or two further questions.

The statement has been made during these hearings that—well, there is apparently general agreement across the country in the consolida

tion of the programs and the delivery of services on an integrated basis.

There is a great controversy, however, on the question of whether the manpower proposal should contain any job-creating provision.

One of the bills does address itself to this-I think that it is probably true to say that under any one of the three bills, that such activities could be promoted.

But one of the bills directly addresses itself to a public service employment program. Would you care to give us the benefit of the thinking of the group that made this report as to the acceptance, particularly in the private sector, of the program which is going to provide immediate and comprehensive jobs job development in the public sector among the different public agencies?

Dr. DOUGLASS. I can't answer the question in quite so broad and general a form, but I can answer it in somewhat more specific form by describing to you, in just a moment, the organization of our research committee within the Southern California Research Council that made this recommendation.

At the beginning of the research project, we organized what is called the "Business Executive Research Committee," to whom each of the contributing firms appoints a middle-management business executive.

This committee out of 50 firms is composed of almost that number of management business executives. These tend to be men well along their advancement in the companies, men who increasingly share the social concerns of the public sector.

When we first started this study, I must confess that the house was divided in this committee over the idea of public service employment for remedial job creation purposes.

But by the end of the study, I think it is fair to characterize the group as having almost reached a mind that this recommendation was one of the strong recommendations of the report.

If I may express a very personal sense of this change in attitude, it is a change which comes from working with the material and drawing one's own conclusions from it as much as persuasion from me or someone else.

I also might comment that I see a remarkable change in attitude among this level of management persons within the private sector over the last 2 or 3 years, a change so fundamental that I think the question you have asked might be answered that there certainly will not be as much resistance in the future as there has been in the past to this concept.

Beyond that, I think I can't answer it.

Mr. HAWKINS. I think you have answered it satisfactorily—at least for me.

You have referred to an incentive-type credit system stimulating employment in the private sector. While this is not a new idea, it certainly has not been widely accepted, and it is not my recollection that any of the bills actually relate to this concept.

Would you just elaborate somewhat on that, and how this would operate, and how you think this would achieve some of the objectives; that is, would it, for example, result in the employment of persons who would not otherwise have been employed by providing some tax credit?