U.S. GOVERNMENT PRINTING OFFICE

65–505 WASHINGTON : 2000

SHRINKING WORKFORCE ENDANGERS AMERICA’S

SMALL BUSINESSES: EXAMINING THE NEED FOR

THE SKILLED WORKFORCE ENHANCEMENT ACT

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

WASHINGTON, DC, FEBRUARY 9, 2000

Serial No. 106–42

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

JAMES M. TALENT, Missouri, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

DONALD A. MANZULLO, Illinois

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PHIL ENGLISH, Pennsylvania

DAVID M. MCINTOSH, Indiana

RICK HILL, Montana

JOSEPH R. PITTS, Pennsylvania

JOHN E. SWEENEY, New York

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

EDWARD PEASE, Indiana

JOHN THUNE, South Dakota

MARY BONO, California

NYDIA M. VELA ́ZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

CAROLYN MCCARTHY, New York

BILL PASCRELL, New Jersey

RUBE ́N HINOJOSA, Texas

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

SHELLEY BERKLEY, Nevada

HARRY KATRICHIS, Chief Counsel

MICHAEL DAY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on February 9, 2000 ......................................................................... 1

WITNESSES

DeWine, Hon. Mike, Ohio, United States Senate ................................................. 4

Bachman, William G., National Tooling and Machining Association ................. 7

Bettcher, Thomas, President & CEO, Copeland Global/Copeland Corporation . 8

Leto, Chris, Vice President, Tampa Brass & Aluminum ..................................... 10

Gooding, John, Chairman & Chief Operating Officer, Gooding, Simpson &

Mackes, Inc ........................................................................................................... 27

Holdsworth, Thomas W., Director, Skillsusa-Vica, Leesburg, Virginia .............. 29

Murphy, Patrick, President, Crest Electrical Company ....................................... 31

Pence, Randall G., Capitol Hill Advocates, Inc ..................................................... 33

APPENDIX

Opening statements:

Talent, Hon. James .......................................................................................... 51

Christian-Christensen, Hon. Donna ................................................................ 56

Prepared statements:

DeWine, Hon. Mike .......................................................................................... 57

Bachman, William G ........................................................................................ 62

Bettcher, Thomas ............................................................................................. 67

Leto, Chris ......................................................................................................... 73

Gooding, John ................................................................................................... 80

Holdsworth, Thomas W .................................................................................... 86

Murphy, Patrick ............................................................................................... 94

Pence, Randall G .............................................................................................. 101

(1)

SHRINKING WORKFORCE ENDANGERS AMERICA’S SMALL BUSINESSES: EXAMINING THE

NEED FOR THE SKILLED WORKFORCE ENHANCEMENT ACT

WEDNESDAY, FEBRUARY 9, 2000

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The Committee met, pursuant to call, at 10:02 a.m., in room

2360, Rayburn House Office Building, Hon. Jim Talent (chair of the

committee) presiding.

Chairman TALENT. Good morning. If we can convene the hearing.

As we convene our hearing today, I am glad to report that the

U.S. economy continues to perform extremely well. The growth is

steady. Unemployment is low. Inflation remains relatively low. In

fact, last Friday the Department of Labor announced that the unemployment rate for January was 4 percent, the lowest it has been

since January of 1970.

Despite this growing prosperity, in fact, to some extent because

of it, we are faced with a severe shortage of skilled workers in

trades and manufacturing. According to the results of a study conducted in 1999 by the National Association of Counties, 75 percent

of the largest counties in America report that they face a shortage

of skilled workers; 85 percent said that the shortage has increased

over the last 5 years; and 97 percent characterize the shortage as

serious to very serious. Officials stated that the sectors of the economy most affected by the shortage of skilled workers include manufacturing and construction.

This hearing will explore the growing shortage of highly skilled

workers. Our witnesses from various trades will testify on the

shortage of skilled workers, the effects on small business, the aging

population of workers, and the high cost small employers incur in

training highly skilled workers in their industries.

Small business owners in particular cannot find workers to fill

their current vacancies. Many companies provide competitive

wages and benefits, but they still cannot find enough workers.

In addition, the current workforce in these trades is aging. Most

of the highly skilled trades find the average worker to be in their

late 40s to early 50s. With this generation expected to begin retiring within the next 10 years, the shortage of workers will grow.

Small employers must invest substantial time and money to provide training. On average, the annual cost of training in the highly

2

skilled trades is $25,000 to $50,000 per trainee. This is an investment worth encouraging and worth making.

Recent press articles reveal when small businesses take the time

to provide training programs, they often find employees become

skilled, committed and loyal to the companies. Accordingly, it is in

our best interest to help small business who are dedicated to their

trades train more employees.

The purpose of this hearing is to examine H.R. 1824, the Skilled

Workforce Enhancement Act, which I introduced on May 14, 1999,

and which has received strong bipartisan support from 49 cosponsors. The Skilled Workforce Enhancement Act amends the Tax

Code to allow small employers with 250 employees or less to take

the $15,000 tax credit to offset job training costs in highly skilled

trades.

To assure training is effective, eligible employers must provide

an employee with 2,000 hours of on-the-job training and necessary

classroom training each year. In exchange, the employers are allowed to claim a $15,000 tax credit per trainee each year for up to

4 years. That is the provision of the bill as written. We will have

different witnesses comment on various aspects of that as the hearing progresses.

Under the Skilled Workforce Enhancement Act, the highly

skilled trades include precision machinists, dye makers, tool and

dye designers, roofing, masonry, heating, ventilating, air conditioning and refrigeration, plumbing, electrical contracting and

foundry technicians. Originally limited to the tooling and machining industry, we have expanded the bill to include other trades for

which highly skilled workers are in short and shrinking supply.

We are pleased to have Senator Mike DeWine testify before the

Committee this morning. Senator DeWine introduced companion

legislation in the Senate last year. He and I and our cosponsors believe SWEA will assist small business owners in training muchneeded workers and in keeping their shops open.

The concept for the bill came to me from a constituent and friend

in my district who will also testify today. As past president and

owner of a machine company, Bill Bachman approached me with

a severe shortage of skilled workers his industry faced and with an

idea of a tax incentive to help remedy this growing problem.

Bill, I want to thank you for bringing this idea to my attention

and for continuing to push it. Indeed, I thank all the representatives of small business and labor here today who have been bringing this need to the attention of Congressmen. I believe the other

witnesses will also thank you, since the growing shortage has affected so many skilled trades.

A few years ago a friend who runs a small manufacturing business told me that if we don’t do something within a few years there

is not going to be a manufacturing sector in the United States because we are not going to have the workers that we need to work

in the businesses. I am sure the construction industry representatives here will agree that that is a serious problem in their segment of the economy as well.

The Skilled Workforce Enhancement Act will provide relief to

small businesses with costly and surprisingly complicated training

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regimens. The bill allows employers to ensure themselves a continuing, capable workforce.

I look forward to working with Senator DeWine, our distinguished Ranking Member Ms. Vela ́

zquez, our other witnesses and

unions represented here today to help small business owners hire

and train new highly skilled workers. We should do something now

while today’s generation of workers can train the next generation

of skilled labor.

I am pleased to recognize the gentlelady from New York for any

comments she may wish to make.

Ms. VELA ́ZQUEZ. Thank you, Mr. Chairman.

I would like to welcome today’s witnesses, especially Senator

Mike DeWine. Senator, I would like to thank you for all your hard

work and leadership in the Senate in the area of worker training.

Mr. Chairman, the United States is experiencing unprecedented

prosperity as we continue to enjoy the greatest economic expansion

in our Nation’s history. It is important that we in Congress acknowledge that this expansion increases the demand for skilled

workers.

As the economy grows and more jobs become available, it is vital

that we have a trained workforce able to fill newly created jobs. In

fact, according to the U.S. Department of Labor, the United States

is currently experiencing a shortage of service industry workers.

This shortage is expected to last into the foreseeable future as the

service industry continues to be the fastest growing sector of our

economy. This is important for small business owners in the service

industry who depend on highly skilled workers because they must

expand effort and resources to locate pools of potential workers, recruit them, and then pay the additional costs associated with apprenticeship training. This has become so difficult that contractors

at times have turned down work due to the lack of trained employees.

I applaud Chairman Talent for recognizing this situation and introducing legislation that will give small businesses a tax credit for

training workers in highly skilled trades.

As a co-sponsor of this legislation, I believe it serves several important goals. First, it allows small businesses to recoup part of

their investment spent training workers. This will serve as an incentive for businesses to hire unskilled and underskilled workers

and train them.

This leads to the second important goal, the investment in a

skilled workforce.

Finally, this tax credit will benefit the workers. The credit will

provide an incentive for businesses to teach unskilled and underskilled workers a trade that will remain with them for life.

It is important to make sure we continue to have the economic

security our country has worked so hard to achieve. In doing so,

we need to make sure we have the trained workers we need to

keep up with our economy evolution in this millennium. By preparing today we can remedy what could be a larger problem for tomorrow.

I support this legislation and look forward to hearing from our

witnesses and in working with you, Mr. Chairman, to improve opVerDate 11-MAY-2000 08:01 Oct 26, 2000 Jkt 010199 PO 00000 Frm 00007 Fmt 6633 Sfmt 6602 E:\HEARINGS\65505 pfrm08 PsN: 65505
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portunities for this Nation’s small businesses and their employees.

Thank you.

Chairman TALENT. I thank the gentlelady and am grateful for

her support for the bill and her advocacy in this area.

We will go right to the first panel. Our first witness on it, the

Committee is very pleased to have before us I think for the first

time the Honorable Mike DeWine, the United States Senator from

Ohio. Senator DeWine.

STATEMENT OF THE HON. MIKE DEWINE, A U.S. SENATOR

FROM THE STATE OF OHIO

Senator DEWINE. Mr. Chairman, thank you very much and

thank you to the distinguished ranking minority member for your

articulation of the need for this legislation.

As you have pointed out, I have introduced companion legislation

in the Senate. It has been a pleasure working with you on this bill,

and I look forward to continuing in the weeks and months ahead

as we push for passage of this much-needed piece of legislation.

You both have outlined very well the need for this legislation.

Let me just add a few comments.

During the 105th Congress, we spent considerable time and effort getting the Workforce Investment Partnership Act that I sponsored in the Senate enacted into law. This law brings a flexible, locally driven, business-oriented solution to our Nation’s system of

Federal job training programs. But, Mr. Chairman, in spite of this

law, our work is obviously still not done. We have a lot of work to

do, and we need to follow up.

This piece of legislation that we have introduced is a natural follow-up to that.

As you have pointed out, our Nation is suffering from a dangerous shortage of skilled workers. For example, in 1999, the National Association of Counties conducted a survey of its large urban

caucus, a caucus which in my home State of Ohio includes counties

such as Cuyahoga—Stephanie Tubbs Jones’ home area which she

knows so well—Franklin County, Hamilton County, Summit County. And in this survey, 85 percent of the local officials responding

said that there was a shortage of highly skilled workers in their

own regions.

Moreover, Mr. Chairman, 96 percent of these individuals characterize this shortage as serious or as very serious. And a majority

indicated that this shortage was negatively affecting their county’s

ability to attract and retain business.

In another study, Mr. Chairman, the National Institute of Metalworking Skills, an organization of which one of today’s witnesses,

Bill Bachman, is a board member, estimates there is a need for

over 22,000 skilled workers in five regions of the country alone.

In my home State of Ohio, the December 1, 1997, edition of the

Cleveland Plain Dealer featured an article on the shortage of workers in just one county in Northeast Ohio, Lake County. This article

featured an interview with Christopher Burton, a machine shop

owner in Mentor, Ohio. He noted in this article that even with increased benefits he is still having problems finding new workers.

This is what Mr. Burton said, ‘‘we can’t find experienced machinists at all.’’ .

5

Mr. Burton is not alone. This is a problem across this country.

The same thing is happening all over our country. I am sure that

our witnesses today on both panels will have similar stories.

Mr. Chairman, as you have pointed out, this legislation would reward employers who provide training to workers such as precision

machinists, dye makers, mold makers, tool and dye designers, heating and cooling contractors, plumbing contractors, pipe fitting contractors, roofers, masons, and others. These highly skilled trades

are an essential part of our economy. They provide the parts used

in manufacturing. They provide the services that allow our Nation’s business to grow and expand. And they are truly the motor

driving our Nation’s unprecedented economic expansion. By giving

a limited tax credit to provide training for these highly skilled

workers, this bill would help keep this motor running.

Mr. Chairman, I hope with your strong leadership, the help of

this Committee, we can ensure the passage of this legislation. I

very much appreciate you giving me the opportunity to come over

from the Senate and appear before your distinguished Committee.

Thank you.

[Senator DeWine’s statement may be found in appendix:]

Chairman TALENT. We thank you for coming, Mr. DeWine. The

Committee understands you are on a tight schedule. We would love

it if you could stay.

Senator DEWINE. I do appreciate that. We are in a conference

talking about the budget.

Chairman TALENT. If you need to go——

Senator DEWINE. I would like to stay, actually.

Chairman TALENT. We understand.

I will recognize the gentleman from New Jersey. Senator, if you

could, the gentleman from New Jersey has one quick point he

wants to make. If you could just wait for a second.

Mr. PASCRELL. Good morning, Senator. How are you?

Senator DEWINE. Good morning.

Mr. PASCRELL. What I find fascinating about this legislation is

that it is—we are going in a very different direction, and we are

talking about the last 3 or 4 years rather than talking about selective immigration. We need to understand that there are workers in

the workforce that need to be trained for new jobs, and you are

tying this in with I think something very, very important, Mr.

Chairman, and that is the question of holding on to our manufacturing apparatus where we have no manufacturing or productive

policies in many States and certainly on a national level. That is

the first thing.

I want to get into some trade difficulties that we have.

On the example that you just brought out, on machinists jobs, we

are beginning to do to that industry what we did to the textile industry and that is trade it away and export the jobs. I am glad that

we are going to spend some time and provide some tax credits

within the industry to train our own people to do these jobs. They

are educable. We recognize that, and we don’t need to go offshore

to bring these people here to do these technical jobs, no matter how

technical they may be. We need to train, and I want to commend

both of you for recognizing that fact. This is not an addendum. This

6

is a very critical and essential part of building and growing the

economy.

I thank you for introducing the legislation.

Senator DEWINE. Mr. Chairman, if I could just briefly respond

to the Congressman’s comments, which I think are right on point.

I think what we have all found in our home States or home districts is that we have many people who are in a transition period.

They may be 40, they may be 45 years of age, they may be younger, may be older who want to be trained, who want to stay at it

and clearly who have the ability and the inclination and dedication

to get that training if we could just get the training to them, and

they can then continue to be even more productive members of society and continue to be highly well paid workers, which is what

we want.

Your comment about the industrial base in this country is absolutely correct. We see it in our home State of Ohio. Stephanie

Tubbs Jones and I see it in the Cleveland area, so very important.

That is one of the reasons, main reasons, we have the quality of

life we have in this country, is our industrial base, and it depends

on skilled workers.

Chairman TALENT. I was going to move on, but Ms. Tubbs Jones

seeks recognition and, one Ohioian to another, I think she deserves

it.

Ms. JONES. Thank you, Mr. Chairman.

Senator DeWine, thank you for coming to our Committee. I am

in support of this legislation.

I would just like to raise one issue both with the Chairman and

Senator DeWine to keep in mind as we go through this process.

The issue of accountability for the training action—I know we always like to believe that everybody will do the right thing, but

somehow we need to include in this the issue of how to establish

that training actually took place and that it’s appropriate.

The only example I can think of, Senator, is for several years in

Ohio and across the country, there were various student loan programs where students took out loans which they were responsible

for paying back, but never graduated from the program in which

they had enrolled. And I am not casting aspersions on any company that would do this training. I think it is a great idea. But

somehow we need to figure out how to ensure accountability. I

don’t necessarily have an answer, but I am prepared to work with

whoever it is to see how we might include that in our legislation.

I thank you very much for appearing and, Mr. Chairman, as well

support you on the legislation.

Chairman TALENT. I appreciate the gentlelady’s constructive

comments.

Mr. Chabot also had a comment.

Mr. CHABOT. Thank you. I will be very brief.

Just as one Ohioian to a fellow Ohioian, I would like to thank

and commend Senator DeWine for his leadership in this very important area.

Senator DEWINE. Thank you very much, Congressman.

Chairman TALENT. All right. We will go to our next witness,

whose name has been mentioned before, Mr. Bill Bachman of St.

Louis, on behalf of the National Tooling & Machining Association.

7

Thank you, Bill, for coming.

STATEMENT OF WILLIAM G. BACHMAN, ST. LOUIS, MO, ON BEHALF OF THE NATIONAL TOOLING & MACHINING ASSOCIATION, FORT WASHINGTON, MD

Mr. BACHMAN. Thank you.

Good morning, Mr. Chairman, members of the Committee.

Thank you for the opportunity to testify on behalf of the 2,600

member companies of the National Tooling & Machining Association, known as NTMA, regarding H.R. 1824, the Skilled Workforce

Enhancement Act, which we in this industry consider absolutely

critical to the successful training of highly skilled workers.

My name is William G. Bachman, Sr., but I am just known as

Bill, Sr., in the whole industry, probably throughout the United

States. Before I retired in 1997, I was president of the company in

St. Louis, which has been in business since 1927, and we employ

130 people, both men and women.

To start this, one day I awakened to the fact that in the USA

we are making a strategic advance to the rear when we consider

our machinists, die makers, mold makers and die and mold designers. Only 15 percent of the members of the National Tooling & Machining Association, NTMA, have an apprenticeship program. Others are doing minor training as specialists, and a specialist is usually for one machine itself.

At the time I was chairman of the NTMA National Apprenticeship Committee which then realized the pathetic situation we are

in. After analysis of the situation, I called about 30 of our competitors from coast to coast to find out their overhead costs and if they

were training apprentices. When the numbers were put together,

the USA average cost to train an apprentice for 8,000 hours, which

is 4 years, the cost is $201,000. That is an average throughout the

United States. When we talked to our competitors, I asked nontrainers if they would get half of their cost back, would they train

apprentices and without hesitation they all said, oh, sure.

Prior attempts to alleviate our shortage of skilled workers have

failed miserably. The welfare to work was presented as a good opportunity to find people to change from that entity to the workforce. Unfortunately, most every individual referred to our companies in our industry lacked the basic skills needed to begin an apprenticeship. The training conducted through the government programs produced a number of so-called skilled craftsmen. In reality,

what those programs turned out were merely button pushers and

machine operators.

The importation of foreign workers widely used in big business

is virtually impossible for a small metal shop to do. The requirements established by the Immigration and Naturalization Service

were numerous and confusing. The Skilled Workforce Enhancement Act, SWEA, through a $15,000 tax credit per apprentice per

year would give small employers much-needed incentive to train

apprentices in-house. While $15,000 may sound like a lot of money,

apprentices will repay the government in full through taxes within

the 3 years of graduation.

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The Joint Tax Committee may score this proposal fairly high, but

if we want to save the manufacturing infrastructure of this country

from extinction, we must give small business this tool.

I might add, there was a question in my invitation about whether or not as a private industry person I had any contracts with the

government. I have had none for the two years you have requested,

and I haven’t had any for at least 10 years.

I thank you for this opportunity.

Chairman TALENT. Thank you, Bill.

[Mr. Bachman’s statement may be found in appendix:]

Chairman TALENT. The next witness is Tom Bettcher, who is the

President and Chief Operating Officer of Copeland Global/Copeland

Corporation of Sidney, Ohio; and he is appearing on behalf of the

Air Conditioning and Refrigeration Institute.

Mr. Bettcher.

STATEMENT OF THOMAS BETTCHER, PRESIDENT AND CHIEF

OPERATING OFFICER, COPELAND GLOBAL/COPELAND CORPORATION, SIDNEY, OH, ON BEHALF OF THE AIR CONDITIONING AND REFRIGERATION INSTITUTE, ARLINGTON, VA

Mr. BETTCHER. Thank you, Mr. Chairman. I, too, am honored to

be here to speak to this issue.

I have submitted written testimony, and I thought I would just

speak to some of the key issues in that testimony today.

First of all, let me describe Copeland, the company that I am

CEO of. We have about 8,000 employees and 26 facilities, and our

product is a compressor. The compressor is a key component of air

conditioning and refrigeration systems. It is basically the engine of

those systems. We are the largest manufacturers of compressors in

the world, and that product ends up in air conditioning and equipment which must be installed by small businessmen, contractors

throughout this country. Copeland is a subsidiary of Emerson Electric which has 120,000 workforce throughout the world.

Today, as you mentioned, I am here representing the Air Conditioning and Refrigeration Institute, and that is a trade group representing 90 percent of the equipment for air conditioning and refrigeration, both residential and commercial, that gets installed in

the United States. It employs about 150,000 people in the manufacturing of those products. More importantly, as you go beyond that

into the distribution channel, the wholesalers, distributors, installers and servicing people, it is probably well over 500,000 people in

the United States. We think we are a critical industry.

Recent data has confirmed to us that the number one problem

our industry faces is hiring new technical talent to come into the

grassroots, the contractor-installer level. And, because of this, the

Air Conditioning and Refrigeration Institute commissioned a task

force; and I am the chairman of that task force to address this.

We work with about 20 volunteers, as I am, who feel passionately about this issue. We have been working over the last year to

come up with solutions. We have identified about 40 different

things we are doing as an industry with the rest of our trade associations to address this, and I think you would be impressed to

know that the number one priority that we have concluded is to

push and do everything we can to help this skilled workforce act

9

go through. We think that is by far the most important thing that

can happen to solve the problem. This will help small employers,

as has already been mentioned, alleviate the cost of training which

we agree is very substantial.

And you might ask why am I here today. I am a big company.

None of the financial benefit would go directly to the large companies that the Institute represents. All of it goes to the contractors.

But, in our case, our success depends completely on the success of

those contractors; and we just can’t go forward without them. So

we won’t benefit directly, but we think it is important.

There is some key statistics that have come up recently that

have convinced us that this is the number one problem. One of

those statistics, and this was reported by the Department of Labor,

said that there was a 17 percent increase required in the number

of installing contractors in the United States over the next 5 years.

That means that we have to recruit new talent, 20,000 people a

year, into our contracting base in order to get this equipment installed.

A second key factor was reported by the Department of Education and that was that there was a 71 percent decline in the enrollment in vocational technical training during the periods of 1982

to 1996. So we have a huge erosion in the base.

Finally, as has been mentioned earlier, our workforce in this area

is in the 45- to 65-year-old age group. They are retiring. There is

no new talent coming into this business. So we think this is critical.

Another factor that we uncovered recently in a small survey was

that the number one issue of our contractors is the inability to hire

technical people. And it is a number one issue by a factor of about

three times. So it is more important to them than price competition, than inflation, than health care. It is their number one issue.

The industry needs to take action. As I have said, it is the number

one issue to us.

The negative impact to this if we don’t move forward—there are

several things. Number one, we simply can’t get our equipment installed. Many of us can remember the hot summers and unfortunate situations that occurred in Chicago and other cities around

this country. During July and August in many parts of this country, you can’t get air conditioning equipment installed because

there aren’t people to put it in place.

More importantly, another key factor is, when the equipment is

installed, frequently it is done now with people who aren’t properly

trained, and the result of that is the equipment isn’t efficient as

it should be, which affects global warming and a whole lot of other

factors. It can save this country money if we can get these technicians trained properly so the equipment is correctly installed.

Another key factor is about 30 percent of the returns of our

equipment from homeowners, from installations where they say

there is a problem, are returned; and they are perfectly good equipment. The basic problem is it is not correctly installed. So we have

a fundamental——

Chairman TALENT. How much do you say is returned?

Mr. BETTCHER. Thirty percent of the returns are—the compressors come back. They are perfectly fine. The issue is that people in

10

this—because they haven’t been able to properly train them

through a good apprenticeship program, don’t install the equipment

correctly.

So that is a huge impact on our industry, on the consumer, and

the quality of our business. So I think this problem will only get

worse, and I strongly encourage everything you can do to make this

act a reality.

Thank you.

Chairman TALENT. Thank you, Mr. Bettcher, for that testimony.

[Mr. Bettcher’s statement may be found in appendix.]

Chairman TALENT. Our final witness on this panel is Mr. Chris

Leto, who is the Vice President of Tampa Brass & Aluminum in

Tampa, Florida, appearing on behalf of the American

Foundrymen’s Society.

STATEMENT OF CHRIS LETO, VICE PRESIDENT, TAMPA BRASS

& ALUMINUM, TAMPA, FL, ON BEHALF OF THE AMERICAN

FOUNDRYMEN’S SOCIETY, DES PLAINES, IL

Mr. LETO. Chairman Talent and members of the Committee, I

appreciate the opportunity to testify before you today regarding the

impact of the shortage of skilled workers on the foundry industry.

My name is Chris Leto. I am Vice President of Tampa Brass &

Aluminum Corporation. We are a small disadvantaged business located in Tampa, Florida. Our foundry was founded in 1957 by my

grandfather, my father, and my uncle. The company has grown

from three to 80 full-time workers.

We produce aluminum and brass castings, machine them for

equipment in industries such as communication, defense, electrical

hardware and medical. We build such parts for lighting fixtures,

satellite component parts and wings for missiles.

Tampa Brass is a corporate member of the American

Foundrymen’s Society. Eighty percent of the 3,000 U.S. foundry’s

employ fewer than a hundred workers, and many are family-run

operations.

One of the most critical challenges facing the foundry industry

is the growing skills shortage. Each day small foundries are faced

with more and more job vacancies because there is no one qualified

to fill these positions. We are spending large sums of money to recruit and train these employees.

We applaud the chairman’s leadership in addressing this jobskill-shortage issue and introducing the Skilled Workforce Enhancement Act H.R. 1824. This legislation recognizes the high cost

placed on small businesses to train workers for skilled jobs by offering a tax credit. My company and AFS strongly support this bill.

Although metal casting is a mature industry, it has become a refined modern-day process, and skilled craftsmen are essential to

the production of castings at several points in the process.

The first is the pattern maker. All castings begin with a blueprint and the skill of the craftsman to produce a precise pattern.

Normally, a pattern maker serves as an apprentice at a foundry

and must train 4 to 5 years to achieve journeyman status.

Second is the mold maker. This is a pattern—foundry mold

maker. He forms and prepares the mold to receive the molten

11

metal. This can be an extremely complex task and requires expertise of years of on-the-job training.

Third is the quality technician. He inspects the quality of the

casting. The metal technician acquires certification by passing a series of written tests and through on-the-job experience. We have

two level 3 technicians, the highest level; and it takes 6 years to

achieve that status.

And, finally, the castings need to be machined, which requires

the skill of trained machinists. Participating in a 4–year program

along with on-the-job training is essential to become a certified machinist.

For the past 3 months, my company has been actively recruiting

six machinists, one metal quality technician, and one pattern

maker—unsuccessfully, I might add. With the demand for skilled

workers outpacing supply, the problem of how to meet the growing

skills shortage is one of the greatest challenges facing my company

and the foundry industry today.

I would like to just share a few examples of how Tampa Brass

is addressing this challenge.

First, we offer a competitive and very generous wage and benefit

package.

Secondly, for the past 2 years, we have invested more resources

into recruiting and on-the-job training. In 1999, we spent approximately $3,000 a month for 3 consecutive months advertising in newspapers with no success. We only

had one of 20 applicants come in that was qualified for the machinist job. For the past 6 months, we have engaged five different temporary agencies to help us locate 10 qualified machinists. Over

those 6 months they were able to locate us six. However, we continue to have job openings for additional machinists, and the use

of these agencies is extremely expensive. We pay them 55 percent

over and above the employee’s salary for the first 3 months they

are with us.

Tampa Brass is also investing resources to provide its workers

with training both in-house and externally through technical colleges. In fact, we are currently sending two young employees

through a 4–year program to become certified machinists.

These company-sponsored training programs have showed our

employees we are interested in their growth and that we value

their abilities. By encouraging them to become involved in the

training programs, these workers have more self-worth, better attitudes and consequently become better employees.

The American Foundrymen’s Society estimates this cost in the

range of 25 to $50,000 per year. Typically, these training programs

take 2 to 4 years to complete. The cost of these programs makes

it nearly impossible for many small foundry shops to train new

workers in these fields.

We also have a drug-free workplace policy. In approximately

three of 10 cases, applicants fail the drug test; and we still pay the

$35 per test. H.R. 1824 would help small foundries offset some of

the costs associated with training workers by providing $15,000 tax

credit up to 4 years. We are the companies that need it most.

More than half of the small foundries surveyed last year indicated they would take advantage of the tax credit set forth in H.R.

12

1824. This tax incentive would help alleviate the burden that the

job shortage and high costs of training that are being placed on

small businesses.

In conclusion, foundries are working hard to recruit, train, and

retain qualified skilled workers. In order for the foundry industry

and other industries to compete in the global marketplace, we must

work together to reverse this skills gap. No one sector can face

these challenges alone, and the time to act is now.

The Skilled Workforce Enhancement Act would serve to assist

small businesses already providing formal training for good-paying

jobs but would also provide an incentive to those companies who

have not yet implemented training. We urge those Committee

members who have not sponsored H.R. 1824 to do so.

I would be pleased to respond to any questions. Thank you.

Chairman TALENT. Thank you, Mr. Leto, for your very effective

testimony.

[Mr. Leto’s statement may be found in appendix:]

Chairman TALENT. We have a lot of members here, so I am going

to ask just a couple of questions, and then I will defer to the Ranking Member.

Mr. Leto, would you just go over briefly for the Committee the

facts you gave us about how you have been trying to recruit machinists, like how long have you been trying to recruit extra people,

the kind of money you have been spending to get them? Would you

just briefly recount that testimony again?

Mr. LETO. Yes, sir. For a while, we went through the newspapers, the local newspapers, the Tampa Times, St. Pete Times.

Those ads would cost us about $3,000 a month to run. And we received—out of 4 months, we had 20 guys come in, 20 employees,

prospective employees come in; and we only hired one. It just

wasn’t cost effective.

Then we moved over to the temporary agencies, that they do all

the work for you in locating the potential employees. But then you

have to pay them a 55 percent percentage on top of what they

pay—we pay the employee. So if he makes $10 an hour, then we

pay the temp agency $15.50 for the first 3 months.

Chairman TALENT. A journeyman, like you mentioned your level

3 people, you have two of them.

Mr. LETO. Yes, sir.

Chairman TALENT. What kind of money can you make working

a year in your company at that level?

Mr. LETO. Between $35,000 and $45,000 a year.

Chairman TALENT. Plus all the benefits.

Mr. LETO. Yes, sir, correct.

Chairman TALENT. Just one more question for the panel, to try

and establish the overview. Because, of course, one of the issues we

are going to have here is how much this bill, quote, unquote, costs

in terms of loss revenue.

Now, my guess is that business people in your position—and, Mr.

Bettcher, you work for a very big company, but you have made

some very compelling testimony on how this affects you because

you make compressors for air conditioning that can’t be installed.

When you are thinking about capital investments as small companies or big companies, when you are thinking about how aggresVerDate 11-MAY-2000 08:01 Oct 26, 2000 Jkt 010199 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HEARINGS\65505 pfrm08 PsN: 65505
13

sively you are going to go after business opportunities here or

abroad, is it true that in the back of your mind is this training

issue? Look, there is no point in making the capital investment if

we don’t have the people to work the machines.

What I am getting at—and discuss this a little bit—is how—I believe this is going to be the brake on this prosperity if we don’t do

something about it. Because you are all sitting there thinking there

is no way we can continue expanding if we don’t get the skilled

help. Is that true?

Mr. LETO. Yes, it is very much true. I do a lot of the sales and

marketing for my company as well.

One job that we are looking at right now that we just have an order for is going to add $2 million to our bottom line, our revenue.

We are a $5.2 million company now. Where am I going to get the

employees? This is part of a plan that we have got to start thinking

about. That is why we started with the temporary agents 6 months

ago. So it is very important.

And one of the other costs that we have had to take care of is

the overtime, because that is what is happening. These employees

last year, our machinists, and there were 40 of them total, they

worked between 45 and 50 hours a week for the entire year. It is

good overtime money. It is not good for our bottom line, and it

causes employee burnout.

Chairman TALENT. My guess is they probably would rather have

a little less overtime. When these guys and gals retire, I am guessing—but they are probably not all spring chickens either, are they?

Mr. LETO. That is correct. The average age of our employees is

40 years old. We have a few young guys. Those are the guys we

are sending to the trade school, but we still do on-the-job training,

classroom situation as it is for an hour a week possibly and sometimes we do Saturday classes, but, again, we pay them for the Saturdays they come in.

Chairman TALENT. I couldn’t agree more with what Mr. Pascrell

said. You all are competing abroad with companies that are getting

directly subsidized by their governments; and this is a way, without getting into that whole issue, that we could help you all in competing with them in addition to all the other benefits.

Mr. BETTCHER. To your question, I would comment two things.

One, I would make a rough estimate that in the peak season for

air conditioning, let’s say July and August, probably 5 to 10 percent

of what needs to get installed is not installed because of the lack

of trained workers. So that is one thing that really affects all of

that whole group of companies.

The second thing I would comment on is that the training of

these people is so inadequate at this point because of the quality

of people coming in and the ability to train them well. My guess

is 2 to 3 percent of the average company’s cost is tied up in these

warranty returns that don’t need to exist. So our competitiveness

as an industry is severely impacted by this. One of the number one

variable or key costs that we work on is reducing the warranty

cost, and it is tied up in this issue of training.

Chairman TALENT. Mr. Leto, if you advertised for, say, a human

resources person or bookkeeper, do you think it would have been

as difficult to get applicants?

14

Mr. LETO. No, sir.

Chairman TALENT. And those are great fields.

I will recognize the distinguished gentlelady from New York.

Ms. VELAZQUEZ. Thank you, Mr. Chairman.

Mr. Bachman, I would like to start with the concern that was

raised by the gentlelady from Ohio, Ms. Tubbs Jones. As drafted,

H.R. 1824 does not provide specific standards for the training provided by the employer. Therefore, it is conceivable that any activity

labeled an apprenticeship or training will make the employer eligible for the tax credit. Part of the reasoning behind this legislation

is to make sure that we have a highly trained workforce, so we

don’t want employers getting tax credits for training that will not

translate into a skill for the worker. In your opinion, should the

legislation follow the definition of the qualified training program as

established by the Labor Department’s Bureau of Apprenticeship

and Training or should the bill adopt another standard?

Mr. BACHMAN. Thank you.

I think the bill should take the existing standards. I was one of

about 15 men 25, 30 years ago that went to the Department of

Labor Bureau of Apprenticeship and Training. We have an apprenticeship training system, and it is signed by the Bureau of Apprenticeship and Training and by the people that we are working within the NTMA to do this.

Now, we—those that are training are training by these rules,

and you can’t have the exact names of the rules, but you should

have rules that these people should train by and then they would

then inform the proper people when they get through. Neither one

of these gentlemen can use the same contract we have. However,

all of our chapter members throughout the United States do, but

we are training machinists, tool and die makers, computer designers. It is different from what they want. So you are going to have

half a dozen or a dozen maybe different regulations so that these

people do this properly.

I agree with you. I think, without any regulation, people say,

yeah, I have trained them. Off they go, and they really do nothing.

All they want is the $15,000 tax credit.

Ms. VELA ́ZQUEZ. Thank you very much.

Mr. Bettcher, would you please give the Committee an overview

of what the apprenticeship in the air conditioning and refrigeration

field entails, how trainee progress is monitored and how the program itself is monitored? In other words, who makes sure that the

apprentices are being properly instructed?

Mr. BETTCHER. I think in our industry that is a program that

needs to be more fully defined. We currently initiated what is

called a North American Technician Excellence Program over the

last 2 years, which is a certification program in our industry. That

is just now rolling out across all of this contractor base. So the

framework is there, but the implementation of that system is still

in the beginning stages of that. But we do have a system of certification, and we do have training.

Ms. VELA ́ZQUEZ. You have a system—I am sorry?

Mr. BETTCHER. We do have a system defined of certification. We

have training programs defined for the voc tech schools and tests

that are—we administer to judge the qualifications of these people

15

so there is a program in place. I think it would need to be adapted

to the regulation that is being discussed today.

Ms. VELA ́ZQUEZ. Thank you. When you say you have a system in

place, who monitors and who certifies?

Mr. BETTCHER. There is an organization that runs the tests that

are run on—they run them periodically through the year across the

country at different test sites. So there is an official testing program that goes on by the group that is sponsored by our trade association as well as some other trade associations. And that is called

NATE, the North American Technician Excellence Program.

Ms. VELA ́ZQUEZ. But you agree with me that accountability is

very important?

Mr. BETTCHER. Absolutely. I very much agree with that.

Ms. VELA ́

ZQUEZ. Thank you.

Mr. Leto, many in the construction industry believe that multiemployer training systems are the most cost-effective way for construction firms of any size to offer comprehensive training to their

employees. By allowing businesses to pool their resources to provide a quality combination of classroom and on-the-job training, a

multiemployer training system provides something individual employers would not be able to provide alone. Mr. Leto, does your

company take part in multiemployer training and why or why not?

Mr. LETO. We do not take part in that. I don’t know that is available in our area for multiemployer training. What we do do in the

quality technician part of it, the level 3 that I alluded to earlier,

there is a level 1, a level 2, and level 3. Each person has to pass

a series of tests and be on the job for 2 years for a level 1, 2 years

for level 2, and 2 more years for a level 3. If he doesn’t pass the

test, then he won’t get to the level 3.

However, in the level three, there is also an outside certification

by a company in Florida that confirms what we have tested this

employee for. For the machinists, we send them to a technical educational college across the bay, and they get a report card on a

quarterly basis. That is a 4-year program, so we monitor their

progress based on the report card.

In addition to that, we sponsor them where—if they are working

on—let’s say they are working on blueprint reading this particular

quarter. We as an employer will give them more jobs that would

involve blueprint reading. So we kind of go along with the curriculum with the college. That is how we monitor.

Ms. VELA ́ZQUEZ. Thank you.

Thank you, Mr. Chairman.

Chairman TALENT. My understanding of your business, Mr. Leto,

is that more of the training is custom, more specific to the particular shop. There are basic skills you learn in these programs,

but really it is the on the job in your particular shop where you

get exactly what you want from the employees. Is that fair?

Mr. LETO. Not necessarily. If we teach an employee, a machinist

how to program, he can go just about to any machine shop and program if he learns how to program. It is the same with setup. It is

the same with tool making. So I think, to answer your question,

they can be used in any other shop.

16

Chairman TALENT. Sure. You learn the basic skills at one of

these programs, and then you come in and do the on-the-job work

in your shop.

Mr. LETO. That is correct.

Chairman TALENT. I have Mr. Pitts next. I recognize him.

Mr. PITTS. Thank you, Mr. Chairman.

You each noted the high cost of training of new employees. What

is the retention level of these new employees after you have spent

money training them? Can you give us a ballpark figure?

Mr. BACHMAN. A lot depends—on the retention, it depends on

how you treat your employees. If you pay them the going wage relative to your area, if you are giving them the reasonable benies and

you go with them and work with them, rather than just push them

aside, they will stay.

We had one fellow that left 2 years ago right after his apprenticeship was completed; and I thought, gee, that was fast. I walked

in the shop about 2 months ago. There he was. He said, well, he

knew the grass was greener on the other side of the street, but

then after 2 years he found out it wasn’t, so he is back again. So

you retain your own people by the way you treat them, both economically and personally. We do not have a problem at our plant.

Mr. BETTCHER. In my case, I have a large company. I am not

sure that is the question. The question is for the small businesses.

I don’t have the statistics for the contractors because they are separate from my company, but we can certainly research that and get

information back to you to answer that question for the air conditioning group.

Mr. LETO. Mr. Pitts, I don’t know the exact percentage, but I can

say that our training involves a little bit more than just a skill. We

involve personal growth and family values since we are a familyowned business, and I agree with the first gentleman that it depends on how you treat the employees. But since we have put this

program in, I bet our retention is above 80, 90 percent. It is that

high.

Mr. PITTS. I believe you noted that many potential trainees don’t

have the academic preparation in some areas like math and

science. What is the average academic level of your trainees?

Would a tax credit allow you to help train them in some of these?

Mr. LETO. I think it would. I would say the average educational

accomplishment of our machinists or the operators is maybe 2 or

3 years of high school.

Mr. BACHMAN. As far as the machinists are concerned, we have—

the shop work that you do, we call it lab work. Then we have 144

hours per year to take up and pick up anything that they are short

on. Mostly we hire people who are graduates of a junior college,

and they have had the blueprint reading, they have had trigonometry, plain trig but not special trig. That is one thing we add

to it. They have a very small entree into metallurgy. We make

them take a better metallurgy course.

And die design, we do that inhouse because we have never found

anybody in the academic world that knew enough about die design

or mold design that could do them any real good. So we teach that

within our own people. We pay our employees to stay at night and

do this.

17

It does vary a little bit per person, per apprentice, but basically

we have to have all of these things, and we will get them one way

or another, and we pay for all of their outside education when they

have come to work for us.

Mr. PITTS. Mr. Bettcher?

Mr. BETTCHER. I think, in our industry, the real targets are high

school graduates or people with 1 or 2 years of voc tech training

that we try to get into the contractor base.

Mr. PITTS. Thank you, Mr. Chairman.

Chairman TALENT. Ms. McCarthy is next.

Mrs. MCCARTHY. Thank you, Mr. Chairman.

I thank you for your testimony.

I come from Long Island, New York, and we have a lot of small

businesses that are working in the areas that you are all talking

about. And I have spent January meeting with all these business

people, and they are talking about the same thing—they can’t find

skilled workers.

What we have done on the Island is work with the business people, having them come into the high schools, especially through the

BOCEs programs, and tell these young people this is what, you

know, we can offer you. This is the kind of education and training

we can offer you.

So far, it is working, but the problem that we are all going to

be facing is, as the years go on, we are not going to have enough

young people, and that is a fact of life right now. So we have to

do whatever we can to help you.

One of the things that I would like to talk about, and some of

my colleagues brought that up, as we go into this global economy,

there are going to be, unfortunately, certain jobs in this country

that are not going to be available to the people that are already

working there. And I am hoping, without making it really tough or

anything else like that, that with the possibility of those that have

been working in some of these factories that they might have first

chance to come and work and be trained with companies like yours.

And my concern was, obviously, those workers that are 45, 50

even—because I look further down the road. These are good people

that have worked all their lives and all of a sudden where they are

supposed to be on the top end of their employment and they have

to start all over again, it is going to really hurt their Social Security. People I don’t think really start to think about this.

So I happen to support this bill. I think it is a good bill. And,

hopefully, you will work with us to clarify it even more, especially

with the responsibility, because I think you can probably put more

input. Sometimes when we do things here, we mess things up a little bit. So it is going to be important to hear all of your input and

to have this go forward. I appreciate it.

Mr. BACHMAN. The St. Louis chapter of NTMA sponsors one

place in the job placement or job fair, and this job fair is in the

greater St. Louis area, and we had 11,000 eighth graders. Now,

there is nothing we can do with a junior or senior in high school

other than go to a junior college and start taking some technical

training, but they can get good technical training if they start in

ninth grade because you have to start with your mathematics to

get through even plain trig. And we have to have this sort of thing.

18

What we did is we—one of the gentlemen from the companies made up a great wage chart, and this started from $7,000 for a

flapjack flipper to $53,000 average throughout the country for a

machinist. They didn’t take into account die makers, mold makers,

designers and so forth, the people who are higher paid.

I went and stopped some of these teachers and the people who

were doing the counseling for the ninth grade, and those are the

people that really start the young people. Somebody has to explain

to them that you have to start now. And I handed this chart out,

and I thought it wasn’t quite enough, so what I did is I took the

W–2s from some of our people—of course, took the Social Security

and their name off of it.

Mrs. MCCARTHY. That is good.

Mr. BACHMAN. All I did add took the classification. I couldn’t do

the other. But I handed it to the teachers and the people who were

recommending all of these things, and they looked at these numbers, and they went from 40 to 75,000 a year. Now, St. Louis is

a fairly high wage area, and there is maybe a dozen of them in the

country, but they—the first thing they said, well, can I be a machinist or could I be a tool maker? I handed them my card. I said,

if you want to, fine.

They all backed off, of course; but I let them have the card. And

I said, if you want to do something, go ahead and send them—call

me and we will get a tour of the company. Because most of the

counselors—not observers, the people who are teaching, are routing

the customers, routing the whole curriculum, they have never been

in a machine shop or a manufacturing plant period. They don’t

know anything about it, and this is where we are really hurting.

I had one school, one—no, it is a high school—high school group.

I went down about 60 miles south of St. Louis and went through

there, told them what we are doing. The counselor who was in

charge said, can we bring 25 people through your plant? Sure, I

said. So we made arrangements, and she made a time.

Two weeks before she was coming she said, how about 45 or 50?

And we ended up with three educators and the rest of them were

students, first and second year, the junior and senior year of high

school; and they went through this. None of the teachers had really

been in a modern machine shop. They didn’t realize. They thought

it was a greasy old place. Everything is dirty. We showed them

whereby we are measuring things by light to the accuracy of 20

millionths per year—I mean per inch. And they had no idea what

this is all about.

Mrs. MCCARTHY. I think also what we have to do is kind of reeducate people. I am on the Educational Committee, and I know

I happen to believe in college education, but I also know with an

awful lot of young people, they certainly are smart, and I will give

you an example. My son did go to college, and he is a white collar

worker. His two friends that are actually brighter than my son

went into other fields of endeavor. Now, Kevin was an 85 percent

student. These two young men were 95. My son is a bright young

man, believe me. But what I am saying is, they went into your line

of work; and they are making the $75,000 a year.

So when I go and speak to my students, I say, certainly continue

education, especially in the math and the sciences. But, you know,

19

some people, like my son, doesn’t like to get his hands dirty. There

are others that love it, and that is where they should be encouraged to go.

We have put such an emphasis on college, which is really terrific

for a lot of people, but some people are just happier working with

their hands. And we have taken away the pride, in my opinion, of

those that want to work in the trades. I think that is a shame. Because when you go to other countries, there is a pride of working

as an apprentice; and I think we in this country have to reinforce

that with men like you going out and talking to people in school.

There is nothing wrong with working in the trades. It can be an

absolutely wonderful life.

Mr. BACHMAN. To show you how clean it is, we have one man

who comes in with a white coat and a tie. He tucks his tie in, takes

the coat off—and white shirt. Works all day. Just rolls up his

sleeves to his elbows. Works all day. Doesn’t get dirty. Puts them

back on. Off he goes. He is one of the top mold makers.

It is not the dirty, cruddy job it is thought to be. Like you said,

we open our doors. I have had as many as 80 people, students,

come through the shop in one day.

Mrs. MCCARTHY. My uncle owned a machine shop on Long Island

many years ago so——

Mr. BACHMAN. You know it.

Mrs. MCCARTHY. I know it. Thank you.

Mr. BACHMAN. Incidentally, I happen to be a registered professional engineer. I went to the engineering school after I got out of

the Army Air Corps in WWII, and I went through in 3 years. And

some of the advisors, they take the top half, and they go to college;

and, frankly, the bottom half, they just go to pot. They don’t worry

about them. And what they don’t understand, that we don’t want

the bottom of the pile, we need people that can think. Just what

you said. They are the ones that are going to come in and really

do a good job and make good money. You can’t take somebody that

is illiterate and try to put him on an apprenticeship. It doesn’t happen.

Chairman TALENT. I thank the gentlelady.

This Committee in part is about people who, in many cases,

didn’t have the money or the inclination to go to college—but were

people who hustled and worked and were risk takers and started

businesses. The kinds of training that we are talking about with

this bill is ideal for people who work in a company for a few years

and then start their own. I haven’t checked this, but my guess is

we probably—some of the witnesses today are in that position. So

this is—these kind of jobs, if they ever were jobs that were the ladder, you know, ended after a few rungs, and that is not the case

anymore, and I thank the gentlelady for bringing that out.

The next member to be recognized is the gentlelady from New

York, Ms. Kelly.

Mrs. KELLY. I am glad to see you all here. I happen to have a

lot of fun in my district going through the various manufacturing

places and walking and talking with the people who are on the

lines doing that manufacture. I am just fascinated with the way

things are made.

20

I am also interested, Mr. Bachman, in the fact that you were

talking about—in your testimony here, you were saying almost

every welfare-to-work person that was referred to your company

lacked that basic education. You were just talking about that a

minute ago with my colleague. Would this tax credit we are talking

about help you or do we have to do two parts to this? Do we have

to try to also add something to bring those people that go to you,

get them up to a basic skills level? Is that what I heard you say?

Mr. BACHMAN. Partially, yes. The people that we take have had

in either high school or junior college some machine shop and they

have had some mathematics, like—they have to have something

that they understand what they are looking at. It is a dangerous

place to be if you don’t know what is going on.

Mrs. KELLY. What level math—I am really kind of throwing this

out to all of you. What level of math are you talking about if you

are in a machine shop would you need? What level is that going

to be?

Mr. BACHMAN. Plain trigonometry, not spherical. That is one

level. If you have to get from here to here in a machine, it goes

by rectangular coordinates. So you have to be able to calculate how

far you go left and how far you go up to get there. Somebody has

to calculate this thing.

Now, they are done by computers. They are much faster, and the

machine tools themselves can do it, but you have to know what is

going on, why and how that gets there.

Mrs. KELLY. What programs do you think that we need to put

in place? What programs are out there that you—or what programs

can we do to put in place to help you?

Mr. BACHMAN. A fellow from Los Angeles and myself jointly

made the training syllabus for mechanics—I keep saying mechanics—machinists, die makers, mold makers, and this will give you

the whole rundown of what they have to have. We wrote this some

20 years ago. Personally, I think it needs upgrading again. Because

this past year we just upgraded the apprentice standards, what you

had to do, and that was done. But this syllabus to lead the people

in training I think by now needs an upgrading.

Mrs. KELLY. I have got three sons and a daughter. I was fascinated when my oldest two sons were in high school—rather in

junior high—they had to take shop. They had a blast. They had a

wonderful time making things. But all of that then was changed

because they got slid into the college prep program and they never

once looked back at that fun that they had.

I think that the manufacture of things is a lot of fun, but it is

tough, hard, dirty work, and it also requires a brain, as you pointed

out. I am concerned that we are trying to give you a tax credit here

in a way that it is going to be really effective as reaching those

kids. I want to make sure that if we are going to do this, we are

going to do it right. So I just want to say that you can all talk to

me later about that.

Mr. Bettcher, you talked about takeback. I have only got a little

second here to talk for a minute. I am interested in that because

I recognize also that major industries are beginning to do service

in a way where they are not only servicing the things that they

manufacture but they are servicing other manufacturers’ things. I

21

am wondering if they are putting that force in position because of

exactly what you have talked about in your testimony and that is

they have got to protect their own product and not—they are trying

to reduce that takeback. Is that true?

Mr. BETTCHER. I think clearly that is a trend in the industry, to

do a more aggressive job at controlling your own product. And so

they can train people better and control that better if they do it

themselves and then have a trained workforce. But it is just a fact

of life——

Mrs. KELLY. But they are going for other people’s things, too. Is

that just to keep those workers working?

Mr. BETTCHER. I think they are trying to grow and they are trying to expand their scope and have a bigger impact, let’s say, on

a homeowner so they can service all the appliances in a home, including the air conditioner.

That is fine with us as long as those people are trained across

that broader product line, and this bill would really help us ensure

that those people get the broad training, that they can service the

hot water heater and the air conditioner and the stove and the

range. That is not simple, to know the ins and outs of all those

pieces of equipment. So I think this bill will help in that regard.

I wanted to make one comment about the training level coming

into this program, and that is that we are talking about a very

broad range of trades here, from the very highly trained requirements that Mr. Bachman talked about. I would say that there is—

they are not all requiring that level of training. In our case, it is

a technical product but not nearly the requirements of a machine

and dye shop. A basic high school graduate with an interest in mechanical things and electricity and some good hands-on experience

can be trained to do our service work very adequately.

Mrs. KELLY. Mr. Leto, did you want to add anything to this?

Mr. LETO. Only in the foundry aspect of it. The mold maker,

probably more than anybody else, really doesn’t need to have a

high school education. He can learn. We have to train him on the

job. We can train him, and that is what we do. It takes about 2

years. He can be a good mold maker.

The pattern maker needs to have that trigonometry because he

has to—he doesn’t have the luxury of a program to help him go

from point to point. He has to lay that out by hand.

And the quality technician, he needs to have a basic understanding of metallurgy, so there is a higher education and skill

there.

But the levels, level 1, level 2, and level 3, what he needs to acquire can only be done on the job.

Mrs. KELLY. Thank you very much.

Mr. BACHMAN. Are you talking about sand molds?

Mr. LETO. Yes.

Mr. BACHMAN. We have two different kind of molds, as long as

you understand that. We are making them out of tool steel, hardening them and polishing, all this sort of thing. So it is a completely different animal. And when I originally wrote this thing, all

I had in mind was the machining and the manufacture areas.

And I beg to differ with you, that the shops aren’t as dirty—

when I went to work for my dad and got out of college, he just

22

threw my scholarship and stuff away and said, hey, go to work—

and he handed me a couple of aprons—and learn. That is the way

I had to do it, without this kind of training. You can have any kind

of education that you can get, and you still have to start doing

something with your hands before you are going to be good at this

area.

Mrs. KELLY. Mr. Bachman, my husband started with a hammer.

I know all about how you start at the bottom, and I want to tell

you——

Mr. BACHMAN. But everybody else here doesn’t.

Mrs. KELLY. I want to tell you, I did, too. Not with a hammer,

but I started with other tools. And I have to say that the concept,

the problem is that people think that doing these jobs with their

hands are just dirty jobs. They are not. They are not. They are

really interesting jobs. It is just a matter, I think, a lot of it letting

us do what you need to do, which is go out there and do it.

Carolyn was talking about—I am sorry, my colleague was talking

about inspiring these people, this workforce that is out there. A lot

of people are in jobs that they are not happy about, and they

should be looking, sometimes, I think at the jobs you are talking

about.

Thank you very much.

Chairman TALENT. Next on the Democratic side is Mr. Davis.

Mr. DAVIS. Thank you very much, Mr. Chairman.

And let me just say, gentlemen, at the offset that I appreciate

all of your testimony and have found the discussion to be somewhat

intriguing. I think all of us come from different experiences, and

I come from the experience of a district that has lost more than

120,000 manufacturing jobs over the last 30 years.

I also come from an area where the problem isn’t what happens

once you get into skilled work opportunities. It is the problem of

some people not being able to get in. I am seeing many people not

being able to get in because there seem to be, in many instances,

especially with trade unions—and I am a trade unionist—there

seem to be a family network. There seems to be an old boys’ network. There seem to be a cousins’, uncles’ network. And so people

can’t get in unless they come with certain kinds of recommendations or they come from certain groups.

And while I think the legislation has a tremendous amount of potential, I think my question becomes—one of my questions becomes, how can we assure that we are going to actually bring new

people into the skilled workforce, I mean, new people who, for all

practical purposes, have been actually shut out?

I recall in my city where the unions decided to move a trades

school out of town, Washburn Trade School, which had a reputation of being one of the best in the business, but once some requirements were put—that they had to let other people in who had not

been getting in, they decided that it was in their interest to just

move out of town, leave Dodge City. So I want to know, how can

we assure that we are going to bring new people into the skilled

workforce and then, Mr. Chairman, whether or not there might not

be some ways that we can tie this legislation into some of the other

things, like empowerment zones, like disadvantaged areas, disadvantaged businesses, or businesses located in certain areas and

23

making sure that they get the assistance that they need through

these tax credits. And so anybody can——

Mr. BACHMAN. Our plant is in the middle—not in the middle of

St. Louis, but it is downtown. St. Louis went from almost 900,000

people down to 300 and some thousand people. They just all disappeared. We have several problems, and you can start naming

them if you want, but they do not—there is nothing we can do

about it as far as a small company.

Now, we take and work with a junior college, a private junior college in St. Louis right in the middle of the area that was—looks

like it was bombed out. They have many trades that they teach,

and the area—if a person comes in and wants to go to the junior

college and they don’t really have the money—when I was retired

from my business, whatever you want to call it, they gave an apprenticeship—I mean a scholarship to a person per year to go

there.

Now, they have—if you take a test and you have to have some

ability—like in our case, the mechanical trades, you have to know,

you know, your left hand from your right hand. Most of these

young people have played with automobiles or something. That is

usually the most common thing for young men. If they do this, the

school now will take and give a catch-up course, so to speak, for

a year free. All you have to do is go.

And this has happened about 5 years ago, and I think they are

doing real well. They bring a lot of people in there that could not

afford to go to the school; and then, after that, then they take them

and they look for people. Like Emerson, they give them $150,000

a year to help these people go through the school. And this is the

way that we try to help those people that can’t just walk in, plunk

down $3,500 and say, hey, I want to go. It is happening in St.

Louis, but a lot of it was lost before we got started.

Mr. BETTCHER. Mr. Davis, I make two comments about the air

conditioning refrigeration business. Part of our program—we have

got several things going on to try to get people into the industry.

But to your question, we have identified the inner cities and the

zip codes of this country where there is not this infatuation with

4 years of college for every person. Those are very, very key target

areas for us because we think those are people that are very good

candidates for our industry. So we plan to target those types of

areas in the country.

And the second thing that was commented on was the reduction

in manufacturing. The other initiative we have taken is to say we

want a package of material put together so that when a company

announces a downsizing or a merger and they are going to lay off

a lot of people, we want to be there the second day with a package

that talks about our industry, the opportunity for training, and this

kind of funding would be a perfect fit with that kind of an initiative

to bring these people into a new trade.

Mr. LETO. We do the same thing. We are a member of the greater Tampa Chamber of Commerce, so we are aware of companies

that are relocating to our area.

I agree with what you said. I think, if I understood it correctly,

we are talking about diversity and race. Us being an 8a contractor

for the defense business, we are of Hispanic origin, and we have

24

a mix of African Americans, Caucasians, Hispanics and women

that work in the business. It is very difficult to find a lady that

wants to work in the foundry business, because it is quite dirty, as

opposed to the machine shop, where it needs to be temperature

controlled.

But there are also hub zones preferential that are involved. We

are not in a hub zone, but we really don’t have that luxury, to be

that particular of who we hire. We need to hire the best person

qualified for that job. And if it is a mold maker and we need to

train that person, it really doesn’t matter. If you came to our facility, you will see a very even distribution of African Americans,

Caucasians, women, and Hispanics.

Mr. DAVIS. And I think it is important that we look at different

requirements, different entities. In some instances, obviously, the

technical requirements are different. In the other instances, it becomes a matter of a willingness to invest in individuals. And what

I hear you saying is there are some instances where you have the

opportunity to do that, and a tax credit would certainly go a long

way where it is helping your company to be able to make that investment, and it is a concept that I like and have a great deal of

appreciation for.

I think I am going to like this legislation. I think I am going to

try and look for ways to make sure that it is targeted and focused

in such a way that we can get the most mileage from it.

I agree with all of those in terms of voc training and voc ed. I

think all of us have had those experiences and we have all had the

conceptualization of what people thought existed. Personally, I

wish that I had more of it than just simply growing up that I knew

how to handle a hammer a little bit better without hitting my finger.

And I think we do need as my colleague from New York, Representative Kelly, suggested. Sure, we can help with young people

from an overall vantage point, but in terms of the nitty gritty of

what goes on in the industry, if these tax credits are going to be

given, I want to make sure that they are given in such a way that

we help to bring into the mainstream some of those many individuals who have been left behind, who have been cut out, and for all

of the reasons that we already know are not there.

When we talk about skilled tradesmen in many areas in my city

where there is over a million African Americans and we talk about

there being 25, 30 blacks in a skilled trade in the whole town, I

mean, that is appalling. That is incredible. That is unbelievable.

And we can just talk about things like tool and die makers. We can

talk about things like plumbers. We can talk about almost any of

the skilled trades, and I want to see us be able to function differently than what some of the trade unions have done in terms

of who gets in and who does not.

Mr. BACHMAN. Actually, aptitude tests which we desire before we

hire somebody, because they are the people that know—not have

the knowledge of education, but they know how to put things together, and it really doesn’t make any difference. You can take a

person out of ninth grade and have an aptitude test and they will—

they can become a machinist or a die maker. Now, if they goof off

for the next 4 years, then they are going to have to go back and

25

do it over again. But their aptitude is there and they want to do

it, they can do it. But aptitude is different than knowledge.

Mr. DAVIS. And they can make a lot of money doing it, a decent

life.

Mr. BACHMAN. That is right.

Chairman TALENT. I thank the gentleman.

I am going to recognize Mr. Toomey.

Before I do, I want to remind the members we have another

panel which we want to get on and testify, although I certainly

don’t want to restrict these lines of questioning. They are very constructive.

Mr. TOOMEY?

Ms. Napolitano?

Ms. NAPOLITANO. Thank you, Mr. Chair.

I did read your testimony, and I was quite impressed. Because

we long believed that we need to focus on stressing in the schools

the math and sciences for our young people, which is one of the focuses that we are trying to revive in certain areas, especially those

areas that are low income. Because we are finding out that a lot

of our students, a lot of our young people, they have the ability,

they have the mentality, but they don’t have the opportunity.

Now, in listening to some of the dialogue and reading some of the

material, it brings to mind that somehow we need to probably get

everybody to start focusing on the low area income schools, to provide speakers that have been successful, some of you are machinists, some of you are mold makers, some of those individuals to attract the eye and the ear of the youngster who will not be going

to college, who might have the capability of doing well in your test,

that might be the identified young person who might be going into

the industry. But he needs to know where to go, who to talk to,

and how to become—be put on that road, that path to be able to

become the machinist or the mold maker or the engineer in your

area.

Have you done or has anybody come up with a video to be able

to show schools the young machine shops or the ninth graders,

tenth graders that might have an idea that they might be interested in that particular field, to show them what areas they may

be able to fit into, what they will need, what kind of math they are

going to need to fit into this particular industry? Does anybody

have any idea——

Mr. BACHMAN. How many of them do you want?

Ms. NAPOLITANO. I am sorry?

Mr. BACHMAN. How many of them do you want?

Ms. NAPOLITANO. I would like to have some to be able to show

in some of my schools, to give to the counselors.

Mr. BACHMAN. The NTMA has I think three different ones, and

we can take a choice.

Ms. NAPOLITANO. Are they geared to high schools?

Mr. BACHMAN. They are geared to junior high school going into

high school.

Ms. NAPOLITANO. Are any of those good material to put on cable,

to be able to instruct the general public?

Mr. BACHMAN. I think it would be, if the public will sit still long

enough and really listen to it.

26

Ms. NAPOLITANO. Well, that is how we form public opinion, is to

be able to inform and educate the general public first that you are

having a lot of your current workers retire or leave the industry,

that you need people who are successful in the math and sciences

that will be able to enter this field and attract young people into

the industry to fill in those slots.

Mr. BACHMAN. I would be glad to get some for you. Afterwards,

I will get your name and address and where to send them.

Ms. NAPOLITANO. Certainly. Ms. Krause over there will see you,

because I will be leaving. I have another Committee meeting going

on, but I needed to come here and talk to you.

The welfare work is very intriguing to me, especially since I come

from California and we now have a max of 5 years for an individual. How can we become more in tune with providing access to

the welfare recipients, even women who might be willing to become

the students and be able to be successful in entering machine shop?

And there are women that I know who work in machine shops.

They may not work in the foundries, but they do work in the machine shops. How can we begin not only to make them the entrepreneurs but be able to assist them because these are good-paying

jobs, that they can provide income for their families?

Mr. BACHMAN. Well, we have a school called the Cornerstone

something, and it is—all government funds. And they are taught

only how to run a machine, and those are what they call numerically controlled machines. They make the part, you put the part in,

you press the button, it machines it, you take it out and put another part in. That is fine, but it is not making—it will be—that

is a machine operator, we call it. And it does get something done.

If you have that—if you need that kind of work.

But now they—last year, they started taking additional courses.

This was, I think, 3 months that they taught this person to operate

this type of machine. Now, that doesn’t take into account numerical

controlled equipment. Now they have gone back and said, we will

teach computer working, we will teach some mathematics, blueprint reading, the basics they need. And they take this into a 12-

month session, and they allow them to do this.

Now, these people, when they come out, they are probably

apprenticeable, and if they want to go on or they can be a good machinist that way. So it is helping.

All I am speaking for is St. Louis. That is mostly all I know. But

they have decided and they have gotten the go-ahead to expand

this thing. I think it is great because these people, who were

pushed out into the industry with actually no information except

to push the gold button and if something happened push the red

button, they just don’t have any real knowledge, and unless somebody is willing to take them under their arm and say, okay, here,

we will teach you more. But they can through the government in

that particular case, continue, but this is only started up really this

year.

Ms. NAPOLITANO. So it is new. You don’t really have any stats

as to how it is working or it is being accepted?

Mr. BACHMAN. No, but I bet my bottom dollar it will. I went

through the classes. I saw what they are teaching. And if they require certain grades, fine, everything will work.

27

Chairman TALENT. Thank you.

I thank the gentlelady and all the members for their interest and

the witnesses in the first panel for their patience and their answers. It has been very constructive, and I will let them leave, and

then ask the second panel to come forward, please. Thank you

again.

I have a hearing in the Armed Services Committee going on now

that I have got to go over to, so I just want the members of the

second panel to know it is not for lack of interest that I am going

to have to leave for a while. I will ask Mrs. Kelly to take the chair.

Mrs. KELLY [presiding]. I want to thank all of you for coming and

being willing to testify here today.

And, Mr. Gooding, I want you to know that Mr. Pitts was very

anxious to be here to welcome you and to introduce you, and we

are glad to have you here. I am sorry this is a very busy morning.

Most of us—as you can see, most of us have many hearings and

other things that we are really mandated to go to, so I apologize

for the fact that I know he was trying—wanting to be here and

tried to be here during the time when you would be here to be introduced. But we welcome all of you, and we look forward to your

testimony.

And this panel we have Mr. Gooding. We have Mr. Holdsworth,

who is the Director of Communications from Leesburg, Virginia.

Mr. Gooding, I am going to back up for a minute, because I didn’t

say that you are Chairman and CEO of Gooding, Simpson and

Mackes, National Roofing Contractors Association. He is a member

of the board of directors.

Then we have Mr. Holdsworth, whom I have introduced.

Mr. Murphy is here with the Crest Electrical Company. He is

here on behalf of the Mechanical-Electrical-Sheet Metal Alliance in

Washington.

And Mr. Pence, Capitol Hill Advocates. He is here for the National Concrete Masonry Association of Herndon, Virginia.

We welcome all of you. Thank you very much.

Mrs. KELLY. I believe we will start with you, Mr. Gooding.

STATEMENT OF JOHN GOODING, CHAIRMAN AND CHIEF OPERATING OFFICER, GOODING, SIMPSON & MACKES, INC.,

EPHRATA, PA, MEMBER OF THE BOARD OF DIRECTORS OF

THE NATIONAL ROOFING CONTRACTORS ASSOCIATION,

WASHINGTON, DC, AND CHAIRMAN OF THE NATIONAL ROOFING FOUNDATION’S ROOFING INDUSTRY ALLIANCE FOR

PROGRESS

Mr. GOODING. Chairman Talent and members of the Committee,

my name is John Gooding; and I am chairman and CEO of

Gooding, Simpson and Mackes, which performs commercial and industrial roofing work. I am also a board member of the National

Roofing Contractors Association, NRCA, and chairman of the Roofing Industry Alliance for Progress, an industry-wide partnership

established to analyze, select, recommend and provide oversight for

projects addressing critical industry issues, including this shortage

of skilled workers.

We thank the Committee for holding this hearing; and I commend you in particular, Mr. Chairman, for introducing the Skilled

28

Workforce Enhancement Act, SWEA. SWEA recognizes and addresses a serious lack of trained employees in the roofing industry.

This has become so difficult at times contractors must turn down

work.

In response to the shortage of labor, NRCA and the Alliance for

Progress have been pursuing numerous initiatives to help our

members find, recruit, and train skilled roofers. These are described in my written statement and include a 31–module training

program.

Mr. Chairman, I would like to submit my written statement for

the hearing record and summarize my remarks beginning at the

bottom of page 4.

For over 50 years Gooding, Simpson and Mackes has struggled

with trying to recruit, train, and retain good employees. In our

Pennsylvania location, we have been involved with the ABC, Associated Builders and Contractors, Apprenticeship Program for sheet

metal workers for the last 30 years. This program involves 4 years

of on-the-job training and in-house training 6 hours per week

throughout the normal school year. This program is dependent

upon other contractors recruiting students interested in learning to

become sheet metal journeymen and willing to give up two evenings a week without pay during the school year.

SWEA might give us the financial freedom to pay students a

small stipend for taking night school classes, thus recruiting more

workers.

In 1998, our company started a 2-year roofing apprenticeship

program, supplying both our facility and instructor for the local

ABC chapter. Our instructor used both the ABC Apprenticeship

Training Program and a new NRCA training module to provide a

very good classroom experience.

Besides the classroom training, our employees are working approximately 2,000 hours on the job as well as attending monthly

safety training and special programs put on by our insurance carrier and trainers during inclement weather.

In addition, our Pennsylvania company has spent over $100,000

on a large training room that can hold 100 employees. We are now

looking into building another facility for hands-on training in a

classroom environment.

In 1998, I also approached the New Castle County Delaware Vocational Technical Schools and asked if they would consider establishing a training program for roofing mechanics if I could help provide employment opportunities. They agreed to this proposal and

sent their instructor to an NRCA training program. I then employed him during the summer to give him a better understanding

of what is expected of his students and familiarize him with the

tools, the equipment, and the products. Our Delaware company

purchased and will continue to buy all the training modules produced by NRCA, and I personally plan to monitor this program as

it unfolds.

My long-term goal would be to hire students from the voc tech

schools and also continue their training as well as educating unskilled employees by using the voc tech night classes and/or inhouse training. The tax credit for training costs under SWEA

would allow me to buy a van and go into Wilmington, Delaware,

29

and Lancaster, Pennsylvania, to hire people who don’t have transportation to get to our business location or our job sites, thus providing good jobs and excellent wages and benefits.

Our employees typically work 45 hours a week throughout the

year except on days of high wind, rain, and snow. Our average employee works 2,000 hours a year, but other companies’ employees

may work fewer hours per year depending on their geographic location.

In closing, the shortage of skilled workers in the roofing industry

is real and shows no sign of abating. For example, we purchased

land and built our facility in Newark, Delaware, in 1989. We anticipated having 100 employees on the payroll within 10 years.

Today, 11 years later, our workforce is only 35. Something must be

done to encourage people to continue to come into our trade.

Mr. Chairman, SWEA is a very important step in helping small

roofing contractors attract the labor they need by giving them the

incentive to train their employees in a formal program instead of

continuing to complain and not achieve the results they want.

NRCA urges every member of the Small Business Committee who

is not already on SWEA to co-sponsor this legislation.

I thank you for this opportunity to testify before you and would

be happy to answer any questions.

Mrs. KELLY. Thank you very much, Mr. Gooding.

[Mr. Gooding’s statement may be found in appendix:]

Mrs. KELLY. Next, we have Mr. Holdsworth.

STATEMENT OF THOMAS W. HOLDSWORTH, DIRECTOR OF

COMMUNICATIONS AND PUBLIC AFFAIRS AND DIRECTOR OF

COLLEGE AND TECHNICAL PROGRAMS, SKILLSUSA–VICA,

LEESBURG, VA

Mr. HOLDSWORTH. Thank you. I make an observation. We could

use a carpenter for this door over here.

Thank you, Mr. Chairman; and thank you to this Committee for

inviting me here this morning.

I am Tom Holdsworth, Director of Communications and Public

Affairs for SkillsUSA–VICA, a nationwide education association.

SkillsUSA–VICA is one of America’s largest public-private partnerships with nearly one quarter of a million student and teacher

members annually. We enjoy the active support of over a thousand

corporations, trade associations, labor unions and businesses at the

national level alone.

Our industry partners are very concerned about our Nation’s

shortage of both experienced and entry-level workers. According to

the U.S. Bureau of Labor statistics, the demand for skilled workers

has gone from 20 percent in 1950 to 65 percent of the labor force

today. This increased demand results in a shortage of skilled workers and is even more difficult for small business.

According to the Bureau of Labor statistics, construction trade

jobs will increase by 8 percent from 1996 to 2006. That translates

to 1,127,000 job openings due to growth or net replacements.

A Harvard study shows the construction industry needs to replace 18,000 carpenters a year. Apprenticeship programs produce

only 5,000 new carpenters annually.

30

The demand for heating, air conditioning and refrigeration mechanics and installers will go up by 17 percent, or 104,000 openings.

Concerns from the machining sector have as much or more to do

with quality as with quantity. While the overall number of employees will trend down slightly, tomorrow’s metal workers must be

more skilled to run increasingly sophisticated and efficient equipment.

Small businesses have traditionally counted on vocational technical education as its largest provider of formal training for its

workers. So the logical question is, how many students are in the

education pipeline for these occupations? The answer is, not

enough.

Department of Education figures from the eighties and into the

nineties show masonry enrollments declined by two-thirds, air conditioning refrigeration and heating by two-thirds, and metal trades

by 60 percent. Carpentry enrollments also dropped.

There are several reasons for these declines. Three of the most

important are population, policy and perception.

First is the simple matter of demographics. We have been going

through the baby bust. There have been fewer high school students

and young adults. The good news is that with the echo baby boom

we are about to see that 16 to 24 age cohort increase.

Second, young people are not encouraged to enter these professions. Since the early 1980s, and for some very good reasons, secondary public education has focused on academics and increased

core graduation requirements. This shift in emphasis, however, has

often changed the objectives of vocational programs. Instead of

teaching skilled proficiency for job entry, some vocational programs

focus more on teaching applied academics. Cutbacks on time in

class has meant students are taught about an occupation rather

than developing skill proficiency. Because vocational courses are

electives, if their enrollments decline, the program is closed. That

effectively closes the door to an occupation in that school or college.

Third is a public misperception of these occupations as careers.

The second-class stereotype of blue collar workers is alive and

doing damage. Too often, the public does not see the financial rewards of these occupations, nor do they see the career paths that

lead from them. Vocational students that come from good vocational programs have career plans, and they have the skills when

they graduate.

By default, specific skilled training is being pushed to the postsecondary level. Here the average age of a student is 28 or older.

Their responsibilities are higher, and their budgets are tight. Postsecondary students are motivated and looking for ways to either

start or change their careers.

Now for some good news about training. The automotive industry

saw a shortage of service technicians in their future, and they took

action. This Committee would do well to study the AYES or Automotive Youth Education System. It is based on industry standards,

manufacturer created, supported by the dealers—which are small

businesses—and delivered through the schools. AYES puts 2 years

of high school together with 2 more years at the postsecondary

level and couples that with ongoing training and certification on

31

the job. In short, they have a training system beginning with the

recruitment and leading to continual professional development.

Caterpillar has also created an intensive 2-year training program

providing college instruction and on-the-job training for Cat dealer

technicians. The point is, of course, Caterpillar was looking for a

way to help small businesses, its dealerships who were facing technician shortages. The dealer service technician program is set to

world-class standards and delivered through community colleges.

In conclusion, I would like to tell you that SkillsUSA is conducting a nationwide awareness campaign this year called Building

Skills for America. Our students are collecting 1 million signatures

from employers, employees and union members voicing their support for America’s highly skilled workforce, also voicing their concern about the shortage thereof. We will be bringing those signatures to Washington in September, 2000. I hope we can count upon

this Committee to recognize our students’ work and the need of

business and industry for a skilled workforce.

Mr. Chairman and members of the Committee, I hope this bill

will help small business, apprenticeships, colleges and, most of all,

workers. Thank you for inviting me to appear before you this morning.

Mrs. KELLY. Thank you very much, Mr. Holdsworth. I think it

is really admirable that you are out there working right now in the

schools with the students. That is where we have got to get them.

[Mr. Holdsworth’s statement may be found in appendix:]

Mrs. KELLY. Mr. Murphy.

STATEMENT OF PATRICK MURPHY, PRESIDENT, CREST ELECTRICAL COMPANY, ST. LOUIS, MO, ON BEHALF OF THE MECHANICAL-ELECTRICAL-SHEET METAL ALLIANCE, WASHINGTON, DC

Mr. MURPHY. Thank you.

Mr. Chairman, members of the Committee, Ms. Kelly, Ms.

Vela ́zquez, my name is Patrick Murphy. I am the owner of Crest

Electrical Company in St. Louis, Missouri. Crest Electrical is a

family-owned business that has been operated since 1953. I have

been the owner for 21 years, and I currently employ about 220 electricians in the St. Louis area.

I am a member of the National Electrical Contractors Association, NECA, and I am pleased to be here today on behalf of the Mechanical-Electrical-Sheet Metal Alliance to discuss the Skilled

Workforce Enhancement Act.

As a former member of our joint apprenticeship and training

committee, I know firsthand the benefits of training excellence in

the construction industry. I feel the quality of apprenticeship and

training is important for my employees because it increases the

speed and quality of their work, improves our customer relations,

creates loyalty within our workforce and creates a pool of skilled

labor to replace retired journeymen.

Alliance contractors in my area have chosen to make a significant investment in the future of our industry. The three organizations of the Alliance are currently training 890 apprentices and

providing continuing education to nearly 3,000 journeymen in the

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St. Louis area alone. The construction industry is currently facing

a serious skilled worker shortage.

The Alliance applauds Chairman Talent’s initiative in attempting to promote and reward training programs in the skilled trades

through SWEA. However, while we support the Committee’s objective of helping small business develop an adequate, competent

workforce, the proposal, as currently written, raises a number of

issues and potential problems for Alliance employers, problems

which could be resolved easily through some modifications in the

legislative language.

The multi-employer training system is the most cost-effective

way for construction firms of any size to offer extensive and comprehensive training to their employees. Multi-employer training

programs allow all construction employers, especially small businesses, to pool their resources to provide a quality combination

classroom and on-the-job training utilizing resources that they, as

individual employers, would not be able to afford alone.

It is our understanding that businesses participating in collectively bargained multi-employer programs will be able to take advantage of the tax credit created by SWEA. However, this is not

directly stated in the text of the legislation. We have been led to

understand that this potential ambiguity will be clarified through

report language, but we believe specific language in the bill itself

is necessary in order to prevent any possible misunderstandings.

Due to the critical level of skilled workforce shortage and to

maintain consistency with the 1958 revenue ruling on deductible

training expenses, we suggest allowing all employers who are party

to an accredited joint multi-employer apprenticeship and training

program to be considered eligible for the SWEA credit. This is particularly appropriate for an industry where the vast majority of the

workforce may be working for one employer one day and another

employer the next.

SWEA already covers nearly all employers in the construction industry. According to the 1997 construction census, there were over

175,000 construction firms in the plumbing, heating, air conditioning, electrical and sheet metal trades. Of this number, only 339

businesses would not qualify for the SWEA tax credit.

Simply because an activity is labeled apprenticeship or training

program does not automatically make it so. Real training, especially in highly skilled trades, requires real effort and real commitment. SWEA uses Labor Department definitions for qualified, highly skilled trades. But it is unclear whether the measure fully

adopts the equally important Bureau of Apprenticeship and Training definition of a qualified training program.

This would not skew the program to only contractors using organized labor. Missouri, for example, has Bureau Apprenticeship

Training certification for both union and non-union training programs. St. Louis County has plans to require BAT-certified apprenticeship as part of its mechanical code requirements.

Compliance with BAT certification is easy and uncomplicated.

The Alliance suggests that in order to standardize definitions for

training, compliance with BAT standards become a requirement for

receiving the SWEA tax credit and appropriate industries.

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Alliance training programs which are exclusively multi-employer

in nature and which all are accredited through the BAT graduate

an average of 80 percent of their enrolled apprentices. By comparison, other programs which use mixed methods for training graduate an average of only 20 percent of enrolled apprentices.

SWEA limits the tax credit to programs that are a maximum of

4 years in length, denying the full benefit advantage to 5-year programs. The Alliance feels this fails to address the very workforce

development aspects intended by SWEA as rapidly advancing technology systems and facilities require more ongoing training. The

Alliance strongly urges that 5-year programs qualify for the SWEA

tax credit.

Mr. Chairman, each of our organizations has invited you to tour

our training facilities in your area. Thus far, your schedule has not

allowed you to take advantage of this opportunity; and at this time

we would like to renew our invitation and urge you to take advantage of it so you may see firsthand the type of instruction that is

going on. Alliance firms have contributed to quality training in the

mechanical, electrical, and sheet metal trades for over 50 years.

The proposed SWEA tax credit would allow us to continue to enhance these quality training programs and to produce those desperately needed, highly skilled workers in response to the current

workforce shortage.

Thank you for the opportunity to testify, and I would be happy

to answer any questions.

Mrs. KELLY. Thank you very much, Mr. Murphy.

[Mr. Murphy’s statement may be found in appendix:]

Mrs. KELLY. Mr. Pence.

STATEMENT OF RANDALL G. PENCE, CAPITOL HILL ADVOCATES, INC., ON BEHALF OF THE NATIONAL CONCRETE MASONRY ASSOCIATION, HERNDON, VA

Mr. PENCE. Thank you, Mr. Chairman and members of the Committee.

My name is Randall Pence. Thank you for your invitation to testify this morning on behalf of my client, the National Concrete Masonry Association regarding the Skilled Workforce Enhancement

Act.

NCMA is, frankly, in the same position as the ARI witness was

in a few minutes ago. We don’t really represent the people who install concrete masonry, but we do represent the people who produce

it. So the financial interests examined here for NCMA are really

tangential to what is happening here today, but we do have an intense interest in seeing that the products are installed competently

in the future.

The highly skilled workforce in America is indeed in jeopardy.

You have heard that to a great extent today. Workforce recruitment is a prime topic in nearly every business confab in the industry. It casts a shadow on Main Street. Its impacts are being talked

about on Wall Street. It is destined, we hope, to become an issue

at both ends of Pennsylvania Avenue quite soon.

Employers in every district in America share this key concern for

the future of their businesses. They know that without skilled

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workers there is no skilled work. They are focused on our action

here today.

There is already major support for H.R. 1824, and that support

grows with every industry executive who hears about it.

Without question, the need to increase the number of new masons is the foremost issue confronting the masonry issue today. A

highly skilled, qualified mason is essential to competently erect a

structure using masonry. Without a mason, there is no masonry

structure. Period. The trade of masonry, of course, is feeling the

pinch as much as any other industry dependent on highly skilled

workers.

Let me offer some facts and figures important to the masonry industry. According to the masonry industry’s most recent study, the

U.S. suffered a shortfall of at least 6300 workers in skilled masons

in 1995 and perhaps up to as many as 13,000. Further, the shortfall has been growing steadily since that time. At the same time,

the average age of masons and the average age of new mason apprentices are both rising rapidly. In one recent 5-year span, census

figures and industry data showed the average age of masons rose

from 37.7 years of age into the low 40s.

Now, what is most disturbing about these numbers is that the

industry may actually be underestimating the speed of the growing

problem. There is clear evidence of upward age concentration in the

industry. This signals an upcoming cluster of retirements. The

acute impact on the industry could be enormous at that time.

Studies also show that the average age of new apprentices entering the trade is rising as well. The masonry trade is missing the

high quality high school students in that critical period immediately following graduation when career paths are traditionally

chosen.

Costs, of course, are also a key limiting factor for training among

masonry and small businesses. NCMA estimates a cost in the

range of 25,000 to $40,000 per year to train a new mason. Survey

data shows that H.R. 1824 could indeed have a strong positive impact on the cost equation. Respondents say that this bill would

allow them to take on an additional three to four apprentices per

company on average.

Now, spread across the entire country, this bill could go a long

way toward reversing the disturbing trends we have been talking

about this morning.

Regarding some key issues in the bill, some may suggest that

H.R. 1824 be limited solely to BAT certified programs or that a

similar restriction be added. NCMA respectively does not support

such a provision at this time. We recognize that BAT certified

union programs do a fine job of training masons. However, there

are also many training programs run by industry without BAT involvement oversight or standards. These programs produce fine

masons as well and should be fully eligible for the H.R. 1824 tax

credit.

Both industry and labor programs have strong support in NCMA.

The only problem is that both are not producing enough masons to

satisfy demand. It is that problem that H.R. 1824 attacks in a comprehensive and inclusive manner.

35

At this time H.R. 1824 does not discriminate. It is labor/industry

neutral and that is a key point to solidifying and maintaining the

growing support for H.R. 1824 outside the Beltway. NCMA sees a

great deal of wisdom in that approach and we hope to see it retained.

Further, on an issue that I know was brought up before to the

previous panel regarding multi-employer training facilities being

eligible, let me say for the record that NCMA supports the proposal

to ensure that multi-employer training facilities will indeed be eligible for the act.

Mr. Chairman, before closing, as a former Senate staffer, I think

it is important to recognize those who suffer for our benefit. Over

the last several months I have had the pleasure of working with

Ligia McWilliams and Melissa Decker. Their strong support, their

professionalism and hard work has been instrumental in propelling

this bill forward. We all appreciate their skillful work.

In conclusion I would like to urge the Congress to consider the

skilled workforce in America as an important national human resource that needs maintenance. We ask that Congress pass H.R.

1824 this year and start rebuilding the skilled workforce as quickly

as possible.

Once again I applaud your strong action and foresight on this

issue and I appreciate this opportunity to share my views for the

National Concrete Masonry Association on H.R. 1824.

[Mr. Pence’s statement may be found in appendix:]

Mrs. KELLY. Thank you very much, Mr. Pence.

I am going to hold my questions and go to Ms. Vela ́zquez.

Ms. VELA ́ZQUEZ. Thank you. Mr. Gooding, in your testimony, you

mentioned that you like to see the minimum number of training

hours required for the tax credit under this bill reduced from 2,000

to 1,500 hours to be more reasonable for your industry. Could you

please explain why this request would be more reasonable and then

whether you want a change be made across the board or just specifically for the roofing industry?

Mr. GOODING. The reason I would like to see this change is because many of the contractors, particularly members of NRCA,

work in northern climates and unfortunately they just cannot get

the hours in. When you get north of the Mason-Dixon line—we are

fortunate. We are in southeastern Pennsylvania and we have no

problem getting the 2,000 hours but even in the northern part of

our State, it becomes almost impossible because of the cold weather

to contend with. But that also involves the other trades such as

masons and sheet metal mechanics and anybody who is working

outside, they are going to be limited with bad weather. You even

go out in the northwestern States, they have the same identical

problem.

Ms. VELA ́

ZQUEZ. Well, reducing——

Mr. GOODING. So I think it should be reduced not necessarily just

for our trade but for all trades.

Ms. VELA ́ZQUEZ. But don’t you agree with me that we will be

cheating the workers of valuable training? Would you feel comfortable the 1,500 hours will be enough to really have the workers

trained in that field?

36

Mr. GOODING. I think the 1,500 hours may be enough but then

the program, in particular our case, the roofing, we have 2 years.

Maybe that would have to be extended to 3 years to get the hours,

get the training involved. Instead of limiting it to a 2-year program, possibly a 3-year program in that particular case.

Ms. VELA ́ZQUEZ. Do you feel comfortable that 1,500 hours will

provide——

Mr. GOODING. I view in our particular case in our trade.

Ms. VELA ́ZQUEZ. What about the other fields?

Mr. GOODING. I can’t honestly speak for the other fields.

Ms. VELA ́ZQUEZ. What you are telling me you don’t feel sure that

this should be made across the board?

Mr. GOODING. I guess you are correct in that statement.

Ms. VELA ́ZQUEZ. Thank you.

Mr. Holdsworth, it is my understanding that under current tax

law, businesses may deduct costs for training if they are, quote, ordinary and necessary expenses paid or incurred in carrying on any

trade or business. The Tax Code includes as the cost of doing business employee salaries and training costs if they qualify as ordinary and necessary. Would you please explain to the Committee

why the current law falls short in providing the necessary incentive

for businesses to train unskilled workers?

Mr. HOLDSWORTH. Representative, I am afraid you have asked

me a question I am wholly unqualified to answer. I know nothing

about the tax law relative to this education. I came to speak strictly to the need in education and the supply of people coming

through the system, but as to this customary and ordinary, I do not

know anything about it.

Ms. VELA ́ZQUEZ. Okay. Thank you.

Mr. Murphy, in terms of years, how long are the apprenticeship

programs in the industry groups you are representing here today?

Mr. MURPHY. I can speak specifically for the electricians is a 5-

year program and I believe that the sheet metal and pipefitters,

plumbers, they are all 5-year programs.

Ms. VELA ́ZQUEZ. Can you please estimate the graduation rate for

the apprenticeship program for the industry groups that you represent?

Mr. MURPHY. As I said in my testimony, in the multi-employer

plans which I represent, overall is greater than 80 percent. I know

in our area in St. Louis, our rate is probably over 90 percent.

Ms. VELA ́ZQUEZ. How is the graduation rate monitored?

Mr. MURPHY. It is monitored by the Department of Labor. They

are a regular participant in our plan but through the number of

people that come into the plan, those that graduate, we follow and

keep statistics on them.

Ms. VELA ́ZQUEZ. Thank you.

Mr. Pence, you already answered my question in your testimony.

Thank you.

Mrs. KELLY. Thank you very much, Ms. Vela ́zquez. I am going

to go—I would like to go back to the issue that Ms. Vela ́zquez

raised, Mr. Gooding, about the number of hours, cheating workers.

Since I live in the Northeast and since my husband is in—as you

heard earlier started with a hammer in his hand, I know that there

are a lot of workers that can’t get out there on the roofs, that can’t

37

get out there doing a lot of things in bad weather. And you can’t

train them on the job in bad weather because it is a hazard. So my

question to you is, do you think that this bill, we might want to

try and tweak this bill a little bit to allow some flexibility in there

somehow so that—because right now you can get credit up to 4

years. If you can get credit for up to 4 years, should we perhaps

think about helping folks who are affected by certain things like

weather conditions or suppose a major flood in a river somewhere

else in the Nation, if they can’t get it in in 1 year or 2 years, then

they could extend 3 years or 4 years. So I don’t see how workers

are being cheated here if we have it in the bill at 4 years and I

am asking you really do we need to tweak this bill or is it okay

as it is?

Mr. GOODING. I would like to see it tweaked. I really would. I feel

right now when we have bad weather, we are training some of our

individuals but here again, we are very fortunate in our particular

area. I think by tweaking the bill, giving the contractors the ability

to stretch that program out to the 4 years, you will end up with

skilled mechanics.

Mrs. KELLY. That is really what we are after.

Mr. GOODING. That is all we are after. We are looking for people

to fill those spots.

Mrs. KELLY. I just wanted to make sure that that was sensible.

Ms. VELA ́QUEZ. I would just like to, if you allow me to follow up

with another question that is related to the one that you just

asked. Mr. Murphy, don’t you agree with me that we should change

the bill to include those 5-year programs?

Mr. MURPHY. Absolutely. Our programs are a major investment

on our part for all 5 years and we certainly feel as though it would

be appropriate if your program is 5 years to have the credit available for all years that you do spend training.

Mrs. KELLY. Thank you.

Mr. Murphy, since we are at you at this point, I am going to skip

over and just—Mr. Holdsworth, I am coming back to you. Right

now I just want to ask Mr. Murphy a couple of questions. I have

got to get to your testimony here because there are a couple of

things I wrote myself notes on. You represent the Mechanical-Electrical-Sheet Metal Alliance people, right?

Mr. MURPHY. Correct.

Mrs. KELLY. I actually have seen some of the—union training

programs in my area; they have been for other trades but I think

they are just great programs. They are very good. My question is

really about the BAT standards. What makes the BAT program

the—I am interested in why the BAT program is the one set that

you recommend rather than having a lot of people have an input?

I think that we are finding that the training itself benefits from

having a lot of people involved and certainly the union programs

benefit from having a lot of people working in and out of the training programs, having the trainees go out to a lot of different people. And I am interested in why you think that this—we should

have everything fall under the BAT. It is one of those things that

I think—I am trying to grab my question here. It is really—it really is a question of industry standards and I am worried about there

being a national standard versus the industry standard.

38

What I am trying to drive at, in various parts of the country

standards are different. If we have something that is imposed from

the top, it gives no ability for those folks down below to have a say

in what their people are being trained at. That is really what I am

after.

Mr. MURPHY. I think I understand where you are going. Certainly we are looking for real training to take place and not just

the term of a trainee or an apprentice. We feel it is very critical

if this tax credit is going to be available that companies that receive the credit are in fact doing the job that they should be doing

and doing real training. The BAT standards do recognize, I believe,

somewhere in the neighborhood of 800 different training programs

in the country, trade programs and if someone has a program and

wants to take it to the Department of Labor, the Bureau of Apprenticeship and Training for certification, they can certainly do that

and that is an open process. Our concern is simply that we don’t

want people that are not doing a good job and are not doing an

adequate job of training to receive credits for very minor amounts

of training. It is very easy to call someone a trainee and provide

very limited training—in other words in our program, I pay out of

our company funds for our people that attend school one day a

week during the day. It is a full-day program and I pay their salary

as if they are at work so that—I am getting four days of work out

of a five-day week with our apprentices and we also contribute 30

cents per man-hour. Our company is spending over $200,000 a year

direct out of pocket on training for our employees. And it is a very

large expense and I want to be certain that, you know, we are held

to certain standards by the Department of Labor in our program.

I want to be sure that anyone receiving this credit, we all do, we

want to see them—be sure that they are doing the job that you

want done.

Mrs. KELLY. Mr. Murphy, I have a real hard time grasping the

concept that anybody with a training program would be training at

a lesser level. That just doesn’t make sense to me. They need highly skilled workers. Why would they train at a lower level. I want

to ask Mr. Pence and Mr. Gooding really the same question that

I asked Mr. Murphy if you can figure out what that question was.

I know it was long.

Mr. PENCE. I think we would find—we have talked today about

one specific program, the BAT certification program, under the Department of Labor. I think if you keep the record open for the next

10 days or so, you are going to be flooded with letters from other

entities, industry entities out there who will say—hold their hands

up and say, ‘‘we have the best program’’ or ‘‘we have a very good

program and we should not be cut out’’.

I think everyone here in the room today is in agreement. Nobody

is interested in funding or supporting sham programs or programs

that are not doing a very good job of training people for any specific

skilled occupation. For example, in the masonry trade, if you have

somebody who doesn’t know what he is doing building a wall, you

can imagine it is not going to be a very good showcase for the industry. That wall may come down. After the mortar is dried, you

have a mess. So it is something you strive very hard to avoid in

the industry for cost and other reasons. So I think we are all in

39

agreement we are talking about good training. I think also to the

issue of the 1,500 hours which I think we need to flesh out further

before we leave today, that we are talking about serious high-quality training programs. The question is who has the best program.

We would submit that nobody really has the single best program.

Going through your press clips in the packet that staff has provided you, you will notice some programs that actually go beyond

the BAT standards in some cases. I recall reading one article about

a program that required I believe 200 hours of training instead of

144 as required under BAT. Under the flimsy rationale that more

is always better, perhaps that should be the standard we should

adopt. Rather than institute this automatic friction between labor

versus non-labor programs, there might be a middle ground here

talking about a certain baseline of criteria that people should follow to ensure, if that is the major concern of the Committee, to ensure that we are not talking about sham programs. We are talking

about bona fide serious skilled workforce training programs that

should be deserving of this tax credit. I think there could be some

work we could do there. But I think to avoid the issue that cleaves

between the labor and non-labor world, we might be able to stay

away from a specific industry standard or specific BAT standard

with all the problems that comes with that kind of delineation.

Mrs. KELLY. Thanks very much, Mr. Pence.

Mr. Gooding?

Mr. GOODING. I also agree with Mr. Pence. I think it is incumbent upon the industries themselves to develop this curriculum. We

are out there. We are not interested in the sham program at all.

We need to train skilled workers and we are going to do everything

within our power to make sure it is done properly. Similarly, he

has a problem, if he builds a wall and it falls down, he has got a

major problem. If my people don’t install a roof properly, we have

a lot of problems, a lot of interior damage which is very costly to

me. So it is really incumbent upon me to give them the best training possible and we are constantly doing that and we just want the

ability through this act to be able to take unskilled people and

work with them and give them that opportunity to become skilled

craftsmen.

Mrs. KELLY. Thank you very much, Mr. Gooding.

Mr. PENCE. Could I bring up one other issue very quickly while

we are still on this. Another issue that was brought up with the

last panel was the issue of accountability. And obviously accountability is always something we want to make sure how you fulfill

missions and so forth. It raises for me, just looking at the proposals

we are talking about today, who we would be accountable to in this

particular case. I think that is going to also require some serious

thought because that is another area where you have this natural

cleavage between the labor union versus non-labor world, which is

what I would suggest we all try to avoid for the betterment of everybody here. Everybody at the table is going to benefit from passage of H.R. 1824 with the amendments we are talking about today

and we should try to avoid these other issues. So I think in terms

of determining a body to whom to be accountable, that is going to

take some work as well.

Mrs. KELLY. Thanks, Mr. Pence.

40

Mr. Gooding, just one quick question. Is this program that you

run certified by BAT?

Mr. GOODING. The one we are running in Pennsylvania is certified by BAT but we are also intermixing the NRCA modules as

well. We are trying to pick and choose what is best for our locale.

Our roofing practices that are done in Pennsylvania may be completely different in some aspects to what is done in southern California. So we have 31 modules to choose from. We may only as a

contractor in Pennsylvania use 25 of those modules and they may

use a different 25 somewhere else in the United States.

Mrs. KELLY. You are finding a certain flexibility works for you.

Mr. GOODING. Absolutely. We need to have flexibility.

Mrs. KELLY. Mr. Murphy, would your number of workers, do you

think, increase if we were able to give this tax credit?

Mr. MURPHY. I certainly think there would be more incentive for

the businesses to employ additional apprentices. We have unfortunately some businesses within our contractor group, some companies that don’t like to hire apprentices and bring them in because

they feel I am paying for the school time and I am not getting work

all the time so I will let somebody else do the training and I will

get them after they are already through the program. So I think

this would encourage more companies to participate in the program

and hopefully expand the opportunities for the apprentices.

I want to go back just a second on the BAT thing. For instance,

in Missouri there are both union and non-union BAT certified programs. Just so you understand, BAT operates in all 50 States.

There are offices in every State and they are out there and this is

a program that is already in place and it is working and they are

certifying people so we don’t have to create anything to certify.

Mrs. KELLY. Yet Mr. Gooding is finding it better to have a little

flexibility drawn into there. That is probably worth our looking at.

Do you have a shortage right now, Mr. Murphy, of workers in your

business?

Mr. MURPHY. We certainly do. It is limiting our abilities currently to take on additional work. There are jobs in St. Louis that

are having very few bidders and sometimes no bidders simply because everybody is busy. We have—out of our workforce right now

we have 20 workers that are from out of State that have come,

travelers as they are called, that are in St. Louis right now working from all across the country are coming in and taking jobs in

St. Louis simply because their areas are slow at the time.

Mrs. KELLY. I want to ask you a minute about the business of

the tax credit versus tax deduction. And that is what I was digging

in my notes here as I was reading your testimony, I had written

this note last night. I want to know, I know because of my experience in the field within my own family that not all businesses take

this tax deduction and I wonder if you can tell me what you think

is the reason.

Mr. MURPHY. They do not take——

Mrs. KELLY. In your testimony, you say that simply put, all businesses may deduct their costs of training under current tax law. I

am quoting from your testimony. But all businesses don’t do that

and I am wondering if you can tell me why you think they don’t.

41

Mr. MURPHY. I would have no idea why you wouldn’t. For instance, in our case, the wages that we pay the apprentices while

they are in school and the funding that we put into the apprenticeship program on a cents per hour basis, those are all deductible as

part of our labor costs on the jobs. And then beyond that, our safety training programs we do and other extra classes and things that

we send people to, those are all deductible items for us. Frankly,

I can’t imagine why a business wouldn’t unless they are just sloppy

and not taking advantage of what is out there.

Mrs. KELLY. Could I throw that out to the rest of the panel here.

I have my own supposition here but perhaps somebody here would

like to answer that.

Mr. PENCE. Sometimes you don’t take a deduction because you

are not making money against which to deduct it, which is not a

good situation. Section 162 is available to anybody, multi-employer

or non-multi-employer for all training costs. One thing I would say

is that with section 162, the above-the-line deduction for employment costs and training costs does apply across the board. That is

one of the issues I discussed with staff previously. If you choose to

allow a BAT only standard for the tax credit, we think it would be

something in the nature of setting a precedent or dividing up the

benefits whereas above the line on section 162, labor union and industry training programs today can all deduct those costs. By

changing H.R. 1824 to a situation whereby only BAT-certified

qualifies, I think it is a substantial difference from the existing law

it is today.

Mrs. KELLY. Mr. Pence, have you any idea what the average

amount of tax deduction is that businesses currently take on these

training programs?

Mr. PENCE. My understanding is it is full deductibility, all costs

for employment or training costs. Other tax experts in the room or

from JCT might be able to answer that question but in terms of

the actual dollar amounts how much companies normally take, I

would suggest they take the maximum possible which would be the

full employment cost.

Ms. VELA ́ZQUEZ. Chairwoman, I would like to ask a question.

Mrs. KELLY. Yes.

Ms. VELA ́

ZQUEZ. Mr. Murphy, I would like you to explain or Mr.

Pence, when you say that businesses deduct employees’ salaries

and training costs, why then this legislation is necessary to provide

the type of incentives to train unskilled workers?

Mr. MURPHY. I think what we are trying to do is trying to expand the opportunities and as I said earlier, trying to encourage

people to take in additional workers. Hearing some of the earlier

testimony about people trying to hire for their companies, I got the

impression they were trying to hire people that were already

trained by somebody else. What we are trying to do is we are trying to encourage—rather than advertising for a skilled position, we

are trying to—in our case we take kids from high school and college and beyond and bring them up and raise them up to the level

that we are after and so we are trying to encourage companies to

do more of that training.

Ms. VELA ́ZQUEZ. Mr. Pence.

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Mr. PENCE. As a matter of the Tax Code, tax credits are always

worth a great deal more than tax deductions above the line. The

tax deduction above the line is always subject to other provisions

that may—adjustments that may reduce the value of your tax deductions. The below the line tax credit is a dollar for dollar reduction in your taxes. So it has a much greater financial impact on the

company to take the tax credit as opposed to a tax deduction.

Ms. VELA ́ZQUEZ. Thank you.

Mrs. KELLY. Thank you. I have just got a couple more questions

here. Again, I have been—I understand from Mr. Murphy that you

think that we need to explicitly state that multi-employer programs

are going to be covered in this bill. I believe I read that in your

testimony. It is my understanding that House legislative counsel

clarified that multi-employer programs for training apprentices are

going to be eligible to receive the SWEA tax credit and so I am not

sure why we need to explicitly state this. Can you answer that?

Mr. MURPHY. I think one of the issues that we had with that was

that the—we have some employer—some of our larger employers

and I talk about the quantity of these companies, out of 175,000

companies that are in the trades that I represent, there are only

330 or so that are above this 250-employee level. In other words,

we have a lot of very small businesses but the larger companies as

well, the few that there are, we would like to see them included.

They contribute to this program as much as we do on a cents per

hour basis and we would like to be sure that they can also receive

the credit and since they are funding it just like any of the other

members.

Mrs. KELLY. Thank you.

Mr. Holdsworth, I told you I had a question for you. As a nonprofit educational organization, you can’t lobby Congress for this

bill but you are here today to give us some educational information

and I am glad of it because I think we really need it. Do you support the concept of this legislation and do you think it can help alleviate the current shortage of the highly skilled trades?

Mr. HOLDSWORTH. Yes, I personally do. I liked what I saw here

very much. I am not as I said earlier conversant in the Tax Code

as you have got some other people up here that are much better

at that than I. But I do see the need and I do look for solutions,

and I personally see something here that is needed. We have people who do need training and we don’t get a highly skilled workforce by simply putting them on the job or running them through

a simple high school vocational program. We at the vocational level

view ourselves to be entry level preapprenticeship training. Apprenticeships are where the rubber really meets the road in this

country in terms of high skilled workers. So if this legislation is

something that is going to help develop that kind of activity, I am

all for it.

Mrs. KELLY. Thank you very much. One final question for you,

Mr. Pence. Is the shortage of highly skilled workers as acute as the

shortage of lesser skilled workers and how do the costs of the training of the highly skilled workers compare with those of the training

of lesser skilled workers?

Mr. PENCE. It is an interesting dynamic out there because we see

lots of news reports about skilled and unskilled workers on the

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news these days. One of the issues we try to impart in our testimony is that the issue of skilled workforce training and the shortfalls that develop in skilled workforce training is really a more intractable issue, and from an economic standpoint we think a more

dangerous issue, that needs attention on a rapid basis. The reason

is these are not programs that can be solved by having a weekend

job fair and putting somebody on board. These are training programs that are in all cases, and under this legislation before us

today, last for a period of years, at least 2 years and up to—if the

bill is changed, up to 5 years. So it is going to take a long lead time

to get people into the system and get them trained. You are going

to have to pull off skilled workers off their profitable jobs and put

them on to overseeing in many cases the new trainees coming into

the program. So it can take 2, 3, 4 years before you really see the

fruits of today’s recruitment, skilled workers that you can send out

on their own to work on the most profitable jobs in the economy

today.

If I could take care of one matter here before we leave this issue.

We talked earlier at the very first part of the questions about the

hours to change from 2,000 to 1,500. When you work on legislation,

you find out things you didn’t know. Our intent was to come up

with a program that would benefit full-time training programs. We

operated under the assumption that that meant 2,000 hours per

year, a number which seems to have come into the vernacular of

work life these days. After doing research with IRS and other elements of the government, we found out there is no requirement in

law for 2,000 hours as defining full-time employment. So we had

a bit of a conundrum here. We might have had the 2,000 hours in

the bill with no real rationale or reason for it to be there.

We also talked about the issue of some of the industries, including the masonry industry, being conducted outside and you are

subject of course to weather delays, things beyond control. So we

were searching for a mechanism or a criterion that would keep us

in the range of serious full-time employment designed to create

skilled workers that are going to be in the career for many, many

years. Serious employment. And we came up with the idea that

1,500 hours might be the appropriate threshold meeting with the

weather delay problems that some of us face but still being—somebody who is working for 1,500 hours is certainly not a part-time

employee and is probably working toward a career in that particular trade. So that is the genesis of coming up with 1,500 hours.

We support that at NCMA and would like to see something along

those lines put in the bill to take care of all the problems we just

addressed.

Mrs. KELLY. I think that what you have said is very interesting

and that is really what we were talking about here with Mr. Murphy and Mr. Gooding. I think that it would be interesting to hear

from Mr. Murphy and Mr. Gooding in light of what you just said.

Would you like to respond to that, Mr. Gooding?

Mr. GOODING. I agree completely that the 1,500 hours would

work out perfectly in our trade, especially with some of the contractors in the areas we talked about previously. I mean, our problem

is really just getting—we can’t find skilled workers period in our

trade so we have to start with unskilled and train them, but my

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problem is that I am not looking for an awful lot. I am looking for

somebody that has a desire to work, that are not on drugs, they

have a pulse and they are willing to climb a ladder. That is all I

am asking. I can’t get them but if I had this tax credit, it is going

to give me the impetus as well as other contractors to get out there

and accomplish this. We are not asking for a lot in our particular

industry but this act would be great to help get those contractors

out there and get these people off the streets that are underemployed and get them in our workforce.

Mrs. KELLY. Mr. Murphy, do you want to address that?

Mr. MURPHY. Yes, I think my only concern with the 2,000 hour

limitation is I agree what we are trying to do here is full-time programs and if I look at situations where we work 40 hours a week

in our trade, we do not have makeup days for Saturday if it rains

and many of the outside trades do. It would be very easy for someone to miss a week’s time throughout the year somewhere and if

now we fell in and it became that they worked 1,960 hours, you

know, I would hate to lose the credit over having missed a week’s

time over a period of a year. In construction, it is very frequent

that you will have some lost time due to conditions beyond your

control, so I do want to be certain that we have—that we are covered for minor missed time throughout the year and we have some

flexibility and we are not oh, gee, you only have 1,875 hours this

year, you don’t get the credit and that would be a shame.

Ms. VELA ́

ZQUEZ. Can I ask another question. What is the magic

in the number of 1,500? Where do you get at that number? Why

not 1,700 or 1,600, 1,650. Why 1,500?

Mr. PENCE. I think among the coalition of staff who have been

working on the issue, there was a little bit of a ballpark guess involved in this due to talking with the members of the associations

and understanding that there is a bit of a track record here. The

idea here is not to create a tax credit that somebody is going to lose

inadvertently. The feeling is that 1,500 hours is going to at least

meet the threshold of serious employment but is not going to force

you to lose the credit because of unforeseen consequences.

Mrs. KELLY. I would like to reclaim my time for a minute. Are

you finished?

Ms. VELA ́ZQUEZ. With your knowledge of the Department of

Labor standards, would you think that that would conform with

what they have in place?

Mr. MURPHY. The 1,500 hour would conform?

Ms. VELA ́ZQUEZ. Yes.

Mr. MURPHY. Frankly, I don’t know. I would have to get back to

you on that.

[The information may be found in appendix:]

Chairman TALENT [presiding]. The other gentlelady from New

York.

Mrs. KELLY. I am interested in this hour situation from another

standpoint and that is if you are taking people who are having to

learn a skill and become skilled, what amount of hours—has anybody done any studies that you know of, Mr. Pence, that indicate

the number of hours after which somebody is going to look at that

training program and say, hey, I just cannot do it, that is too long?

45

There is a discouragement factor that can be built into that training I think and we have to be cognizant of that as well.

Mr. PENCE. Are you talking about the psychological or marketing

aspects to the trainees?

Mrs. KELLY. I am thinking about Mr. Holdsworth here who is

talking about going into schools and training and reaching people

and we were talking earlier about reaching out to people in schools

saying look, you can do this, you don’t have to go to college to do

it. This is a good trade. You are going to make a lot of money in

this, really doing the kinds of PR that we need to try to bring people into the trades, but if they then are told, if you join this trade

you are going to have to go out and put in 5 years of 2,000 hours

every single year, are you talking about a lot of hours? And people

may look at their lives—I am thinking about my kids. I am thinking that they may look at their lives and say, I am just not going

to put 10,000, 20,000 hours into this job. I want the job. It is a good

job but I am not sure that that amount of training—that I want

to take that much schooling.

I don’t know, Mr. Holdworth, you may want to jump in here too.

Mr. HOLDSWORTH. I do have this observation which is probably

not a very good one to make at this moment. There is something

about seat time and competency. Seat time doesn’t assure competency. There are some people who are going to learn something

in a hundred hours and it is going to take somebody else 300

hours. So it seems to me that the standard that we probably should

be looking at—instead of the traditional education model of somebody sitting in a seat for a semester—and rather ask what are the

standards that we are working toward and has that individual

achieved that competency? It becomes a little more difficult.

It is easier within your legislation to say X number of hours covers everybody. You don’t have to get into some of that standard

stuff. But I don’t like to leave it on that seat time because you are

right, there are going to be students who are going to say, man,

that is a long time. On the other hand, I know that there are apprenticeships, National Tooling & Machining Association for example has their apprenticeships, the students are going to school fulltime during the evening and they are working full-time during the

day. So their college is being paid for and they are getting their apprenticeships. I certainly hope this legislation would cover that

kind of an arrangement.

Mrs. KELLY. I just watched my husband study as a journeymen

carpenter with that hammer in his hand and it was a long time.

Mr. MURPHY. Addressing your issue over the 5–year period now,

in our program, when an apprentice comes in they start out at a

base wage. Then every thousand hours as they progress through

the program they get increases until they reach their full journeyman status after 10,000 hours of training. The first 21⁄2 years they

spend the day a week in school and it is not just in a chair. We

have labs where there have been pipe and pull wire and makeup

control modules and do fiber-optic work and telecommunications

work and so forth. So there is a lots of hands on and book learning.

And then we have grades. This is like regular school. You have

tests and grades and you have got to pass or you get out of the program. It is a regular schooling program but you have one day a

46

week for 21⁄2 years in school and then the rest of the time you are

on-the-job training.

Mrs. KELLY. But you are saying you also get a carrot at the end

of that stick so to speak. You get more money as you get up in the

program.

Mr. MURPHY. Every thousand hours you are going to get an increase in your wage.

Mrs. KELLY. Thank you.

Chairman TALENT. I thank the gentlelady and I want to just say

I regret not being able to be here for most of this panel. I had another hearing that was getting on. I do understand that you covered most of the issues and I am not going to make everybody rehash them. We will leave the record open for 10 days if people have

additional questions and we will continue working on this bill and

those who want to go can.

One thing I want to get into and maybe refocus this hearing

right at the end, let me ask you all, what do you envision happening if we don’t do something effective in the government to help

you with this? What solutions are you going to be able to develop

or are you going to be able to develop? As this problem pinches

more and more, what are we going to see? Businesses going out of

business? Businesses not expanding? Let me just—sitting here as

a person who is not always in love with government solutions, is

the market going to come up with something if we just sit tight and

do nothing? Are you all going to be able to figure out some way

around this? Tell me what is going to happen where you see the

current trends taking us unless something changes it, and whether

you think something might change it outside of some government

action and then I will let you all go run your businesses.

Mr. MURPHY. What we are seeing in St. Louis happening is

projects are taking longer to come on-line. Buildings will get to a

point and we will need iron workers, sprinkler fitters, pipefitters,

whomever, and they simply aren’t available. So we are stretching

out the time on the jobs, whether it takes 2 years to finish a job

instead of 18 months. There is financial impact there on the owner

and on the revenue generation from that building.

So I think that that is one of the things that you will see. I

mean, things are just going to take longer and what we have seen

over the past 10 years is people want buildings faster and faster

and faster, and if we start going backwards on that, they are not

going to be very happy with that and perhaps do less building and

find other ways of making it happen.

Mr. PENCE. I would have to say in most cases you are going to

see it is going to be Economics 101, things we learned about in the

first year of economics in college. You are going to see inflationary

factors as we have to increase wages to attract more people and

keep people in the skilled occupations. We are going to see—somebody mentioned earlier this morning and I think it is absolutely

correct—employee burnout because you are going to see a lot more

people, the ones who are working, are going to be working more

overtime hours. That is good for the paycheck in the near term. In

the long term I am not sure it is best for that worker. We will see

construction delays and cost increases.

47

One factor I think we have to keep in mind here in Washington,

D.C., is that one of the biggest customers if not the biggest customer out there is the taxpayer. At the local, State, and Federal

levels, government construction is one of the major costs for the

taxpayers. So anything that increases construction delays and the

appurtenant cost increases in government construction as well as

in the private sector is a major concern to all policymakers at all

levels of government.

Chairman TALENT. Mr. Holdsworth, you want to comment?

Mr. HOLDSWORTH. Of course I come at it from the education side.

I am going to add here that you are going to see issues in terms

of quality of what is produced. We have heard that referenced in

an earlier panel this morning and I concur with that. I have heard

that from industry. They say: ‘‘Our problem is our products are not

being appropriately applied’’. I am very concerned when I see the

recruitment side of things in this country in vocational education.

We are seeing students who are not being encouraged to go into vocational education. You talked about government a moment ago

and I realize education is not really within the purview of this

Committee, but we have education policy in this country and practice that has tended to discourage young people from going into

these occupations. As a matter of fact, there are occasions when if

we stop and look at it, education is encouraged to keep students

within their own high schools, for example, rather than sending

them off to the area vocational center because they keep the tax

dollars right there at that school.

So what we have seen—and I have heard this a long time from

industry—is ‘‘My goodness, the people that they are sending over

for vocational training are the ones that the schools basically will

pay to send there. They call them ‘road scholars’ ’’. They are the

ones administrators will pay to get rid of, put on the road and send

someplace else. When we are drawing from a shrinking force of

qualified people, the quality is going to fall apart. We also are

going to have a vision of what a skilled worker and it is not very

good.

I will take also this observation. I am working with students all

of the time. They look at a high-tech computer-driven economy,

people making money on IPOs and so on. Let’s face it, a lot of the

students who we want to go into vocational education are the sharp

ones and they have got lots of options today they didn’t once have.

They say; ‘‘ I can go on over here and make a bundle instead of

doing that’’. So we have got to find some way to make it attractive

to be over there and that is becoming a very, very difficult problem,

I think, for many of these industries.

Chairman TALENT. You don’t see, I take it, from your comments

anything on the horizon out there where you can say to yourself,

oh, boy, we have been worried for these years but this is coming

now and it is going to fix it?

Mr. HOLDSWORTH. I am not seeing it. I am not seeing it right

now.

Chairman TALENT. This problem is not something that just

sprung up last month or 6 months ago. Everybody has seen this

coming for sometime. Mr. Pence, you mentioned about costs of

48

wages going up and it is still not alleviating the problem. Is that

a fair statement to this point?

Mr. PENCE. Yes , a fair statement. We are here today because

whatever has been done in the past is not working and we need

to do more.

Chairman TALENT. Do you have a comment, Mr. Gooding?

Mr. GOODING. The only comment I have we are seeing employee

burnout. In some cases we have men working literally two shifts

to satisfy customers. We are finding out customers have asked us

to do what we can. In some cases they are even changing their

budgets because the fact that we can’t get there in time. We are

driving wages, just skyrocketing wages. We have roofers that are

making 55, 65, $70,000 a year but where does it stop? I have

moved up my base starting rate 2.25 cents an hour in the last 8

months and I have only recruited two employees. I have $2,000

signing bonuses. I am doing everything I can but we are still not

getting those people that we need.

Mr. HOLDSWORTH. I do have another comment. It sounds awfully

doom and gloom here. Let me bring something else in for just a

minute. An interesting phenomenon is happening out there. In

community colleges, the largest new enrollment area are called ‘‘reverse transfers’’. They are 4-year graduates. They are going back

to community college to learn job skills. I think some of the stereotypes are breaking down. I think there does need to be more activity within the education community and business community to get

to parents and to those people who are helping to make the decisions and say there are other options. These are challenging careers. They are well paid careers and they are careers that lead

somewhere. I’ve talked to parents who see their children going into

masonry and they believe their children will be hod carriers for the

rest of their lives. That student today may be a hod carrier, tomorrow may be a subcontractor and a few years from now a contractor,

and that is a leader in the community. People aren’t seeing that

right now.

Mr. PENCE. If I could add one last comment. This bill is seen in

the industries as the number one answer that may help turn the

situation around. I can’t overstate there is real excitement growing

about this bill as the information spreads outside the Beltway and

more and more business leaders learn about it. In the survey that

we have done at NCMA, they are telling us this bill alone will spur

them to hire three to four more masons per company. Now, that

is an outstanding response. People are coming to us at confabs and

on the street and saying ‘‘this is really an excellent bill’’. ‘‘How can

we get on board?’’. People I have never heard from before from

other industries are calling me asking what is this wonderful legislation about, how do we get on board and how do we help. I think

it is a good message to take back to the constituency in the districts. I think they are looking for an answer like this that really

‘‘bull’s eyes’’ the issue that they are facing every day.

Chairman TALENT. We really need some method here of being

able to count those perhaps somewhat less direct or, I don’t want

to say intangible, less direct benefits of a bill like that that will result among other things bringing money into the Treasury at the

same time as we are looking at directly how much this is going to,

49

quote-unquote, cost the government. This is a struggle, of course,

we are engaged in now how much this bill is going to cost and yet

everything you have said tells me that if we don’t do something

like this or, at a minimum, if something like this speeds up trends

that would otherwise occur in the marketplace, Mr. Holdsworth,

because perhaps the passage of this bill generates publicity so that

parents and counselors out there say, wait a minute, we need to

look at this all over again. If it speeds the process up by a couple

of years, it has got to generate more in terms of more projects you

can do, Mr. Murphy, more people employed at higher wages, paying more taxes, less cost to the taxpayer because of delay in our

construction projects. My guess is and it is just a gut guess, this

bill pays for itself probably. And yet we are locked in this struggle

internally here where we are not allowed really to take that into

account in terms of scoring this bill. It is very unfortunate. The

people who are most familiar with the situation believe so strongly

it is going to have these very beneficial aspects to it.

Mr. HOLDSWORTH. I just have this observation as well. The average age of a college—community college student is 28 or older.

That student graduated from high school when he or she was 18.

There have been 10 years that that student has been underemployed. I can do this only anecdotally, but I can’t tell you how

often I have talked with students who have said: ‘‘I have been

bouncing around, do you want fries with that? And now at the age

of 28 I have got a family, I have got responsibilities, I have got

these things’’. If this bill is able to get that student to work at the

age of 20 or 21 instead of going back to school at 28, you have performed a tremendous service in terms of tax revenue because that

person is now producing.

Chairman TALENT. I agree. I think it is real important to understand the bills we pass here occur of course in the broader context

of what is going on out there in the country. I do think, not to be

all gloom and doom, that there is a reaction setting in. You mentioned the community colleges and certainly in my area and in my

State, they are stepping up and responding. State authorities are

beginning to understand this. You are seeing the proprietary

schools going into these trades and expanding them and working

out arrangements with local trade associations to get machines on

loans so they can train people. One of the ones in my area worked

out a cooperative arrangement to get welding equipment so they

can teach people that. But if we can help by putting this bill into

that overall mosaic, if you will, and help complete it faster, it will

have a tremendously positive impact; and, on the other hand, if the

downside is true and this response is not coming quickly and we

really begin seeing the impact in construction or manufacturing of

this shortage of these skilled employees and the potential for the

economy is very negative. So this is at a minimum a very wise

hedge against possible recessionary influences against this kind of

situation.

Mr. Gooding, I didn’t intend this to last so long but what the

heck, I am the chairman.

Mr. GOODING. Mr. Chairman, the only thing I would like to add

to this is the welfare-to-work program as we see it in our particular

industry hasn’t produced the people that we need and I think that

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your bill will certainly change that dramatically and I just hope

and pray that it is accomplished in a very short order because we

offer good benefits, but unfortunately we have just run out of ideas

of how to get those employees to at least knock on the door.

Chairman TALENT. Mr. Pence, and then I will close this.

Mr. PENCE. I think your earlier comment about the dynamic

scoring barrier, if we get past that somehow, it might be possible

this bill would come up as a plus when all things are considered.

We, just talking about it among staff and among the coalition, the

numbers we have been seeing are clustering in an area that are

not very expensive. We don’t have the numbers back from JCT of

course yet, but if they are at all close of what we have been talking

about in our caucuses, this bill is not going to be that expensive

and with dynamic scoring we would be in the plus range and home

free.

Chairman TALENT. It would be great. Let’s close this by bringing

home what Ms. Velazquez and I were talking before about what

this Committee is about and why we really try to make it about

people and real opportunities for real people, both small business

people and their employees. If this bill has the impact of enabling

small business people to grow and expand and have more opportunities, and of enabling their employees, individuals, somebody

hired in their late 20s wondering how they are going to be able to

put food on the table for their family, and now the local machine

shop or electrical shop is able to say to them we will send you to

the community college, we will give you the on-the-job training,

your whole life turns around now.

These are real people that we can help with this and I agree with

you, Mr. Pence, what will end up being no cost to the government,

and it is these kinds of things that we try and look for on the Committee. We do try and confront problems in legislation, concerns

people have on a straightforward basis. Usually we can work them

out and I am grateful to you all for being here.

Unless the gentlelady has any further comments or questions, I

will adjourn the hearing.

[Whereupon, at 12:50 p.m., the Committee was adjourned.]

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