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J313 CARTER ADMINISTRATION EMPLOYMENT AND

.11 TRAINING PROGRAMS FOR FISCAL YEAR 1978

DOCUMENTED 

GOVERNMEN'IuL 7 1977

Storage !ELL Li Y

3 STAlt UN,I Y

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HEARING

BEFORE THE

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COMMITTEE ON THE BUDGET

0 HOUSE OF REPRESENTATIVES

arR NINETY-FIFTH CONGRESS

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FIRST SESSION

87-934..

MARCH 17, 1977

Printed for the use of the Committee on the Budget

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1977 F- 6-. 9 3
THE COMMITTEE ON THE BUDGET

ROBERT N. GIAIMO, Connecticut, Chairman

JIM WRIGHT, Texas

'THOMAS L. ASHLEY, Ohio

ROBERT L. LEGGETT, California

PARREN I. MITCHELL, Maryland

•OMAR BURLESON, Texas

LOUIS STOKES, Ohio

ELIZABETH HOLTZMAN, New York

BUTLER DERRICK, South Carolina

OTIS G. PIKE, New York

DONALD FRASER, Minnesota

DAVID R. OBEY, Wisconsin

WILLIAM LEHMAN, Florida

PAUL SIMON, Illinois

JOSEPH L. FISHER, Virginia

NORMAN Y. MINETA, California

JIM MATTOX, Texas

DELBERT L. LATTA, Ohio

JAMES T. BROYHILL, North Carolina

BARBER B. CONABLE, JR., New York

MARJORIE S. HOLT, Maryland

JOHN H. ROUSSELOT, California

JOHN J. DUNCAN, Tennessee

CLAIR W. BURGENER, California

RALPH S. REGULA, Ohio

GEORGE GROSS, Executive Director

BRUCE MEREDITH, Assistant Director, Budget Priorities

NANCY TEETERS, Assistant Director, Economic Analysis

WENDELL BELEW, Chief Counsel

WILLIAM LILLEY III, Minority Staff Director

TASK FORCE ON HUMAN RESOURCES

PARREN J. MITCHELL, Maryland, Chairman

LOUIS STOKES, Ohio CLAIR W. BURGENER, California

OTIS G. PIKE, Ncw York

DAVID R. OBEY, Wisconsin

PAUL SIMON, Illinois

NATHANIEL THOMAS, Administrator

ALAIR TOWNSEND, Senior Analyst

(II)
CONTENTS

Statement of—

Brown, Robert J., Under Secretary of Labor, Department of Labor;

accompanied by Arnold H. Packer, Assistant Secretary for Policy,

Evaluation, and Research; Alfred M. Zuck, Comptroller, and William B. Hewitt, Administrator for Policy, Evaluation, and Research

in the Employment and Training Administration 

Additional information submitted for the record by—

Brown, Robert J., table submitted for the record entitled, "U.S.

Department of Labor Fiscal Year 1977-78 Budget Estimates By

Function" 

Page

2

7

HIGHLIGHTS

CETA Reauthorization 4

Comprehensive Employment and Training Act—Public Service Employment 4

Department of Labor Programs—Fiscal Year 1978 3

Economic Outlook 3

Employment and Training Efforts 6

Federal Supplemental Benefits 5

Longer Term Outlook 6

UI Financing Reform 5

Youth Programs 4

(m)

CARTER ADMINISTRATION EMPLOYMENT AND

TRAINING PROGRAMS FOR FISCAL YEAR 1978

THURSDAY, MARCH 17, 1977

HOUSE OF REPRESENTATIVES,

TASK FORCE ON HUMAN RESOURCES,

COMMITTEE ON THE BUDGET,

Washington, D.0 .

The task force met, pursuant to notice, at 10 a.m., in room 210, Cannon House Office Building, Hon. Parren J. Mitchell, chairman of the

task force, presiding.

Present: Representatives Mitchell, Latta, Holt, Rousselot, Burgener,

and Regula.

Mr. MITCHELL. The task force will please come to order.

First of all, by way of a prefatory remark, the Congress, in its

infinite wisdom, has passed a budget process and, as a result of that

budget process, each committee, subcommittee, and task force works

under horrendous time constraints.

As you well know, we have timetables to meet. That is why some of

the members of the task force are not here. I assure you that they are

keenly interested and I assure you that the transcript of the hearing

this morning will be shared with them. I know the members of this

task force read each piece of material that comes from the task force

painstakingly so your words of wisdom will be made available to them.

I am delighted to welcome you to the Human Resources Task Force

hearing on the Department of Labor programs in the fiscal year 1978

budget. The House Budget Committee will begin markup of the first

budget resolution for fiscal year 1978 on Thursday, March 24. We

have with us today Robert J. Brown, Under Secretary of Labor, who

will provide testimony on the administration's new initiatives and proposed funding levels for existing programs.

In the midst of structural deficiencies in the economy that render

more than 7 million persons delegated to the wraths of the unemployed, it is imperative that the administration and the Congress

work in tandem to restore the priority of employment. We, therefore,

are convening these budget hearings in a spirit of cooperation to ascertain what focuses and priorities the administration will place on unemployment and what are the mechanisms for implementation.

In revealing the administration's plan, we are requesting that you

detail the role of unemployment insurance, public service employment,

and manpower training programs. We also plan to look into the teenage unemployment which is both structural and cyclical.

(1)
2

In an effort to prepare for the first budget resolution for fiscal

year 1978, the task force must obtain, from you, a working knowledge

of the President's fiscal year 1978 budget proposal. We are anxious

to hear from you, Mr. Brown.

I would turn to the ranking minority member, Mr. Burgener, to ask

if he has an opening statement that he would like to make at this

time.

Mr. B URGENER. Thank you, Mr. Chairman.

I have no opening statement. I see my colleague, Mr. Duncan, has

joined us. He is senior to me.

We are pleased to welcome you to these hearings. I am sure they

will be very productive and useful in attacking this problem.

Thank you, Mr. Chairman.

Mr. MITCHELL. Thank you.

Again, by way of explanation, since we are moving into so many

areas we have defined seniority on the basis of time of arrival.

Mr. Brown, each of us has a copy of your testimony which, of course,

will be submitted for the record. If you desire to speak simply from

your prepared testimony, that will be fine. If you desire to read certain portions of it, that will be fine. We will leave it up to your

discretion.

We welcome you and please proceed.

STATEMENT OF ROBERT j. BROWN, UNDER SECRETARY OF LABOR,

DEPARTMENT OF LABOR; ACCOMPANIED BY ARNOLD H. PACKER,

ASSISTANT SECRETARY FOR POLICY, EVALUATION, AND RESEARCH; ALFRED M. ZUCK, COMPTROLLER; AND WILLIAM B.

HEWITT, ADMINISTRATOR FOR POLICY, EVALUATION, AND RESEARCH IN THE EMPLOYMENT AND TRAINING ADMINISTRATION

Mr. BROWN. Thank you, Mr. Chairman.

I would like to read the statement and I will be happy to respond

to questions at the finish of the statement.

I welcome this opportunity to appear before this committee to discuss the administration's budget for fiscal year 1978, in particular

its relation to Department of Labor programs. Of particular concern

to me is the longer term prospect for reducing the serious unemployment problem that today confronts our Nation, and your views on how

we may best deal with this and other problems concerning the Department's programs.

Accompanying me today are Arnold H. Packer, Assistant Secretary

for Policy, Evaluation, and Research; Alfred M. Zuck, Comptroller

for the Department of Labor; and William B. Hewitt, Administrator

for Policy, Evaluation, and Research in the Employment and Training

Administration.

As you know, President Carter's highest priority is to put our people back to work. The administration's goals are to reduce unemployment and inflation steadily over the next 4 years. The near-term employment goals, as first articulated by President Carter late last November, are to reduce the unemployment rate to under 7 percent by the

end of this year and move toward 6 percent by the end of 1978. This

will require real GNP growth of around 6 percent both this year and

next.
3

ECONOMIC OUTLOOK

Realization of these near-term goals will be difficult. After strong

expansion in the first half of 1976, the rate of economic growth fell

during the second half of the year. The economy grew at only a 2.1

percent annual rate in real terms during the fourth quarter of 1976.

December figures on retail sales, auto production, and new orders

indicated that the "pause" in the recovery was over. However, extreme

weather conditions and the resulting natural gas shortage brought new

problems which may have extended the "pause." Industrial production

fell a full 1 percent in January, retail sales declined 3 percent and the

unemployment rate rose once again. The most recent evidence suggests

that the bad weather was not as disruptive as initially feared and that

the economy is rebounding strongly. The declines in industrial production and retail sales were for the most part reversed in February. The

effects of the cold weather on employment and prices have been surprisingly small.

Although employment grew by 2.7 million in 1976, the rapid laborforce growth of 2.1 million lessened the improvement in unemployment. If the labor force grows as much in 1977, employment growth

must be in the neighborhood of 3 million during 1977 and by the fourth

quarter of 1977, real GNP must increase about $77 billion over the

fourth quarter 1976 level if the administration's 1977 economic goal

is to be achieved.

The combined effects of the recent severe weather, the continuing

drought, and the natural gas shortage pose some threats to the attainment of these goals. The natural gas shortage may continue into the

summer. Any net loss of workers' income, due to layoffs caused by the

shortage, and increased consumer outlays for fuel may well mean a.

reduction in the consumption of other goods and services and act as a

drag on the recovery. We will have to monitor the data closely over the

next few months to see if our economic goals can be met. For now, we

do not believe we are off track.

DEPARTMENT OF LABOR PROGRAMS-FISCAL YEAR 1978

The purposes of the administration's fiscal stimulus package for 1977

and 1978 are to provide the impetus required to achieve an immediate

reduction in the unacceptably high rate of unemployment, and to provide special assistance to those persons and communities hardest hit

by the recession.

In fiscal year 1978 the DoL portion of the fiscal stimulus package

contains budget authority of $6.9 billion in Function 500—Education,

Training, Employment, and Social Services—and 550—Health, Budget authority for other DoL programs in these functions will amount

to $4.4 billion. Thus, in 1978, DI programs account for 42 percent of

Function 500 budget authority based on the President's budget request.

The recession also affects DoL programs in Function 600—Income

Security—especially unemployment compensation. DoL budget authority in that function amounts to $15.4 billion.

It would be useful, I believe, to discuss some of our program

proposals in these functions.
4

,COMPREHENSIVE EMPLOYMENT AND TRAINING ACT-PUBLIC SERVICE

EMPLOYMENT

-It is unlikely, in the near term, that job growth in the private sector

will be sufficient both to keep pace with the expected growth in the

labor force and reduce the heavy burden of unemployment. Thus, we

have proposed a sizable program for jobs in the public sector. By the

second quarter of fiscal year 1978 the administration's proposal envisions a public service employment—PSE—strength of 725,000.

The President's budget for 1978 proposed $5.9 billion in budget authority for public service employment under titles II and VI of the

.act. However, the House Appropriations Committee and the Senate

Labor-HEW Appropriations Subcommittee have already included all

but $1.2 billion of that budget authority in the 1977 economic stimulus

supplemental which passed the House on Tuesday and is pending in

the Senate. The effect of the Appropriations Committee's action has

been to fund the public service jobs programs through the end of fiscal

year 1978. However, that action failed to take into account the project

requirement under title VI. Unless the remaining $1.2 billion requested by the President is provided for 1978, we will be unable to

finance the 12-month projects in the law, when the 12-month projects

we fund this year are completed.

CETA REAUTHORIZATION

The Department's proposal for CETA reauthorization is to continue

the existing framework of decategorization of employment and training programs instituted with passage of the act in 1973. We recently

sent to the Congress a proposal for a simple 1-year extension of CETA

titles I—V, as well as the countercyclical PSE title VI, through fiscal

year 1978. This will allow the administration time to study the programs authorized under CETA and to determine what changes, if any,

should be made in this basic structure.

YOUTH PROGRAMS

In addition, in accordance with the recent Presidential message to

Congress, the fiscal stimulus package contains programs directed to

improviner the employment situation among our Nation's youth.

During fiscal year 1976 some 2 million young people were employed

in CETA programs, most of them participating in the summer youth

employment program. The fiscal Etimulus p::oposals will expand these

ongoing efforts.

First, we propose an increase of $342 million in the job corps program—title IV—during this year and next, which will roughly double

the size of the program by the end of fiscal year 1978.

Second, we propose three new youth initiatives, and will submit

legislation shortly to combine these initiatives in a separate, new youth

title in CETA. These initiatives are as follows:

First, a National Youth Conservation Corps, similar to the CCC of

the 1930's, under which young Americans-16 to 24 years of age—
5

would be employed at youth conservations centers in national forests

and national parks under programs administered by the Department

of Labor through agreements with the Departments of Agriculture

and Interior. We plan to spend $350 million over the next 18 months

and enroll 35,000 youths in this program.

Second, youth community conservation and improvement projects,

developed by State and local governments to employ youths age 16 to

19 years in well-planned, well-supervised projects for local benefit in

rural as well as urban locations. We plan to spend a total of $250

million over the next 18 months for 30,000 jobs.

Third, comprehensive youth employment and training programs, in

which community-based organizations and local agencies will provide

a full range of employment services for disadvantaged youth age 16

to 21. We plan to spend $900 million to provide over the next 18

months, 138,000 such jobs. One-half of the funds will be allocated by

formula to prime sponsors, and the remaining one-half will be targeted by the Secretary of Labor to areas with high needs and to encourage innovative and experimental youth projects.

These programs will provide many of our young people with the

skills and the opportunities to begin meaningful careers. With these

efforts, we can address the immediate youth unemployment problem

while continuing to explore options for the long term./

FEDERAL SUPPLEMENTAL BENEFITS

The House Ways and Means Committee, with administration support, has recently voted a 1-year extension of Federal supplemental

benefits to March 31, 1978. This program, made necessary by the extraordinarly deep recession experienced since late 1974, will continue

to provide 13 additional weeks of benefits to workers, in high unemployment States, exhausting their entitlement under both the regular

unemployment compensation and extended benefits programs. The administration's proposed economic stimulus package will begin having

its effect over the course of the next year, and we anticipate no need

for extending Federal supplemental benefits beyond March 1978. We

have proposed that the January to March 1978 period be the time of

phase down for this program.

Of course, even when the economy has improved, long-term unemployment for structural reasons will continue to be a problem for some

individuals. However, there are more appropriate remedies to deal

with this problem than providing long-term unemployment insurance

benefits.

TJI FINANCING REFORM

The recent recession has put an unusual strain on the UI trust fund

with 22 States finding it necessary to borrow about $3.8 billion. These

moneys are borrowed by States from FUTA funds which have been

supplemented by general revenue to meet these needs. The Department

of Labor is heading a task force to examine alternative approaches

to deal with this problem.

87-934----77 2
6

LONGER TERM OUTLOOK

We must keep in mind that the problems facing the economy are not

merely cyclical in nature. Significant structural problems also exist,

although they have been overshadowed by the severity of the 1974

cyclical downturn.

As the economy continues on its recovery path during the remainder

of the decade, we will necessarily shift the emphasis of our efforts from

cyclical to structural solutions with greater stress on training programs

for the disadvantaged.

As indicated in the transmittal of the CETA extension bill, it is the

President's intention that future levels of funding of the countercyclical PSE program be related to the pace of the recovery. The administration is committed to a continuation of the countercyclical PSE

program in fiscal year 1979. Any future legislation that carries the

program beyond fiscal year 1978, however, must contain mechanisms

that adjust the level of funding to the level of employment as the economy recovers. We have not reached a conclusion as to the preferred

method and will be working with Congress in developing one by

May 15 and hopefully before April 15.

EMPLOYMENT AND TRAINING EFFORTS

Most of the training activities conducted under CETA, including

OJT, classroom training, work experience, and a small amount of

PSE, are contained in title I. Recently, the amount of OJT and classroom training has declined considerably relative to the total effort, as

the focus has shifted toward shorter run concerns. The workers typically served by the training programs are the more disadvantaged with

fewer skills and less education. The relative number of the disadvantaged served by CETA has also been down, probably because of

the economic situation which added so many nondisadvantaged to the

unemployed population. We expect that, as the economy recovers, the

volume of training for the disadvantaged, as a proportion of total

c ETA funds, will once again rise.

This listing of Labor Department programs necessarily gives the

impression that only Federal efforts can solve the Nation's economic

difficulties. Nothing could be further from the truth. To achieve these

employment goals, we must conscientiously plan for the future and

attempt to provide a coordinated array of policies, involving both the

public and private sectors, which will overcome the problems of both

structural and cyclical unemployment. I think the administration's

stimulus package is the proper tool for reducing cyclical unemployment in the near term while the continuing departmental employment

and training programs will help meet the long-term needs of the

structurally unemployed. 4/

[The following table was submitted for the record by Hon. Robert J.

Brown :I
7

U.S. DEPARTMENT OF LABOR FISCAL YEAR 1977-78 BUDGET ESTIMATES BY FUNCTION

[In millions of dollars]

Fiscal year 1977—

Ford Fiscal year 1978

Budget

authority Outlays

Ford Carter

Budget

authority Outlays

Budget

authority Outlays

500—Education, training, employment, and social

services:

504—Training and employment 6, 494 6, 347 3,931 5,003 10, 820 11,325

Temporary employment assistance (2, 384) (2, 358) (0) (1, 000) (4, 855) (4, 872)

505 --Other labor services 277 273 305 301 311 307

550--Health:

553—Prevention and control of health problems_ 130 129 135 132 135 132

600—Income security:

601—General retirement and disability insurance 33 33 31 31 31 31

602—Federal employee retirement and disability 307 307 292 292 292 292

603—Unemployment insurance 17, 161 16, 380 15, 960 13, 860 15, 060 13, 110

Total 24, 402 23, 469 20, 654 19, 619 26, 649 25, 197

Mr. MITCHELL. Thank you very much for your statement.

I have a serious concern about what has transpired in the past in

regard to youth employment programs. This concern centers around

the apparent lack of supervision at the local levels in terms of youth

employment. We have seen some horrendous reports about this lack of

supervision. Recently your own Department of Labor submitted to me

some information that I had requested concerning audits of youth

employment programs.

I think the programs are too important to let them be attacked

incessantly and sometimes unnecessarily because of some flaws in

supervision and management. I want to be assured that once we (Yet

these two or three items in place, Labor is going to establish tight

guidelines in terms of supervision, the meaningfulness of the job, and

the meaningfulness in terms of the public good of the job. Would

you respond to that, please ?

Mr. BROWN. Mr. Chairman, I could not agree more. We have had,

of course, almost 10 years of experience under MDTA and EOA and

now with CETA. This is a particular problem as we try to mount a

fairly sizable increase in our programs. We have on one hand the

urgency of the problem, the high unemployment rates of youth. There

could be a propensity to ignore the substance of the job, to ignore the

monitoring, and to ignore the supervision.

Secretary Marshall and Assistant Secretary Ernie Green are very

aware of that, as both come from backgrounds involving youth, have

experience in working with youth and know of the necessity of assuring that the projects are good projects and that the supervision is

there.

In terms of the Job Corps program, which is probably the most

difficult one to mount because it is dealing with the most disadvantaged

youth in a residential setting, we are phasing in that program over the
8

18-month period precisely because of the difficulty we anticipate in

establishing some 10 to 12 Job Corps centers by the end of this fiscal

year. That in itself will be a very difficult task. The additional 60

Job Corps centers will be established during fiscal year 1978 so that

there will be a phased approach in terms of that most Pdifficult program

in terms of design.

In connection with the community programs, and the additional

138,000 enrollees that will be operated essentially by the prime sponsors, we have some existing and fairly significant capability. But,

again, those projects will be reviewed at the regional level very carefully so as to determine whether or not these important aspects are

considered.

Mr. MITCHELL. I will come back to that.

Mr. Burgener, you are recognized for 5 minutes.

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

I have never gotten on this early in 5 years in this place. I have to

recover from the shock. Having done that, I want to welcome Under

Secretary Brown and Assistant Secretary Packer and Mr. Zuck and

Mr. Hewitt very warmly.

My regular committee is the Appropriations Committee. I applied

for that instead of Ways and Means thinking it might be more fun to

spend than tax, so I don't know as much as I should about unemployment compensation.

Would you be kind enough to review for me the kinds of unemployment compensation and the length or duration of each? I guess we have

regular, extended, and supplemental.

Mr. BROWN. Yes; the basic program is operated by the States, primarily in relation to certain Federal standards relating to taxes and

other important features of the tax laws.

The duration of benefits is some 26 weeks on the average in most of

the States. The basic program is 26 weeks. Then the extended program

which is a matching program with the States is an additional 13 weeks.

That brings it up to a total of 39 weeks.

The Federal supplemental benefits program extension that we have

proposed and that the Ways and Means Committee has, I understand,

acted on, at least in subcommittee, would provide an additional 13

weeks. Now in prior years the program added an additional 13 weeks to

bring it up to 65. The current proposal, the one before Ways and

Means, would limit that to 52 and would phase out in March of next

year.

Mr. BURGENER. Are there some proposals about the kind of work

that must be accepted under the bill before Ways and Means?

Mr. BROWN. Yes, sir, there are. There is a requirement that a job

paying the minimum wage or the prevailing wage for the occupation

must be accepted if the person is going to retain eligibility.

Mr. BURGENER. Must a person, or may a person refuse work not in

his or her primary line of training?

Mr. BROWN. No; as long as the wage is the appropriate wage for the

occupation itself.

Mr. HEwrrr. For Federal supplemental benefits, a person would

have to accept a job offer that meets the wage requirements in order

to be eligible for Federal supplemental benefits under the proposed

law.
9

Mr. BURGENER. Not deciding whether this is a good idea, is there a

direct correlation between the unemployment rate and the number of

weeks or months of unemployment compensation offered? In other

words, if you reduce—and I am not suggesting this is a good or bad

idea—but if you reduce the unemployment compensation by weeks or

whatever, does that have a direct correlation? Perhaps you can answer

for the record and comment on it briefly now.

Mr. HEwirr. I think there is a tendency in that regard.

Mr. BURGENER. But there is a correlation?

Mr. HEwirr. There is a tendency on the margin. I think it extends

the duration of unemployment. Studies have indicated that there may

be some tendency in terms of extension of the duration of unemployment but it is at the margin.

Mr. BURGENER. Would you comment?

Mr. PACKER. I would like to add some further remarks on that

question.

Certainly as the extent of the unemployment continues for an individual, he or she will continue to look for employment if they are still

receiving unemployment compensation. While he is looking, he is one

of the unemployed. If he stops lookinc,and becomes discouraged, he

then leaves the labor force and though still unemployed, he is not

counted as one of the unemployed but rather out of the labor force.

Mr. BURGENER. Are you sure he is not counted?

Mr. PACKER. That is right. The survey done by BLS asks if you

have looked for work in the last week or a question of that sort. If the

respondent answers that they have not been looking, they are considered out of the labor force and not unemployed nor employed, just out

of the labor force.

Mr. BURGENER. We might direct our attention to some more accurate

and better means of truly counting the unemployed.

A specific question on the National Youth Conservation Corps for

which I certainly commend you in forestation, national forests and

parks. Who would be eligible? 'What are the general rules of eligibility

for youths to apply for these jobs or is it too early to say?

Mr. HEwirr. The administration is still in consultation with both

Houses of Congress drafting this legislation, but we hope to have a,

bill by April If In the planning that has gone on so far

'

it is contemplated that the program would be open to all youths between the ages

of 16 and 24.

Mr. BURGENER. On a first-come-first-served basis?

Mr. HEWITT. Unemployed, yes, sir.

Mr. BURGENER. So a college student studying forestry could apply

for summer work doing this?

Mr. HEwrrr. This program would be year-round work for out-ofschool young adults.

Mr. BURGENER. Not concentrated on summer?

Mr. HEWITT. It is not a summer program. The summer youth employment program presumably would continue as it has been.

Mr. BURGENER. Do you have any idea what the rate of pay would be?

Mr. HEwrrr. It probably would be the minimum wage.

Mr. BROWN. Plus there would be clothing allowance and subsistence.

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

Mr. MITCHELL. The gentleman's time has expired.
10

I, too, want to commend you and the administration for raising the

level of public service jobs in fiscal year 1978. While I commend you,

I also want to comment on that increase. Quite frankly, I am one of

those who has studied this unemployment problem quite carefully, and

I am one who believes that we could use 1 million public service jobs

in fiscal year 1978 without any grave danger.

Let me put it more specifically: Do you believe it is feasible for

prime sponsors to create more than the 725,000 jobs you have proposed

in fiscal year 1978? If you think it is possible, I would like to hear a

"why or why not" response.

Mr. BROWN. Mr. Chairman, Secretary Marshall and I talked about

this at great length before making recommendations to the President.

The Secretary wanted to go higher than 725,000 when he first addressed

the problem. But as you grapple with the issue of really quadrupling

the rate of increase in terms of the employment level of 300,000, our

existing level of public service employment, and moving that up to

725,000 in three quarters and, in addition, using the same system in

developing and focusing on the new youth programs, the doubling

of the Job 

Corps, 

the new veterans initiative, and the HIRE program,

taken together it was our judgment that this is as far as we could go

still maintaining the quality of the program and maintaining the

targeting, especially under title VI, so that we get to the disadvantaged, the long-term unemployed and those on welfare or those who

have exhausted their unemployment benefits.

It is our practical judgment that we have gone about as far as we

can go.

Mr. MITCHELL. I hope your practical judgment will be reconsidered.

You mentioned the new constraints of title VI, that are imposed.

Do they constitute a major stumbling block for prime sponsors to implement the program? I am referring specifically to the provisions

that these must be truly disadvantaged, unemployed people, and that

they cannot replace or be used to replace people in city or county

governments in those jobs. In fact, they must almost be new hires.

Does that constitute a major impediment for local prime sponsors?

Mr. BROWN. Mr. Chairman, we don't believe it is a major impediment. It is going to be somewhat more difficult to be sure that the program is a net incremental help, to be sure that it is a fiscal stimulus and

to be sure that those who have been unemployed the longest and are

the most disadvantaged get those jobs. It requires a better screen, but

we believe it can be done.

Mr. Mrruatmi.,. What do you estimate the potential labor pool to be

for title VI? How many people, who have been unemployed for 15

weeks or longer and who meet all the other criteria of title VI are we

actually talking about?

Mr. BROWN. About 1 million or 1.1 million as I recall the figure.

Mr. HE wriv. Over the course of a year there may be 1/1 2 million.

Mr. MITCHELL. Roughly over the course of a year it would be 1.1

million. Might it slip below or above?

Mr. HEWITT. Right.

Mr. MITCHELL. Mrs. Holt.

Mrs. HOLT. Thank you, Mr. Chairman.

How do you view the fiscal substitution problem? What effect does

it have and do you think that there are problems with CETA for that
11

reason? I would like to hear your comments on what kind of reauthorization you would like to have.

Mr. BROWN. Mrs. Holt, studies indicated that under the prior title

VI, prior to the title VI changes of last year, there was a fairly sizable

substitution effect, up to 40 percent after 2 years. We believe that the

new criteria requirement that you be unemployed at least 15 weeks,

that these be special projects, and that the individual be from a poverty family should essentially eliminate the duplication problem with

the addition, of course, of the nonprofit features of the language.

Mrs. HOLT. So that would be the safeguard that you would want to

see built in in the future?

Mr. BROWN. Yes.

Mrs. HOLT. Didn't one of the studies that was done indicate that it

rose to about 100 percent after five quarters?

Mr. HEwrrr. There was such a study, the Johnson-Tomola, study, 4

years ago. These data have been reanalyzed by a gentleman named

Wiseman and his conclusion was that this was fairly grossly overstated

in terms of that study's conclusion. Notwithstanding there still would

be substitution in the range of perhaps 40 percent. That old program

has now been changed by title VI. The longer that program has been

carried, the more the effect was apparent.

Mrs. HOLT. Thank you.

Mr. MITCHELL. The older Americans community service employment

program is now funded at about $91 million. It appears that the funding will be increased to the full authorization level of $150 million in

the economic stimulus supplemental.

However, the President has requested only $23 million for this program in fiscal year 1978. Are you in a position to explain why the President is proposing such a drastic cut in this program which is so near

and dear to all of us?

Mr. BROWN. Mr. Chairman, of course the President would not propose a cut in the program, certainly not to that degree. What has happened is that 9 months of the fiscal year is already funded. We already

have forward funding. We need the last quarter of fiscal year 1978 to

complete the fiscal year.

Mr. MITCHELL. Is the $23 million for the last quarter?

Mr. BROWN. Yes.

Mr. MITCHELL. Would that take us up to $91 million?

Mr. &MK. That is right. That maintains the $91 million operating

level through the end of 1978. As you have indicated, both Appropriations Committees of the House and the Senate, in passing the economic

stimulus bill, added an additional $60 million to bring it up to a $150

million program level.

To maintain that would also carry the program only through

June 30, 1978. If we were to fund the quarter from July 1 to September 30, we would then require an appropriation of some $37.5 million to maintain the higher level through the end of fiscal year 1978.

Mr. BROWN. I should add that both committees did keep the entire

package within the President's request.

Mr. MITCHELL. This is one of the programs that is regularly forward

funded. However, in the President's budget submission he did not anticipate the forward funding for the next fiscal year. Is that right?
12

Mr. BROWN. Mr. Chairman part of the problem there is that title

IX of the Older Americans Act terminates. Unless there is a new extension of the Older Americans Act itself, that program would terminate. Of course, the administration is currently looking at whether

or not the Older Americans Act should be extended as it is or should

title IX perhaps be moved into CETA in terms of any further extension of CETA.

The question is under review right now and we are just not prepared

to give you a definitive answer but certainly we are going to be encouraging the administration to keep the program and I am quite sure

we will have a receptive audience.

Mr. MITCHELL. Thank you, Mr. Chairman.

Mr. Latta, you are recognized for 5 minutes.

Mr. LATTA. Thank you, Mr. Chairman.

I am glad to see on page 10 of your statement in your summary that

you recognize the fact that the private sector demands to be called

on as well as the Federal sector to solve our economic woes. I have heard

from time to time different figures about the number of illegal aliens

in the United States. I have heard a low figure of something like 8

million and I have heard a high figure of something like 13 million.

It seems to me that if we really want to do something about this

problem, we would start with that 8 to 13 million people who are

illegally in this country and a good many million of them are working

and taking jobs from American citizens. What efforts are being made?

What is the position of the administration on this question?

Mr. BROWN. The so-called undocumented worker, or illegal alien

problem is in fact a severe and difficult one. It is a problem that goes,

of course, beyond the employment problem to the whole question of the

reuniting of the families already here, either legally or illegally, and it

goes to the question of our relationships with other countries.

The administration has formulated a committee that will pick up

the material of the report that was submitted by the Domestic Council

in December of last year by the last administration. It has reviewed

that report and, in conjunction with the Department of State, the Immigration Office, and the Department of Labor, it is trying to formulate a proposal for the administration so that we can wrestle and tackle

that problem.

It is a severe problem. It involves, as you know, the whole question

of identity of whether or not you are a citizen. It involves the whole

question of whether or not employers should be penalized for hiring

illegal aliens. It involves the question of whether or not you can have

effective union organization when the person can be threatened with

being exposed and sent out of the country.

It is a very complicated question and one that is being looked at by

the administration very intensely.

Mr. LATTA. We have had some legislation for the last two sessions

of the House pass the House on this subject only to die in the Senate.

Are you familiar with that legislation?

Mr. BROWN. The so-called Rodino bill?

• Mr. LATTA. Yes.

Mr. BROWN. Yes, sir.

Mr. LATTA. What is the position of the administration on that?
13

Mr. BROWN. I don't know if I am making any new policy, but I can

-tell you my position. I would favor Mr. Rodino'S bill. That is the bill

that has passed the House. The administration itself does not have a

policy on that yet.

Mr. LATTA. Well, I don't know whether this particular bill is the

answer to it, but it certainly is a start in the right direction. I wish

you well in the Senate. Maybe we can get some action over there because I come from northwestern Ohio and we have a lot of illegal aliens

in northwestern Ohio.

Last summer I stopped in Ottawa, Ohio and the border patrol

stopped at the same place I did and they had a couple of illegal aliens

in the back of their car. They were telling me something about the

problems they have in our district. They say they come from Detroit

from their office and come in our district and pick these people up

and fly them to Chicago and back to Mexico at the taxpayers' expense

and before we can get back to Detroit they are back in northwestern

Ohio or some other place.

It is a continuing problem. I really don't know what we are going

to do about it unless we head in the direction of that legislation. This

is just a little area of the United States. I don't want to be one of the

individuals who says "I told you so," but I can recall several years

ago when they repealed the Bracero program, a lot of people wanted

to get rid of it, but they didn't undertsand it. They brought up the

thing of dividing families but under that program only single males

came up here and they went back at the end of the year.

It was a very good program as far as Mexico and the United States

jointly were concerned. It was a controlled program. At the time that

program was permitted to die with the Congress of the United States,

many people said that illegal aliens will becoming into this country

like they never came in before. History since that time has shown that

that is absolutely correct.

So I suggest some attention be given to the experience prior to the

time they let that program die an what it has meant since that time.

I am quick to admit they do need some people in this cotmtry. The

economy of Mexico needs some dollars down there and that was a legal

way to do it. We didn't have the problem then 365 days a year.

Mr. MITCHELL. The gentleman's time has expired. If you wish to

comment on that, there is no problem.

Mr. BROWN. I would only add to the discussion by saying I think

the problem has changed only in terms of its dimensions of the socalled Bracer° program. Many of the undocumented workers are working outside of agriculture. I suspect the greatest share are no longer

in agricultural pursuits but are in industries throughout the country.

It makes the problem much more difficult.

Mr. MITCHELL. Following the mandate given by Speaker O'Neill

and reemphasized yesterday to be eminently fair to the minority,

instead of taking a question I will call on Mr. Rousselot for 5 minutes.

Mr. ROUSSELOT. I have always been impressed by the eminent fairness of my colleague from Maryland. I appreciate that.

Under Secretary Brown, we appreciate you being here to help us try

to gage for the future as we have to do with the first budget resolution.

I don't think there is any member of this committee, including myself,
14

who could be more in agreement with President Carter's statement

and desired goal to estalelish a high priority to put people back to

work. I think we are all interested in that. I guess we want to find out

how to really do that and that is where the disagreement is.

I was interested in page 2 of your statement where you said that the

employment goal will be, as articulated by President Carter, to reduce

the unemployment rate to under 7 percent.

Now, as we begin to formulate the policies that we have to formulate

and one of the big things we address here is what is the impact of whatever we do on the budget resolution on unemployment and employment.

I noticed last month as you did, I am sure, that the number of people

employed went up substantially to 8 or 9 million.

Have you had a chance to articulate more carefully what you mean

by just under 7 percent? Do you count the people that are in transit

from one job to another that are only unemployed 3 or 4 weeks?

Mr. BROWN. That is the official BLS definition of unemployment. It

has problems on both sides of the equation as you know.

The primary problem, of course, is that it does not tend to count the

discouraged worker or those working part time and seeking full-time

employment, et cetera.

Mr. ROUSSELOT. What you call underemployed?

Mr. BROWN. Yes what you would call underemployed. I don't know

what you would call the discouraged workers. They are even more

unemployed than underemployed.

Mr. ROITSSELOT. Do you plan to add that group of people who are

unemployed but are less than where they think they should be?

Mr. HEWITT. Those figures are reported by BLS. They are not in the

unemployment rate that gets all the attention.

Mr. ROUSSELOT. Is the President's goal to include those people in the

unemployment figure?

Mr. BROWN. There are really two questions, Mr. Rousselot.

Mr. ROUSSELOT. But I am trying to make sure we understand what

the President means when he is trying to achieve that goal.

Mr. BROWN. It is the generally recognized BLS regular unemployment rate issued every month, the first Friday of every month.

Mr. ROUSSELOT. I was not here and I apologize, I was in a Census

and Statistics Subcommittee in the same building. I am trying to

satisfy the Bureau of Census on what is a farm and what is not. That

is a real discussion.

My understanding is that before I arrived you said that you considered those unemployed—and this is a Bureau of Labor Statistics

figure—those who have been looking for a job at least 4 weeks.

Mr. HEwrrT. No.

Mr. ROUSSELOT. Then help me find out what you mean.

Mr. HEwrrr. According to the Bureau of Labor Statistics' definition,

a person is counted as unemployed if during the reference week of the

month, which is the week that includes the 12th day of the month, that

person has been looking for work, has not been at work for wages or

an unpaid family worker for more than 15 hours a week.

They also keep score on people working part time and seeking fulltime work. Those figures are reported. They are not included in the

regular unemployment figure. BLS keeps s quarterly scorecard on
15

something loosely defined as the discouraged worker, those people not

really looking for work because they have become discouraged.

There is an add-on to the regular unemployment figures every quarter that they put out which is an approximation of the measure of discouraged workers.

Mr. PACKER. Mr. Rousselot, the 4-week figure applies in the following way: The individual had to have sought work sometime during

the previous 4 weeks. The official arrangements are that they have to

be without a job during the survey week, have made specific efforts

to find employment sometime during the prior 4 weeks and be presently available for work.

Mr. ROUSSELOT. I understand that, but what I am trying to determine is: Was that person saying he was seeking work actually unemployed during those 4 weeks?

Mr. PACKER. No, just during the survey week.

Mr. ROUSSELOT. So he could have been in a previous job while looking

for new employment and receiving a salary from whatever that previous job was but saying that he was going to be terminated or quitting

or whatever?

Mr. PACKER. He has to be not at work during that survey week, but

he could have been at work 2 weeks before.

Mr. RoussELoir. Then the answer to that question is yes. I am sure

you can see what I am searching for and that is because some of us on

this committee have great problems as to who really is genuinely

unemployed and unable to get the jobs and is really in desperate straits

of not being able to get another job someplace else.

The reason that becomes important is because as you look at the

February statistics on unemployment, roughly 67 percent of the people

have been unemployed 14 weeks or less. When you go to the 15 to 26

weeks unemployed, you only have 14 percent. So that becomes an

important time frame.

The thing that has always bothered me is how many of those people

in that 15-week period which is a substantial number of those listed

as unemployed and at that given moment are actually in transition,

know that they are in transition and are merely moving and know they

are moving to another job. Therefore is it really correct, even though

they are not receiving a paycheck in that time frame, to count them as

the desperately needy who need to find a job? Do you understand

my point?

Mr. BROWN. Yes. Mr. Rousselot, a number of years ago, some 12

years ago I believe it was, under the so-called Gordon commission,

the unemployment-employment statistics question was analyzed and

recommendations were made to BLS in terms of changing its design.

They did that. The Congress in its great wisdom last session—passed

a new, what you might call a new Gordon commission—called for the

establishment of a new Unemployment-Employment Statistics Commission. That Commission is in the process of being set up and certainly we will be looking at these important questions.

Mr. MITCHELL. The time of the gentleman has expired.

Mr. ROUSSELOT. Well, let me make a conclusion to my. statement. I

will drop you a note and I would like your response relating to this

area.
16

The reason I think that becomes important is that when we sit down

here and start to project what resources we allocate to "reduce unemployment," it becomes important to many of us how productive those

dollars are in really getting people back to the job which I know is

President Carter's goal and he restated it last night in his meeting in

Clinton, Mass. We need to know how to allocate those resources to

really be productive.

Mr. BROWN. We will be delighted to respond to any questions you

send to us.

[The requested information may be found in committee files.]

Mr. MITCHELL. Mr. Brown, as you know, the entire CETA Act

expires this year. Has the Department/administration taken a position

on the future of CETA? Do you seek a reauthorization? If you do,

what type of reauthorization would you seek? Please respond.

Mr. BROWN. Mr. Chairman, we have some legislation that would

extend CETA 1 year, a simple extension of 1 year. There are three

provisions that are fairly important to us. One is the waiver of the 20-

percent limitation currently imposed for titles III and IV so that we

can mount our youth program in advance of getting substantive youth

legislation itself.

bSecond, we plan to come up with a separate youth title under CETA.

Third, there is language in connection with the veterans' preference

piece that would implement the President's veterans' initiative that

he announced on January 25.

Mr. MITCHELL. A simple 1-year extension and 20 percent? I am

sorry I missed it.

Mr. BROWN. We need to have a new CETA title. We believe it would

be helpful to have a new CETA title for youth. That will be coming

up shortly. The veterans' preference section is in connection with implementing the President's initiative on the HIRE program and other

pieces of his program which he announced on January 25.

Mr. MITCHELL. Mr. Regula you are recognized for 5 minutes.

Mr. REGULA. Thank you, Mr. Chairman.

Mr. Brown, are you contemplating any studies to determine the

effectiveness of our job training programs in terms of providing people

with skills that are saleable in the marketplace?

Mr. BROWN. Yes, sir. I think Mr. Hewitt might be able to elaborate

on some of those that have been ongoing and some we plan.

Mr. HEwrrr. We have had a substantial evaluation program for

some years. We don't have any final results on evaluation of CETA yet,

but we have a very substantial effort underway which involves interviewing and getting data from a large sample of enrollees and then

following up on those enrollees for a period of 3 years while they are

going through the programs and when they get back out into the labor

market. We will in the next year or two be able to have hard data

which shows how much more earnings they have by going through

the program.

I state that positively because I believe that is what it will show

as compared to a sample of the population that did not go through

the programs.

Mr. REGULA. Do you make any effort to evaluate the job market

situation prior to instituting training programs? I illustrate this by

the fact that the Washington Post has 22 pages of jobs in their Sunday
17

paper seeking people and yet I understand there is a 5-percent-plus unemployment rate in metropolitan Washington, D.C.

Out of curiosity I examined those 22 pages and found almost every conceivable kind of job. Something is wrong. How do you explain this? Do you try to fit the people to the jobs?

Mr. HEwrrr. We do indeed try to fit the people to the jobs. Many of those jobs are filled and they become empty or new jobs appear. The 5-percent unemployed in the metropolitan area are not the same people who stay unemployed month after month. The labor market is a dynamic process. There is a good deal of turnover, particularly in the jobs that don't pay all that well.

Mr. REGITLA. SO it is not 5 percent that are unemployed continually? Mr. HE W 1112. That is correct. There is an awful lot of turnover, both in employment and among the unemployed. So that the same jobs that

appear one Sunday are not necessarily the same jobs that will appear a

month from Sunday nor are the unemployed from month to month the same group of people. There is a lot of matching of people with jobs in a continuing process.

We do have some researdh on newspaper want ads for jobs as well

as we take into account the level of unemployment as indicative of the buoyancy of the labor market in all of our evaluation studies. That is one of the variables that we try to correlate with other outcomes to appraise the success of the program.

Mr. REGITLA. Are you attempting to reduce the proliferation of dif- ferent kinds of training programs? I recall a friend of mine -vvho was running a program in Columbus, Ohio. She was trying to get clients

away From another similar training program simply to perpetuate her job. She admitted that both federally funded programs were doing practically the same thing. Now that is a waste for a lot of reasons. Mr. HEwirr. What we tried to do with the long-sought reformed

manpower programs was to avoid this kind of thing. Mayor Moody, I suppose he is still mayor in Columbus, is in charge of deciding who is going to deliver services funded through the comprehensive employ- ment and training program out there and hopefully we do not have that kind of waste or competition.

Mr. REGITLA. So you think the steps you have taken will result in a

reduction of program proliferation?

Mr. HE WITT. I could not say it will result in a reduction in prolifera- tion. Proliferation is not bad as long as they are not repeating programs and trying to get the same applicants in. We need more

programs and more types of programs rather than fewer.

Mr. BROWN. I wonder if I might expand on that because I.think it is a very important question. It is a structural problem with regard

to an employment training program. If you look at the number of occupations there are in the dictionary of occupational titles, you will find 40,000. But if you look at what you can physically do in setting

up a series of classrooms for 10 or 20 enrollees, you find very .quickly that the opportunities for sponsors to actually mount training, programs narrows very dramatically into the range of probably less than 100 of these occupations.

So that in terms of really providing learning opportunities for indi- viduals related to their aptitudes, it is very, very difficult to meet their aptitudes with regard to institutional' raining programs alone. That is why we need to have in addition, institutional training programs and
18

on-the-job training programs because when you do that, you then can

design programs for the individual across the whole occupational

spectrum, at least at the entry level.

Mr. REGULA. Have you found programs to place people in industrial

situations such as the vocational co-op program that the high schools

use and in an environment beyond the high school?

Mr. BROWN. Very definitely. In addition to that, in connection with

the President's January 25 message on veterans, you will recall that

the President emphasized that the Department of Labor should be

working together with the VA so as to mount on-the-job training programs in approved on-the-job training settings so that these two programs can help put unemployed veterans into meaningful jobs and

provide them with meaningful training.

Mr. REGULA. One last question: Chairman Schultze alluded in his

testimony a few weeks ago to the idea that part of the problem might

be that we have structured programs so as to make unemployment more

attractive than some types of employment. Do you see that as a

problem?

Mr. BROWN. I don't think that that is a serious problem. I think that

most people really do want to work. The programs are not specifically

structured so as to provide disincentives to work.

In connection with some of our welfare programs, if a person leaves

and then finds it very difficult to get back in, there might be on the

margin some disincentive to leave welfare.

On the other hand, under the work incentive program dealing with

welfare recipients, our experience is that when offered an opportunity,

more recipients volunteer than we can handle. People want to work.

They want to get into good jobs.

Mr. REGULA. Thank you.

Mr. MITCHELL. I have just one last question. I am certain the other

members will have questions and they will be submitted to you as part

of the SOP operation of these hearings.

Regarding your separate youth title, I understand that right now

about 50 percent of the CETA title I employment is given to youth by

local prime sponsors. I also understand that the youth participate in

titles II and VI in what some would call disproportionate numbers. If

you put in a separate youth title, would that mean that the local prime

sponsors could not use titles I, II, and VI for youth employment, particularly in those areas where there is drastic, severe youth employment?

Mr. BROWN. No, sir. We will not change any of titles I, II, or VI

criteria so that the youth cannot be reached. The chairman is absolutely right. The youth unemployment problem is half the problem

of this country. That is why we envision the new title to be a net addonto titles 1,11, and VI. There will be some title III.

Mr. MITCHELL. Also, would title III be related?

Mr. BROWN. Some of title III is being used for youth. That would be

under the youth title.

Mr. MITCHELL. Thank you, I am reassured.

Gentlemen, thank you very much for your testimony and your

presence. We are most appreciative.

The hearing is adjourned.

[Whereupon, at 11 a.m. the task force adjourned.]

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