/ £ > / / A d I 'Xr MP- EMERGENCY EMPLOYMENT A S S IS T A N C E S ^ APPROPRIATION, FISCAL YEAR 1972 f

GOVERNMENT Storage DOCUMENTS AIJG 2 41971

T H E <_le^ Y HEARINGS KA NS AS STAT E UN IV ER SITY BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OF REPRESENTATIVES NINETY -SECON D CONGRESS FIRST SESSION

SUBCOMMITTEE ON DEPARTMENTS OF LABOR AND HEALTH, EDUCATION, AND WELFARE AND RELATED AGENCIES DANIEL J. FLOOD, Pennsylvania, Chairman WILLIAM H. NATCHER, Kentucky ROBERT H. MICHEL, Illinois NEAL SMITH, Iowa GARNER E. SHRIVER, Kansas W. R. HULL, J r., Missouri CHARLOTTE T. REID, Illinois BOB CASEY, Texas SILVIO O. CONTE, Massachusetts EDWARD J. PATTEN, New Jersey Robert M. Moyer and Henry A. Neil , Staff Assistants

Printed for the use of the Committee on Appropriations

EMERGENCY EMPLOYMENT ASSISTANCE APPROPRIATION, FISCAL YEAR 1972

H E A R IN G S BEFO RE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OF REPRESENTATIVES NINETY -SECON D CONGRESS F IR S T SE SS IO N

SU BC OMMIT TE E ON DEP ARTM EN TS OF LA BO R AN1) HEA LTH , ED UC AT IO N. AN D W ELFA RE AN D RELA TED AGEN CIE S DANIEL J. FLOOD, Pennsylvania, Chairman W IL LI AM H. NA TC HE R, Ken tu ck y RO BE RT II. MICHEL , Illino is NE AL SM IT H. Io wa GA RN ER E. SH RIV ER, Kan sa s W. R. HU LL , JR.. Miss ou ri CH ARL OTT E T. REI D, Illino is BOB CASEY, Tex as SILV IO O. CO NT E. M as sa ch us et ts ED WA RD J . PA TT EN , New Je rs ey R obert M. M oyer an d H enry A. Neil , S ta ff Ass is ta nt s

Printed for the use of the Committee on A ppropriations

U.S. GOVERNMENT PRIN TING OFFICE 65-488 WASHINGTON : 1971 COM MIT TE E OX APPRO PRIA TIO NS GE OR GE II. MAHON , Texas, Chairman JAMIE L. W HI TT EN . Mississippi FR ANK T. BOW, Ohio GE ORG E W. ANDREW S, Alabama CH AR LE S R. JON AS, N orth Carolina JO HN J. RO ON EY , New York EL FO RD A. CED ERBERG , Michigan RO BER T L. F. SIK ES, Florida JOHN J. RH OD ES , Arizona OTTO E. PASSMAN, Louisiana WILLIAM E. MINSHALL, Ohio JOE L. EV INS , Tennessee RO BE RT H. MI CH EL , Illinois EDWA RD P. BOLAND, Massachusetts SILVIO O. C ON TE . Massachusetts WILLIAM H. NA TC I1E R, Kentucky GL EN N R. DAVIS, Wisconsin DA NI EL J. FLOO D, Pennsylvania HOW ARD W. ROBIS ON, New York TOM ST EE D, Oklahoma GA RNER E. SH RI VER , Kansas GEO RG E E. SH IPLE Y, Illinois JO SE PH M. McD ADE , Pennsylvania JOHN M. SL ACK, West Virginia MARK ANDREW S, North Dakota JOHN J. FL YNT, J r., Georgia LOUIS C. WYMAN, New Hampshire NE AL SMITH , Iowa CI BURT L. T AL CO TT , California RO BER T N. GIAIMO, Connecticut CH ARL OT TE T. RE ID , Illinois JU LI A BUTLER HA NSEN , Washington DONALD W. RI EGLE , Jp.., Michigan JO SE PH P. ADDABBO, New York WE ND EL L WYATT, Oregon JO HN J. McFALL, California JACK EDWA RDS, Alabama W. R. HU LL , J r., Missouri DEL CLAW SON, California EDWA RD J. PA TT EN , New Jersey WILLIA M J. SC HER LE , Iowa CL ARE NCE D. LONG, Maryland RO BER T C. McEWEN, New York SIDNE Y R. YA TES, Illinois JO HN T. MY ERS, Indiana BOB CA SEY, Texas DAVID PR YOR, Arkansas FR ANK E. EVANS, Colorado DAVID R. OB EY , Wisconsin EDWARD R. ROYBAL, California WILLIAM D. HAT HAW AY, Maine NI CK GAL1FIANAK1S, North Carolina LOUIS STOK ES, Ohio J. EDWA RD ROUSH, Indiana K. GU NN McKAY, Utah P aul M. Wii.so n, Clerk and Staff Director

Staff Assistants William Gerard B oling Milton B. Meredith Samuel R. P reston Samuel W. Crosby Gary C. Michalak Donald E. Richbourg George E. E vans Dempsey B. Mizelle E arl C. Silsby R obert B. F oster E nid Morrison G. H omer Skarin J ohn M. Garrity Robert M. Moyer Charles W. Snodgrass H arold A. Griffin P eter J. Murphy, Jr. H unter L. Spillan A ubrey A. Gunnels H enry A. N eil . Jr. George A. Urian J ay B. H owe Byron S. N ielson E ugene B. Wilhelm T homas J. Kingfield Robert C. N icholas III T hayer A. Wood K eith F . Mainland John G. P lashal Administrative Support Gerard J. Chouinard Gemma M. H ickey Dale M. Shulaw P aul V. F armer Lawrence C. Miller Austin G. Smith D aniel V. Gun Shows F rancis W. Sady Randolph T homas (II)

If » M i.

XHUVOi EMERGENCY EMPLOYMENT ASSISTANCE APP ROPRIATION, FISCAL YEA R 1972

■ W ednesday , J oe y 28 , 1971. DEPARTMENT OF LABOR

Manpower A dm ini stra tio n

E mergency E mploym ent A ssistance ,■ i “I !i .7 < '' . J •: in- : i •» iip miu; O xlijiri , *1 -b 11 >'i 1 W IT N E SSE S

MAL CO LM R. LO VEL L, JR ., A SSIS TA N T SEC R ETA R Y FO R M A N PO W ER PA U L J. FA SSER, JR ., M A N PO W ER A D M IN IS T R A T O R W IL L IA M M IR E N G O FF, A C TIN G ASS OCIA TE M A N PO W ER A D M IN IS ­ TRA TO R FO R PU BLIC S E R V IC E EM PLOY M ENT R IC H A R D E. M IL L E R , ASS OCIA TE M A N PO W ER A D M IN IS T R A T O R FOR FIN A N C IA L AND M A N A G EM EN T SY ST EM S JA M E S P. ROBERTS, JR ., D IR ECTOR, D IV IS IO N OF BUDGET , M A N ­ PO W ER A D M IN IS T R A T IO N CO NR AD M. JO NES, D EPA R TM EN T A L BUDGET O FFIC E R

Mr. F 'lood. N ow we have the Department of Labor back with a return engagement—emergency employment assistance. The presenta­ tion will be made by Malcolm IL Lovell, Jr., the Assistant Secretary for Manpower. The request is contained in II. Doc. 92-143.

INTRODUCTION OF SUPPO RTING WITN ESSES Mr. Lovell, do you have anybody new in your cast of characters that you would like us to know ? We know most of them. Mr. L ovell. Bill Mirengotf is to my left. He is head of the Job Corps and has been asked to take the responsibility for the Emergency Employment Act. He is a rough, tough administrator. Mr. F lood. He has been around a long time ? Mr. Lovell. Thirty-five years of Government service. That is staying power, anyone who can stay around with the Government for 35 years and take the Job Corps through the last 2 years must have something. Next to him is Paul Fasser, Deputy Assistant Secretary and Man­ power A dministrator. Mr. Jones you know, and Dick Miller, our As­ sociate Manpower Administrator for Financial and .Management Systems. GENERAL STATEM ENT

Mr. F LOOD. AV e see that you have a statement. IIow do you wish to proceed ? Mr. L ovei.l. Well, sir, perhaps it would be easier to have the pre­ pared stateinent put in the record and I could informally tell you what (1) 2 we are planning to do. Or I will read the statement, whatever yon prefer. Mr. F lood. It is your show. You speak well; so we will do it that way. Mr. Lovell. All right. (The statement follows:) Mr. Chairman and members of the committee, I am delighted to be with you today to discuss the budget estimate for the new emergency employment assist­ ance program. The President has requested $1 billion, the full amount of the authorization provided for the first yea r of the act. This amount is absolutely necessary to help counteract unemployment and at the same time meet the emergency needs of our general units of State and local government. Because of the urgency of the program—an urgency that both the executive and legislative branches share—we are already developing many of the administra­ tive procedures needed to dis tribute funds and have made a number of basic de-> cisions on how funds will be allocated. The heads of local units of government (cities, counties, States) will be the principa l agents of the Secretary of Labor, carryin g out the provisions of the act at their level. These agents will, on our behalf, deal with the sub-units within the ir jurisdiction, thus precluding a complex overburdening Federal involve­ ment at the local level. Units of government of 75,000 or more will be eligible to partic ipate individually. Smaller units will be covered under the "balance of Sta te” and the Governor or eligible county will act as our agent. We will be prepared to immediately announce the distrib ution of the $750 million section 5 funds by Sta te as required by the law. We do not currently maintain unemployment sta tistics at the level of government chosen (75,000 or more) so it will be a few days more before we can determine the amounts that will be allocated to the agents w ithin each State. Our request of $1 billion includes $083,419,000 for emergency employment assistance and $1(5,581,000 and 800 positions for program direction and support. The estimate for emergency employment assistance encompasses the full range of program activities authorized by the legislation. The gre ate st portion of these funds ($864,119,000) will be fo r wages and employment benefits for program par­ ticip ants. Because the mix of public service jobs and salaries will be based on each age nt’s decisions, we cannot determine precisely how many jobs will be funded in fiscal year 1972. We estim ate tha t the average salaries and benefits will range from $5,000 to $7,000 per position. If the average is $5,000, 172,800 jobs will be funded ; if $6,000, 144,000 jo bs; and if $7,000, 123,400 jobs. I want to stress that these new jobs will be tra nsi tional—leading people into perm anent jobs. This is the most critical fea ture of the act and will yield real and lasting benefits to the unemployed and not merely provide them another form of public subsidy. To realize this objective of continuing employment we are requesting that a significant amount—$36.800,000—be devoted to the training and supp ort of those to be directly served by the act. In addition to these direct funds, we also plan to utilize the services of the other manpower programs to tra in and as sist these people. We are requesting $43,500,000 for the adm inistratio n of the program at the local level. We assume that the majority of the age nts’ staff will themselves be employed in public service jobs und er the a«t. The estim ate, then, will provide for the salaries of those staff members not eligible for these jobs and necessary non­ personal service costs. A total of $39 million is requested for agent assistance and statistic s. This program is unprecedented and complex. It will raise many new problems at all levels of local government. These dollars will provide the con trac tual assistance and dire ct help needed to solve these difficult problems. Our request for program direction a nd support is $16,581,000 and 800 positions. This represents only 1.6 percent of the total request. Since there will be a minimum of Federal involvement in the program at the local planning and application stage, we intend to watch carefully the need for Federal staff. Should less tha n 800 actually be needed as the program matures, we will use only those required. If, on the other hand, the Federal staff proves insufficient to do the job properly, we will certain ly seek more positions as soon as the need is proven. 3

Thi s co nc lude s my pre pa re d st at em ent, Mr. Cha irm an . My st af f an d I will he ha pp y to a ns w er a ny qu es tion s you mig ht h av e.

AM OUNT AU TH OR IZED

Mr. L ovell. We are requesting the entire $1 billion that is author­ ized by the act. Mr.' F lood. Let ns begin right there. There we have, we think, some kind of a legal problem, which is now unusual. Mr. Mahon. I)o we have the basic act Mr. F lood. Yes. I )o you have a copy of the act 1 hereI Mr. Lovell. Yes, sir. Mr. F lood. Suppose you take a lookjit page 2. Mr. L ovell. Page 2 authorizes $750 million. That is section 5. Mr. F lood. Y ou say there is $1 billion authorized by the act. You just pointed th at out, hut section 5 of this act clearly says, and I quo te: For th e pu rp os es of ca rr yin g ou t th is ac t, th er e are au th or iz ed to he ap pro ­ pri ate d $750 mill ion fo r th e fiscal y ear en di ng Ju ne 30, 3972 * * *. That does not say for part of this act. I don’t find any place in the act that says, “ In addition, there is authorized to lie appropriated $250 million.’’ Mr. L ovell. Section 6(a) on page 3, “There is hereby estab­ lished”— Mr. F lood. Section 5 expressly says as 1 have stated: F or th e pu rp os es of ca rr yin g out th is ac t, th ere are au th orize d to be ap­ pro pri ate d $750 mill ion fo r th e fiscal year en ding Ju ne 30, 1972, an d $1 bil lio n fo r th e fiscal year en di ng June 30 ,19 73. At the top of page 3, under the title ‘‘Special Employment As sis ­ tance,” we find section 6, subsection (a). I quote: Ther e is he reby es ta bl ishe d a Sp ecial Em ploy men t A ss ista nc e Pro gr am , The re are au th orize d to be appro pri at ed $250 mi llion ea ch fo r th e fisc al year en ding Ju ne 30. 1972, an d fo r the succ ee ding fiscal ye ar , to car ry ou t th e pr ov isions of th is sectio n. 'Phis section s part of the act and the language rather clearly says there is $750 million authorized for the act. So it would seem that the $250 million authorization for the one section is par; of the $750 million authorized for the whole act. Mr. L ovell. Having been rath er close to the process by which this bill was passed, 1 can assure you. sir, it was the intent of the commit­ tees that deal with it that these would be two separate items, $750 million and $250 million. That was the intent of the act. Mr. F lood. That is not what it says. There is no doubt at all that faced with this kind of construction your legal people must put something in this record because this act doesn’t say what you are saying at all. While we know what you mean find you indicate what the intent is, we have to abide by the words of the law. Mr. L ovell . We will he happy to do whatever you suggest. Mr. Mahon. I would like to interpose, Mr. Chairman. We are not committed to a ppropriate a billion dollars. 4

Mr. Lovell. I understand that. Mr. F lood. That is what they are talking about here. Mr. Mahon. Ion are talking about whether or not it is authorized? Mr. Lovell. That is right. Mr. Mahon. We are not coftnnitted Io appropriate all that is authorized. Mr. Lovell. Of course not. Mr. F lood. We are concerned----- Mr. Lovell. Wc are asking for it. Mr. F lood. We are concerned as well with that point, but also with the plain matter of statutory construction and we are certainly going to have to find out more about what your legal people have to say to explain to us what I have asked you about. Mr. L oVell. W e will do that. (The information follows:) U.S. Department of Labor, Office of the Assistant Secretary for Manpower, Washington, D.C. Hon. Daniel J. Flood, House of Representatives, Washington, D.C. Dear Congressman F lood: As requested, we have reviewed both the text and the legislative history of the Emergency Employment Act of 1971 to ascertain whether Congress was clear in its intent that the $250 million auth oriz ed under section G be p art of, or in addition to, the $750 million authorized under section 5 of the act. In my opinion, both the law and the legislative history are clear that section (5 funds were intended to be in addition to section 5 funds. The most dire ct state ments of intent were those made July 1. 1971, on the floor of the House just prior to the vote on the conference report. Congi’essnian I’erkins in his statem ent described the bill a s follows : ,“The conferees agreed on a $750 million appropriation for fiscal year 1972, and a $1 billion dollar app ropriation for fiscal year 1973, which is somew hat below the $4 billion appropriation authorized under the House- passed bill for tlie ‘regular’ program. In addition, the conference report contains authorization for a ‘special’ employment assistance program of $250 million a year for 2 yea rs in are as where unemployment exceeds G percent.” (p. H6225). To tlie same effect was Congressman Quie, also on the House floor on Julv 1.1971: “There is $750 million on tlie national triggering, plus the $250 million of section G money, making it $1 billion for tlie fiscal year that began today. There is $1 billion in the national program and $250 million in section G. being the local program for fiscal 1973, which makes it a total of $2,250 million authorized in the conference repo rt.” (p. HG22G). Even Representative Gross, an opponent of the bill, indicated a sim ilar un­ derstan ding of its provisions when he said : “I t is a sad commentary on the management o f the country, with an annual gross national product of $1 trillion and 805 billion, th at it must pass a bill to provide ‘make work’ to the tune of $2.2 billion for 2 years.” (p. HG228). No one offered a different interp retation of the relationship between sections 5 and 6, and for the good reason th at the sta tute and the legislative history are replete witli indications sections 5 and 6 fund s are to be made available separately. Section 5( a) authorizes an appropriation of $750 million. Section 5(b ) pro­ vides: “No furth er obligation of funds appropriated under this section may be made subsequent to a determination by the Secretary that the rate of national unemployment (seasonally adjusted ) lias receded below 4.5 per centum for three consecutive months.” ( Italics supplied.) Se ction 0 prov id es fo r fina nc ia l as si st ance fo r an y eligible are a “which lia s a ra te of un em ploy men t e qu al to or in ex ce ss o f 6 p er ce nt fo r 3 co ns ec utive m ou th s.” The H ou se report in d es cr ib in g th is sec tio n specified t h a t— “T he se pr og ra m s w ou ld co nt in ue to be fu nd ed so lon g as th e loca l ap pli­ cant met th e cri te ri a spelled out in se ction 6 (c ) notw ithst andin g th e fa ct th a t th e national ra te of un em pl oy men t may dr op below 4.5 per ce nt .” The co nfer en ce re port pick ed up th is dis tinc tion in in te nt be tw een se ct ions 5 an d G as fo ll ow s: “The Hou se am en dm en t conta in s a pr ov ision es ta blish in g a sp ec ia l em ­ ploy men t as si st an ce fu nd . The fu nd op er at es se par at el y from th e mai n pro ­ gr am of pu blic se rv ices em pl oy men t an d is not af fe cted by sh if ts in th e na­ tion al un em ploy men t ra te . I t is to be us ed to pr ov id e fu nds fo r pu blic se rv ice jo bs in loc al are as w her e th e un em ploy men t ra te is G per ce nt or mo re . . . Th e co nf er en ce ag re em en t au th orize s a ‘spe cial em ploy men t as­ si stan ce pr og ra m ’ si m ilar to th e pr ov isio ns of th e Hou se am en dm en t w ith an au th ori zation of .$250 mill ion fo r each of th e fiscal years en di ng Ju ne 30, 1972, an d Ju ne 30, 1073. T he co nc ep t of a sp ec ia l fu nd in th e T re asu ry was de lete d from th e co nf er en ce .” Fin ally it is hard to see how th e in te ntion of se ct ion 6, to pr ov id e fina nc ial as si st an ce to are as w ith G per ce nt or mor e un em ploy men t, co uld be sa tisf ie d if mo ney appro pri at ed purs uant to th a t section were su bje ct to th e ap po rtio nm en t re qu irem en t which ap pl ie s to fu nds au th orize d p u rs uant to section 5. In app or­ tion in g section 5 fu nd s th e S ecre ta ry is re quited to co ns id er “t h e pr op or tio n which th e to ta l nu mbe r of un em ploy ed pe rson s in ea ch such S ta te bea rs to such to ta l nu m be rs of such pe rson s, re sp ec tive ly in th e U ni te d Sta te s, but no t les s th an $1,500,000 sh al l be ap po rtio ne d to an y S ta te . . .” Se ction G pr ov ides fo r fina n­ cial ass is ta nce to are as which hav e a ra te of un em pl oy men t eq ua l to or in excess of (i pe rc en t fo r 3 co nsec utive mon th s. The se two fo rm ula s wou ld no t ne ce ss ar ily pr ov ide fo r th e same dis trib ution. T here is no in di ca tion in th e act or its legi s­ la tive hi st ory th a t Co ng ress anti cip ate d or was co nc erne d by th e pote ntial co n­ flict. Thu s it ap pea rs they ex pe ct ed th e di ffer en t fo rm ula s to be ap pl ie d to di ffer ­ en t fund s. In vie w of th e ab ove st atu to ry la ngu ag e an d le gi sl at iv e histo ry , we belie ve it is cl ea r th a t Co ng ress inte nd ed th e $250 mi llion auth orize d unde r section G fo r fisc al yea r 1972 to be in additio n to tiie $750 mill ion auth ori ze d und er se ction 5 fo r th e same ye ar . Sinc erely , I’et er G. N a s h . Solicitor of Labor. Mr. L ovell. As you may recall, there were two bills, a Senate bill and a House bill. The House bill had section 6 in it and the Senate bill did not. The question in conference was whether section 6 should remain or not. I t was the intent of section 6 in the House bill to be in addition to section 5, so the conference decided it should be added. Mr. Mahon. Hid the House bill specify the $750 million and say in addition thereto, or is it just as vague as it is in the present act? Mr. Lovell. Mr. Chairman, I am not sure. Mr. Maiion. This is something that you have to resolve. Mr. Lovell. We can certainly take a look at that. There is no question in my mind that it was the intent of the confer­ ence that this should be a total authorization of $1 billion. Mr. F lood. There is in ours. Mr. L ovell. I understand that; I am saying that in participating in some of those discussions, I think the intent was quite clear in this regard. We will get our solicitor's statement to you right away. I think you should have that. (Committee note: See page 9 for further discussion regarding the question of the amount authorized to be appropriated for 1972.) 6

FORM ULA FOR ALLOTTING FUN DS

Mr. Lovell. The act does require that 80 percent of the $750 million be allocated first among the States according to an equitable formula developed by the Secretary. This formula takes into consideration the number of unemployed people in those States as compared to the number of unemployed people throughout the Nation. We have de­ veloped a formula tha t takes that into consideration and adds another element; that is, the unemployment above 41^ percent. Not only the total unemployment but the severity of the unemployment. Mr. Flood. There are two things in the yardstick ? Mr. Lovell. Two factors in our formula, that is correct. One is the amount of the unemployment, and the second is the severity of the un­ employment. We have applied that formula in coming to an allocation among the States.

DE FINI TION OF “ AREA” FOR ALLOCATION PURPOSES The act also requires that once having done that, the money should be allocated to areas within a State. Mr. F lood. What do you mean by an area ? Mr. Lovell. The act does not specify; just an area. So we have chosen to regard areas as cities and counties with populations of 75,000 or more. Mr. Mahon. In other words, you write off smaller areas of the country ligh t off the bat? Mr. Lovell. No, sir; quite the contrary. Really, I think we are say­ ing there are three units that will receive an allocation on the basis of the same formula. The first unit is the cities and the counties that have less than 75,000. They will get their share according to this formula. Take the unemployment in all the areas that do not have 75.000 and you will apply that proportion to the State allocation and that money must be used in those geographic areas. Second, you take the cities and counties with a population of 75,- 000 or more and you apply the formula and you give them that share to be used in that area.

ALLOCATIONS BY AREAS W IT H IN A STATE

Mr. Michel. When you say “that share,’* who determines what that share is? Mr. Lovell. That share is in this formula. In other words, you take the areas having less than 75,000 and you determine how many people are unemployed in that area. You take that number as a percentage of the total number unemployed throughout the whole State. Mr. Michel. Comparable areas, like areas? Mr. Lovell. No; of the whole State. For example, these areas of less than 75.000 may have 5.000 people unemployed. They may have 2,000 people that represent employment over 4l/£> percent. That gives you 7,000 people. In the State the total number of people unemployed may be 25.000 and there may be 5,000 over 4!/2 percent. Take seven- thirtieths of the State money and that goes to these areas of less than 75,000. Mr. Michel. These comparisons are always made within the State? Mr. Lovell. Yes, sir: according to the law. Mr. Fi ood„ . It is quite a trick. Mr. Lovell. What it gives you then is an allocation that is available to every single eligible applicant throughout the country. Mr. F lood. What you are saying is that there are a great many things that you can do; you have to take one ? Mr. L ovell. We have not excluded any one. Tha t is the point that is offered. Mr. Michel. Take us through the steps from the top to bottom. Here is $750 million that you are talking about. Illinois, Massachusetts, or Pennsylvania gets a determination based upon what the unemploy­ ment rate in the State is as against the national figure ? Mr. L ovell. Yes. There are two factors. Total number of unem­ ployed in the State compared with the total number in the Nation. Then, with equal weight, the number of unemployed over 4i/ 2 percent as compared with the number of unemployed in the Nation over percent.

CON SIDE RATION OF OUTMIGR ATION IN ALLOCATING FUNDS Mr. Smith. Don't you take into consideration outmigration ? Mr. Lovell. No, sir. Mr. Smith. You don't ? Mr. Lovell. No, sir. Mr. S mith. Then you are going to fall back in the same old crack they did 10 years ago. We have parts of this country where people leave when unemployed and that would permanently penalize them. To secure one of these jobs, they have to go to an area of higher un­ employment which is exactly where we don’t want people to migrate to at this time. Mr. Lovell. This is an unemployment rate as of May 1071. Mr. Michel. That would be updated when ? Mr. L ovell. It would be updated at least every year because the money only triggers in when the unemployment rate is over 4 ^ per­ cent. You have to make a new computation at least every year. Mr. S mith. The lack of employment opportunities does not show up properly that way. These people left and they increase unemployed statistics somewhere else, but the cause is lack of work where they came from. Mr. Lovell. It does not take into consideration employment oppor­ tunities. It only takes into consideration the number of unemployed and the severity of the unemployment. Jus t those two factors. We could have taken other factors into consideration. Mr. F lood. Half a dozen. I suppose. Mr. Lovell. Yes. We know how much money will go into each area. What we don't have a formula for and what is going to be a very difficult job is how it gets divided within that area. Every govern­ mental unit, every school board, every township, every city, county. State. Federal Government—all are eligible applicants. How do you divide that ? One answer is th at you cannot. You dismiss that alterna­ tive. What we have decided to do is this----- Mr. F lood. Y ou will have school boards and city councils and all these local agencies knocking each other's brains out. Air. Lovell. Fir st we thought, hire 5,000 Federal people and stick them on it. But first of all, by the time we hired them the year would have gone by. Mr. F lood. You mean new employees?

RESPONSIBILITIES OF LOCAL AGENTS Mr. L ovell. Yes, sir; or transfer them from other areas. Second. I think it would discredit the opportunities for local people to participate in their own lives in this regard. What we have said is. let us engage cities, counties and States to be our agents—not turn over the responsibility to them, but to be our agents—and we will give them some guidelines to follow. Have them come up with a plan and we will review the plan. The plan will also be reviewed by the appropriate units of govern­ ment within the area so tha t everyone at least has a peek. Mr. F lood. Would that bring about a delay ? Mr. L ovell. It will cause a little delav, there is no question about that. Mrs. Reid. Every state will have a different plan ? Air. Lovell. Yes. ma'am. Take the city of Cleveland: they have laid off 200 policemen and they may want to bring them back. They may decide they want to put somebody in the schools. Mr. F lood. You are getting about as close to revenue sharing as you can get; aren't you ? Mr. Lovell. Yes, sir; there are elements of revenue sharing in it be­ cause the nature of the act is very much of that order.

CR ITER IA FOR AL LO CA TING FUNDS

Air. Smith. I f I could interject back to my previous conversation, the act does not say you only use that criteria ? Air. Lovell. No. Air. Smith. I remember specifically talking to the members of the committee about this before it came up. The act says not less than 80 percent shall be apportioned among the States in an equitable manner ? Air. Lovell. That is correct. Air. Smith. Then it says, “Taking into consideration----- Air. Lovell. As the chairman said, we could use five or six things.

OUTMIGRATION Air. Smith. Administratively you are excluding outmigration? Air. Lovell. Yes, sir; no question about it. A. esterday talking to Air. Perkins, Air. Daniels and members of the House committee, they said we had to use just unemployment. AVe said “No, that is not right.’’ AA e could use any factor we want as long as we take this into con­ sideration. AVe came up with a formula that frankly we thought was basically equitable. It uses the factor that the bill suggested and one other factor of severity. AVe believe that areas of high unemploy­ ment should get more money than those of low unemployment. Air. Smith. Alav I take about a minute here ? 9

Mr. F lood. Yes. Mr. S mith. I cannot believe that after the experience that we have had for 10 years yon are not going to consider the outmigration fac­ tor in rural America where these people have been coming from to the cities. The day they graduate from high school, they leave, if there is no job there. This helps create higher unemployment statistics in the cities hut the origin is in other areas. They need those job < ppor- tunities in tin* rural areas if they are going to have rural development. You are going to penalize them in effect under your formula and add to the unemployed in the high unemployment cities. Mr. L ovell. We did take into consideration the people that have not left. They don’t get credit for those that left 2 or 3 years ago; you are right. Mr. Smith. T cannot believe after 10 years experience you come up with that kind of administrative ruling ignoring the outmigration factor. Mr. Lovell. Well, there is another factor, too. The $250 million au­ thorization. whatever legal status it has. is for use in areas of unem­ ployment of G percent or more as determined by the Secretary. 1 here is no formula required, so technically all of that $250 million could be given to any one area having unemployment of G percent or more. It does not define what that area is. except it does not say it has to I k1 a governmental unit. It can be a piece of a unit or piece of a rural area; it could be Bedford-Stuy vesant. Harlem or Watts, or part oi a rural area defined by the Secretary. If there was a particular injustice that could be demonstrated, for example, and because of outmigration, the Secretary could take that into account in the allocation of the $250 million. Mr. S mith. After it operated for 2 or 3 years they found out this was a major shortcoming of the administration and they tried to do (hat. Mi-. Lovell. I understand your point.

AM OUNT AU TH ORI ZE D TO BE -A PP RO PR IA TE D FOR 1 9 7 2 Mr. S mith. Mr. Chairman, the counsel for the committee got a copy of the original House bill, and section 5 originally said: “In addition, there is authorized * * *." The words “in addition" were stricken in the final bill. T hat might be interpreted that they did not intend the $250 million to be “in addition." Mr. F lood. I raised that question just on the face of the act. Mr. S mith. Legal counsel has to get around that fact, too. Mr. F lood. I agree with that. That certainly should be dealt with specifically. (The following was subsequently submitted:) U.S. D epartment of L abor, Offic e of t h e S ol icitor , Washington, D.C., July 30,1071. lion . D aniel J. F lood, House of Keprcsentatives, Washington, D.C. Dear C ongressman F lood : The following is intended to supplement our let­ ter to you of July 28, 1971. As you know, section 5 of the original House version of the Emergency Employment Act contained authorization for appropriation 10

of $750 mill ion fo r fiscal y ear 1972 an d a billi on fo r ea ch of th e 3 succeeding fiscal ye ar s. Fur th er m ore , se ct ion 6 prov ided th a t “I n ad ditio n, th ere is au th o r­ ized to be ap pr op riat ed fo r dep os it in th e [spe cial em ploy men t as si st an ce ] fu nd fo r th e fiscal ye ar en di ng Ju ne 30, 1972, th e sum of $250 mill ion, an d, fo r each of th e 3 succeeding fiscal yea rs , such sums as may be nec es sa ry to ass ure th a t a t th e en d of such year th e sum in th e fu nd will be a t le ast $250 mill ion. ” We unders ta nd th a t you are in te re st ed in our vie w as to why th e fin al bil l, as re port ed by th e co nferen ce co mmitt ee , does not co nt ai n th e ex pr es s la ng ua ge th a t th e au th or iz ed appro pri ations fo r section 6 are to be “in addit io n” to th e su ms au th or iz ed to b e a ppro pri ate d in s ec tio n 5. IVe ha ve ca re fu lly ex am in ed al l th e var io us bills , am en dm en ts, an d de ba te s in th e Hou se an d in th e Sen ate, as we ll as th e co nf er en ce re po rt, an d we ca nn ot find any ex pl ic it ex pla na tion fo r th e om iss ion of th e la ng uag e in qu es tio n. We of co ur se ha ve no firs th an d kn ow ledg e of w hat tr ansp ir ed in th e co nference, but we belie ve a conclus ion , th a t th e wor ds “in additio n” wer e no t used in th e fin al ve rsion re po rted out by th e co nferen ce co mmitt ee be ca use th ey were su r­ plus ag e, is s ound. As you kno w, th e Sen at e bi ll di d no t co nt ai n an y prov ision fo r th e pr og ra m se t fo rt h in section 6 of th e ac t. The co nferen ce re port reflec ts a comp romi se whe re by a sp ecial em ploy men t as si st an ce pro gr am w ith an au th ori zation fo r ap pro pri ation of $250 million, lim ited to the fisc al yea rs en di ng J une 30. 1972, an d June 30. 1973. w as ag re ed up on . Also, th e co nc ep t of a sp ec ial fu nd in th e T re asu ry of un ob lig ated ba la nce s from th e $250 mill ion co nt ai ne d in th e Hou se ve rsion was rej ec ted. (C on fe re nc e re port 92-310, p p. 14 .15.) In su pp or t of ou r co nc lusio n, we ag ai n re fe r to th e st ate m ents of R ep re se nta ­ tive s Per ki ns . Quie. an d Gro ss co nt ai ne d in ou r July 28 le tt er. Further m ore , in di sc us sing th e co nferen ce re port on Ju ne 29. 1971, pri or to a vo te in th e Sen ate on th e co nferen ce co mmitt ee ve rsio n of th e bill. Sen at or Nels on s ta te d : “T he or ig in al Sen at e bi ll auth orize d up to $750 mill ion in fiscal 1972 an d up to $1 billi on in fis cal 1973. Th e co nferen ce re port au th or iz es thes e am ou nt s, trig ge re d by 4.5 per ce nt un em ploy men t, but also au th orize s an ad ditio nal sp ecial em ploy men t as si st an ce pro gr am auth ori zi ng appro pri a­ tion s of $250 mill ion ea ch y ear to be mad e av ai la ble to units of ge ne ra l go ve rn men t which ha ve w ithin them are as of 0 pe rc en t un em ploy men t or hig her .” (C on gres sion al Rec ord, p. S10162.) Furt her m ore . Sen at or C ra nst on wh o w as also a mem be r of th e co nferen ce co mm itt ee s ta te d : “A lth ou gh no t enou gh , th e bil l does au th orize a to ta l of $1 billion fo r fiscal yea r 1972 an d $1.25 billi on fo r fiscal year 1973, en ou gh fo r per ha ps 200,000 an d 250,000 jobs in th es e 2 ye ar s. T h at re pre se nts a good st art . * * * The act wo uld also est ablish a ‘spec ial em ploy men t as si st an ce pr ogra m ’ to pr ov id e fu nd s fo r pu blic se rv ice em ploy men t to po ck ets of high un em ploy ­ m en t—ov er 6 per ce nt fo r 3 m on th s—even whe n nat io nal un em ploy men t fa lls below 4% pe rc en t. The fu nds auth orize d fo r th is sp ec ial pr og ra m —$250 mill ion a yea r— ar e in ad eq uate , but th ey also re pre se nt a pr om ising begin­ ni ng .” (C on gr es sion al Rec or d, p. S10172.) It is st ill my opini on th a t th e ac t. to get her w ith th e le gi slat iv e histor y, clea rly in di ca te s th a t section 0 fu nd s were inte nd ed to be an ad ditio n to secti on 5 fund s. Sincerely , P et er G. N a s h , Solicitor of Labor.

TE NT AT IV fc AL LO CA TION OF F IN D S BY STAT ES

Mr. Flood. Can yon place in the record your tentative allocation of funds bv States? Mr. Lovell. Yes. sir. Tt is a tentative allocation based on the as­ sumption of a $1 billion appropriation. But the allocation we have here is SO percent of $750 million, or $600 million. Mr. F lood. We would also like the basis for the determination of each State’s allocation. Mr. Lovell. Yes. sir. (The information follows:) 11

Fund s will be dis tr ib ute d am on g S ta te s an d des ig na te d are as on a tw o- pa rt fo rm ul a in which bo th th e ab so lu te nu m ber s of un em ploy ed pe rson s an d th e re la tive se ve rity of un em ploy men t will be giv en eq ua l weig ht. Th e fu nd s will be ap po rtio ne d am on g Sta te s ba sed on th e nu m be r of un em ­ plo yed pe rson s in th e S ta te as a per ce nt ag e of th e nu m ber of pe rson s un em ­ plo yed na tion wid e, an d on th e nu m be r of th e Sta te 's un em ploy ed in excess of 4.5 pe rc en t as a pe rc en ta ge of nat io nal un em ploy men t in ex ce ss of 4.5 pe rc en t. No S ta te will be al lo ca te d les s th an $1,500,000 re ga rd le ss o f it s un em pl oy men t st atu s, as t he la w pre sc rib es . A tta ch ed is a li st of th e te nta ti ve S ta te al lo ca tion s which wo uld be av ai la bl e if Con gress pa ss es th e ap pro pri ation of $1 billion au th ori zed by th e act an d re ­ qu es te d by th e Pre si de nt. The fu nds list ed fo r ea ch S ta te is th e am oun t to be spent, w ithin th e ge og raph ic are a of th e Sta te , by eligible go ve rn m en tal un its. The am ou nt s into which th es e Sta te s ap por tionm en ts will be divi de d fo r use in de si gn at ed are as w ithin ea ch S ta te will be mad e av ai la ble as soo n as the un em ploy men t ca lc ul at io ns are co mplete d. Tentative apportionment of section TEA fund* by State

Th ou k io i

'J? RE SPON SIB ILI TIES OF LOCAL AGENTS

Mr. F lood. Let me take tha t word “ag en t” th at you have used several times. The v are obviously going to be very im po rta nt chara cte rs in admi nis ter ing thi s prog ram at the local level. Could the agent be a person, local a gency, or w hat ? Mr. Lovell. AY e have said th at Tt could be an vthing we decided on. M r. F lood. W ha t are y ou t alking about? Mr. Lovell. AA’e are th in kin g of go ing to the heads of government of these units. In other words, we go to the mayor, we go to the cou nty executive, wha tever, and go to the G overn or and say. “AAT11 you please handle this res ponsibility fo r us ?” Air. Flood. AYhat will be the responsibilities of the agents? Mr. L ovell. The res ponsibility of the agent is to develop a p lan ac­ cordi ng to the guidelines which we prescribe and sub mit it to us fo r appro val. M r.F loop. AA'hat contr ols do you have on the p lan ? Mi’. L ovell. AATe will have a line item veto in ou r review and ap ­ proval of the plan. Fra nk ly , our intentio n is not to question every comma and dot. or to cross every “ t.” Mr. F lood. AA’hat control will the ?>tate gov ernments have over these local agencies? Mr. Lovell. The States un de r the law have a righ t to comment on tlie area plans. Tn othe r words, the'c iti es and the coun ties of 75,000 or more must submit th ei r pla n to the State fo r comment. Th at is all. Th ev can ignore the com ment. Mr. Mirengoff. T o the extent the State admi nis ter s this as an agent, it will be requ ired to equitably d istrib ute the f un ds it is a llo cat­ ing within the State and to exam ine and be responsible fo r the pr o­ gra m in accordance with the stipulati on s of the ------Mr. Lovell. Those are as o f less Ilian 75,000.

PROCEDURES FOR PLA CIN G AN AP PLICAN T IN A .TOB

Mr. F lood. Joe Doa ks up in one of ou r towns is unemployed and wants a iob under yo ur p rogram . AA’hat pro ced ure does he go t hrou gh fr om the time he gets the idea until he gets the job ? Mr. Lovell. AA’e are .going to req uire th at all of these jobs be listed with the Fm ployment Service . Bu t we are not going to require every ­ bod y to go throu gh the Fmploy men t Service.

ES TA BL ISH ING PAY LEVELS

Mr. F lood. H ow is it dec ided w hat he gets paid ? Mr. L ovell. Th at will be in the plan. He must be paid either the pr ev ailin g rate or the Fe de ral minimum wage, whichever is higher. 'That creates some interesti ng problem s among gov ernme ntal units th at do n't pay the minimum. Mr. F lood. AA’ill the pay be the same nationw ide fo r the same typ e of iob? Suppose the groundskeeper in Seattle gets twice as much rs the groundske eper in Boston : what about th at ? Mr. LoVfll. H e may do th at , if t ha t is the prevailin g rat e and is in excess of the minimu m wage. He will be pa id the same amount of 13 money as the individual performing comparable work for that em­ ployer. If he is hired by the city of Seattle to be a parks maintenance man, he will get the same money as all maintenance men in Seattle, as long as it is above the Federal minimum wage. You have the Tuscaloosa public wage that is lower than the Fed ­ eral minimum wage, and the individual would have to be paid the Federal minimum wage. They have to raise everybody to his level. Mr. M iciiel. If you don't do that, you may have a fellow who is better off getting himself fired and then coming back aboard as your----- Mr. Lovell. Yes; in addition to that, the law specifies an applicant must not differentiate between what a person hired under this act gets and what a person doing comparable work gets. When you look at that legally it means th at not only can't they get less but also not more than anybody else. I f they are required to get the Federal minimum wage, tlie only way to deal with tha t is bring everybody else up.

ASSURANCES PA RT ICIPAN TS WILL BE PLACED IN REAL JOBS Mr. Flood. You talk about this local matching being only 10 percent, and it may be in kind ? Mr. Lovell. Yes, sir. Mr. F lood. What is the incentive for local administrators to be sure that these participants are put in real jobs rather than stuck in a p ay­ roll and nothing else ? Mr. Lovell. Well; first of all, in order for a plan to be approved, the jobs outlined would have to meet criteria of a real job. That is going to be pretty hard to measure initially. Our plan is to get the money out as quickly as we can and then provide a lot of help for the people in the communities to run the program right. The normal procedure we would follow is to insist tha t they develop the correct process before they get the money. Both the Congress and the President are anxious to move rapidly in this. We are going to have teams work with the local communities to help select jobs that are real jobs and see to the maximum extent feasible that tlie people get the kinds of experience so that they can move through to nonsubsidized employment, which is the objective of the act. To the extent tha t we can work with communities to do so. we will. Once we get this initial phase over, we contemplate a staff of up to 800 Federal people, most of them in the field. Mr. F lood. That is better than 8.000. Mr. Lovell. It is better than 8.000.

PROGRAM DIRE CTION AND SUPPORT

Mr. F lood. You are budgeting $99,081,000, or 10 percent, for what you call program direction and support. "What is the percentage for this purpose under the MDT Act ? Mr. Mirengoff. I think it is higher than this—about 5 percent. This provides l.G percent, assuming it is $1 billion; for the Federal direction. Mr. L ovell. This act requires 85 percent of the funds be used for wages and benefits. That cuts down on the amount available for train ­ ing and administrative costs. 14

Mr. F lood. Suppose in all of t his business the Congress only allow s you 500 F ede ral jobs instead of th e 800 that you are asking for : would you bre ak dow n and cry ? Mr. Lo\ ell. Yes, sir. Mr. M ire ngoff. We wou ld Hood th is place. Mr. L ovell. We have establ ished an effective procedure. As we go throug h this we say we are not sure we need 800—it may be 1.200 or (500. So we a re g oing to look very caref ull y at the tasks to be perform ed to see what is necessary and to estimate as respon sibly as we can the number of people required. We really are not try in g to b uild a F ede ral burea ucrac y—we are tryi ng to keep it down. Mr. F lood. Y ou very ea sily could i f you s ta rt off t his way. Mr. L ovell. We could go hog wild. If we do n't prop erly monitor this prog ram it could be a terrible scandal. We h ave to watch it. Mr. F lood. In the justifica tion you wan t 45 ad ditio na l jobs for the Se cretary's Office. You ref er to. a nd I quote, “emergency pre pared nes s fun ctions.” Th at is one of the things crea tin g a need fo r add itonal jobs. W ha t does th at mean ? Mr. M iller. P rim arily , Mr. Ch air man, those are jobs th at would be located throug ho ut the Se cretary's Office. For example, in the Office of the Assistan t Se cre tar y fo r Adm inist ratio n there are a num ber of auditors who would be req uir ed because of the ad ditio na l audit wor k­ load caused by th is p rog ram .

CO NT RO L OVER NUM BER AN D PA Y OF LOC AL ADM IN IS TR ATI VE PE RSO NNEL

Mr. Fi , ood. W ha t control will you exercise ove r the number of ad ­ minist rativ e personnel at the local level, and t he s alary rates? Mr. L ovell. We will exercise our au thor ity at the local level. Mr. F lood. I can see them lickin g th ei r chops on this one. Mr. L ovell. There is a very im po rta nt control. The sponsor th at hires people at hig h salaries, an d the salaries may go up to $12,000— the sponsor th at does th at must hire few er people. We are going to sug gest th at it is one of the objectives of this act to emp loy as many people as possible. It seems to me essential if the ave rage rate of th at employer is say $8,000, the ave rage rat e hired here sho uld be less th an that. It sho uld not be more than th at . It sho uld be less th an th at , just as a guideline. In New York City the y do n't have anybody hired on the city pa y­ rolls un de r $0,000. Wh en you ad d about 17 percen t fo r benefits, th at comes out to abou t $7,000. In New’ Yo rk City we are not going to be able to spend under th at —w’e’ll pro bab ly be closer to $8,000. Mr. M ich el . Accor ding to yo ur figures you have o nly 123.000 people then who would be emp loyed throug ho ut the country with $1 billion. Mr. L ovell. Th at is rig ht. I think this is of value fo r emergency periods an d certain kinds of people.

STAT US OF OFFIC IA L RE GU LA TI ON S

Mr. F lood. Y ou are doing a lot of talking about this among you r own crowd, th at is pr etty clear. 15

In what kind of shape are your official regulation s? M hen are you publi shing them? Air. Lovell. They are being drafted now. 1 would hope within a week or two; maybe 2 weeks. Mr. F lood. They cannot become effective until 30 days afte r published ? Mr. AIirengoff. There would have to be an exemption on the 30 days. We expect to have them published perhaps in the second week in August. Mr. F lood. Are you having squabbles in your own family down­ town, any bigshots having any serious objections to this or that pro­ posed regulation that would further delay the effective date ? Mr. Lovell. No, sir. Mr. F lood. The possibility is right there tha t in the next two or three weeks they will be ready. Mr. L ovell. We have made some pretty quick decisions and the President has been pretty interested in this program. Mr. F lood. Y ou are not in trouble in your own back yard so far? Mr. L ovell. Not yet. Mr. F lood. The Occupational Safety and Health Act was signed into law last December 29. 'When do those regulations become effec­ tive? Mr. Lovell. 1 have no idea. Mr. Flood. Put that in the record. Mr. Lovell. Yes, sir. (The information follows:) The Occupational Safety and Health Act became effective on April 28, 1971. Regulations concerning planning grants under the act were first published on May 14, 1971, and were effective immediately. Health and Safety Standards were published on May 29, 1971. and became effective immediately for establishments previously covered by other Fed eral laws. For newly covered establishments they will become effective August 27, 1971. Mr. Flood. Mr. Mahon?

AL LO CA TION FO RM UL A

Mr. M ahon. Let us take the State of Texas in the context of this program. If you took all of the people in the United States and made a list of the unemployed and then if you said, assuming unemployed people in each State, so many in Texas—would that enter in any way in the formula? Mr. Lovell. Yes, sir. Mr. Mahon. Just that fact alone? Mr. Lovell. Yes, sir. Mr. AIahon. In allocating funds to a State, you would take into consideration total unemployment in that. State in relation to total employment in other States? Mr. 1j OVell. Yes, sir; that is one-half of the formula. Mr. AIaiion. Will States, in your opinion, feel when these guidelines and formulas have been made public that they have been discriminated against, or cities have been discriminated against, in your opinion. Mr. L ovell. Yes, sir; some will.

65- 48 8— 71------3 1G

Mr. Flood. There are going to be some Governors of States that won’t want any part of it. Mr. Mahon. My point is, what will probably be the basis of those complaints? I am try ing to foresee some of the difficulties. Mr. Lovell. 1 would say that if you could take the formula basis, strictly on the number of unemployed and those whose States do not profit by the 4^-p erc ent severity factor—in other words, a State with a low unemployment rate will get less money proportionately than the State with a high unemployment rate. I think Texas perhaps would be adversely affected from tha t point of view. New York would be hu rt and Ohio and Virginia would be hurt by it. Washington, D.C., would be hurt. Washington State would be helped by it. Oregon would not. I would say for any State that had an unemployment rate over 4 ^ percent, the higher it got above 41^ percent the more the State would be helped. Any State with lower than that would be hurt and probably complain.

POSSIBILITIES FOR PROGRAM MISMANAG EME NT AND ABUSES

Mr. Mahon. I would like to say tha t as for myself, I am skeptical about this program. I would say that in listing programs which Con­ gress has approved from time to time, I wouldn’t list this high on my priority list. I am very concerned about it. I t seems to me that it opens the gate for all kinds of mismanagement and even possible scandal. It could in some instances turn out to be a boondoggle which would re­ act unfavorably upon the administration and upon Congress. What is your comment as to this thought ? Mr. Lovell. I think that the potential of what you say is there. On the other hand, I think that with the unemployment rate as high as it is today, the need for a program which provides some needed public service jobs is a real one. The challenge we have, I think, is to run it well. I think that there is justification, very real justification, for a program of this nature, of this magnitude, at the present time. As 1 said earlier. I would not recommend a program of $10 billion magnitude for public service, or even $5 billion, but a program of this magnitude, with unemployment hovering around 6 percent, where we do have some critical needs for services to be performed at the State and local level. I think is perfectly justifiable. I think it is needed. In terms of abuses, any program of course is subject to abuse. I think the responsibility we have is to see that it is run with a maximum degree of honesty and with a maximum amount of effectiveness. We have a pretty well-trained cadre of professional people in the Man­ power Administration. We plan to run it well. I would be naive indeed to say that we will do everything well and that we will make no mistakes—we will; we will get blamed for a lot we don't make. I think that we can run this in a wav that will benefit the Nation and it will to an important degree alleviate some of the more serious problems of unemployment where they are heaviest. That is how we plan to administer it. COMPARISON WIT H WPA

Mr. Maiiox. What are some of the sharp similarities and sharp differences between this program and the old WPA? In the old 17

AV PA we helped com mu nities finance pro jects and those com munities took the responsibility who lly for tin* employme nt. Mr. L ovell. T his pr og ram will not finance proje cts as such. It will perfo rm a varie ty of serv ices curre ntly being perfo rm ed in a broader way. Fo r example, ma ny cities have had to lay otl people. I his act will allow them to br ing the m back. Mr. M aiio x . Make work? Mr. L ovell. Bring the m back into jobs th at are needed to be done but where the supp ly of money in th at loc ality has just given out. ■Mr. M aiio x . Would you say you would br ing them back to jobs probably of a lower pr io rity natur e? Mr. L ovell. N o ; I would say it would br ing them back to the jobs the y were laid off from . Mr. M aiio x . Th ey wo uld n’t have been laid off from the highest pr iority jobs. Mr. L ovell. It dep end s. If the y have a union agreem ent, the y are laid off by sen iority. I was ta lk ing to Mayor Stokes the other day and he had to lay off some police, which is very hig h priority. He feels th at they are in a very dangero us con dition, 'file police were not the first to lie laid off. He laid off a lot of oth ers but lie will br ing the m back in the orde r of pr io rity to the city as lon g as the union agree­ ments make it possible. Mr. M irengoff. One of the differences, and I worked for W PA in 1930-31). is t ha t at th at tim e we cre ate d special kinds of pro jec ts and put people to work on them. Th is prog ram int ends to pu t people in reg ular ong oing estab lished departm ents —teache rs, firemen, sa ni ta ­ tion workers, rec rea tion wor kers —ra th er than to establish com pletely separat e projects. Mr. L ovell. It does not f orbid doing tha t.

TIIAXSIT IO XAL VS. PER M A N EN T NATURE OF PRO GRAM

Mr. M ichel . Doesn't th at ten d to do what the chairma n is so con­ cerned about, provide a permanent Federal subsidy ? When you spe ak of policemen for the cit y of Cleveland , you say in yo ur testim ony here “th e most critical feature of the work will yie ld real and las tin g benefits to the une mployed and not merely p rov ide them anothe r form of public subsidy.’’ Tha t is a co mpletely ------Mr. L ovell. One of the great ligh ts we have had over this act was wheth er the employment under it would be tran sitio na l or not. The ad ministratio n battled very hard. As a m atter of fac t, you may recall the President vetoed the pub lic works bill on the basis tha t the public service jobs cre ated un de r th at act were not tra nsition al. Mr. M aiiox . Plea se expla in what you mean in this con text by tra nsition al. Mr. L ovell. I am ta lk in g abou t people, the indiv idu als hir ed on this job not rem ain ing forev er on those jobs but being forced and urg ed to get out into nonsubsidized employment. Th ey could do this. Th ere are two ways to do this. Th ere is alawys turnov er on regu lar public service jobs as there is in an yth ing. It actua lly is the largest grow th indu str y in the country. Publi c local gov ernme nt is grow ing at a more rapid rat e than almost any o ther sector. Say we create a job of policeman as an ad ditio n to the old payro ll. Ind ivi du al N is h ire d 18

into th at job. Three m onths l ater a policeman retires. Th is fellow still rem ain s a policeman bu t th at pa rticul ar ind ivi du al moves from the sub sidy role to the n onsub sidized role, leavin g an opening for anoth er person to come in. In dividu al Y moves into this policeman’s job. No­ body dies or retires , but aft er ind ivi dual Y has served fo r a year, the economy improves. IEe used to be a plu mb er's help er, so an opening as plum be r’s helpe r comes up and because his une mployment sta tus is reviewed twice a year, he is referre d to th at job an d takes the job as plu mb er's helpe r and leaves the policeman’s job, a llowing room for Mr. Z to come on. Tha t is one aspect of the tra ns ition al n atu re. Th e second is th at it is a prog ram th at trigge rs in na tio nally only when une mployment is ov er 4 bo percent. If un employment f alls under 4*/, percent as it was fo r a numb er of years, the n the re is no more money fo r the pro gra m. The program ends. The prog ram is only a 2-y ear program a nyw ay. I t has that limit. Mr. Mahon. You would agree, I wou ld assume, being somewh at a stu dent of government, that we are probably tied to th is program ? We latched onto this prog ram and it will probably be here for the rest of your lifetime. A t least perha ps fo r a lo ng time. Mr. Lovell. I th ink------Mr. Mahon. You u nd erstan d th at ? Mr. L ovell. I think we will have a public service ing red ien t to m ain ­ tain in our pro gra ms for a l ong tim e: there is a public service ingred i­ ent in IT.R. 1 of $800 millio n. I suppose any manpower reform th at comes out o f Congress will have some form of tha t. Mr. Mahon. I n other words, this is n ot a 2-year prog ram but from here on ? Mr. Lovelt.. I think you are pro bab ly rig ht.

FEDERA L BUDGET DEFIC IT

Air. M ahon. You are f am ilia r with the fact th at th e deficit this year under the unified plan —the most fav orable lig ht t hat you can look at it fo r last year—was $23 billion, one of the largest in histo ry? Mr. Lovell. Yes, si r; I know th at. Mr. Mahon. The budget deficit, according to the Federal fund bud get, is estimated now as being $30 billion. We con tinu e to find at­ tra ctive way s to spend mon ey and this is a very grave s tep we are ta k­ ing here because a $1 billion effort can easily balloon into a much larg er pro gram.

READINESS OF DEPARTM ENT TO PU T THE PROGRAM INTO OPERATION We are ge tting ourselves h ere into quite a prog ram a nd we are con­ sid ering bringing this up in a special resolution which I myself will have to handle in the H ouse, when we know too lit tle about how it will ope rate. It distu rbs me a grea l deal. You don’t kno w how it is to op ­ era te, you don’t have that in han d v et, do yo u ? Mr. L ovell. Well, I th in k it wo uld be very pres um pti ou s on m y p ar t to say we have all the answers to this program . I t is 2 weeks old now. Mr. Mahon. S hould we fin ance a program t hat is o nly 2 weeks old? Mr. L ovell. I think we should. I think th at we have had enough general experience in this field. 19 We have run programs somewhat of this character before to a lesser extent. We have run a $250 million summer youth program now for a couple of years, a $200 million program for Neighborhood Youth Corps, which is public service employment. We have run a $60 million Operation Mainstream program. We are not completely without knowledge of these kinds of things. This is a much bigger program. It is a much more difficult program. It has many more pitfalls. I think we can handle it and do all of this.

JU ST IF IC A T IO N FO E T H E AM O U N T OF T H E RE QU ES T Mr. Mahon. What magic is there; is that $750 million picked out of the h at ? Mr. Lovell. It is a big hat. Mr. Mahon. Yes. Is there any scientific predicate for this amount ? Mr. L ovell. I think it is the same scientific formula used in many of our appropriations, Mr. Chairman. Mr. Mahon. 1 think it is too. and that bothers me. Thank you. Mr. Chairman. Mr. Flood. Mr. Michel. Mr. Miciiel. Mr. Lovell, you are testifying here in support of what, a total of $1 billion for the balance of the fiscal year 1972? Mr. Lovell. Yes; that is right. Mr. Miciiel. Since we are already through one of the months of the fiscal year. 11 months to go, and conceivably some time lag, would that mean if you got the $1 billion you would have an excess for the balance of the year ? Mr. Lovell. No: because what we will do is obligate it for one 12- inonth period. We will have no problem obligating all of the money. The money once obligated will not all be spent in this fiscal year. Mr. F lood. Y ou will write somebody by letter and say, “ You are going to get so much.” a letter of credit ? Mr. L ovell. Yes; but we would expect all of the people to be hired. Mr. F lood. That has been done before. There is nothing new about that. Mr. Lovell. No, wc always do that.

AL LO CA TION OF FU NDS

Mr. Miciiel. That billion dollars I understand under the provisions of the act is broken down $600 million distributed to the States on the basis of the formula you have been talking about ? Mr. Lovell. Yes,sir. Mr. M ichel. $250 million earmarked for those areas in excess of----- Mr. Lovell. Six percent. Mr. Mkiiel . And then a third element, $150 million at the discre­ tion of the Secretary ? Mr. L ovell. Yes; out of that discretionary money must come the Federal expenses of the program which will include the agent assist­ ance and things of that character. Mr. Michel. Will those 800 positions you are asking for come out of that $150 million ? 20

Mr. L ovell. Yes, sir. Mr. Miche l. When yon make the allo cation to the States of the $600 million an d the $250 million , do those peop le out in the field th at are actua lly resp onsible to the State and local level fo r ad minist er­ ing the prog ram come un de r the allotm ent th at o rig inally w ent to the St ate ? Mr. Lovell. Yes.

FEDERAL. STATE. AND LOCAL PERS ON NE L TO AD MINISTER THE PROGRAM

Mr. Miche l. Y ou are a sking fo r 800 F ederal people. How ma ny do you exp ect the re will be over and above this administ ering this pr o­ gram at St ate and local levels and fund ed the n no t in the Se cretary’s discret ion ary $150 million pa rt of the $750 million, but throug h the allo cative fo rm ula ? Mr. Lovell. We don’t have an actual numb er but we have a do lla r figure. Mi\ Mirengoff. $43.5 million for local ad mi nistr ation. Mr. Michel. What level of persons will these be. salary wise? You speak here of people who a re going to actua lly be emp loyed hop efully, or taken off th e unem ployed rolls, ge tti ng $5,000 or $6,000. ITow about the people who a re a ctu allv g oin g to run this th ing? M r. Lovell. We a re going to urg e to th e extent possible t ha t as many people as can be used to run this prog ram be hir ed u nd er the act, They won ’t all be able to. The law requires some fa irly complex detaile d repo rting systems.

FORM ULA FOP. ALL OCA TING FUNDS BY STATE

Mr. Mich el. Let me see if I un de rst an d thi s for sure. Of all of those people une mployed in the Un ite d Sta tes , my figures are th at 4.9 pe r­ cent are in my home State of Illinois. Does th at mean out of th is $600 million th at Illino is should get 4.9 percen t of th at fund ? Mr. Lovell. Th at will be one elem ent of the formula. Mr. Mich el. And the o ther elem ent is wha t ? Mr. Lovell. The percent of unemployment over 4i/> percent that Illino is has. Mr. M ah on. 1 low do you weig h tho se ? Mr. Lovell. Equally. Mr. Mich el. Is it fa ir to say we get 4.9 percent of $300 million to star t ? M r. Lovell. It d oesn’t work quite th at way. Mr. Mich el, 'fell me now exa ctly how th at thi ng works. I am sorry I don't have them, but I assume we, have the s tat istica l resources th at will tell me what portion of the over percent une mployed people we have in Illinois. Mr. Lovell. \\ h ate ver t ha t is, that would be an equal we igh t in the formu la with th e percentage of unemployment. .Mr. Michel. If you are going to have it weighed equ ally . No. 1, on the basis of the percentage of total unemploym ent and secondly on the basis of the oth er factor, the easiest way for me to do t ha t stat isti­ cally is to take ha lf of the $60 0 million and say $300 million is dis­ tri bu ted under each. Mr. Lovell. What is your unemployment ( Mr. Michel. The percentage is 4.9. That is not the rate in the State. Tha t is what we consider to be our percentage of the total of unem­ ployed in the country. Mr. L ovell. That would give you $15 million if you took the figure on $300 million. Mr. Miguel. That is right. Admittedly the State of Washington is in a lot worse shape than my home State of Illinois. Mr. Lovell. Illinois gets $17.9 million; about $18 million. Mr. M ahon. Let us take a State that has precisely 4.5 percent un­ employed. smooth, even throughout the State; no pockets. It is just 4.5. Then, based on that, the State would get its money more or less on half of the formula ; is that right ? Mr. Lovell. Yes. Mr. Mahon. Then if there were no pockets of higher unemployment that State would really get a very small percentage ? Mr. Lovell. That is correct. You have to get a minimum. Mr. Mahon. You have to what ? Mr. L ovell. You have to get a minimum with the 4% percent.

EFF ECT OF PO CK ET S OF U N E M PL O Y M E N T I N FU N D AL LO CA TIO N In addition the pockets do not have to be in a governmental unit, it can be a piece of a unit. For example, in a ghetto area of Houston or Dallas you could have an unemployment rate, as we do in most big cities iii the innercity areas, that is high, and in some of the rural areas you have some fairly high unemployment too. So it would be very un­ usual for a State not to have any areas. If it were so. you are right. Mr. Mahon. Suppose you go into a State where it has a pocket of very high unemployment, say 20 percent, but suppose it is a relatively small area. How do you equate tha t? You weighed the formula, half on one basis and half on the other basis and you don't have too many people who are in that one pocket of high unemployment. How do you keep them from getting a disproportionate part of the $250 million fund ? Mr. Lovell. We have not yet developed a method by which we will allocate this $250 million. I really can't answer your question because we haven't figured it out. Mr. Michel. Do we have any prelim inary estimates of the number of people involved in areas in excess of 6 percent unemployed.

AREAS EL IG IB LE FOR SP EC IA L TREA TM EN T DU E TO EX CE SS IV EL Y H IG H UNEMPLOYMENT

Mr. L ovell. The first thing we have to do is decide what limits we are going to put on eligible areas. We have to put some limits on it. We just can't have every half block come in with a plan as an eligible area, although th at is possible under the act. Every census tract could do it, or piece of a census tract. There is no limitation except on the ability to mount a program. You could have one person in the program. We are going to have to make a definition of what the eligible program is and say arbitrarily the limitation as to what that is. Once we have 09 made tha t decision, then we can go on and make some judgment as to various levels of unemployment. I suppose we would not treat every area the same. An area of 12 percent unemployment we would prob­ ably want to give more money. Mr. Mtchel. What are you talking about in time? The urgency of this bill seems to be compounded bv the very districts which have the highest level of unemployment that you are not yet prepared to define. A1r. Lovei.e. We have been working on this for 2 whole weeks as I say and we have come quite a ways. We haven't come all the way. Mr. Michel. We don’t mean to lie over critical. We’re talking about a billion bucks here and we have an obligation to see that its spent wiselv. Mr. Ainu sxgoff. We can have this worked out in a matter of weeks. Air. Lovell. AVhat we will do in all probability is work out some kind of formula that makes a tentative allocation of money among various regions and among various States. Then we will probably solicit from our agents plans for expenditure of this money against certain target figures. Air. Mtchel. You do have the specific right of veto over every one of these projects? Air. Lovell. Yes.

STATE VS. CITY CONTROL OF PROGRAM

Mr. AIichel. Let me give you another proposition. The State of Illinois is the second largest employer in the State, public or private sector. In Cooke County alone we have 15.000 State employees. When you talk about the human things like vocational edu­ cation. child care, rehabilitation, public assistance, all of these things we were talking about yesterday on the floor on HEW. this is a State responsibility primarily as distinguished from the local city govern­ ment of Chicago. Air. Lovf.ll. Yes. Air. Michel. In (he statute where you speak of equitable manner of distribution, what is going to happen in the city of Chicago or the county board of supervisors in Chicago or the State—who is control­ ling the situation like that? We have a similar situation like that in Peoria. Mr. Lovell. They have it everywhere. I think we will have to say this: In the guidelines to our city and county agencies we would re­ quire them to indicate what portion of the total public employment population were State employees, were school board employees not as­ sociated with the city, or were city employees, perhaps countv em­ ployees as well, and expect them in the development of their plan to take into account these ratios in allocating the contracts within this area. Air. Mirengoff. I will sav in the event that a city has a large State institution, a hospital or whatever, we would expect the city as the agent to take into account the State employment as well as city em­ ployment so the mayor doesn't spend all of his resources exclusively on municipal people. Mr. Michel. I don't think as a practical matter that is going to work. The city government or mayors in some cases because of political differences aren't going to give two tinker's dams about the Sta tes obligations. I want to find out if the city is going to be responsible for those institutions where there are city employees. I here is no prohibition for the same project area then being approved for those programs that are dependent upon the State. Mr. L ovell. Particularly when they present some uniquely good employment opportunities and opportunities for upward mobility.

IN DIV ID UAL REQ U IR EM EN TS FOR PARTIC IP ATIO N

Mr. Michel. Going back then, to qualify as an individual under this program he has to be currently unemployed or underemployed ? Mr. L ovell. Yes. We will say in most instances we are going to be talking about unemployed. Mr. Michel. Are there any visible signs of this qualification being subverted in any way?

R E II IR IN G PE RSO NS TO T H E IR OLD JO BS

Mr. L ovell. We have already had questions raised in an effort to subvert it. For example, the question was raised—if a city is about to lay off somebody, could they get the money or do they have to lay them of? My answer was they not only have to lay them off but demonstrate that the layoff was not in contemplation of this act and that it was in excess of any number of people that would be called back under this act. In other words, if all they had to do was to threaten to lay off people, you are just handing out money and creat­ ing no new jobs at all. So we have to be careful about that. Mr. Michel. I will pass for the moment. Mr. Chairman. Mrs. R eid. May I ask a question in this regard? Mr. F lood. Yes. Mrs. R eid. Y ou talk about rehiring people in jobs where they had been let out because of lack of funds. Mr. Lovell. Yes. Mrs. R eid. Will they actually try to rehire those who lost their jobs? Mr. L ovell. I think in those areas where they have either union agreements or a matter of public policy of calling back the same people, yes. It raises some interesting questions. M rs. Reid. It certainly does. Mr. Lovell. For example, if a person called back is currently work­ ing, is he eligible to be called back ? If the person who worked on the job lives out of the area for which the allocation has been made, lives out in the suburbs or some place outside of the area, is that person eligible? There are some technicalities we are going to have to work out here. I think too we are not going to allow all of the resources to be used for the purpose of calling back laid-off people, because we are going to have to take into consideration the veteran, the Vietnam era veteran, 24

and the civil ligh ts provisions req uire we tak e into acco unt the pe r­ centage of m ino rity gro ups am ong the unemployed. So if c all ing back people brou gh t in all white peo ple, fo r example, and no minority gro ups were hir ed u nder the act, we wo uldn 't wa nt th at to happen. So we will hav e to tak e step s to see th at it doesn’t. So the guidelines we establish here are going to have to set some lim its and we are g oing to tr y an d pu t up as few obstacles as we can but we are going to be obliged to pu t up some to see these kin ds of situations are dea lt with . Mr. F lood. Mr. Hu ll. Mr. N ull. X o questions. Mr. F lood. Mr. Shriver. Mr. Shriver. Thank you, Mr. C hairm an. You have a big job, Mr. L ovell. Mr. Lovell. Tt is going to be intere sting.

POSSIBILITIE S UNDER PROGRAM FOR UN EM PL OY MEN T IN AEROSPACE IN DUSTRIE S

Mr. S hriver. My home city o f W ichita in Kansas has un employment in excess of 11 percent. T suppose it is a bout the only city in my State that has a v ery hig h percentage. Thi s is a result large ly of the Federa l Government cu tback in the defe nse and aerospace indu stry and the a d­ jus tment from wartim e to peacetime economy. Mr. Lovell. Yes. Mr. S hriver. Those people prob ably make $10,000 or more a yea r. Wh ere would they fit in to the p ict ure of public service employment ? Mr. Lovell. We have had an interesting experience in Seattle. As you know our serio us problem na tio na lly is eng ineers and scientists associated with space and science ind ustries. One of the princ ipa l prob ­ lems the y have to face is th at there is work the y can do all rig ht but the y are g oin g to have to live in a differ ent style. Th ere aren 't enough jobs in the aerospace in du str y anym ore to sup po rt the nu mb er o f people who had been m aking $25,00Q a year. So the y have to move from being a $25,000 a y ear m an and liv ing in a c ertain com munity an d doing cer ­ tain thing s to being a $15,000 a ye ar man. liv ing in a certa in commu­ nity and doing certain other things. Psy cholo gic ally th at is very difficult. We find those people pos tpone making th at decision as lon g as it can be p ostpon ed. I n Seattle we find a $20,000 a ye ar man will take our special S T E F job which pay s $2 an hour, which is a tempo rary work experience job funded under MDT A, because he knows it is a 13-week wor k prog ram . He doesn't psy cho logically have to say I am not $25,000, I am $15,000. He can say I am still $25,000, out of work, taking tem po rary wo rk to h old me up. From th at point of view this prog ram could offer the op po rtu nity fo r them to make $6,000 or $7,000 o r $8,000 or even $10,000 a ye ar and allow them to either psy cho logically ad just themse lves to a lower level or to tempo rarily pay the m ort gage u ntil the y move into anoth er area or tak e an othe r job th at pays the m more. Bu t I th in k the fact th at it is conside red a t ransition al p rogram psycho logically might help people like th at. Maybe it is bad, may be the y have to face up to the rea lity a lo t sooner. I think the re will be taker s. MAXIM UM PAY FOR PARTICIPANTS

Mr. Michel. If the gentleman will yield, what is the maximum amount that can be paid ? Mr. Lovell. $12,000. M r. Michel. Under this program ? Mr. Lovell. Yes.

TIM ING OF FINAL FUND ALLOCATIONS

Mr. S hriver. When do you expect to have the final allocation figures available for the local governments ? Mr. L ovell. In a few weeks. The problem is to get the unemploy­ ment rate because we don’t normally collect unemployment rates for smaller areas. We collect it by standard metropolitan statistical areas. We have to break it out into cities and counties. Mr. S hriver. That is going to take a while but the need is now. Mr. Lovell. We are going to have it in a couple of weeks.

SU PPLEM EN TA L EM PLO Y M EN T OF PA RTIC IP AN TS

Mr. Michel. If the gentleman will yield again, is it possible for one of these public service employees to have what they are getting through this act supplemented by the local government or whatever entity by which they were employed ? Mr. Lovell. Yes. Mr. Miciiet, ( Conceivably one of Mr. Shriver's high-powered people could draw $12,000 through the program and $5,000 front somewhere else ? Mr. L ovell. That is right. This is specifically made possible.

IM PACT OF PRO GRAM ON NATIO NAL U N E M PL O Y M E N T PROB LE M

Mr. Mahon. If the gentleman will yield further, what impact can a program of this type, even though very expensive in light of our fiscal stringency, what impact can it have, because at $12,000 per year only a 1 ’united number of people could get jolts ? Mr. L ovell. First of all we don't contemplate everybody making $12,000. We contemplate perhaps half of that. Mr. M ahon. But if everybody made $12,000, how many jobs could you give ? Mr. Lovell. About 80,000. Mr. Mahon. That is not many jobs. Mr. Lovell. There is a limit of one-third on the number of profes­ sionals that can be hired. But as I say our guidelines are going to discourage paying the maximum amount of money to these people. Let me comment in terms of impact. We have developed a formula which does not spread the money evenly over the country, and in areas like Illinois where you don't have as high an unemployment rate you are not going to get as much money as areas which have a high unem­ ployment rate. We have done that because we want the money to go where it makes the biggest impact. 26

Mr. Michel. That is why I contend that portion of the bill which is directed to those areas with unemployment of 6 percent or more is much more compatible to my whole philosophy than that very critical level of percent because in times of greatest prosperity in this coun­ try, without any war, we have to try hard to keep unemployment less than 5 percent. T am all in favor of doing what we have to do for those areas who are suffering this unfair situation of 6 percent or more. Mr. Shriver. This discussion we are having makes it more evident to me that it would have been better if the Federal Government would have kept the SST program. Mr. L ovell. I think this administration has never felt tha t a mas­ sive public employment program can ever take the place of stimulat­ ing the economy in the private sector. It has been pointed out that this program probably will provide more jobs more cheaply than many public works programs because there is a minimum amount of extra cost to it, and at a time when there really is a demand for increased public services of a useful nature. So I don't think this will be a wasteful program. I think the public services that will be performed under this act will be useful, will be constructive, will be productive. I think we will find this will get more people employed more quickly than any other technique we could use of an artificial nature. Tt does not take the place of a strong economy. Of course one of the highest priorities this administration has is licking inflation and getting a sound economy that is going to grow over time. This is a measure which at this particular level I think we can use constructively.

ELIGIBILITY OF ECONOMIC DEVELOPMENT UN ITS

Mr. S hriver. We have in my community an EDA development area which goes beyond my county and into an adjoining county, but in my congressional district. Who would act as the agent in that kind of a situation ? I assume they would be entitled to qualify as a govern­ mental unit of some kind. Mr. Lovell. Not an EDA unit. Mr. S hriver. What do we mean by governmental unit? Mr. Lovell. We have defined that, but certainly an EDA unit with unemployment of 6 percent or more could be eligible as an applicant. Mr. Mirengoff. EDA units are usually larger than a single city. Mr. Lovell. An EDA unit of several counties would be an eligible applicant for part of the $250 million. Mr. S hriver. 1 would think so. My question is. who would be the agent when you have two or three counties involved ? Mr. Lovell. Who would administer it ? Mr. S hriver. Yes. Mr. Mirengoff. I think in that case you would probably look to each county. Mr. L ovell. We would do that or ask the State depending on what kind of capacity is built-up. Hopefully the State might be able to administer that. We want to get a minimum amount of Federal people. RELA TIO N SH IP OP PROGRA M TO OTH ER M ANPO W ER PRO GRAM S Mr. Shriver. H ow would the other manpower programs work in conjunction with this program ? Mr. Lovell. The act specifies that for training and other manpower services we should call on other manpower programs to supply them when necessary. There is not as much money for training in this budget as we might want because 85 percent must be spent on wages and benefits. The public service careers program, for example, is a program where we have currently allocated about $100 million for 1972, and that might be used to provide training and supportive services to people employed under this act.

AUTHORIT Y TO W AI VE M A TCH IN G REQUIR EM ENT

Mr. S hriver. As your material mentions, section A of the act gives the Secretary the authority to waive 10 percent local matching funds. Mr. Lovell. Yes. Mr. Shriver. Under what circumstances might that be '? Mr. Lovell. I think it would be very rare indeed.

SUBM IS SI ON o r APP LIC ATIO NS TO ST AT E GOV ERN ORS

Mr. S hriver. On page 8 of the justification, you stated all applica­ tions for this assistance will be submitted for comment to appropriate local government officials and State Governors. Mr. L ovell. Yes. Mr. S hriver. What is meant by the “for comment"? They have no control? Mr. Lovell. I think by and large it is a notification of intent so that if somebody doesn't like it. they can protest to somebody. From the Governor's point of view, it does give him an opportunity to com­ ment on a substantive basis in terms of whether the State employment is adequately represented in the plan or whether the kind of services to be performed are duplicative of State services. Frankly, the first year I see it mainly as an opportunity to allow units of government that have been left out to appeal in intelligent fashion. For example, a plan would have to receive comment from a school system, if an independent system, so they would know about it. They could say, “Look, the city got $2 million and the schools have 20 percent of the public population and you didn’t give us any money.” And they would say, “Mr. Regional Manpower Administra­ tor, we appeal to you to correct this inequity.” If they hadn’t seen the plan, they might not have appealed in time. We just can’t allow an awful lot of time for appeals and this kind of thing. We will have to allow a reasonable amount, but we are going to have to shut it off pretty quickly to get this money out in a timely fashion. The purpose of th is act is to do this in a timely fashion. We have to do it now. 28

Mr. S iiriver. You don't visualize the need for a lot of construction of new facilities? Mr. L ovell. X o. Y ou can't use the act to do that anyway. Xo; I do not. Mr. Shriver. I wish you luck. Mr. Lovell. Thank you very much. Mr. Flood. Mr. Patten.

COMPARISON OF PROGRAM COST W IT H AM OUNT SP EN T ON ALCOHOLIC BEVERAGES Mr. P atten. Mr. Chairman, I would like to ask if Mr. Lovell knows how much we spent last year in this country for booze and beer ? If I told you over $27 billion, would you take my word for it? Air. Lovell. Xo; I don't know.

ABILITY TO EFF ECTIV ELY USE $1 BILL ION

Air. Patten. The remark was made about $1 billion. AVe drew up this bill and passed it unanimously in the House and the Senate, the President signed it. You sound like we picked it out of a vacuum. Doesn’t this come as a result of your mayor’s association, the Governor's Conference, and the work of your own department in stating this is something you could do with merit and qualified help. Air. Lovell. I agree this money can be spent efficiently. Air. Patten. You sat here a few weeks ago and spoke of the Opera­ tion Alainstream, and you said you tried to reach 21.400. I don't re­ member how many you said you would like to reach, but I think it was 10 times that number. You also spoke of another program—special targeting : This is just last month when your department for manpower train ing asked for an amount about equal to what we have here 1 suppose. Air. Lovell. Alore than that. A billion and a half. Air. Patten. A s far as my State goes, we have over 30,000 people in State institutions for mental health and the like. AVe are always short as a budgetary matter. Xever, never been able to get enough nurses or nurse’s aides and porters. I was a AVPA mayor, one of the best. I had 8,000 unemployed, and believe me we took advantage of every dollar. If you remember, that was at $41 a month. They were glad to get it. Others committed sui­ cide. They jumped otf the bridge. I have 32.000 people out of work in my district. AVe have 5 million people out of work in the Nation. In my city and my county and my State we will spend every dollar for good purposes. Let's not be pussyfooting over this as if we don’t know what we are doing or we don’t know why we are here. Air. Lovell. I think it is an appropriate line of questioning for us to explain. I think we have the responsibility to do that. Mr. P a tten. I tell you if 1 were the President of the United States. I could tell you what we could cut out to save many billions of dollars by edict. Our public today never had so much money, our banks never 29 had so much money, and I can document it. People are eating straw­ berries in January. We never have had so many people in my town eating steak. We never had it so good. We have some who never made a sacrifice. Our cities and States need this help. We will put these people in spots righ t now where we have very severe shortages. In my city we are going to use them to collect the garbage, we are going to use them to clean up the park, we are going to use them in environment control, we are going to use them in worthwhile areas. Aly mayor has assured me of that. In my town we can use a little extra help and a little extra money. Don't have any qualms. AVe are going to spend $1 billion for the ta x­ payers of the United States, for State, county, and local purposes. You came in with 8 or 10 ideas on manpower trainin g where you could make great in-roads in training people to help in the hospitals. I hope you will stiffen a little bit and help the President in the needed area and don't vacillate whether we are going to use it for useful purposes. Air. Lovell. Let me make the record clear. 1 have no question as to our ability to use this money. Air. P atten. I have no further questions, Air. Chairman. Air. Flood. Airs. Reid.

ESTA B LIS H M EN T OF GUID ELIN ES

AI rs. Reid. In all deference to my good friend from New Jersey, I do think we have posed questions this morning which should be asked. 1 am concerned about the guidelines which you admit must be set forth. AA’hen do you foresee these guidelines will be worked out ? Air. Lovell. AVithin a couple of weeks. Airs. Reid. For instance, would you feel that priority would be given to those people who have exhausted their unemployment benefits? Air. L ovell. I think this would certainly be a logical thing. One has to choose between the amount of limitation one puts on a local sponsor in terms of the kind of jobs, the kind of persons, where he can spend it and how he can spend it and see. AVe are leaning in the direction of setting some broad guidelines but letting the local people within the definition of the act decide who to put on. As we go down the road and get better control and more experience, I think we can be more sophisticated in it. This is a criteria we use in our ST EP program, for example: that is, if an individual exhausts his unemployment benefits he is eligible. It is a concept we have used, and it makes sense. AI rs. Reid. In your guidelines would you set forth some kind of provision to protect the job security of civil servants who are presently employed ? Air. Lovell. The law provides for that kind of thing, and we would certainlv have in our guidelines all of the provisions of the act. AI rs. Reid. I think you have a big job ahead of you. Air. Lovell. I agree. Airs. Reid. Thank you. Air. Chairman. 30

T IM IN G FOR ESTA BLIS H M EN T OF PRO GRAM

Mr. C onte. Once appropriations are provided for this program, when is the earliest we can expect to see people put back to work under it? Mr. L ovell. We hope that people can begin to be employed under this program no later than September 1, and earlier if possible. Mr. Conte. Can you give us some idea of what administrative pro­ cedures have already been developed to distribute funds under the program ? Mr. Lovell. At the present time, we have already determined tenta ­ tive allocations to the States and have developed a list of eligible program agents, who can receive and administer funds. We are also developing application and grant formats and are completing the collection of data for determining program agent allocations. Mr. Conte. Have any concrete arrangements been worked out with the heads of local units of government to implement the act ? Mr. Lovell. As yet, no concrete arrangements have been made.

AD EQ UA CY OF U N E M PL O Y M E N T ST AT ISTI CS Mr. C onte. Y ou state that you do not currently maintain unem­ ployment statistics at the level of government chosen (75,000 or more). How soon do you expect to change this policy ? Mr. L ovell. We are investigating the problem and its costs. The cost of collecting these statistics increases as the size of the area gets smaller since the sample required must be considerably larger. In the meantime, we are developing methods for the best utilization of the data tha t we have now in order to meet program needs.

program’s relationship to other manpower programs Mr. C onte. What other manpower program services do you con­ template using to train and assist the beneficiaries of the act? Mr. L ovell. Program agents are encouraged to utilize whatever manpower programs and facilities are in their area. We particularly expect to utilize the local employment services for placement, recruit­ ment, and counseling and MDTA training.

prospective local problems

Mr. Conte. What are some of the new problems at the local level of government you expect to be created under the act and what steps are you taking to meet them ? Mr. L ovell. Problems with civil service and merit system barriers to employment are expected. We are working with the U.S. Civil Service Commission in developing guidelines on job restructuring and removal of barriers. We also anticipate difficulties in relationships be­ tween political units and semiautonomous public service agencies and we are trying to develop subgranting procedures to maintain relation­ ships and funding flow. There may be funding problems, such as the separation of program funds from other funds on the local level and local authority to receive funds. Additionally, we expect some difficulty 31 in matching jobs to client groups and hope that our utilization of Em­ ployment Services and the Civil Service Commission will help meet the problem. PROGRAM EVA LUATION

Mr. C onte. What steps will be taken to implement an effective evaluation program? Mr. Lovell. We are making plans for long-range evaluation studies. We are also setting up monitoring techniques and allocating consider­ able staff to this function; we expect to visit larger projects on a very frequent basis. OTHER PROGRAM PROBLEMS

Mr. Conte. What specific kinds of specialized labor market infor­ mation will have to he developed to assure the successful implementa­ tion of the act? Mr. L ovell. For the purposes of an equitable distribution of the section 5 funds, we need labor market information collected on indi­ vidual jurisdictions. For implementing section 6, we need informa­ tion on even smaller areas, particularly in our major cities. Mr. C onte. Would you be more specific in detailing some of the controversial political problems the Office of Public Service Em­ ployment will have to deal with ? Mr. Lovell. Our most difficult problems will be in the area of inter­ governmental relations. These questions include: Who qualifies as a program agent, who can administer funds, how is the money divided among employing agencies, and where are jobs located? Mr. Conte. What are the pitfalls of previous job creation programs that you hope to avoid under the new act ? Mr. Lovell. Previous programs subsidized jobs with little meaning­ ful work and few career opportunities. Frequently, totally new agen­ cies were created to do new work. In this program, funds will largely be used for staff extensions in already established fields for which there is needed work. Mr. Conte. Aside from those mentioned on page 16, what legal ques­ tions do you expect to arise from the statute and do you believe two positions in the Solicitor’s Office will be sufficient to handle them? Mr. L ovell. Once the emergency employment program is opera­ tional, we do not anticipate any legal questions or problems other than those listed on page 16. We believe that two positions, in addition to the people presently working in this division, will he sufficient to han­ dle any legal questions which may arise afte r the program becomes operational. Mr. Flood. Thank you very much gentlemen.

LETT ER AND STAT EM EN T OF CONGRESSMA N WALTER S. BARING OF NEVADA We have a letter and statement from our friend, Congressman Bar­ ing of Nevada, concerning the subject of this hearing which was hand- delivered earlier this morning. We are glad to have it for our hearing record. If we receive any additional written testimony before this rec- ord has to be sent to the Public Printer, we will place such testimony in th at record following that of Mr. Baring. (Mr. Baring’s letter and statement follow:)

Con gr es s of t h e U nit ed S ta tes , H ou se of R ep res en ta ti ves , Washington, D.C., July 28,1911. Hon. Daniel J. F lood, Chairman, Labor-Health, Education, and Welfare, Subcommittee of Appropria­ tions, The Capitol, Wash inyton, ll.C. 1 ear> D an : I am enclosing a brief information stateme nt rega rding the severe unemployment figures affecting the S tate of Nevada. 1 am urging That the Congress approve the appropriation for the Emergency Employment Act auth oriz atio n prior to the August 6 congressional recess for reasons explained in my enclosed statem ent. I appreciate your atte ntion and the atte ntion of your colleagues on your subcommittee. With best wishes, I am Sincerely, W al te r S. B ari ng , Conyressman for Nevada. Attachments.

I nf orm at io n S ta te m ent by C ongre ss man W al te r S. B ar ing Mr. Chairman, and members of the subcommittee on Labor and Health, Educa­ tion and We lfare; I appreciate your consideration of my brief rem arks pin­ pointing the bad unemployment problem facing the State of Nevada today and its two major cities. According to the Nevada Employment Security Departm ent unemplovment fig ares for June, the State of Nevada is currently experiencing the highest un­ employment in 10 years. Statewide, Nevada’s unemployment figure is 6.8 percent—th at is above the June national figure of 5.6 percent. In total numbers-—18,200 Nevada residents a re out of work. Nevada’s two major cities, Las Vegas and Reno, are also laboring under the highest unemployment figures in 10 years. The largest city in the State, Las Vegas, has a current unemployment figure of i,.'i percent which is over 1 full percentage point of what it was in the previ­ ous month of May when it was 6.1 percent. Ten thousand peoide in Las Vegas alone a re out of work. Reno's unemployment rate rages at 5.8 percent now which is an increase over the May figure which was 5.4 percent. Therefore. I urge your subcommittee and the full Appropriations Committee of the House to push for approval as soon as possible by the Congress of the funding for the 1972 fiscal yea r Emergency Employment Act authorization bill which includes approximately ,$1 billion worth of what I will term proper pump priming to help c urtain the unemployment in this country. Mr. Chairman. I will take one more moment to make note of the fact, of which I am sure the subcommittee is aw are: that is the August 6 congressional recess for 1 month during which I fea r unemployment will continue to rise. I believe the approval of the appropriation for the Emergency Employment Act for fiscal year 1972 must be implemented before the August recess so tha t immediate efforts by the Departm ent of Labor can begin to slow down, if not halt, the rising unemployment rate. I am enclosing one set of recent Las Vegas. Nev., newspaper press clippings for the subcommittee’s perusal which are accurate and exemplify the unem­ ployment problems in Nevada. I stand ready to assist and appreciate your kind attention. W al te r S. B arin g , Congressman At Large, Nevada. 33

[F ro m th e La s Vegas Rev iew-Jou rn al, Sa turd ay ^ Ju ly 17, 197 1]

LV Une mpl oy men t S oars to R ecord 7.3 P ercent (By Terry Ryan) Unemployment in Southern Nevada hit an all time high in June, say State officials who cite the sluggish national economy, a decrease in tourism and the reluctance of consumers to spend as reaso ns for the soaring unemployment rate. The State departm ent of employment security said Friday the seasonally adjusted unemployment rate in C lark County reached 7.3 percent of the joh force during the month of June. Th at was up more tha n a full percentage point from May’s 6.1 percent unemployment ra te. “Persistently dark national economic conditions are influencing the tourism and trade industries in Las Vegas,” said George Scott, operations manager for the Las Vegas Employment Security office. “Along with below normal summer tourism for June, there is an app arent hesitation by consumers to spend until they are more confident in the national economy,” said Scott. Overall employment in the area increased during the month, but not as fast as unemployment increased. There were 136,000 people drawing paychecks in Jam*, up from 134,100 in May. B ut there were 10,000 people out of work in June, up from 8.100 in May. Scott pointed out tha t unemployment in the Greater Los Angeles area reached 7.2 percent in June, an indication of continued financial hard times in an area that supplies 55 percent of the tourists who visit Las Vegas. In addition to the effects on Cla rk County of a slack national economy, Scott said summer job seekers have swollen the unemployment rolls as students and returning veteran s go looking for work. “The Las Vegas area is also deluged with joh seekers from other States,” said Scott, “hut consumers are not spending, employers are not hiring and job open­ ings are rare.” The hotels and casinos that a re the backbone of Clark County's tou rist industry had what many described as a fa ir month in June. The Intern ational Convention of Lions Clubs brought between 30JMK) and 50.000 people to town, but there was considerable debate about how much hard cash they left behind. The hotels reported good occupancy rates on weekend, hut nearly all had rooms available during the middle of the week, something they do not like to see during the peak summer tou rist season. [F ro m th e Su n Loc al New s, Mo nday. Ju ly 19, 197 1]

U ne mploym ent H its 7.3 P ercent —;Joe Vegas F inds J obs A re “T ig ht ” (By Maureen Reilly)

Ju st ask the man in the stre et, he’ll tell you. Everywhere, jobs are “tig ht.” The seasonally adjusted jobless rate in Clark County is now 7.3 percent of the work force, compared with 6.1 percent in June, according to the most recent re­ port of the S tate Employment Security Department. The officials blame the sudden increase on the sluggish national economy to a decrease in tourism and the relu ctan ce of consumers to spend. The Jun e unem­ ployment figure for the State is 6.8 percent, the highest since 1961. There were 18.200 Nevadans out of work, compared to 5.6 jobless in the country. Las Vegas’ seasonally adjusted unemployment rate in May reflected exactly the 6.2 percent on the national level. It also reflected the unusually broad cross- section of people filing, and the high degree of skill many possess. Standing next to a construction worker in torn T-shirt and jeans, a neatly groomed man in a business suit is likely to be applying for his first check at the Employment Security Departm ent (ESD ). 135 S. Eighth Street. Fu rth er on down the line, skilled men and women of all ages wait patiently to file for next week’s check. Some have been on unemployment for several months. 34

Their complaint is the same : “I lost my job. ami now can’t find any other work.” Even if they are skilled in one particular area , most would he willing to switch occupations for a job. "I'll take whatever conies up,” explained a professional surveyor. “After all, you’ve got to live somehow.” The majority of unemployed in Clark County come from the reso rt industry, the largest single work market in this area. Tourism has been greatly affected for months by a slack in the Los Angeles region. Coupled with a rash of s trikes in Nevada that put a block in the economy, job­ less ranks in Clark County numbered 10,000 in June, an increase of 1.900 over May. The fac t that unemployment is stea dily rising is nothing new to those who wait in line on the ESD’s first floor. For one reason or another, they have all found themselves out of work “thro ugh no fau lt of their own,” a clause neces­ sary to collecting compensation. Recently Governor Mike O’Callaghan took cognizance of the fact that today's unemployed represen t a sizable chunk of the average community, and he twice increased the benefits as well as extending the claim period from 26 to 39 weeks. However, checks are not all the ESD dispenses, operations man ager George Scott is quick to point out. “The public is not aware of the total concept of our agency—actually, you register for employment first, then for unemployment compensation.” A person recently unemployed and entering the ESD doors at 135 So. 8th St. for the first time, would report right away to the registratio n desk upstairs. There, his priority as a veteran or a skilled-unskilled worker would he deter­ mined. lie then fills out an application and return s the n ext day. Meanwhile, the application is processed and the person’s priority is deter­ mined. Libraries listing job openings throughout the State are available up­ stairs, as is employment counseling. Counselors specialize in aiding the three prior ities: (1) those who need tra in­ ing; (2) those whose skills must be rechanneled ; (3) those with workable skills. Veterans come before all priorities. When the person return s the next day. counselors may begin to work on his case. l ie is now eligible to report do wnstairs to the unemployment receptionist. After a series of questions determining if the applicant is intrastate, inter­ sta te or on Federal aid, he files for his first unemployment check. Claims filed any day of the week are effective as of the previous Sunday, office manager Maxine Du Main pointed out. She said the heaviest rush of applicants is on Monday, whereas this is not necessary. Afte r tiling, the applicant is assigned a regular reporting time and window. The checks arrive bv mail a week late r from Carson City. Unless the applicant lives in a designated (out-of-the-way) mail area, he must repo rt on job interviews ami refile his claim each week. The maximum amount of a check is determined by the average weekly income in Nevada for the previous year. The maximum this year. Scott said, is $72.50, one-half of last year’s average salary. Although it is not a bright pictu re, a recent poll conducted by Manpower, Inc., inte rnational temporary help organization , revealed that in a breakdown of U S. Labor Department regions. No. 10 (Arizona. California and Nevada) is one of the most optimistic for the third fiscal qua rter. In region 10. 24 percent of those polled predicted employee increases. On a na­ tional level, for each of the last fou r ou arters only 16 or 17 percent looked for a rise in employment, offset h.v 10 to 12 percent predicting decreases, Manpower reported. Before the economic slowdown, it was not unusual for 30 to 40 percent of those surveyed to predict employee increases for the upcoming 3 months. LI ST OF WITNE SS ES Pag e Fas se r. 1*. J., J r ______1 Jo ne s, C. M______1 Lov ell, M. R., J r ______1 Miller, R. E ______1 Miren goff, W illiam ______1 Ro berts , J. I’.. J r ______1 (i )

I N D E X

Page Abilit y to eff ectiv ely use $1 billion------___ 28 Aerospa ce in du st ries , part ic ip ati on of un em ploy ed in ------___ 24 Allo catio n of fu nds______P.) By Sta te s, te nta ti ve______BI Definition o f “a re a”______6 For m ul a f o r ______6, 8,1 5, 2(1 O ut m ig ra tion , co ns id er at io n of______7, 8 Poc ke ts o f un em ploy men t, effect of ______21 Tim in g of final fu nds______25 Amou nt re qu es ted fo r fiscal y ear 1072------1!) App lic at io ns fo r fund s, su bm ission to Sta te go ve rn ors ------27 A re as eligible fo r sp ec ial tr eatm en t______21 A ut ho rizi ng le gis la ti on______3, 0 Com pa ris on with AVPA______16 Con tro l of pro gr am , S ta te v er su s cit y ------22 Con tro l ov er local adm in is tr ati ve pe rs on ne l______14 Eligi bi lit y of econo mic de ve lopm en t unit s______26 E val uat io n of pr og ra m ______31 Guide lin es ______2! I Im pa ct on nat io nal un em pl oy men t prob le m______25 Lo cal pe rson ne l to adm in is te r pro gra m ______26 Lo cal ag en ts, re sp ons ib ility of______8, 12 M at ch in g re qu irem en ts, w ai ver o f______27 M isman ag em en t an d ab us es of pro gra m ______16 Pay of p art ic ip ants ______12,2 5 Per so ns eli gible to p art ic ip ate ______23 Pla ci ng of ap pl ic an t in a jo b_____ .______12 Ass ur an ce s of re al jo b______13 Pr ob lems, p ro g ra m ______31 Lo ca l ______36 Pro gr am di re ctio n an d su pport ______13 R ea di ne ss of D ep ar tm en t to opera te pro gra m ______15 Reg ul at io ns , st atu s o f______14 R eh irin g pe rson s to th eir old j obs______23 R el at io nsh ip to ot her m an po w er pro gra m s______16. 27. 36 Sta te m en t of th e H on or ab le AV. S. B ari ng______31 Sup plem en tin g pa y of p art ic ip ants from oth er th an Fed er al fund s. 25 Tim ing in es ta bl is hi ng p ro gra m ______30 T ra nsi tional ve rsus pe rm an en t n atu re of pro gra m ______17 ( iii)