Mr. KOLBERG. Again, I think the answer is that vocational educators and vocational education systems belong to the public sector. They don't belong to private employers. They do not represent private employers. Although they are involved, and sometimes very well, they do not involve them in a broad enough way. Employers do not see that as their institution.

It is very difficult, and I should not try to generalize about vocational education even in a single State, let alone across the United States. It varies a great deal by quality, and the way that it carries out its work.

I think that my answer would be, you raised the right questions related to Wisconsin, specifically. If we fail to tie in vocational educators and the vocational education system with this new developing institution, we have made a grave error.

Mr. PETRI. As you know, there is now what they call "budget cutting mania," supposedly going through the Congress, and what we are going to have to work at is to still get the job done for people to the extent possible, and cut duplication and overhead as much as we can, so that we can reduce the budget and not prevent these 10,000 people a month from hopefully getting jobs.

Mr. HAWKINS. Mr. Kolberg, you made some reference to 10 million jobs being created. I was not so sure what period of time you were talking about.

Mr. KOLBERG. I think, Mr. Chairman, that is 1976 through 1979. Mr. HAWKINS. To what do you attribute that remarkable record? What number of factors do you contribute that to?

Mr. KOLBERG. Not being an economist, Mr. Chairman, I am not going to pretend to know very much about all the phenomena in our economy that do that.

We had a booming economy, at least in the job creation sense. Certainly, we had increasing inflation, but the unemployment rate got down to 5.5 percent and stayed in that area for a year to a year and a half over a 3-year period. Employers continued to add new workers.

We absorbed a continuingly high percentage of women. As that increase went on, I believe that it is better than half of the new jobs, something like two-thirds, I am sorry, went to women. Their entry into the labor force and the growth in the labor force during that period was very rapid and continues to be.

My memory tells me that it takes something like 2.5 million jobs a year to stay even in the United States. Now with the labor force growth, particularly with women and young people, it is going to take something like a creation of something like 2 to 2.5 million jobs to stay even. If we don't do that, unemployment is going to continue to

rise.

Mr. HAWKINS. You are assuming practically zero productivity growth in that, I would assume.

Mr. KOLBERG. It is about what it has been in the last year. It is not quite zero, but it has not been what historically it has been, 3 to 4 percent.

Mr. HAWKINS. I was curious about that, because there have been other references made to the tremendous growth in the number of

jobs, but everyone takes credit for it. I was just curious as to what it was due to our fiscal policies, possibly the 1978 tax reduction, whether it was due to CETA being enacted. There are references that have been made to CETA having provided a tremendous number of jobs. The Secretary of Labor has claimed a lot of credit, not for himself, but for other programs. No one seems to have analyzed why it was that that remarkable record was made. Some cited the recovery, that always in a recovery there are a tremendous number of jobs.

The committee, obviously, is interested in the answer because it helps us to make the decision as to what we should be doing if that record can be replicated, without at the same time increasing, as some would believe, inflation. As you indicated, there was not a dramatic increase in the inflation during that same period of time, which refutes to some extent the trade-off theory.

Again, Mr. Kolberg, we appreciate your appearance before the committee.

Mr. KOLBERG. Thank you, Mr. Chairman.

Mr. HAWKINS. The next witness is Madeleine Hemmings, associate director for human resources of the U.S. Chamber of Commerce.

Ms. Hemmings, we welcome you. We have your prepared statement, and supporting documents which in their entirety will be printed in the record at this point. We look forward to you giving us the highlights of those statements.

[Prepared statement and supplementary statement of Madeleine Hemmings follow:]

PREPARED STATEMENT OF MADELEINE B. HEMMINGS, ASSOCIATE DIRECTOR, HUMAN RESOURCES, CHAMBER OF COMMERCE OF THE UNITED STATES

My name is Madeleine Hemmings. I am Associate Director of Human Resources for the Chamber of Commerce of the United States. With me today are Charles J. Rae, Executive Director of the Private Industry Council, Inc., and Manager of Manpower for the Greater Springfield Chamber of Commerce, Massachusetts, and Hilda Heglund, Vice President, Human Resources, Metropolitan Milwaukee Association of Commerce, Milwaukee, Wisconsin. Both Mrs. Heglund and Mr. Rae play leadership roles in their communities' Private Sector Initiative Programs. We are here today on behalf of the Chamber of Commerce of the United States and its 94,706 business and organization members, to support H.R. 6796 sponsored by Chairman Hawkins, Mr. Perkins and Mr. Jeffords.

The Chamber of Commerce supports H.R. 6796 which would reauthorize Title VII of the Comprehensive Employment and Training Act (CETA), known as the Private Sector Initiatives Program (PSIP). I will briefly discuss PSIP in general. Mrs. Heglund and Mr. Rae will describe their Private Industry Councils and their accomplishments. After that I will summarize the U.S. Chamber's position on H.R. 6796.

PSIP: A TURNING POINT FOR CETA

CETA was enacted in 1973 to reorganize the delivery system for the many federal employment and training programs which had evolved during the 1960's and early 1970's. CETA's basic purpose was to consolidate these programs under one administrative system and to allow for local planning and operation of the programs.

CETA's promise of local planning and design quickly faded when the nation's unemployment rate rapidly rose, and the new CETA administrative system was used to implement a massive public jobs program. In its first four years of existence CETA was repeatedly amended, and its funding skyrocketed from $1.9 billion to $11.8 billion. With each amendment, CETA got further away from its original purpose of locally designed training programs to assist unskilled individuals. More and more, it was a public jobs program-providing employment for job-ready people.

By 1975, CETA was serving as an instrument of the federal government's fiscal policies for state and local government. This occurred because both the magnitude of the 1974-75 recession and the recession's impact on the fiscal base of the local governments had been severely underestimated. Neither the Administration nor the Congress had evolved an alternative strategy to respond to the need for municipal fiscal relief, and political considerations dictated using the most readily available program, i.e., CETA.

Statistics revealed a severe imbalance between public service jobs and private sector job training under CETA developed :

Of the $9.617 billion in estimated CETA fiscal year 1978 outlays, 5,735 billion, or 60 percent of the total were for public service jobs.

Of the 2,361,400 persons who participated in CETA programs under Titles I (Comprehensive Manpower Services), II (Public Employment Programs), and VI (Emergency Job Programs) during fiscal 1977, 40 percent (945,800) were holding public service jobs. Only 7 percent (173,000) were enrolled in on-the-job training, primarily-but not exclusively-with private employers.

The abrupt shift in emphasis from training to public jobs and the burgeoning increase in funding from $1.9 billion to $11.8 billion caused much stress on the CETA system. Local governments were required to spend their public jobs funds in a short period lest funding be taken away .Needless to say, when 60 percent of their total funding was for public jobs, they spent most of their time trying to fill those jobs. Pressure to fill jobs resulted in misuse of CETA funds by some program operators. By 1978 when Congress was considering its reauthorization, the whole CETA program was suffering from a negative image.

It is clear why Congress was upset. CETA's imbalances, as well as the confusion over its basic aims, had to be rectified by reemphasizing the legislation's training objectives and by sharply defining-and limiting-the scope of its employment objectives. The sharp drop in services to the truly economically disadvantaged had to be reversed by tightening up the eligibility criteria for all CETA's programs. The imbalance in the allocation of resources between public service jobs and programs and activities designed to assist people to qualify for unsubsidized private sector jobs had to be corrected through the appropriations process.

The private Sector Initiatives Program (PSIP) emerged as an answer to this problem.

The momentum for and the general direction of change had emerged from the Congress. The Administration contributed the policy thrust by stating that PSIP would "provide the private sector with a direct role in the planning and delivery of CETA programs and services in the expectation that such a role will encourage the private sector to make more effective use of the training and related services available through CETA.”

PSIP has been termed the "major new initiative" of CETA. It does represent a significant change in Administration policy. However, the changed policy is not really new to CETA. Rather, PSIP is the vehicle to turn CETA back to its original intent.

PSIP ACCOMPLISHMENTS

The new Title VII has great potential for uniting business, education, labor and government to help the nation's disadvantaged unemployed to move into mainstream jobs. PSIP promises a major breakthrough for business people who need workers with certain skills but have difficulty in filling jobs. Under PSIP, the government will help pay to train the hard-to-employ. The employers will design the training. They will be helped to develop in-house training, if they wish, or the training may be done at community colleges or other training centers. To live up to that potential, the program requires dedicated people, financiai resources and multi-organizational support. PSIP has benefited from the skill and commitment of professionals such as Mrs. Heglund and Mr. Rae, but it has labored under other extra-ordinary difficulties.

From the beginning, PSIP has faced funding uncertainties which raised serious doubts whether the program would ever get underway. In the 1979 Supplemental Budget, $100 million was requested for PSIP but was not granted. In July, 1979, the Department of Labor reallocated $75 million of its funds to show that PSIP and the Private Industry Councils (PICS) could work. The Department of Labor extracted a promise from Congress that $325 million would be forthcoming in the fiscal year 1980. PSIP received its first funding in 1979, making fiscal year 1980

its first year of operation. In spite of this, 34 early test sites have had 18 months to organize PICs, set priorities and develop and carry out programs. 436 other PICS have had 14 months or less in which to operate. With encouragement from the Department of Labor, 95 percent of the prime sponsors established PIC's. But the PIC's have had definite funding alloactions for only about nine months.

PSIP had more problems. Some prime sponsors found it difficult to arouse enthusiasm for a new program which amounted to only 5 percent of total CETA funding. It did not seem worth a major committment in time and effort. Many in the private sector thought of CETA as a public jobs program or a patronage system if they knew of CETA at all.

In spite of uncertain funding, doubts on the part of many key organizations, and ignorance, those who took up the challenge of making CETA work have had remarkable initial successes. Stories of these successes are the clearest proof that PSIP should be reauthorized. Hearing these stories cannot help but convince the Subcommittee of the program's value.

STATEMENT OF CHARLES J. RAE

My name is Charles J. Rae. I am Executive Director of the Private Industry Council, Inc. and Manager of Manpower for the Greater Springfield Chamber of Commerce in Massachusetts. In this capacity, I am responsible for the overall administration of the Private Industry Council of Hampden County.

My testimony will demonstrate that the Private Industry Council of Hampden County is an example of the ability of the private sector to interact effectively with federal and local manpower programs. My intent is to show that the PIC concept in Hampden County has been very successful and that private sector participants have developed a new outlook on CETA's potential.

THE PRIVATE INDUSTRY COUNCIL

The Private Industry Council of Hampden County has been established as a non-profit corporation according to the general laws of the State of Massachusetts since May 1, 1979. The intent of this council is to impact significantly on the employment of disadvantaged individuals within the county. This is being accomplished by providing them with appropriate training in skills businesses need.

Administrative funds for the PIC are provided through a $450,000 grant of CETA Title VII funds from the Hampden County Manpower Consortium. These funds are used to train disadvantaged individuals in tool and die, and machine skills through the Hampden District Regional Skills Center. (An explanation of the Skills Center is provided in Exhibit 1).

In addition to funds received through the Department of Labor, the Private Industry Council of Hampden County also received funds from the private sector which are matched by the City of Springfield funds to administer a program designed to place unemployed members of the Springfield Hispanic community in private sector jobs. The program, known as the Hispanic Employment Program, is funded with $56,000 (50 percent private sector money) along with inkind contributions amounting to $42,000 from the private sector. The program goes beyond the scope of Title VII legislation in solving a community manpower problem. (Exhibit 2 summarized all of the PIC programs.)

The Board of the Private Industry Council consists of 37 individuals. It also utilized the expertise of 50 other private sector volunteers. Composition of this Board (Exhibit 3) is in accordance with the guidelines of the Department of Labor. The full PIC Board and its executive committee meet on a monthly basis. The meetings serve as a focal point for interation between the private and public sector.

MAJOR BENEFITS AND RESULTS

Since the inception of the Private Industry Council of Hampden County, several major benefits have been derived from involving the private sector in CETA. They are as follows:

Increased awareness of all CETA programs by the private sector.

Business participation in curriculum design, resulting in relevant training by the CETA skills training programs.

Increased use of the Targeted Jobs Tax Credit by employers hiring the disadvantaged.

Private sector leadership in funding of a program to place Hispanic community members (50 individuals placed in the first 22 months of operation).

Infusion of CETA training into area economic development programs, i.e.. attraction of new industries, expansion of current industries.

Expansion of training facilities to accomodate potential expanding industry manpower needs.

Accurate identification of industry's manpower demand.

Streamlining of other area manpower programs such as the Division of Employment Security by injecting sound business expertise into their programs.

AREAS OF CONCERN

Theree major area of concern have been observed through the local administration of the private sector initiative program. They are:

(1) There are limited provisions under the current Title VII legislation for training and upgrading activities as in Title II-C. Exhibit 4 includes letters from major Hampden County employers expressing the need for upgrading of employee within their shops.

(2) Funding under Title VII is based on an allocation formula and does not take into consideration successful programs. An area like Hampden County whose companies desperately need trained employees, and has programs in place to train along with a strong private sector committment may, in fact, experience funding cutbacks (cutback of $120,000 in 1979). Exhibit 5 is a proposal to the Governor of the State of Massachuetts indicating a severe need for training programs and funds beyond Title VII and other CETA funding, required to fully develop the private/public sector partnership.

(3) It has been the experience of Springfield that manpower and economic development (bricks and mortar) go hand in hand. We have found that if manpower training is in tune with business expansion, both business and the community benefit.

CONCLUSION

The PSIP concept has worked well in Hampden County. It is an accepted part of all aspects of community manpower activities and provides direct access and input by business into training programs. The private sector is willing to work with government and public agencies. The rewards are mutual. The private sector has shown its commitment to helping the CETA system work and we urge government to strive to make PSIP a major part of CETA planning and funding. It is a method of making CETA useful both to the nation's disadvantaged and to business.

STATEMENT OF HILDA HEGLUND

As a member of the Milwaukee Private Industry Council, I am very pleased to report on our success with PSIP. CETA is not new to the Metropolitan Milwaukee Association of Commerce. Since its passage, we have administered Milwaukee's on-the-job training program under Title II-b. Because of that experience and our interest, we were invited to become a member of the Private Industry Council. Before I describe our PIC activity, I would like to outline why I feel our program works, then describe our program, and finally present some of our concerns and suggestions for improving the program.

REASONS FOR SUCCESSFUL IMPLEMENTATION

1. Our County Executive has provided strong leadership in involving the private sector. In 1977, he created an economic development unit within the country's CETA office. One of the subcommittees of the Council, the Employment and Training Subcommittee became the core of the PIC created two years later. 2. PIC membership is limited to a workable group of 12 members. The PIC has created linkages with existing resources such as the Foundryman's Association and other industrial groups.

3. We do have an extremely capable staff. The PIC director is a former staff member of the Association of Commerce and is familiar with Milwaukee's business community. In addition, the CETA director is a strong ally and has welcomed the PIC's input in redirecting other CETA activity as well as that for which the PIC is directly responsible.