appropriate to allow participation on the PIC by any local economic development council.

It may be helpful to the Chairman and to the Committee to hear about manpower training for economic development activities being initiated and coordinanted by the Private Industry Council of Philadelphia. It appears to us that we have set out to do the type of activity H.R. 6796 seeks to encourage.

The Philadelphia PIC identified economic development as the focus of its Title VII activities immediately after the Council organized. It selected an economic development focus because the Council members did not wish to embark on manpower training activities without firm prospects for employment at the end of the training activity. By focusing the PICs efforts on economic development activity (job creation activity), the Private Industry Council of Philadelphia felt it could position itself as an organization to guarantee that the investments made in training programs would result in actual job placements and job retention. In other words, it believed that it could use the public dollars under its control to leverage private dollars, in the form of employment, for economically disadvantaged individuals.

Although we have just begun to implement our PIC's broad economic development efforts, I can report on two projects which have begun. The first project links training activity to jobs generated by private sector investment. The second project links training activity to jobs created by public sector investment.

In the first instance, the Philadelphia PIC is contracting with a large private corporation opening a new hotel in downtown Phliadelphia. The hotel will employ 500 workers. We expect to train 175 of those workers under the auspices of the Private Industry Council. To oversee the design and implementation of this program as well as the design and implementation of training programs for four additional hotels opening in Philadelphia, the PIC established a Hospitality Employer Council. That offshoot of the PIC has attracted the managers of major hotels and restaurants in Philadelphia as its members. It is chaired by Russell Busby, a senior corporate officer of ARA. The Hospitality Employer Council is now working on plans to establish a permanent training facility, linked to CETA to meet new job demands and to fill positions in other hotels in the city which occur because of the growth of Philadelphia as a convention and hospitality center.

The second major manpower for economic development project being launched by the Philadelphia PIC is using a combination of Title VII and Targeted Jobs Demonstration Funds. CETA, EDA and HUD monies are being invested in the American Street Corridor, an aging industrial area in North Philadelphia. American Street has been targeted by the city as a business revitalization district. American Street contains 475 small business firms. The city has invested millions of its federal dollars in infrastructure improvements for the area. The Philadelphia Economic Development Council (PEDC) has augmented that investment by making subsantial investment of EDA funds in the firms on American Street. The PIC is training economically disadvantaged individuals-primarily individuals who reside near American Street-for jobs yielded by these EDA improvements and by PEDC grants and loans. These two projects appear to be exactly the type of activity envisioned by the bill under discussion today. Looking beyond Philadelphia PIC's activities, I would like to comment more generally, Mr. Chairman, on your bill and its impact on PIC activities across the country.

If the expected downturn in the U.S. economy occurs, resulting in decreasing private sector job creation, it will be very important to have an organization in place that can address itself to publicly-inspired job creation activity. I suggest that, with the revisions in wording I have recommended. H.R. 6796 will identify PICS as the appropriate local organization to achieve this purpose. It has the effect of broadening the purposes of the Title VII legislation from private sector job-creation activity to both private and public sector job-creation activity.

The second important feature of H.R. 6796 is the extension of Title VII for 4 years. I believe it is safe to say that this provision of the bill will be unanimously welcomed by the thousands of individuals who have become engaged in building the Private Sector Initiative Program. It will be greeted as a sign that the Administration and the Congress value the considerable time commitments businessmen, labor officials, educators and officers of community-based organizations have been making to PSIP. It makes a clear statement from Congress of its intention to bring change to the entire CETA system through private sector par

ticipation and cooperation. It says further that the Congress understands more about the process it has set in motion than has been credited to it. Those of us involved in Private Sector Initiative Program activities are constantly being asked to provide the press and the CETA system with the results of an experiment that has only just begun. I am convinced that such queries reflect a lack of understanding of what the Congress has asked PICs to do and of how long it takes to do it. A four-year extension of Title VII makes clear the long-term nature of impacting broadly on the CETA system.

Mr. Chairman, I have devoted my adult life to organization building-to start-ups, and to programming organizations for activities designed to bring about the participation of the economically disadvantaged in the primary economy of this country. Of all the organizations and programs I have developed, the goals of the Private Sector Initiative Program are the most difficult to accomplish. I say this after having just completed the construction of a major youth initiative in Hartford, Connecticut.

Contrary to popular belief, the Private Sector Initiative Program isn't moving slowly. Rather, I fear, it is moving faster than may be prudent. Congress has legislated into being a new community institution. The obstacles and barriers to forming that institution and making its function differ from community to community, but in every jurisdiction the obstacles are formidable, requiring time and effort to overcome.

Congress did not legislate a private sector employment and training program that is wholly private sector. It is only directed by the private sector. Labor, educational organizations, and community based organizations have all been invited to participate; the effort that goes into reconciling their often conflicting points of view and contrasting ways of doing business requires considerable energy. This takes time.

Neither did Congress legislate the creation of a program that stands by itself. It legislated a program that must grow within the context of the CETA system. In many jurisdictions the local prime sponsor has viewed the mandated creation of the PIC with suspicion, and, in some cases, without outright hostility because it is perceived as competitive or duplicative of the Prime Sponsor's own efforts.

The tensions in the relationship between PICS and Prime Sponsors need to be resolved. In the majority of jurisdictions, the negotiation of the PIC's role in the prime sponsorship remains to be determined. We face the prospect of a great deal of conflict between Prime Sponsors and PICS as they differentiate their roles in the employment and training arena. In most jurisdictions, I am convinced, tensions will subside, and constructive relationships will emerge as PICS and Prime Sponsors learn to work together. The time and effort to accomplish this should not be underestimated.

The 4-year extension will serve as a message from Congress. It will be read as a restatement of the Congressional commitment to an open-ended kind of reform of the CETA system that has begun. The businessmen and the representatives from other interest groups who have been drawn into the public sector to create a public sector clientele from the CETA system will be encouraged to continue to persevere in their efforts to build such a change in manpower policy. It will be seen as a recognition that Congress understands the difficulty of what is being undertaken, understands that institution-building happens one step at a time, and that those engineering this reform do not intend to shift gears or to change the overall direction of its effort. To carry out this reform, we need a certain degree of stability.

One final point, Mr. Chairman. It is essential that Congress and the Department of Labor communicate to Prime Sponsors the necessity of building an employer clientele the CETA system. If the long-term objective is redirecting the CETA system toward full-time unsubsidized employment then CETA must build an employer clientele. Prime Sponsors need to be assured that they will be rewarded for their efforts to establish such a relationship with employers. The technicalities of CETA regulations are overwhelming to employers, newcomers to the whole CETA system. Occasionally PICs will run afoul of the labyrinth of regulations. It is important that Prime Sponsors know that they will be judged-not by whether the Title VII effort has met every technicality of the CETA regulations, but rather by the degree to which CETA redirects its programs to private sector manpower needs. The job is to get disadvantaged people employed in unsubsidized jobs and to retain them in these jobs as long as pos

sible. Prime Sponsors need to know that they will be supported in getting this job done. They need to know they will be supported when they look beyond gove ernment regulations and allow Private Industry Councils to initiate programs not spelled out in CETA regulation XYZ. And they need to know that DOL will frown on any bureaucratic attempts by auditors, regulators and Prime Sponsors which will deter getting the job done placing disadvantaged people in unsubsidized jobs.

I believe the 4-year extension contains that message; and am pleased to express strong support for that message, as contained in H.R. 6796.

STATEMENT OF GEORGE H. RICHMOND, EXECUTIVE DIRECTOR, PRIVATE INDUSTRY COUNCIL OF PHILADELPHIA

Mr. RICHMOND. Mr. Chairman, would you like us to summarize? Mr. HAWKINS. I think we would appreciate that. We don't know just how much time we have. The bells may begin ringing at any minute, and yet we may have adequate time.

Mr. RICHMOND. My name is George Richmond. I am executive director of the PIC in Philadelphia, and executive vice president of the National Association of Private Industry Councils, and chairman of its subcommittee on policy evaluation and research. I have come here today to testify in support of the bill, H.R. 6796.

It is an honor to testify today before the subcommittee. For many of us who are involved in PSIP, this is our first opportunity to dialog with those who have forged the new directions in manpower policy. We are well aware and most appreciative of the commitment and leadership that you and other members of the committee have demonstrated.

I am particularly pleased to testify with other individuals who have been active and early supporters of the title VII effort, Mr. Kolberg of the National Alliance of Businessmen, and Mr. McGlotten of the AFL-CIO. I am also in favor of the testimony of the national chamber.

Kay Stratton and I are both members of the National Association of Private Industry Councils, and we are accompanying Millicent Woods here today.

NAPIC was established last fall by a small group of PIC executives who had been meeting informally to discuss mutual program ideas and concerns. These meetings proved so valuable to those participating that it was decided to form a formal structure through which PIC's across the country could share program ideas and solve problems together.

We established the Washington office in December to enable our organization to achieve the following objectives:

To communicate the views of our membership, private industry council members and their operating staff, and national policymakers. Foster mutual assistance among PIC's across the country through a network established by the association.

Devise, through our members, a means for evaluating the effectiveness of PIC's in developing an employer clientele for the CETA system. I am going to emphasize that this is not clearly stated in the bill as a mission, but this is something we think ought to happen. CETA has been devoting, in terms of its membership, significant resources developing a participant clientele, but we interpreted the title VII

effort as really an effort on the part of the Congress to get an employer clientele generated for that participant clientele. What we are interested in seeing happen is that match of clienteles.

This third objective, Mr. Chairman, is one which I wish to stress. We believe that title VII was a congressional mandate redirecting Federal employment and training policy toward unsubsidized employment. In essence, this means that CETA, the operating arm of the Federal Government's manpower policy, must integrate private sector employment and training needs in the program planning and in the program design. We have been involving the private sector in the design of the employment and training programs.

In the meeting last Friday of my subcommittee of NAPIC, we took up the items that are before us today in this legislation, and I would like to speak to those.

We support the 4-year extension. We think that that will be encouraging to the thousands of members of PIC's who have become involved from the business community and also from the labor community, and the community-based organization, and others in the development of industry council movement.

We are also in support of the economic development features of the bill. We urge that there be one or two amendments, and that those coincide with those that were voiced by Mr. Kolberg. I would not call them amendments, but modifications.

In the text of my remarks, I have suggested two miner modifications of the bill, Mr. Chairman. The first suggestion is to add language that specifies the involvement of private industry councils in CETA economic development activities. I make this suggestion for the following reasons:

PIC members, especially in my community, have adopted as the major focus of the PIC manpower training for economic development activity in the private sector. We are extending that also into manpower training from economic development activity in the public sector, and we see this bill is encouraging that direction. We find that for the major group of our council that is the direction they want to go. We are very encouraged by the bill moving in that direction.

The reason for doing it as a public activity is that we will be able to leverage private sector funds, as well as with the public dollars that are being furnished by the CETA system, so that we can bring together a whole community effort.

The second suggestion is to delete the specific reference to Public Works and Economic Development Act councils called for in section 702. In some communities, those councils do not exist, and there are others who are performing that function.

I would like to highlight one last aspect of my written statement, and that deals with the relationship between PIC's and primes. This is a major area of concern to us in Philadelphia and in other communities, and was spoken to at length by members of other PIC's throughout the country at the Friday meeting.

It is essential that Congress and the Department of Labor communicate to prime sponsors the necessity of building an employer clientele for the CETA system. If the long-term objective is redirecting the CETA system toward full-time unsubsidized employment, then CETA must build an employer clientele.

Prime sponsors need to be assured that they will be rewarded for their efforts to establish such a relationship with employers. The technicalities of CETA regulations are overwhelming to employers, newcomers to the whole CETA system. Occasionally PIC's will run afoul of the labyrinth of regulations, and they are formidable.

It is important that prime sponsors, now that they will be judged not by whether the title VII effort has met every technicality of the CETA regulations, but rather by the degree to which CETA redirects programs to private sector manpower needs, and does the job of seeing disadvantaged persons in those jobs.

I envision a time across the country when we will see strains emerge between PIC and primes because they have broken one rule or another, and the primes in many cases will take over a program because a rule has been broken, and drop off the private sector. I think that that is easy to do, given the complexity of the issues, and I would like to see Congress make clear what the intent of this bill is, which is to bring the private sector in. They have to learn the system. They have to learn the regulations. That is going to take time.

We have hired several individuals on our staff of 30 from the prime to make sure that we don't make too many mistakes, and we are being cautious in every way. We are checking many of our programs with the prime, and we have a very collaborative relationship. Thus far, we have only had one episode that was destructive of that relationship, and it is going through the process of rebuilding.

It is not clear to the primes, because of the way the bill is phrased, or the law, which says that the prime has ultimate responsibility, financial responsibility for what the PIC's are doing. When a rule is broken, that translates into that responsibility.

I would like to yield the floor to my colleague, Kay Stratton, from Boston.

[Information and prepared remarks of Catherine Stratton follow:]

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