Mr. GRAY. Let me begin the questioning by referring to your statement that you are concerned that the States will not be able to provide what the Federal Government has been providing in the past. As you know, part of the economic proposals that are being suggested are large block grants which would go to State agencies and to local agencies, with the primary amount going to State agencies.

Could you spell out exactly what you mean by your concern about States not being able to protect the poor?

Mr. SORRELL. Well, let me give you an example-two examples. One is with the current involvement with the block grants that are already in place, the community development block grant. In Philadelphia there has been continuing disagreements on how those funds should be spent. The current administration and the past administration has continued to put a lot of money in center city development, when on the other side there have been outcries that that money ought to go into generating housing for lower income people. It should also be going into developing neighborhood businesses instead of center city businesses. So there is disagreement in terms of priorities.

I think the same thing would exist if the money were to flow through the State, where you have a government unit farther away from Philadelphia where some priorities have to be made up.

If there is a 25-percent reduction in the funds plus 12-percent inflation, you are talking about approximately 37 percent less money. There are going to have to be some priorities in terms of how the money should be spent, and is State government better prepared to set priorities for Philadelphia as opposed to Philadelphia?

Mr. GRAY. One of the arguments that is being utilized for the promotion of the block grant approach at the State and local level is that it will bring the decisions on how to spend that money closer to the people who will be the beneficiaries or whose lives will be affected. Do you agree with that statement, that by giving large block grants to the State, and to local government, that will necessarily mean that local citizens at the city, county or State level will have more input in determining where those dollars will go?

Mr. SORRELL. In general, no. I think it depends on who will participate. Those who vote will participate, those who contribute to campaigns will participate or have some influence. But I don't think it will give more influence from the poor or, in general, from the poor or black people as to what the priorities are going to be. My example would be just over the past 2 years our Governor has been trying to institute what he calls welfare reform. It basically amounts to terminating, in Philadelphia, 40,000 people from the public general assistance rolls. That is coming from State government. So I don't think State government has demonstrated its capacity to take care of or to want to take care of the needs of poor or black people.

Mr. GRAY. Earlier today on our housing panel we had testimony with regard to the cutbacks in housing, that would cut down the overall supply, particularly to low-income people in urban communities. Would you agree with that assessment in light of the statement that you made-supply is the problem in housing. Do you see the cutback in housing from 250,000 subsidized units to 175,000

subsidized units as applying more inflationary pressure in the housing industry and basically affecting the low-income persons the most?

Mr. SORRELL. Exactly. I think it is more of the same. We have in better times had moneys coming into Philadelphia that could have been used for such programs that I think would have helped the poor by providing low-cost interest loans for housing rehabilitation, and also for the acquisition of housing. But those funds largely have not been utilized. And now with the reduction in funds, I think that you have pretty much more of the same coming out of city and also State administration. Again the administrations have not demonstrated that they really want to do something about this problem, even when they had some wherewithal.

Mr. GRAY. In terms of unemployment, you mentioned that the real question is the nature of jobs or the types of jobs available. As you well know, the President of the United States, several months ago while in New York, held up a section of one of the New York newspapers, classified ads for jobs that were available, and said that surely with all of these jobs available being advertised in that New York paper-I don't know which one it was-that the real problem is that people just have to go and find these jobs.

Is that a correct assessment, that there are jobs available in places like Philadelphia and New York as seen in the want ads, and all one has to do is go out and find those jobs? Or are you saying something-

Mr. SORRELL. No, just the opposite. The statement that I made was that the supply of jobs and the nature of employment in Philadelphia, and I think across the country, the jobs are more technical in nature, require a different set of skills than those jobs in manufacturing, which is the industry in Philadelphia which is decreasing, where one could access those jobs with limited skills, without an awful lot of difficulty.

Now those jobs require college degrees. If you look at the want ads, you will see the largest number of jobs are jobs such as systems analyst, where you don't take a person out of the garment retail industry and move them into a position as systems analyst without an awful lot of training, if at all.

So the nature of work in our society is changing, and the population that is being displaced does not and cannot compete for the jobs that are available-not without an awful lot of training.

Mr. GRAY. So you are saying that the jobs that are available in newspapers in Philadelphia, in New York, and the example of the President holding up the want ads, are jobs that require a great degree of skill and training, and that really don't address where the unemployment is in urban America?

Mr. SORRELL. Exactly.

Mr. GRAY. Thank you. Congressman Dymally.

Mr. DYMALLY. Mr. Sorrell, this is not really a question. It is a comment on an observation you made and you are free to answer or not. You are the second witness today who made reference to the enterprise zone. I have been in the Congress approximately 6 months. I am not so sure I understand it. I recognize my comprehension in these complicated Republican matters is not very keen.

When you look at the causes of inflation, four major causeshealth, energy, food, housing-do you see anywhere where the private sector is going to move into Watts and rebuild that community with factories and affordable homes? What is meant by the enterprise zone? If you can enlighten me on the subject.

I know your national executive director wrote a column. I was tempted to write him and tell him to be somewhat cautious about embracing these new concepts. I have not found anyone in 6 months to explain to me what the free enterprise zone is and what is anticipated, what's the structure of that whole concept. I am afraid that we might be falling prey to good conservative propaganda about it. So I just want to express a little of my own personal caution about it.

Perhaps I ought to take time to talk with my friend, Congressman Garcia, so he might enlighten me. But I have not been able, in any public literature, to get a full understanding of the enterprise zone-besides my own skepticism that the private sector is going to do it all. I don't see them coming into Watts, or in this section of Philadelphia, to rebuild the city.

Mr. SORRELL. I think cautious optimism is how I would characterize a reaction to the Kemp-Garcia bill for the enterprise zones. But as I understand the concept, it is identifying an area within Philadelphia, or it could identify Philadelphia as the area, as opposed to Valley Forge or some other surrounding community, and say, "Let's try to attract business and industries into this area.' The proposed bill says the area could be as small as a census tract. We think that would not be correct for a city such as Philadelphia. You would need to target areas such as north, west, and south Philadelphia. But by using incentives such as tax credits, an attempt would be made to draw businesses into these areas, offering them not only tax credits but also subsidies for certain employees. Employees, for example, that may come out of the CETA training program. But a package of tax credits would be offered to attract employees into certain areas.

Now, maybe that starts to make some sense when you take a look at the cost of transportation, when you take a look-in particular transportation. When employees have to move from Philadelphia out to Valley Forge or some of these other industrial parks that spring up around Philadelphia-there is an awful lot of that that goes on in this area.

Now, I certainly would not sit here and say that we think it will work. What I think our response has been, is that it is worth investigating anything is worth investigating if it will provide some jobs in this area.

Mr. DYMALLY. Tell me the truth. If you were white, conservative, M.I.T., Ph. D., head of a semiconductor company, would you really go into the central city?

Mr. SORRELL. If you made it attractive enough, I might consider doing that.

Mr. DYMALLY. Considering the incentives in the Sun Belt States, the right to work, tax holidays?

Mr. SORRELL. At least as I would perceive the bill, we are not talking about attracting businesses from the Sun Belt. Philadelphia has an awful lot of businesses that locate across the city line.

Mr. DYMALLY. I'm talking in terms of national thrust.

Mr. SORRELL. My remarks are based upon the impact on Philadelphia, and what it might mean to the Philadelphia economy. There are an awful lot of businesses that decide to locate in this area, and they can locate across the city line. There are distinct advantages to that. One is that your employees don't have to pay the city wage tax, which is over 4 percent. They have all the advantages of being located in this area. They can have access to the same transportation networks. But they can cut the cost of doing business by locating just outside of Philadelphia. I think what the bill means to me-again, I'm saying anything that might do something about improving this economy is worth taking a look at, because I believe jobs are the No. 1 priority.

Mr. DYMALLY. In conclusion, Mr. Sorrell, "cautious optimism" is an oxymoron, which is a contradiction.

Mr. GRAY. Congressman Dellums.

The CHAIRMAN. I have no questions, Mr. Chairman.

Mr. GRAY. Going back to the urban enterprise zone-you mentioned that you saw some problems vis-a-vis the tax credit provisions which basically provide tax incentives for social security taxes, with a two-tiered system for youth employment providing greater incentives for the hiring of youth as opposed to those much older. What were the problems with the tax credit that you saw? Mr. SORRELL. Well, one would be whether or not could the city of Philadelphia afford to give the tax credits. One of the problems that the current city administration has is a declining tax base in Philadelphia. Not enough revenues are coming into the city coffers to support the services needed. Could the city afford to give new industries these large bundles of tax credits or benefits to attract them into and not be increasing the tax base to pay for city services?

Mr. GRAY. What if the urban enterprise zones were primarily targeted toward areas where there is open land, vacant land, where there is no tax collection on that property now?

Mr. SORRELL. That might help-where you are collecting nothing currently. I don't think anybody has the numbers. I think what our organization's position has been, that it is worth taking a look at.

Mr. GRAY. Thank you very much, Mr. Sorrell, for your testimony. We appreciate your coming. We are sorry for the delay before getting to you. Thank you very much.

Mr. SORRELL. Thank you.

Mr. GRAY. At this time we call the employment panel-Elmore Johnson, executive director, Hartranft Community Corp.; Dr. Kate Donohue, member, Executive Committee, Women in Work Coalition; and Debora Roye, member of the African America Mothers. If you will come forward, we will begin our testimony on employment.

STATEMENTS OF ELMORE JOHNSON, EXECUTIVE DIRECTOR, HARTRANFT COMMUNITY CORP.; KATE DONOHUE, MEMBER, EXECUTIVE COMMITTEE, WOMEN IN WORK COALITION; AND DEBORA ROYE, MEMBER, AFRICAN-AMERICAN MOTHERS

Mr. GRAY. We would like to, again in the interest of time, remind you that your written testimony will be submitted fully in the record. We would like to ask you if you will please to stay within a 3- to 5-minute summary of the high points of that testimony. And, of course, during the question and answer period we will be getting into the depth of your written statement. I will turn the chair over to my colleague and the chairman of the District of Columbia Committee, Congressman Dellums.

The CHAIRMAN. Mr. Johnson, you may proceed.

Mr. JOHNSON. Mr. Chairman, members of the committee, my name is Elmore Johnson. I do not come here to pretend to be an expert on youth employment or housing or crime or any of the other areas mentioned in the transmittal. However, I would like to share with you some personal experiences in terms of what I see on a day-to-day basis in a number of the neighborhoods and communities of Philadelphia.

The same trends and problems can be found in all large urban areas. And I would venture to say that a number of the problems that are experienced in Washington, D.C., are also experienced in Philadelphia, and vice versa. Both of them are magnificant cities, but Washington does have one problem that Philadelphia does not have, and that is taxation without representation for the District of Columbia.

In relationship to Federal legislation, there are two primary pieces that I would like to address. One would be the CETA Act, and the other one would be the community development block grant.

In my way of thinking, these two pieces of legislation have had more impact, or have the potential of having more impact, on inner city communities than virtually all other pieces of legislation that come to mind.

As you know, the CETA legislation has been drastically cut and reduced. The community development block grant will probably fair a little better than CETA. But the kind of benefits that could have been derived if properly applied in neighborhoods and communities such as the one that I represent, the results could have been beneficial, not only to our residents, but to the city and the Nation as a whole.

In relationship to youth unemployment, I don't think that we have the luxury any longer of neglecting the needs of our young people. When you look at the priorities that have been set forth for the country, and year after year and day after day the youth don't consider themselves a part of that priority, then I think we are heading down a road to destruction. When we look at our young people as the future of our country, and we don't give them the kind of incentives for the programs, or the proper training and education that they should have, then really what we are saying to them is that you really don't count.