other foreign countries, Western European countries and others where they have what they think of as full employment situations, it points in the same direction. So that you will get a figure some place around a half of 1 percent. Representative SCHEUER. So of this million, roughly half of them could be trained and qualified and educated so that they could make it in the private sector? Secretary WIRTZ. The figures got confused because you and I started talking about the unemployed. Now, another part of the group that we are both thinking about is not technically unemployed because they are not looking for work. Representative SCHEUER. They are out of the statistical universe ? Secretary WIRTZ. That is right. That is why my last figures goes up again a half million. Representative SCHEUER. I take it there would not be any doubt in your mind that as to the million who have-who could be constrained and qualified for private sector employment that our private enterprise economy could absorb them? Secretary WIRTZ. Yes, sir; there is no doubt in my mind about that. Representative SCHEUER. Do you have any doubt that as to the other half million who presumably would be trained for some kind of subprofessional or service job, that there is the need for them in public services? Secretary WIRTZ. I have no doubt about that. pres Representative SCHEUER. Do you feel that our economy at the ent could afford the cost of educating and training and qualifying these million people? Secretary WIRTZ. It will cost us less to do it than the cost after the second year if we don't do it. Representative SCHEUER. How much do you feel? Secretary WIRTZ. If I make my point clear Chairman PROXMIRE. Will you yield a moment? You are telling us that it will cost us less to do it than it would within 2 years in welfare costs, and so forth, if we do not do it? Secretary WIRTZ. That is right. These are not idle figures. Chairman PROXMIRE. You make that estimate based on a study? Chairman PROXMIRE. Will you supply us with the data? ON-THE-JOB TRAINING PROGRAMS MEMORANDUM FOR THE PRESIDENT You have stated that a major purpose of your Administration is to make the poor, the unemployed, and the disadvantaged taxpayers rather than tax eaters. I am happy to report that Manpower Development and Training Act on-thejob training programs are doing just that. These programs will repay their cost to the U.S. Treasury many times over. The average trainee repays in taxes the cost of his training in less than two years. The programs are sound investments for the Nation, both in human and in fiscal terms. The facts are these: The average MDTA on-the-job trainee earns $57 a week during 14 weeks of training, and $73 a week as a fulltime worker after his training. Thus the average trainee earns $3,572 the first year. The cost to the Government of regular on-the-job training averages about $500 a trainee. Some cost more, some less. According to the Internal Revenue Service, income taxes on earnings of $3,572 range from $419 for the trainee with no dependents to $74 for trainees with three dependents. More than 45 percent of the trainees are single; another 15 percent claim only one dependent; 14 percent have two dependents; 12 percent have three, and the remaining trainees have four or more. Of the 182,000 on-the-job trainees approved since the program began in 1963, the incomes of nearly 163,000 are taxable, after deductions. Of the 182,000 men and women who have had or are now being given onthe-job training, 163,000 are taxable, after deductions. The Federal Government allocated $95.8 million for their training. The Federal treasury has so far received back $50.5 million in taxes from these trainees, or better than 53 percent of what was spent on them. An average on-the-job trainee in his first year repays the Federal Government over one-half of its total investment in him. Before the second year is over, the Government has been repaid in full. And the Nation will continue to profit thereafter because the trainee becomes a productive citizen and a taxpayer who can carry his fair load. On-the-job training programs are one of the soundest investments we can make. Trainees not only pay back the cost of their training, they add to the production and prosperity of the Nation. These programs have been warmly received by American employers, who, in the long run, must provide the jobs for American workers. The business community along with American labor has cooperated in making MDTA on-the-job training one of the most exciting and successful aspects of our Manpower policy. W. WILLARD WIRTZ, Secretary of Labor. September 2, 1966. Chairman PROXMIRE. It does not matter if you can supply us with the general data. Secretary WIRTZ. In 4 years it will be paid back in taxes. Representative SCHEUER. In 4 years after employment, after training? Secretary WIRTZ. Yes, sir. Representative SCHEUER. Could you give us the approximate cost of training involved? Secretary WIRTZ. Yes, sir; we work on the rules of thumb. The figure, and it cannot be precise, but it is this, if we are talking of a Neighborhood Youth Corps in a school situation, we are talking about $500 in round figures. If we are talking about on-the-job training, our experience pinpoints that to $800 and $1,000. This is to pull a person back to the point of where he can be self-supporting. On institutional training it is about $1,500 to $2,000. Until we get to the cases where there is a lack of basic education, at which point again, the need for greater support of services, it goes up to $3,500. Representative SCHEUER. What is the cost of your jobs? Secretary WIRTZ. That is only a 2-week brushup program. Chairman PROXMIRE. There is a vote on the floor. Congressman Scheuer, will you take over until I return? Representative SCHEUER. Yes, Mr. Chairman; I would be happy to preside. (At this point Representative Scheuer assumed the chair.) Secretary WIRTZ. To answer your question, we are using present day figures of $400 and I think that has been lower, no doubt, and it would be a lot lower. Representative SCHEUER. It might be helpful in the committee if you would submit some of the experiences that you have had with the on-the-job program. (The material below was subsequently submitted for inclusion in the record:) It is difficult to provide the average illustration. Programs vary from the most expensive, during which 52 weeks of training is provided, to those lasting only 3 weeks. Some widely varied types of on-the-job training programs, illustrate, however, how they pay for themselves: Tidewater Oil Company estimated that $567,000 will be paid in income taxes by 1,080 service station manager trainees while they are earning approximately $5,400,000 during 44 weeks of training. This program will pay for itself the first year. Forsyth Memorial Hospital in Winston-Salem, North Carolina, said $22,353 will be paid in income taxes by 353 health care trainees who will receive a total of $159,665 in annual wages. Federal funds totalling $44,611 have been allocated. This is 50 percent repayment the first year. Leverenz Shoe Company in Sheboygan, Wisconsin, estimated that $22,477 will be paid in income tax by 70 trainees who will earn $236,600 in annual wages. Federal costs of the program were $33,135. The first year's return on this program is about 68 percent. Winzen Research, Inc., of Mount Vernon, Texas, said $10,374 will be paid in income tax by 42 trainees who will be paid $109,200 in annual wages. Federal funds of $3,970 were approved for the six-week OJT project. This program is making a 260 percent return in its first year. Sixteen Fiberglass layup trainees at Ramco Manufacturing Company in Gainesville, Texas, will pay $4,446 in income taxes from their annual earnings of $46,800. Total Federal cost of the program was $3.836. The return on this program the first year will be more than 115 percent. While these illustrations cover only some 1,500 trainees, they also would apply to the more than 63,000 on-the-job trainees approved during 1965. Representative SCHEUER. It is a million and a quarter we are talking about, and three quarters of a million can probably end up in private sectors, and a half million will end up in the public sector if they get the training, education, and qualifying that you are talking about? Secretary WIRTZ. Yes: we both realize we are using the best figure available for discussion purposes, and they are not statistically refined at all. Representative SCHEUER. I am most impressed by the judgement that you gave that these costs would be returned in 2 years from, say, the welfare expenditures and 4 years out of tax revenues that these people would produce. Secretary WIRTZ. Yes. Representative SCHEUER. If that is true, and I am sure it is, is there any reason—and I think that is a rate of return that any corporation would feel is an extremely satisfactory rate of return on capital investment on its plant and equipment over the years or even workers. Is there any reason why we should not gear up to such a national program right now? Secretary WIRTZ. I think the limiting factor is personnel and the building up of experience with these programs. So there is a limiting factor of know-how and personnel. Representative SCHEUER. No limiting factor as to ability of the factor to support these training and orientation programs or the ability of a need of the private and public sector to absorb these? Secretary WIRTZ. To any extent-this is manpower. To the extent it has come from manpower agencies, it should alleviate this. There is no limitation. Representative SCHEUER. From the point of view of general economic policy, the economy needs them, the economy can absorb then, and the cost of such a program would be paid in perhaps 2 years out of welfare expenditures; and, again, in the first 3 or 4 years of tax payments. Secretary WIRTZ. Yes, sir. Representative SCHEUER. Thank you. (At this point Senator Proxmire resumed the chair.) Chairman PROXMIRE. A very interesting line of questioning. You say the limiting factors are personnel and what else? Secretary WIRTZ. Know-how. Chairman PROXMIRE. What can we do to start moving as fast as we can in that area? What can we do about personnel in this tight market? Secretary WIRTZ. That is very hard to answer, Mr. Chairman. 1 wish it could be answered more easily. The testimony this morning before the Government Operations Committee concerned social science research; and we ran into the same question there, with the same difficulty there. There just are shortages right now. We are trying to develop training programs of one kind or another. We tried, Mr. Chairman, 2 years ago, and the year before, to develop a summer training program of personnel; and it was called CAUSE. It was a program in which we took college graduates and put them through an intensive 12-week on-the-job training program. It didn't work too well. One, we were just that much ahead of the development of this program that we got them trained before the programs were ready to pick them up. It was the year the Poverty Act passed, and so forth. The other mistake we made was putting some questions on reactions and attitudes into a test which got us into all kinds of trouble. We are trying very hard to present to the Congress an employment service bill which meets this problem where it is most serious, which is not in Washington, but in the State agencies of one kind or another. I do not believe there is any one single answer. Chairman PROXMIRE. We also need some kind of priority system for training manpower, for the manpower that is capable of doing training, for teaching, who have been able to move in here so we can use at least the discretion of the Federal Government to make and break the bottleneck that way. Secretary WIRTZ. Yes, sir. We are trying all varieties of ways. You have given us authority to authorize research in the colleges and universities and we are doing it frankly where they are not only getting research, but researchers. Chairman PROXMIRE. All these programs are good, the Teacher Corps and so forth, and my colleague, Gaylord Nelson is one of the principal sponsors on this. It is a fine program, but it runs into this terrific shortage of teachers; and it would seem to me that some kind of priority system-do we have the available data on who are where, or where are the teachers, or who can be brought into the teaching picture, that kind of thing. Do we know that? Secretary WIRTZ. I don't believe we do. Mr. Ross could respond to this. We can manufacture an answer to that in the affirmative but the real answer is no, there has not been a good job done. Chairman PROXMIRE. Why would this not be desirable to do? Secretary WIRTZ. It would. We have tried an approach to that in the establishment of the President's Committee on Manpower. We have that as a committee covering all of the agencies. It is a committee which has worked extraordinarily well together but which has had a good many energies directed toward the immediate problems but the committee hasn't functioned very well on the development of personnel in this field. I say this critically of the President's Committee on Manpower. There is a forum there, a forum for doing this. It also gets into the competition between this area and the whole area of the physical researchers. I suppose one of the things that has put as much push on this area is the development of the Medicare program. Chairman PROXMIRE. If we cut a billion dollars out of the Space Program, say, let the Apollo program stand but cut a billion out of the non-Apollo space requests of a billion and a half dollars this would ease a lot of pressure on extremely able instructors in universities around the country not engaged in teaching, but engaged in space research. Would this kind of thing be helpful? Secretary WIRTZ. You will understand my answering only that I would expect it would have some effect in loosening up that kind of personnel. I think that in order to answer your last question, we ought to pursue the preceding question. There ought to be some clearinghouse for information within the country-not just within the Government-and there ought to be some opportunity to analyze ways for making use of limited personnel. Chairman PROXMIRE. One closing question. Gerhard Colm recommended the establishment of what he calls a high level unit in the Executive Office to assemble and analyze data concerning prices, productivity, inputs, and incomes. This is something that I understand Mr. Ross does now, does a very fine job and makes the information available to the Council of Economic Advisers. The staff of this committee wants it, but does not get it, the public in general does not get this information. What prospects would there be that this could be opened up to the public? Secretary WIRTZ. Information which is available to the Council and is within the Department but not available to this committee? Chairman PROXMIRE. That is my understanding. Maybe I misunderstood my staff. I am told that we had excellent cooperation from the Council. They give us whatever we ask for. But we think it would be helpful if the whole academic community throughout the country could get this and get it on a regular basis. |