major industries here to talk about some of the problems that they have and how they look at these problems, so I want to thank you very much for taking the time to be with us.

Mr. CAPLES. It is a pleasure to be here. We feel this is a tremendously important problem and we are happy it is being dealt with. Thank you.

Senator KENNEDY of Massachusetts. Our next witness is Mr. Leon Shimkin. He is the chairman of the board of Simon & Schuster in New York.

Senator JAVITS. Mr. Chairman, may I just introduce to the subcommittee two very prominent New Yorkers who are here to testify? One, Mr. Leon Shimkin, chairman of the board of Simon & Schuster, one of the leading publishing houses in New York, who is a personal friend of mine, and the other is Mr. Herrick K. Lidstone, of the law firm of Battle, Fowler, Stokes & Kheel. Both are outstanding New Yorkers, and I commend them to you.

Senator KENNEDY of Massachusetts. Mr. Shimkin, I will ask you to proceed in your own manner.

STATEMENT OF LEON SHIMKIN, CHAIRMAN OF THE BOARD, SIMON & SCHUSTER, NEW YORK, N.Y.

Mr. SHIMKIN. Thank you, Senator Kennedy, and your colleagues, for the privilege to appear before you.

I appear before you not representing any association, any business or industry, but purely as a private citizen, in the hope that I may be of service in our common interest.

The program I would like to outline to you briefly deals only generally with the on-the-job training program, more specifically with onthe-job training for those who do not have jobs. Those who are unemployed, disemployed, including the very large number of dropouts who have not yet had sufficient skill developed to enable them to secure jobs.

I want to thank Senator Javits for the privilege of coming back from another important meeting to listen to me.

Senator KENNEDY of Massachusetts. Senator Javits has indicated his interest in introducing the witness to the subcommittee, so we are delighted to have him make a comment, and we will put that in the record.

Senator JAVITS. Thank you, Mr. Chairman. I think I have already stated Mr. Shimkin is one of our leading publishers and a very able man, and I am very glad to see him bring his talent before this subcommittee.

Mr. SHIMKIN. Thank you. I am generally very much in favor of many of the proposals I heard talked about this morning, including bill S. 2343. With due respect to the importance of improving the education and skills of those who have jobs today, I am confining myself this morning to that very large body of unemployed which represent both a drain on our financial resources as well as a strain on the human resources and wastes thereof.

I call my plan very simply a job-giving tax-saving plan.

It is based on the premise that there exists today throughout our land a very large number of industries and other business organiza

tions that have existing training facilities as well as existing supervisory people to train, and equipment to help train people with skills. This job-giving tax-saving plan, briefly, is as follows:

Through their ability to meet certain established requirements, some of our Nation's industries would be considered by our Government as qualified employers. A qualified employer would be permitted to engage a certified unemployed person-certified through a local agency-for a period. In my prepared statement I said "up to a year," but that would depend, obviously, on the skill. That would also call for a certified person being provided with on-the-job training of an approved nature. I have merely outlined this, hoping it might commend itself to the attention of this committee for the purpose of warranting further study in detail.

The qualified employer would, under this plan, be entitled to deduct the total amount paid to the certified employee for training from his Federal taxes.

It is recognized that the Government income would be reduced to the extent of the tax exemption. However, the reduction in unemployment benefits, welfare payments, the cost of Government training programs, plus the addition to the tax roll of the previously unemployed person who would thereafter earn a taxable income, as well as the reduction of the cost of the welfare, would offset this loss of revenue.

Most important, it will make it possible, to a greater degree than seems presently available, to deal with a large number of unemployed young people (including dropouts) than the present Government

programs encompass.

After 1 year of training, the certified employee would be eligible for regular employment by the original qualified employer or would be in a position to seek employment based on the skills he acquired during the training period.

All commitments of the qualified employer with respect to any labor contracts and union rules would be observed during the period of training.

A qualified employer would be eligible for qualification under rules similar to those now prevailing with respect to the merit rating for unemployment insurance-that is, no reduction in the previous rate of employment-and a genuine addition of the particular kind of employee that would be certificated; namely, those who need jobs and need skills to get jobs and keep them.

A certified unemployed person would be eligible for certification based on the present rules for eligibility for unemployment benefits or welfare aid.

Now, aside from all the fiscal and economic features, this plan might offer a solution to the human factor the opportunity for the unwanted unemployed to secure, through his tax exemption value, the self-respect of a job and training in a skill, instead of the feeling of rejection and a handout or dole from the Government.

Senator JAVITS. Mr. Chairman, may I ask just one question of Mr. Shimkin?

Is it not a fact that an employer today can deduct as an operating expense any money which he pays to an employee who is in training? Mr. SHIMKIN. Exactly, and therefore this is not a hundred percent tax credit.

Senator JAVITS. What is the difference between that and this plan? Mr. SHIMKIN. Assuming the employer's tax rate is 50 percent, and he pays the unemployed man $5,000, under the present rules, he would still have to pay $2,500 in taxes more than he would, because under my plan he would deduct the total of $5,000 from his tax.

Senator JAVITS. He would deduct the total amount from his taxes rather than from his income?

Mr. SHIMKIN. Mind you, his contributions will be in terms of providing a roof over the head, a machine to learn, to a supervisory employee for training, and all the other supervisory employees. He does make a contribution for that. He gets a trained employee, the cost of the compensation being provided by the Government.

Uncle Sam, in effect, would deploy the large amount of moneys to be spent in training schools, and give each employer a little bit of it and would relieve our problem, I believe, effectively.

Senator JAVITS. Would you put any overall limit on the amount of that credit?

Mr. SHIMKIN. I have assumed a limit should be when we do not have any unemployed people in the country.

Senator JAVITS. Thank you.

Senator KENNEDY of Massachusetts. Mr. Shimkin, I want to express on behalf of Chairman Clark appreciation for your appearance here. Senator Pell?

Senator PELL. No questions.

Senator JAVITS. I think it is a very provocative idea, Mr. Chairman, and I certainly will do my utmost to get consideration for it from the subcommittee.

Mr. SHIMKIN. Thank you, sir.

Senator KENNEDY of Massachusetts. We will include your complete statement in the record at this point.

(The prepared statement of Mr. Shimkin follows:)

PREPARED STATEMENT OF LEON SHIMKIN, CHAIRMAN OF THE BOARD, SIMON & SCHUSTER, NEW YORK, N.Y.

Mr. Chairman and members of the subcommittee, my name is Leon Shimkin. I am chairman of the board of Simon & Schuster and president of Pocket Books, Inc. As a publisher, I am devoted to the dissemination of good literature and educational texts to the public at the lowest possible costs. As a public-spirited citizen, I appear before you in the hope that I may be of service in our common interest.

The program I am prepared to outline to this subcommittee today-which I call the job-giving-tax-saving plan-evolved from my endless thinking about what useful steps might be taken by business and industry to improve education and training generally and, specifically, to fill the gap that has been created by the rapid technological advances and the need to meet the challenge. I believe it is an accepted fact that too many of our people are sorely in need of training that will enable them to keep pace with the strides of our changing world.

This job-giving-tax-saving plan takes into account the fact that there are existing "training" schools in industry with tools and equipment and supervisory help which can be more quickly mobilized to help people than the Government training programs can hope to cope with. If we, as a Nation, can find a remedy and the application of the remedy could be divided among the already existing qualified employers, rather than totally through the process of Government which are, of necessity, slow, we might be able to effect a cure and, consequently, alleviate an obviously critical situation.

My proposal, briefly, is this: Through their ability to meet certain established requirements, some of our Nation's industries would be considered by our Government as qualified employers. A qualified employer would be per

mitted to engage a certified unemployed person (certified through a local agency) for a 1-year period on condition that the certified person be provided with on-the-job training of an “approved" nature.

The qualified employer would, under this plan, be entitled to deduct the total amount paid to the certified employee for training from his Federal taxes.

It is recognized that the Government income would be reduced to the extent of the tax exemption. However, the reduction in unemployment benefits, welfare payments, the cost of Government training programs, plus the receipt of income taxes from the certified trainees who might otherwise be on welfare rolls, would offset this loss of revenue.

Most important, it will make it possible, to a greater degree than seems presently available, to deal with a large number of unemployed-the disemployed adults and the still unemployed young people (including dropouts) than the present Government programs encompass.

After 1 year of training, the certified employee would be eligible for regular employment by the original qualified employer or would be in a position to seek employment based on the skills he acquired during the training period.

All commitments of the qualified employer with respect to any labor contracts and union rules would be observed during the period of training.

A qualified employer would be eligible for qualification under rules similar to those now prevailing with respect to the merit rating for unemployment insurance-i.e., no reduction in the previous rate of employment would be acceptable in place of the tax-exempt trainee employment.

A certified unemployed person would be eligible for certification based on the present rules for eligibility for unemployment benefits or welfare aid. Aside from all the fiscal and economic features, this plan might offer a solution to the human factor-the opportunity for the unwanted unemployed to secure, through his tax exemption value, the self-respect of a job and training in a skill, instead of the feeling of rejection and a handout or dole from the Government.

Senator KENNEDY of Massachusetts. Our next witness will be Dr. William Miernyik, who is professor of economics and director of the Regional Research Institute, in Morgantown, W. Va.

STATEMENT OF DR. WILLIAM MIERNYK, PROFESSOR OF ECONOMICS AND DIRECTOR, REGIONAL RESEARCH INSTITUTE, WEST VIRGINIA UNIVERSITY, MORGANTOWN, W. VA.

Dr. MIERNYK. Thank you, Senator Kennedy. I am very glad to have an opportunity to appear before you to present my ideas on onthe-job training and the reduction of unemployment.

I have a prepared statement which I will not read, but I will summarize the highlights of this statement.

There are only three or four major points which I would like to try to make this morning.

First, I would like to comment briefly on the uneven nature of the reduction in unemployment in the past 5 years. The latest unemployment rate of 4.6 percent is encouraging, but when one looks behind the average figure at the rate for specific groups, it is still a rather discouraging picture.

Youngsters between the ages of 16 and 19 have a 14-percent unemployment rate. Nonwhite workers, male and female combined, accounted for almost 24 percent of the unemployed in July, with an unemployment rate of 8.8 percent for males and slightly higher rate for female workers.

On-the-job training has undoubtedly contributed to the reduction in unemployment, but I think it is necessary to distinguish between two types

Senator KENNEDY of Massachusetts. Professor, when you are giving these figures about the unemployed, do you have an unemployed rate for the more elderly workers, for example, those over 45 years of

age.

Dr. MIERNYK. Not at hand, Senator. These are given in the monthly report on the labor force: I did not include them in my statement, but they are substantially lower than those that I have given in the statement. These are the highest unemployment rates for specific groups for which separate rates are reported. It is true, however, that the rate for workers in the older age groups is above the overall average.

I think it is important to distinguish between two kinds of on-thejob training which I have called types 1 and 2.

Type 1 is the kind of on-the-job training which Mr. Caples was discussing a few moments ago where he indicated that practically everyone who comes to work for Inland Steel gets some training.

The second kind is a cooperative form of on-the-job training under which Government agencies, in particular the Office of Manpower, Automation, and Training, and private enterprises cooperate to train workers. In essence, under what I have called type 2 on-the-job training we are using the facilities of private industry for educational purposes.

We have no data on the extent of the first type of on-the-job training. There is no question that it does account for most of this type of preparation for employment. But for the second kind where the Government pays the bill and private enterprise provides the facilities and at least part of the instructional staff, we do have some figures.

In 1963, about 7,600 trainees went through such a program. Last year this figure jumped to 27,600. The rate of increase is very substantial, but the number of workers reached is still very small.

In my opinion, as far as using on-the-job training as a means for the reduction of unemployment, it is the second type which is going to be most effective. It is also going to be expensive.

If by some chance we added another 50,000 on-the-job trainees under the cooperative program this year, using last year's cost figures as a basis, it would require an additional expenditure of about $26.5 million. Once these workers are trained, of course, they go through normal hiring channels. They have to find jobs through employment services and on their own.

I would like, finally, to comment on hiring practices in industry and the potential for expanded on-the-job training. It has been my observation that hiring practices have become more stringent over the years. I was interested in Mr. Caples' comment that whereas the average level of educational attainment at Inland Steel is still below 12 years; their present hiring standards are such that they want to hire only workers who have a secondary school education.

Now, the raising of hiring standards is understandable, but I feel that it does operate as a barrier to the employment of a great many of the approximately 1 million teenagers in the job market today, many of whom have not completed formal education.

As an educator I certainly would not argue against the advantages of education as preparation for a job career, but it seems to me that private employers might well review their present hiring practice to