a car on the rack, the variety of items for sale and their merits, and the techniques of selling. He learns often for the first time-how to work. It is that simpleand important.

WAGES

The Bureau of Apprenticeship and Training (BAT), which is responsible for the administration of OJT-MDTA, has for years directed the promotion and development of formal apprenticeship programs in the United States. The general rule of thumb regarding wages paid the entry apprentice is this: He receives half the going rate paid the journeyman or full-fledged craftsman, with periodic increases so that in his final period of apprenticeship he is earning 85 percent of the journeyman rate.

This rule of thumb has been applied whenever possible in those occupations and industries where the final rate of pay is high enough to warrant this starting wage rate. In general, however, the employer pays the on-the-job-training trainee whatever he is paying his other workers in comparable jobs. Virtually all trainees are paid at least $1.25 an hour.

A broad sampling of 40,000 trainees showed that the first year wages paid the trainees averaged about $3,760, and more than $4,700 the second year. These wages included those received during post-training as well as training.

TOWARD A BETTER TRAINING PROGRAM

Mr. Chairman, I have been involved in the formulation and administration of the manpower training program since its inception. This has meant, necessarily, looking always for ways to improve it.

We knew from the beginning that one of the necessary developments had to be the leaving of the maximum degree of responsibility for specialized job training in the hands of employers.

This prompted us to consider very seriously, and to explore thoroughly, the possibilities of tax incentives to employers as a substitute for federally-assisted or subsized training programs. I knew that these possibilities have been, and remain today, in the thinking of many people.

The difficulties with the tax incentive proposal were discussed with this subcommittee by Mr. Stanley Ruttenberg, Manpower Administrator, at your hearings last September. He noted the difficulties of selecting a base period to measure the extent of additional training for which the employer would be given tax credit; of establishing controls to assure that the tax incentives would actually stimuate more training of the type most needed by the econmy; of avoiding over-centralization in the decision making process covering training at diversified and local levels; and of preventing credit being taken for training not commensurate with the tax deduction.

In my considered judgment now, however, the controlling consideration is that the on-the-job training program has supplied us-as a lesson of proven experience with the answer we were looking for.

It puts the training almost entirely in the employers' hands.

It has become an effective instrument for implementing national policies which employers share with the entire community.

And it is proving to be an almost historically economical program.

Let us look at this program in hard-headed, dollars and cents terms-in terms of who the trainees are, what it costs to train them, what their earning power becomes, and what the Government (which is the country) gets back on its investment.

Here are some of the key facts:

Most of the on-the-job trainees (about two-thirds) were unemployed be fore they joined the program.

We estimate that the average MDTA on-the-job trainee earns $59 a week during 19 weeks of training, and $80 a week as a full-time worker after his training. Thus the average trainee earns $3761 the first year.

The cost to the Government of on-the-job training averaged about $495 a trainee in 1965. Some cost more, some less.

According to the Internal Revenue Service the average Federal income tax for married workers with one child who earn $3761 a year is $211. Thus, in the first year, a typical on-the-job trainee repays the Federal Government about 43 percent of its total investment in him. Before the second year is over, the government has been repaid in full.

It is difficult, of course, to find the "average" illustration. Programs vary from the most expensive, during which 52 weeks of training is provided, to those lasting only 3 weeks.

Those trainees already approved will earn almost $392 million during their first year of training and work. Their training will cost the Federal government $51 million, of which about $20 million will be repaid in taxes during the first year, and the remainder the second year.

On-the-job training programs are a sound investment.

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 an exciting and successful program.

Thank you.

Secretary WIRTZ. Then my summary, Mr. Chairman and members of the subcommittee, would be very much in terms of the particular points to which you and Senator Randolph have referred in your opening statements.

The statement reflects what is at this point a very deep and broad conviction that in this on-the-job training program we have developed what, I think, is probably the most promising instrument in the present manpower arsenal.

There are several things which commend the on-the-job training program particularly. Senator Randolph, you just referred to one of them, and that is the fact that here we have a situation in which a person is both training and employed at the same time and it has shortened the bridge between training; in fact, it has removed the bridge that we had to develop previously between training and employment. It brings those two together and it is an extremely important, practical point.

The other thing that is emerging so clearly in our experience of the last few months especially is that these on-the-job training programs can be developed with an extraordinary degree of flexibility to meet the situations and needs of particular employees, special groups of employees and the needs of employers.

A third point of very basic import is this: We have realized from the beginning that this training program has to be developed along lines which leaves the center of gravity where it belongs with the private employer; and we are finding in the on-the-job training programs an extraordinarily effective combination of the public and the private functions with a clear emphasis on the role of the private employer. The fourth and final central point, in our judgment at this stage is that we are developing an experience which shows that the on-thejob training program can be the most economical of all of the training programs.

Now, in the statement which I filed with the committee there is a reference to the history, the developing history, and most of it is very recent history, of the on-the-job training program.

As I look back over the past 6 to 9 months, the most important single development is that we are working now much more with community organizations, with large associations of one kind or another, and with large corporations which permit us to work through them to the various smaller units which are involved.

When we testified even as recently as last fall, we still faced the problem of what to do with working out arrangements with small employers. There was too much redtape, there was too much difficulty

in making an arrangement between the Government and small employers.

We are finding the answer to that in these contracts with various community organizations, in these contracts wth associations, and these contracts with large corporations which can become, in effect, kind of middlemen as far as developing the relationships with the small individual employers and concerns.

You referred, Mr. Chairman, to the extent to which it has been possible to move this program along lines which meet the particular needs of specially disadvantaged groups. I would respond to that point in terms of two illustrations.

There is a kind of special pride in a couple of on-the-job training contracts, which we have worked out recently. One is with the Institute of Industrial Launderers. There is a reference to this in my prepared statement. We made a contract with the Institute of Industrial Launderers which involves the training of some 1,000 people.

Under that contract we are picking up the expense, the training expense, to the extent of $25 per week per individual for 10 weeks. These are training programs involving very elementary skills as far as the work in the industrial laundries is concerned.

It could well be inquired why the Government should pick up $25 a week of that training expense. The answer is that all of these thousand people are mental retardees, and what we are doing is working out with the launderers an arrangement whereby we will pick up part of that expense during the first brief period, and they are quite confident that at the end of 10 weeks over 80 percent of these people will be fully employable on a completely independent basis.

This same experience is developing in connection with our contract with the National Association for Retarded Children in which we are working out on-the-job training programs covering some 1,500 people in that state of special attention-it used to be desperation-it is not any more. We are finding ways of working out of that particular problem.

You inquired as to the extent it is possible to work these programs toward the needs of a different type of group; namely, the minority, the nonwhite groups in this country. About a fifth of our on-the-job trainees now are nonwhite, a little over 20 percent.

That group is, of course, only 11 percent in the population, but the 20-percent figure is very much in line with the percentage of the unemployed nonwhite in the work force.

One of our most successful programs or series of programs scheduled for 7,000 trainees-during the last year has been the agreements worked out with Urban League chapters, functioning to develop onthe-job training programs in their particular communities, finding the employees for whom this kind of program meets a very real need, and matching that with the particular needs of the nonwhite group.

You inquired, too, as to the extent to which it is possible to direct this program at the developing situation involving some, at least potential, manpower shortages in this country. We find it the most flexible, the most effective instrument we have so far for that purpose. It is possible to move in directly in response to employers developing manpower pressure situations, to move in on a comparatively short-term basis in most cases and to meet that developing manpower situation.

Your inquiry also covered the extent to which it is possible to make this program meet the problems which we are encountering more and more as we advance now on the hard-core unemployed problem, to make it meet the problems of those who in a good many cases lack the basic qualifications for work, because they have not had a chance.

They cannot go into regular institutional training programs, they cannot go into normal employment because they do not know how to read and write.

So, another of the interesting recent developments of the on-the-job training program is the development of what we are calling the coupled program. I think we will find a better word for that before we are through, but right now it means a coupling of the on-the-job training with training in basic arithmetic and reading needs particularly.

There are so many trades now where people could be used if they had those basic qualifications along with a specialized skill training which comes later and a very high percentage of our on-the-job training programs this next fiscal year will be these coupled programs in which we will try to supply those two elements.

As I remember the list of suggestions in your opening statement, Mr. Chairman, you referred particularly, too, to the continuing inquiry of this subcommittee and the committee, the Congress-as a matter of fact, the country as a whole-to the question of whether there ought to be some other approach, perhaps by way of a tax incentive, as far as the development of on-the-job training programs are concerned.

I should like to say just this in what I hope are not overly personal

terms.

I have been involved in the development of this manpower program, in its formulation, its administration, really, about since it started. There has been continuing interest at our end of the program in the exploration of these tax incentive possibilities. There is a certain, at least, apparent similarity between this kind of problem and the one that Congress meets in connection with the investment credit legislation in 1962, and I have great respect for the ideas, the principles that are reflected in the Human Investment Act proposal which is before the Congress and before this subcommittee.

I am frank to say that at the present point it seems to me the arguments of experience in support of the on-the-job training program, as it has now developed, outweigh the arguments for the consideration of a tax incentive proposal.

It is by no means a one-sided question. The principal considerations are these:

There are great difficulties of administration as far as a tax incentive proposal is concerned. Similar programs have been tried, are in effect in Great Britain, in France, and in some other countries. As we look at that experience and as we anticipate the situation here, there develop very real difficulties about trying to limit a tax credit to those situations in which special training is needed and trying to line up the advantages of the tax credit with the development of the kind of training programs which both the employers and the country need.

On the other hand, there is developing this experience with the onthe-job training which seems to us to reflect its having a flexibility about it, a possibility of directing it toward what are both national

and employer needs, and also in economy, which we think cannot be matched on any other basis, and I have included in my statement some of the hardheaded statistics about this.

As things are working out, the on-the-job training programs cost about, as a round figure-about $500 per person. Now, there is no single figure. If it is a 52-week coupled program, it will cost more than that. If it is a short 2 to 13 week, 4 to 13 week program, it will cost less.

Five hundred dollars is a good round number, and we are finding that the results of this are that most of these people are earning in the first year of this experience, including both the training period and the posttraining period, between $3,400 and $4,500, which means, in short, that over half of that cost is being returned to the Government in taxes the first year and all of it within the first 2 years.

And that experience is now confirmed by a considerable amount of review of the situation. So, in summary, Mr. Chairman and members of the committee, I report to you on what is still a developing experience covering about 30,000 to 40,000 people this year, with an anticipated coverage next year of about 125,000 people, a program that we think is working extraordinarily well. Thank you.

Senator KENNEDY of Massachusetts. Thank you very much, Mr. Secretary.

I know that the minority representatives requested that they be allowed to submit some questions in writing for the record and these questions will be forthcoming and we hope that you, Mr. Secretary, and members of your staff, you will be responsive, as I am sure you will be.

Secretary WIRTZ. Surely.

(The material referred to follows:)

RESPONSES FROM SECRETARY OF LABOR W. WILLARD WIRTZ TO QUESTIONS SUBMITTED BY SENATOR WINSTON L. PROUTY

Question 1. In your recent testimony before the Joint Economic Committee, you pointed out that the number of hard-core unemployed-those out of work for 15 weeks or more had dropped to 675,000. You said at that time

"Any substantial further reduction in this total depends very largely on special training programs, usually including basic literacy training."

This statement is in close agreement with your remarks at the Mayor's Conference on Employment, in Chicago on November 3, 1965.

"It appears unlikely that unemployment among those groups in which it is most serious-especially younger workers and minority groups will be substantially reduced below present levels by any foreseeable economic expansion. The necessary improvement will have to come from measures aimed directly at these areas of concentrated unemployment, particularly at the increased preparation and training of those who have been left out of the general educational and employment opportunity patterns."

But then, in your Joint Economic Testimony, you went on to say in the sentence following the one quoted above,

"Continued expansion of the economy remains the central necessity." Now, just to clarify your position, do you think the primary emphasis on getting the hard-core unemployed back to work should be placed on expanding the economy, or on stepping up training programs for the hard-core unemployed? Answer 1. In my appearance before the Joint Economic Committee, I said that, "It will be part of the basic approach which I will be taking up with the committee that we should recognize the coordinate importance in the record of the last five years of the fiscal, the monetary and the budgetary policies, on the one hand, and the manpower programs or the "Great Society" programs, or more broadly those which included antipoverty, training, so on and so forth, alongside the developments in the policy of the fiscal area."