the expenditures he has made for training. This is both on-the-job and other types of training. The determination of refunds available from the major fund is made industry by industry, so, as I say, there is a considerable amount of flexibility involved. What may be appropriate for the coal industry in terms of refunds would not be appropriate for the steel industry, and so on. Senator KENNEDY of Massachusetts. Who makes that determination? Mr. TAYLOR. It is done within the industry councils. Five of these councils have been established as of May of this year, and they have six, I think, in the planning stages and ready to go. Senator KENNEDY of Massachusetts. You mentioned in your testimony one of the areas of concern is how to improve on-the-job training in smaller firms. In many parts of the country we have a number of smaller firms, a whole wide range of different industries. I was wondering what has been done on that. Mr. TAYLOR. It seems to me that the industrywide approach has particular benefit in the training efforts of smaller firms. I think you are right that they do face greater difficulties because of their inability to devote relatively as many resources to training, and it is possible under an industry approach to have training conducted jointly so that the firms can contribute a smaller portion and the economies of scale enter in and training can be more effectively completed. I might say that I think there is some difficulty with adapting the English system to the American setting because compared to England we are not as well organized as far as industries are concerned. The geographical problem is much greater here than in Great Britain; collective bargaining does not tend to be nationwide, and so forth. For this reason I think it is possible that this adaptation would be quite difficult in the American setting. But it does seem to me that it is important to get some information on how the system has worked in Great Britain and investigate the possibilities of adapting it. Senator KENNEDY of Massachusetts. Mr. Somers? If it is agreeable, Senator Murphy, maybe we can have the whole panel testify and then we can ask questions, if you will excuse me for interrupting. STATEMENT OF PROF. GERALD SOMERS, UNIVERSITY OF Mr. SOMERS. In his appearance before this subcommittee 4 years ago, the then Secretary of Labor Arthur Goldberg referred to the proposed programs for on-the-job training in the Manpower Developand Training Act and said, "we contemplate in those programs that help will be given to 55,000 the first year, 75,000 the second, 100,000 the third, and 100,000 the fourth." And yet in 1963, the first full year after passage of the Manpower Development and Training Act, on-the-job training projects were approved for only 6,400 trainees, and in 1964 on-the-job training projects were approved for only 22,067 1 Training and Utilization of the Manpower Resources of the Nation." Hearings before the Senate Subcommittee on Employment and Manpower of the Committee on Labor and Public Welfare, 87th Cong., 1st sess., 1961, p. 236. trainees. Although the number of on-the-job training approvals has continued to accelerate in 1965, it is likely that by the end of the year the achievements in this type of training will still fall far short of the total goals initially projected. These results are disappointing for on-the-job training has a number of special advantages: 1. The great need for the training and retraining of unemployed and underemployed workers can be met only if training on the job is widely used as a supplement to institutional training in the vocational schools. 2. Training on the job is traditionally the most common means by which specific occupational skills have been acquired in American industry. One would expect employers to welcome so familiar a procedure. 3. The Government's expenditures per trainee in on-the-job training projects are substantially below-often as much as one-third belowcosts in comparable Manpower Development and Training Act institutional training programs.3 4. The equipment used in on-the-job training is usually more expensive, more up-to-date and better adapted to changing technology than the equipment found in most vocational education facilities. 5. The job placement ration of on-the-job training graduates is substantially higher than that of Manpower Development and Training Act institutional trainees (94 percent compared with 72 percent in 1964), because most employers hire their own on-the-job training trainees before, during or after their training. 4 6. These placement results further the motivation of workers in entering the training course and in completing their training, relative to institutional trainees. It has been noted that in spite of these advantages the Manpower Development and Training Act's on-the-job training projects lagged because, unlike institutional training, a whole new system of procedures and standards had to be developed for on-the-job training. Staff limitations hindered not only the establishment of these procedures, but also the necessary promotional and technical assistance. Moreover, unions have been concerned about the possible wage effects of such training and the possible reduction of employment and advancement opportunities for their own members. Aside from these general and administrative factors influencing the rate of introduction of on-the-job training projects, the decisions of private employers must be accorded the central and most crucial role. To a much greater extent than in institutional training, the successful growth of the Manpower Development and Training Act on-the-job training projects will depend upon employers' evaluations of the potential costs and benefits of such projects. 2 Manpower Report of the President and a Report on Manpower Requirements. Resources. Utilization, and Training." U.S. Department of Labor, March 1965, p. 129. 3 "Manpower Research and Training Under the MDTA," a report by the Secretary of Labor. March 1965, p. 35. 4 Idem. 5 Manpower Report of the President, p. 129. SURVEYS OF EMPLOYERS Considerable light can be cast on the past problems as well as the future potentialities of Federal on-the-job training programs through surveys of employer attitudes toward governmental activity in this field. In addition to a general appraisal of the public statements of managerial officials, useful insights are provided by three surveys of employer opinion, conducted as part of the University of Wisconsin's overall evaluation of retraining and vocational education. The first interview survey of 132 employers, was carried out in 1962-63 primarily among employers in West Virginia who had hired trainees of programs established under the Area Redevelopment Act and State retraining legislation. The second, a nationwide mail questionnaire survey, was conducted in 1964 with the cooperation of the American Society of Training Directors. Responses were received from 1,048 members of the ASTD. In the third survey, a mail questionnaire was sent to over 1,000 employers in apprenticeable trades in Wisconsin in order to determine their attitudes toward the apprenticeship form of on-the-job training. Useable responses were returned by 457 employers. Some of the major conclusions to be derived from these surveys are summarized briefly below: 8 1. The attitudes of employers toward Government-subsidized onthe-job training are influenced by their views on Government intervention in general on behalf of the unemployed. These attitudes are likely to reflect the region in which the firm is located. In West Virginia, suffering excessively high rates of unemployment at the time of the survey, over 90 percent of the interviewed employers favored some form of Government aid in the retraining of unemployed and underemployed workers. In the national ASTD survey, on the other hand, only 53 percent were in favor of Government intervention in this field. Whereas only 50 percent of those in the South were in favor of Government aid for retraining unemployed workers, 87 percent of the employers in the New England and Middle Atlantic States favored such aid. In those regions where a larger percentage of employers favor Government aid for the training of unemployed workers, the percentage of employers who prefer on-the-job training relative to institutional training assistance is also larger. Thus in the South only 14.6 percent of the employers favored Government-subsidized on-the-job training projects, whereas in New England and the Middle Atlantic States the percentage was 32.1 and in West Virginia 37. As is noted below, the Reported in detail in "Retraining of the Unemployed: Case Studies," edited by Gerald G. Somers, ch. II, "Government Retraining of the Unemployed in West Virginia." by Harold A. Gibbara and Gerald G. Somers, to be published shortly by the University of Wisconsin Press. A few employers who had hired trainees in depressed areas of Tennessee and Michigan were also included in this survey. Reported in detail in Edward C. Koziara, "Employer Views and Evaluations of Government Retraining Programs," unpublished doctor of philosophy dissertation, University of Wisconsin, 1965. Reported in detail in G. Soundara Rajan, "A Study of the Registered Apprenticeship Program in Wisconsin," unpublished doctor of philosophy dissertation, University of Wisconsin. 1965. The region-preference relationship is significant (chi square) at the 0.001 level of significance. West Virginia results are also influenced by the smaller size of responding units and by their greater experience in hiring trainees as compared with the respondents from other regions in the ASTD survey. Distinctions also arise through the use of interviews in West Virginia and mail questionnaires in the national survey. Many employers who opposed the Federal program of on-the-job training were by no means opposed to on-the-job training itself. Indeed, their opposition to Government intervention was buttressed by their view that on-the-job training was the traditional area of private initiative, that such training programs would be expanded by employers as labor demand expanded, and that, therefore, no role by the Federal Government was required. Similar views have been publicly expressed by major employer spokesmen in other forums. For example, Malcolm L. Denise, vice president for labor relations at the Ford Motor Co., has stated: When the impetus and needs are there, the training problem so far as production work is concerned, can be met by the employer and that is probably the best way to do it.10 Or, as one of the respondents in our survey, the director of employment for an Oklahoma oil company, put it, "I doubt if business wants Government to train their employees." Other employers who spoke in this vein noted the "bureaucratic redtape" that surrounded the Government-sponsored projects and decried the time they "invested" in trying to gain approval for their proposals. 2. A somewhat larger group of employers prefer Government-aided institutional training as compared to those who prefer subsidized onthe-job training, but the proportion of on-the-job training preferences greatly exceeds the ratio of on-the-job projects currently included in the total Manpower Development and Training Act program. In both the ASTD survey and the West Virginia survey, approximately 60 percent of those respondents who supported Government retraining aid gave their first preference to institutional rather than on-the-job training projects. But it is significant that 40 percent of these respondents would prefer Government subsidies to on-the-job training whereas only 8 percent of all Manpower Development and Training Act trainees were approved for on-the-job training projects by the end of 1964.11 It would appear that considerable expansion of on-the-job training projects would be in line with employer prefer ences. 3. Employers who have had experience in hiring retrained workers and who are aware of Government-sponsored programs in their area are more favorably disposed toward Government-sponsored training, in general, and toward on-the-job training projects in particular, than are those who have not hired trainees and who are unaware of training programs. This finding, too, would lend support to promotional efforts to bring employers into closer contact with ongoing programs. It is not clear 10 "Impact of Automation on Employment," hearings before the Subcommittee on Employment and the Impact of Automation, Committee on Education and Labor, House of Representatives, 1961, p. 520 (see also his statement on p. 551). Similar employer views have been expressed in appearances before this Senate subcommittee. A review of statements made by employers and others on the question of Manpower Development and Training Act on-the-job training is contained in Karen Shallcross Koziara, "Legislative Programs to Combat Unemployment: Economic Analysis and Legislative Development." unpublished doctor of philosophy dissertation, University of Wisconsin, 1965, pp. 143-186. Manpower Report," p. 128. which is cause and effect in this case; i.e., employers who have hired trainees may have done so because they were more favorably disposed toward Federal retraining. At any rate, it is encouraging to know that the hiring employers continue to be more in favor of Government programs than other employers even after their experience with the trainees. 4. The preference for Government-subsidized on-the-job training increases with the size of the responding firm. Whereas the number of respondents in the ASTD survey giving first preference to on-the-job training was 18 percent of those in units of less than 500 employees, the percentage increased progressively in each larger employment category, reaching 25.2 percent in companies with 10,000 and more employees. On the other hand there is no significant relationship between establishment size and preferences for institutional training or for no Government aid. The comments of respondents help to explain the relationship between firm size and preference for on-the-job training projects. Many respondents in the smaller size categories indicate that they do not have the training facilities for an on-the-job training project and must rely on the vocational schools or on workers trained in other establishments. Even though considerations of cost might induce the interest of small establishments in Government subsidies, this inducement is insufficient to overcome the obstacles to in-plant training in these establishments. Even so, comments by smaller firms indicate that the positive relationship between firm size and on-the-job training preferences would be much sharper still if the attraction of Government subsidies were not available to small firms. For many, the cost of a formal on-the-job training program would be prohibitive. As is noted below, much depends on the nature of the industry and the occupation in determining the relative attraction of the Government on-the-job training subsidy. The survey of employer attitudes toward apprenticeship in Wisconsin confirms these findings with regard to training costs, facilities, and firm size. Employers in small establishments note that they cannot afford to add apprentices because of the cost involved. Other small firms indicate that they are prevented from doing so by the lack of training facilities suitable to apprenticeship. Employers in large establishments, on the other hand, are more likely to stress the restrictions imposed by union apprenticeship ratios, rather than the limitations of funds or facilities. It would appear that Government subsidies might make a major contribution toward increasing on-the-job apprenticeship training in small firms.12 5. Within industry classifications, the greatest relative employer interest in subsidized on-the-job training is found in hospitals and other service establishments. Many trade establishments and local government units also prefer on-the-job training, but even more of the respondents in these latter two categories give first preference to Government-sponsored courses in the vocational schools. Among firms in the durable manufacturing category, prerences were almost equally divided between on-the-job training and institutional retraining. In nondurable manufacturing, on the other hand, |