skills that exists in our economy. It will therefore help accomplish an important social objective without the administrative expense and waste of first collecting revenues and then directing them back to the States to be used for federally financed programs, not to mention the Federal control inherent in these kinds of programs.

This badly needed legislation was originated by our able Republican colleague in the other body, Senator Winston L. Prouty, who, with the help of many scholars, economists, labor experts, and businessmen has produced a carefully thought out and well-drafted bill. Senator Prouty is introducing this same measure in the Senate today.

Republicans have led in creating the philosophical framework for the national manpower training and retraining effort. We have realized that manpower development is a major means of spurring economic growth and creating needed human capital.

This Republican effort began with Operation Employment in 1961-62, a fullscale study under the aegis of the Republican policy committee which heard the leading authorities from all parts of the Nation on employment and unemployment. For the first time a groundwork of theory and data was laid for fully comprehending the problem of structural unemployment and the role of manpower development and training in our advanced industrial economy. I discussed many of the findings of this study in my book, published in 1962 by Duell, Sloan & Pearce, "87 Million Jobs." Much of this research and scholarship was incorporated into the Manpower Development and Training Act of 1962. No one can claim a greater and more intense concern with the welfare of the worker in our society than those of my colleagues who at that time participated in developing this body of knowledge and law.

Unfortunately, because of the manner in which it has been administered, the Manpower Development and Training Act of 1962 has not been as effective as it should have been. A more fundamental approach is thus needed. It has been proven that a substantial amount of our present unemployment is not because of too few jobs, but because a large portion of our manpower is untrained in the skills that are actually at this moment in serious demand. An estimated 2 million American are structurally unemployed. These structurally unemployed persons need only additional training to become employable. They constitute our most underutilized economic resource. The legislation being introduced today by Senator Prouty in the Senate and myself and my colleagues in this body is thus a further milestone.

No element in our society is better able to train those in need of skill upgrading than American business firms. Business has recognized that a rapidly advancing technology requires continuous programs of training and retraining. It conducts formal as well as informal training during business hours or after work in plants, offices, and classrooms. Instruction is provided by skilled supervisors and other staff, or outside experts and teachers. No one else is as capable both of teaching the skills business needs and of teaching those skills well and properly.

HOW THE ACT WILL WORK

Specifically, the Human Investment Act of 1965 provides a 7-percent tax credit to employers for six types of expenses incurred in training their employees in new skills.

This is how the maximum tax credit under the Human Investment Act of 1965 would be computed:

The maximum amount of credit that a taxpayer may claim for 1 taxable year is $25,000 plus 25 percent of his tax liability in excess of $25,000.

Example: Suppose a taxpayer has a tax liability to the Federal Government of $425,000 for a tax year. The maximum amount of credit that he could claim under the act is $25,000 plus 25 percent of the tax liability in excess of $25,000. The tax liability in excess of $25,000 is $400,000-$425,000 minus $25,000. Twentyfive percent of this $400,000 is $100,000. The maximum that could be claimed is thus $25,000 plus $100,000, or $125,000.

The taxpayer then adds up his allowable employee training expenses. Case A: Suppose this figure amounts to $2 million. Seven percent of $2 million is $140,000. Since this is in excess of the maximum allowable-$125,000—the most the taxpayer could claim would be $125,000.

Case B: Suppose the figure for allowable training expenses is $1 million. Seven percent of $1 million is $70,000. Since this figure is less than the maximum allowable, the taxpayer would claim the full $70,000.

However, it is important to note that in both the above cases the total employee training figure $2 million in case A and $1 million in case B-continues to be deductible as a business expense.

Many of the provisions of the bill will be explained by my colleagues during the debate.

IMPORTANCE OF HUMAN CAPITAL

Three years ago, the Congress enacted a 7-percent tax credit to spur investment in modern plant, machinery, and equipment. What the Congress failed to realize at that time is that a nation's most important kind of capital is its human capital-the skills, experience, and security of its workingmen and women.

Thus, the language of the Human Investment Act is parallel to that of the investment credit provisions of the Revenue Act of 1962, amended in 1964. The bill requires that a trainee be on an employer's payroll for at least 3 months after the completion of training--except in the case of death, disability, voluntary separation, or firing for cause. Thus, the bill helps to insure that trainees will be continued on the payroll and in the employ of the firm after being trained. This provision helps meet an often heard objection to Government-run training programs that trainees may be unable to find work even after completing training. In addition, this tax credit approach makes new Government regulations, redtape, and bureaucracy unnecessary.

THE TAX LAWS SHOULD TREAT HUMANS AS WELL AS MACHINES

Thus, we maintain that the tax laws should treat humans as at least equal to machines. In light of the rapid obsolescense of human skills and the increased need for new and more technical skills, it is imperative that we modernize our tax approach. In 1965, when a person's skills can become obsolete in his own lifetime, sometimes more than once, a constant training and retraining process is needed in order just to stand still. Our job is to create the economic framework in which business can undertake the programs of training and retraining of human capital investment that our society needs.

Mr. ANDERSON of Illinois. Mr. Speaker, I have today joined the gentleman from Missouri, who is in the well, in introducing the Human Investment Act. I would not want this opportunity to pass without telling the House that I think the gentleman from Missouri deserves a great deal of commendation from all of us for the initiative that he has shown in sponsoring this bill in the House and interesting other Members of this body to do likewise. I think it may well be one of the most, if not the most, significant pieces of legislation to be introduced in this 1st session of the 89th Congress. I congratulate the gentleman.

OUR EMPLOYMENT DILEMMA

Mr. BROOMFIELD. Mr. Speaker, one of the ironies of our Nation's employment situation is that thousands of jobs are going begging while many of our workers are unable to earn an adequate income.

In most cases, the reason is job skills. Many workers do not possess the technical knowledge nor do they have the experience to qualify for skilled and semiskilled jobs in a particular trade.

Congress in the past has instituted a number of programs to upgrade these skills for the unemployed or the unskilled.

Vocational education programs and the Manpower Retraining Act have been valuable tools in providing these skills to a limited number of workers.

But they are not enough. They can never be enough unless and until the private sector of our economy, private enterprise, is brought into full play in an attack on this problem.

That is the reason I am happy to cosponsor this Human Investment Act today. This approach provides the incentive to private enterprise to take a chance on new workers, to train them, to let them gain invaluable experience on the job at tasks which will upgrade their skills and reward them richly at the pay window.

If enacted into law, as it should be, it will provide a 7-percent tax credit to an employer who invests in certain training programs to either train new employees for responsible jobs or to retrain certain of his present employees for more demanding jobs.

The 7-percent credit would include allowable training expenses with a maximum credit of $25,000 plus 25 percent of the taxpayer's tax liability in excess of $25,000.

ALLOWABLE TRAINING EXPENSES

Allowable training expenses would include: Wages and salaries of apprentices, employees in Manpower Development and Training Act on-the-job training programs and employees in cooperative education programs alternating work and study; tuition and course fees paid by the employer at colleges, business or trade schools; home study course fees paid by the employer to colleges or accredited correspondence schools, and expenses to the employer of organized group instruction.

The provisions of this proposed new law would apply only to training for skilled and semiskilled jobs-not to the training of managerial, professional, or advanced scientific employees. It would not be, in other words, a device to provide Ph. D.'s for college graduates in managerial training.

THE NEED FOR THE ACT

How badly needed is this new act?

If the Detroit metropolitan area is at all representative of what is happening in other parts of our Nation, the answer is: Very badly indeed.

A recent article by Carl Konzelman, home editor for the Detroit News, points out that as many as 30,000 additional skilled workers are needed in the building trades in that one area alone.

Furthermore, the pinch for new workers in the building trades is actually slowing down the boom in the Detroit area and could put a damper on future prosperity for that important region.

Plant expansion is being curtailed because of a lack of skilled workers, new home deliveries are running months behind schedule, and premium overtime rates to skilled workers are driving building costs sky high.

What is happening in building in Detroit is happening in manufacturing as well, and every indication we have is that skilled labor shortages will grow more acute in the years to come.

The problem is going to have to be met head-on by those with the greatest stakes in finding a proper solution, and these are the worker and the employer.

A DANGER-RUNAWAY INFLATION

Unless an adequate and meaningful solution is found, and soon, we may find business booms turning into runaway inflation and eventually economic busts throughout our country.

I think that the Human Investment Act I am cosponsoring today will be a long step toward solution of this pressing problem when it is passed into law and I urge its prompt consideration in committee and early passage by the House and Senate.

For the information of my colleagues, Mr. Konzelman's article follows:

[From the Detroit News, Sept. 6, 1965]

SHORTAGE RAISES COSTS-BUILDERS STRAIN BOOM LIMITS AS 30,000 JOBS GO BEGGING

(By Carl Konzelman)

Many thousands of additional skilled workers-perhaps as many as 30,000could be used by the Detroit region's building industry. That is the heart of the current labor pinch in the eyes of industry people accustomed to coping daily with the shortage.

Boom-time building and a costly application of the law of supply and demand are the clear-cut reasons for the acute shortages which are causing disruptions in housing construction and relatively high building costs for this area for homes, business buildings and factories.

The estimated need of up to 30,000 more skilled workers is given by William F. Baker, president of the Builders Association of Metropolitan Detroit, whose members primarily are residential and light commercial builders.

"Manpower shortages are growing more critical every day," said Baker. "As a result, the delivery of new homes is being slowed to the point where it may take anywhere from 4 to 8 months before a new home purchaser can move in, and this is after the basement is excavated.

"Builders are almost helpless to give firm dates for occupancy because of the refusal of various subcontractors to commit themselves on when they can

perform their part of the total work. For example, basement excavators will accept orders, but refuse in many instances to indicate when they will be able to come on the job.

"In the case of carpenters and other trades, the shortage is equally critical, with most homebuilders reporting that they could use double the number of men they now have available.

"If the industry has 55,000 people working for it, as the May figures show, and it takes twice to three times as long to build a house, I would think it would be perfectly safe to figure up to 30,000 more skilled people needed for efficient operation."

GRADUAL WORSENING

"The shortage in manpower is one that did not explode suddenly, but has been worsening month by month. Its causes in the housing field primarily are the lack of new men coming into the field and the increasing complexity of new homes.

"The combination of larger homes and increased demand has made the supply of building trade mechanics completely inadequate."

Heavy industrial, commercial and institutional building throughout Michigan, combined with residential expansion, suggest a basic cause of the current manpower shortages in the heavy building industry.

Figures supplied by William C. Dennis, secretary-manager of the Builders Exchange of Detroit and Michigan, reflect a mushrooming of heavy building since 1962 throughout the State. Clearly, factories, large building projects for housing and business building generally are a strong factor in the hot competition for skilled tradesmen.

TOTALS LEAP UP

In 1962, contract awards for large projects totaled $147.645,000 in the six countries of the Detroit region on the basis of work which proceeded to the building phase through architect offices.

The builders exchange estimates that its figures represent about 90 percent of all such buildings because some projects go directly from ownership to construction without reaching an architect.

The figure of $147.6 million was sharply eclipsed by one of $253.965,000 in 1963. In 1964, the total soared to $501,042,000. Contracts represented in the 1964 total are affected by the present labor shortages, since work planned then is in the construction phase now.

While the Detroit area was accumulating a growing volume of construction, the same thing was happening outstate. The exchange figures show that in 1962, the State total outside Detroit was $203,743,000. It changed little in 1963 with a $203,662,000 volume.

MORE THAN DOUBLE

But in 1964, the volume leaped to $330,777,000.

Combined, the Detroit and State figures tell this staggering story: A rise from $351,388,000 in 1962 to $831,819,000 in 1964-a period of increasing prosperity which also saw private housing construction setting a fast pace.

As short as the supply of skilled labor is, the total has been increasing, a comparison of March, April, and May figures for 1964 and 1965 indicates. Construction labor in March this year was at 48.800 compared to 43,800 in the same month last year in Wayne, Oakland, and Macomb Countries. April, the number rose to 51,000 compared to 45.900 last year, while in May the total stood at 55,100, up from 49,300 in the same month of 1964.

In

So workers are coming from somewhere, although still not in sufficient numbers to satisfy the demands of a booming industry. But even with the added building volume, why such painful shortages?

DROP DURING FIFTIES

Building observers point out that the heavy project categories were at ebb in the middle 1950's and reached a low, low point in 1958. The middle 1950's were the years when automation began to have an upsetting effect on auto industry employment, and this started a declining trend in many things, including housing.

The market for new houses drifted downward to 15,500 in 1960 in the three countries. The result was a flight of building tradesmen into other occupations

and other areas. One estimate puts the loss in carpenters alone at 5,000 in this period. Other trades were similarly depleted.

Along with the numbers of individual tradesmen, the contractor community shrank. When the turnaround came in 1961, in housing as well as in other building, the supply-and-demand balance began to change. It has worsened each year since as Detroit and Michigan people, and others outside began to appreciate the golden prospects of the water and auto wonderland.

INVESTORS ACT

Spurred by a rebirth of pride in Detroit and Michigan, a substantial image. building movement began to have a deep effect on both outside and local investor money. Office buildings, new business ventures, defensive modernizing of older structures began to sop up the available supply of building labor.

Apartments, pegged at the start on urban renewal multiple construction, began to appeal to a widened Detroit audience.

In 1963, the first 4-year contracts were signed by the carpenter unions. They specified roughly 5-percent increases annually for 1964, 1965, 1966, and 1967. And they recognized a trend to a shortened workweek which put the carpenter on a dwindling schedule aimed at a 35-hour week in 1967. The electricians went on 35 hours in May 1965.

DISCOUNTS GONE

The shortage hit soon afterward. Between summer of 1963 and summer of 1965 home prices rose as much as 20 percent. The rise was not entirely represented in the fat overtime paychecks of the building labor, but in other cost hikes as well. Despite the price advances, demand increased.

By mid-1964, the seller, whether merchant or private, was in the saddle. Demand for architect and building skills and the real estate to bring them together became urgent. The discount days of the late 1950's in housing and in all enclosed space was over. Price indices began to bulge upward toward those of other metropolitan centers.

By early August of this year, a Cleveland builder, attracted to Detroit to share in the hot market with a 2,000-unit apartment building program, said that Detroit building costs were "higher than in Cleveland." And that is something if true, for Cleveland long has ranked along with such high-cost areas as New York and Chicago.

"You're in a great building boom here," said this builder, "with a more than ample supply of work but not of personnel to perform it. The subcontractors are having trouble getting and keeping labor and hence their prices are inching up as a matter of self-protection.

ABUSES COMMON

"Largely it's a matter of supply and demand. When times are good and building is active, the labor is independent and building costs go up. You learn to live with this sort of thing, adjusting as you go to the longer time required for building and for the higher costs.

"We have lived with it before and we undoubtedly will have to live with it now."

Proof that building labor is independent because of shortages is everywhere these days.

Reports of individual abuses of contractual relations are common in the industry.

Both electricians and carpenters are said to be exploiting this device in some cases:

Employed by one contractor for normal work hours, they often will work Saturdays and Sundays at premium rates for another, then take Monday or another weekday off at the expense of their regular employer.

And totally aside from overtime premiums is the additional cost of overscale paychecks. To keep workers to fulfill commitments, a subcontractor often will pay above scale when he cannot offer overtime premiums or even when he can. The result is higher, and ever higher, costs.

Mr. CLANCY. Mr. Speaker, I wish to join with my colleagues in sponsoring this legislation to offer employers a tax credit to offset part of the expense of programs designed to train prospective employees for jobs with the company or or to retrain current employees for higher level jobs requiring a greater degree of skill.