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But I agree, this is something that we perhaps need more information on.

Senator KENNEDY of Massachusetts. I have just one question and then I will give Senator Murphy a chance to ask some questions.

I am wondering, Mr. Somers, whether you know of any of the major industries that are providing training facilities for some of the smaller industries, if there might be any kind of arrangement!

Mr. Somers. In this country I do not, although I believe there are such provisions in the on-the-job training section of the Manpower Development and Training Act, and definitely there are some beginnings of this sort of program. However, it has not moved very far in the United States. This is a type of program that could be encouraged, however, with the proper kind of subsidy arrangement.

In Japan, as I mentioned, where on-the-job training has been the general rule and has been one of the major strengths in Japan's phenomenal growth in recent years, this cooperative type of on-thejob training is incorporated as part of their overall governmental training programs. The Government will provide financial aid to some of the large companies on the condition that they train workers who will then be employed elsewhere, not necessarily in the company in which they are trained.

This obviously means a considerable saving in setting up new vocational schools and in acquiring a vast amount of new equipment for training, since the big companies already have such facilities and are able to put these at the disposal of the smaller ones. However, I am not aware of very much progress in this direction in this country at the present time.

Mr. Taylor. There was a program that is somewhat along these lines--the Chrysler program under the Manpower Development and Training Act--where they trained mechanics at the factory under an on-the-job training grant, I believe. These workers were sent out to the various dealerships of the firm. This is a variation of the JapaSenator KENNEDY of Massachusetts. Senator Murphy? Senator Murphy. This was not a new plan with Chrysler. For many years the Ford Motor Co. had many programs in Detroit so that all their mechanics would go to Detroit. This was part of the usual company business.

I would like to ask Professor Somers: In Japan is this a Government-subsidized programs? Mr. SOMERS. Yes, it is. Senator Murphy. May I ask this: Do they go-let us say that the program applied to manufacturing--do they pick out one particular plant and make that what you might call a pilot, or do they spread it across the industry? Mr. SOMERS. I do not think they centralize it in any particular plant. It is a cooperative arrangement worked out with any company that is willing to go along with this scheme. Senator MURPHY. The whole idea that the committee is talking about

, there was some sort of an incentive for a company to take on some on-the-job trainees?

nese program.

Mr. SOMERS. Yes.

We have some examples under the antipoverty program in which some major American corporations are becoming involved in community action programs, including training and education. This may be a precedent for this type of on-the-job training.

Senator MURPHY. I have a proposal now that is a very interesting one that I have just submitted to Sargent Shriver, that has to do with a biochemical company in Los Angeles, which has been a very successful one and was the basis for the legislation that Senator Javits and I put in about setting a standard, and the standards are very high.

They have done a very interesting bit of research on their own and show that there is a need at the present time immediately for 50,000 young people that need not have finished high school and can be trained to operate in this industry within a period of probably 6 weeks.

I have found this most interesting and very productive. You mentioned hospitals. I would think that this would be one of the greatest places of need and also one of the ideal places to set up a program. Would

you suggest that the program should be let me phrase it another way—might it not be more practical to go in and carefully set up a program and test it and make sure you have one that worked and then suggest that to go industrywide, or would you suggest just turning it loose on an industrywide basis with some sort of subsidy, hopefully, that the individual companies would pick it up and work it out on their own?

Mr. SOMERS. There has been already a fair amount of experience with these training programs in some industries. For instance, hospitals have been an area in which on-the-job training has spread more rapidly than anywhere else because of the obvious need and advantages.

There should be enough experience now to have some confidence in the procedures, and I would expect this type of training in hospitals to expand even further.

Senator Murphy. I am always amazed whenever I get to Los Angeles over the weekend and the Sun paper comes out, and there is always a section about this thing (indicating] of want ads.

There may be 10 pages from Douglas Aircraft, 10 pages from Northrup and North American, and the rest, and at the same time we have a high unemployment rate.

It has always fascinated me as to why these jobs are vacant and why there is not someplace where fellows who obviously are lacking in the proper skill, for these particular jobs cannot go to get the skills.

On the other hand, many of the electronics plants out there that have lost contracts or have not had contracts renewed will suddenly give the newspapers from three or four other cities to engineers and say, “Here, see if you can find yourself another job, because we are going to have to cut off this program in 3 or 4 weeks."

It is a difficult thing, because these are young people who have come out there and established homes and started to raise families, and then all of a sudden the job has moved someplace else.

Mr. SOMERS. In the case of engineers, electronic technicians, and other technical and professional people, vacancies can very well exist, and you might still have a substantial number of unemployed, because, unfortunately, the unemployed do not have the background or qualifications to be trained for that type of position.

In the hospitals and small-scale establishments there is another danger involved in on-the-job training, although I strongly recommend we try to encourage them. Many of the vacancies in hospitals, and some of these smaller service establishments exist simply because the wages and working conditions are so very bad that they cannot retain their employees, and some of these establishments are merely taking advantage of the Government subsidy to obtain the productive contribution of the trainee in jobs such as a nurse's aid or an orderly that do not require a great deal of skill. They benefit from these services during the period of training when the Government may be paying for most of it. They are not so interested in developing a permanent employee as in filling their immediate job needs with Government aid.

Senator KENNEDY of Massachusetts. I think you have heard the earlier testimony and statements. I know you were here when Senator Clark read the statements of Senator Prouty and Senator Javits. Other than the incentive of tax credit, have you gentlemen formulated any thoughts as to how you could stimulate industries to go ahead and encourage on-the-job training?

I think everyone has demonstrated that there is a critical need. This committee has been hearing testimony for some time on the need itself and there have been suggestions made by Senator Prouty and Senator Javits and others about the tax incentives.

I am wondering whether in your own experience you have been able to detect in this country or other countries ways in which on-the-job training could be encouraged ?

Mr. SOMERS. I am not sure there would be very much difference in the nature of the incentive whether you give the employer a tax credit, or simply give him the funds to cover the expenses of training on the job.

The point that Mr. Ruttenberg raised is a crucial one. If you want certain types of people to be trained, let us say those who are unemployed or underemployed, you are forced to lay down some rules, restrictions, and safeguards. This involves a certain amount of redtape and bureaucratic intervention, and this would be necessary under the tax incentive scheme, just as it is necessary under the on-the-job training subsidy program of the Manpower Development and Training Act.

Therefore, one of the great advantages that the proponents of the tax incentive program put forth, that is, a greater freedom on the part of the employer to do as he wishes would not necessarily prevail if we are to insist that they receive a tax credit only if they train certain kinds of people in certain kinds of ways.

These are two alternative ways of giving an employer an incentive, to offer on-the-job training, but in both ways, if you want to give him

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an incentive to do certain types of training, you are going to have to provide some safeguards and there is going to have to be some redtape.

Employers in our surveys did complain about this redtape, about the weeks they wasted in preparing a proposal that they hoped would pass muster, only to be turned down because it did not meet all of the criteria. I am sure that procedural delays can be reduced, but at the same time if you are to have safeguards, there is bound to be this type of redtape involved in Government inspection and review.

I have not studied the tax credit proposal very carefully and I am not much of a tax expert. There may be some advantage in going the tax route, perhaps as a supplement to the present on-the-job training subsidies under the Manpower Development and Training Act, and on an experimental basis; but I would not want to see the on-the-job training provisions of Manpower Development and Training Act abandoned in favor of an untried tax proposal.

Senator KENNEDY of Massachusetts. May I ask you this: Do you foresee administrative problems either in the tax credit or with some other kind of direct payment? Do you see administrative problems which would frustrate the overall policy of any kind of legislation which would be designed to train those who were undertrained or to meet a critical shortage of skilled manpower?

Mr. SOMERS. There is no doubt it can be done. There are strains and stresses because we must coordinate the activities of agencies that have had traditional roles in the training field. For example, the Bureau of Apprenticeship and Training has had a traditional role in on-the-job training. Understandably, they would feel left out if they were not closely involved in the on-the-job training procedures of the Manpower Development and Training Act. At the same time, this results in fairly complicated relationships with other agencies of the Federal Government and with State agencies and local committees.

I do not think that these are insuperable administrative problems, however, and every effort should be made to reduce the administrative delays which seem so irksome to some employers.

Mr. TAYLOR. In S. 2343, it is puzzling to me why the credit for training is tied to the total amount of credit that the employer can get for both physical equipment that he installs as well as investment in improving his human resources. It would seem to me that this would tend to penalize an employer who invested heavily in new equipment, thereby using up his total credit, and because of this new equipment needed to train a large number of workers to operate this equipment. He would be up to the limits of the fund and be unable to take the additional credit for training workers.

Senator KENNEDY of Massachusetts. Mr. Franke, would you care to comment ?

Mr. FRANKE. In terms of my own outline of what ought to be considered in expansion of on-the-job training, I am also concerned about the timing problem on tax incentives. I am not a tax expert either but I think careful consideration ought to be given to the question of whether under a tax incentive you get the training at the times when it is most critical.

Senator KENNEDY of Massachusetts. Senator Murphy ?
Senator MURPHY. I have no questions.

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Senator KENNEDY of Massachusetts. I want to thank all of you very much for coming and express the pleasure of the subcommittee for your testimony and your responsiveness to the questions. You have been very helpful. Again, on behalf of the subcommittee, thank you for your appearance here today.

Our final witness this morning will be Mr. Mitchell Sviridoff, the executive director of the Community Progress, Inc., of New Haven, Conn.

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COMMUNITY PROGRESS, INC., NEW HAVEN, CONN. Mr. SVIRIDOFF. I appreciate very much, Senator Kennedy, being given this opportunity to testify with respect to the possibilities under on-the-job training. I submitted a statement for the record, which is self-explanatory. I will take a few moments to touch on its more important points.

Senator KENNEDY of Massachusetts. It will be included in its entirety without objection. (The prepared statement of Mr. Sviridoff follows:)

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The New Haven manpower program, sponsored by Community Progress, Inc., in cooperation with many local and State agencies, is crucial to the overall success of the local community action program. No other community action component contributes so directly to promoting economic self-sufliciency as manpower programs. CPI's three neighborhood employment centers have attracted nearly 6,000 unemployed and marginally employed inner-city residents since they opened in October 1963. As the manpower program has grown, in response to the needs and demands of neighborhood residents, new components have been added to provide varied training and employment opportunities.

As will be discussed in my testimony today, of all the various manpower training programs, our experience in New Haven has indicated that on-the-job training is the outstanding resource for delivering training experience quickly, effectively, and economically. First of all, it provides immediate action, requiring very little paperwork to set up, and making possible a quick link between a candidate and an employer. While institutional training programs require 12 to 15 openings in å job area before an institutional training program can be established, onthe-job training requires just one job and one employer. It has proved, for this and other reasons, to be particularly effective with the small employer. On-the-job training serves as a real spur to small business because it gives an employer, who otherwise might not be able to compete with large industry for trained help, technical assistance along with some reimbursement for training costs. Also, on-the-job training is effective in the rapidly expanding service field.

Finally, a close relationship is established between the community action agency, with its available battery of services to the unemployed, and the actual employers who will be training the candidate.

As is typical of the entire New Haven community action effort, all of the appropriate Federal, State, and local agencies are involved in the various manpower program.

Overall program planning is carried out by the CPI Manpower Division. Administrative responsibility and the design of indi

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