First of all, the increase in unemployment that we have experienced since 1969 is many times greater than the unemployment that would have occurred because of the reduction in size in military forces, which is a very large number. What I am saying is that the reduction in size of the military has accounted for only a small slice of the increase in unemployment.

Secondly

Senator MILLER. You are talking about since 1969?

Mr. HaVEMAN. Yes, sir.

Senator MILLER. How about in the last year? We have all been reading that there is a very large number of Vietnam war veterans that are unemployed. I don't know what percent of the unemployed that is, but it seems to me it would be more than one-tenth.

Mr. HAVEMAN. I don't have the exact figures on that.

Senator MILLER. And then, of course, in addition to those you have the others that have been taken out of the armed services, quite apart from the reduction in Vietnam.

Mr. HAVEMAN. That is correct. And I wouldn't in any way want to deny that the reduction in military forces has accounted for some slice of the increase in unemployment.

Senator MILLER. Then how about the space and the defense contracts?

Mr. HAVEMAN. Let me make the second point I was going to make earlier. You are asking about the lag that we could expect in employing people that came out of the military forces. It seems to me, Senator, that the key variable in determining the size of that lag is the level of aggregate demand in this economy, that is, the demand for goods and services, which turns into employment for people. We can reduce that lag substantially if we can induce a substantial increase in the aggregate demand in this economy. And it seems to me that that at the present time calls for some rather major stimulative policies and perhaps a tax cut.

Senator MILLER. Would you include maybe price controls in that? Mr. HAVEMAN. I would strongly support a more cogent, stringent application of an income policy for this country now. I would stop short of advocating wage-price controls.

Senator MILLER. Thank you very much.

Thank you, Mr. Chairman.

Chairman PROXMIRE. Thank you very much, Professor Haveman, for a most helpful job in wearing two hats.

Mr. HAVEMAN. Thank you.

Chairman PROXMIRE. The committee will stand adjourned.

(Whereupon, at 1:05 p.m., the committee adjourned, subject to the call of the Chair.)

CURRENT LABOR MARKET DEVELOPMENTS

FRIDAY, JULY 2, 1971

CONGRESS OF THE UNITED STATES,
JOINT ECONOMIC COMMITTEE,
Washington, D.C.

The committee met, pursuant to call, at 10:10 a.m., in room 1202, New Senate Office Building, Hon. William Proxmire (chairman of the committee) presiding.

Also present: John R. Stark, executive director, Loughlin F. McHugh, senior economist; Richard F. Kaufman and Courtenay M. Slater, economists; Lucy A. Falcone, research economist; and Walter Laessig and Leslie J. Bander, economists for the minority.

OPENING STATEMENT OF CHAIRMAN PROXMIRE

Chairman PROXMIRE. The committee will come to order. Today, the unemployment figures for June are to be released. These hearings are being held because a month ago the administration canceled monthly press conferences by the Bureau of Labor Statistics for the experts to interpret these figures for the press and the public in a professional and analytical objective way. This month, we see a dramatic and very welcome drop in the unemployment. I think this is the single most encouraging statistic of the year. The fact that unemployment has dropped from 6.2 percent to 5.6 percent or sixtenths of a percent in a single month, but because there was such a big drop, it seems to me more than ever that we need an analytical, professional expert analysis of how significant it is. Does this mean we are now moving out of a recession into a period of full employment, or is this some statistical aberration?

We expect to have experts at 11:30, coming before the committee this morning to give us their explanation and respond to cross-examination.

On June 21, long before the statistics were known for this month, we invited Secretary of Labor Hodgson and his technicians to appear here as soon as the statistics were available. He declined, saying it would serve no useful purpose, but offered to send his technicians up. and, as I say, they are going to be here this morning.

Now, before they come and because of the importance of the unemployment figures and what they mean to individuals and the fact that the human aspects of unemployment has been ignored and the statistical aspect are cold and do not mean very much to people and to get at what this 5.6 or 6.2 percent really mean, we decided, this morning, that the best way to really get the significance of unemployment was

to have five American citizens who represent those Americans who are looking for work and do not find it to appear before this committee and give us their view. In doing this, we have asked five people who, I think, represent various phases of our economy which are distressed, various groups of people. Each of you, I think, represent hundreds of thousands of people who are in the same category you are in-at least many thousands of Americans.

The first is a highly trained worker from the aerospace industry which has been faced with curtailed orders.

The second represents a jobless construction industry worker who, at the height of the construction season, is still unable to find remunerative employment.

The third is a veteran returned from Vietnam who found little Government aid in finding a suitable job in industry or Government.

Next is a young man representing an unemployed automobile industry worker with little seniority and, therefore, through long unemployment is now without unemployment compensation.

Then, a black woman. As we know, unfortunately, unemployment is higher for women and it is higher for blacks, and I suppose it is higher for black women than just about any group in the society.

We will ask these witnesses to tell us about their experiences, and then have some questions for each of the witnesses.

So, our first witness is Mr. Keith W. Bose.

Is that correct, Mr. Bose-B-o-s-e?

Mr. BOSE. That is correct, sir.

Chairman PROXMIRE. Of Kings Park, N.Y.?

I understand, Mr. Bose, you have been unemployed 8 months out. of the last 12. You wrote a story which appeared in the Washington Post recently, on June 6?

Mr. BOSE. That is correct.

Chairman PROXMIRE. And it was designed to help others find jobs. Mr. Bose, will you go ahead and briefly tell us your experience?

STATEMENT OF KEITH W. BOSE, UNEMPLOYED AEROSPACE PROFESSIONAL, KINGS PARK, N.Y.

Mr. Bose. Senator Proxmire and distinguished gentlemen. I represent a new kind of unemployed American. We have been cast aside by the Federal Government. Why we were chosen for sacrifice while others remained is left for each of us to brood about. It is unimportant

now.

Yet society demands that we seek reemployment at any task which is offered. Many of us from the aerospace industry have been laid off before. It is not a new experience. But now we are told to seek work in other fields.

We are meeting with prejudice when we seek jobs in a peacetime economy. It is not a secret that a psychological ploy of the military industrial complex is to capture the loyalty of a mediocre worker by paying him more than he is worth to engage in trivial work.

We know that in the aerospace industry diligence and craftsmanship is often cast aside in favor of shoddiness. But let us look at the future of the diligent, skilled, honest employee. We have no job rights, no tenure, no pensions. We work from contract to contract. Few of us

spend more than 5 years with a firm. One of my young friends at the age of 32 has held nine jobs in 10 years. He holds a master's degree in electrical engineering.

Our savings are destroyed by frequent relocation. We call ourselves. "defense bums." We have little time to sink roots in local communities, to enjoy the cultural benefits open to us.

A vast coercive mechanism has shown up upon which we must depend when we seek a job. Company personnel staffs are linked together; nefarious policies militate against the lonely individual who must bargain for himself. As we seek work we fill out countless applications divulging our confidences on records to be pawed over and bartered by agents. Our résumés sell in bulk lots in the larger cities. I have with me an application form. Listen to these ominous words:

Failure to keep your appointments or agreements will be communicated to the state and my associates. This will result in your being classified as undesirable, as well as losing state subsistence checks.

The system now used to recruit professional personnel has spawned a labyrinth of "placement agencies," "management consultants," and others that work together with firms on a lucrative basis which has degenerated into cutthroat competition. By this process many naive young professionals with impressive paper credentials have become figureheads in shaky corporate structures.

Many irregularities of personnel recruiting stem from the practice of paying 10 percent of the first year's wage of a job candidate to private recruiting agencies through what is known as fee-paid recruiting. This fee is ultimately billed to the taxpayers as overhead cost. It opens the possibility of kickbacks and so-called Christmas lists and erodes the qualifications of job candidates by placing a premium on superficial paper qualifications. But most important, the system feeds on constant job turnover.

We are accustomed to seeing glittering ads for professional positions. Such ads are often placed by competitive agencies in response to a single vacancy. Another practice is to place glossy help wanted ads conveniently close to the financial pages as a ploy to attract naive investors. Such practices over the years have created an illusion of scarcity when in fact we are now faced with a surplus of technically educated people.

I recommend legislation to destroy this criminal activity and the establishment of a supervised central job bank upon which Federal contractors must draw. This would improve community stability by eliminating "musical chairs" between firms and prevent unnecessary relation of families. Another advantage would be the elimination of a minority of incompetent employees with impressive paper academic credentials who are migrating from company to company to lend glitter to contract proposals. Finally, it would provide ombudsmen rights to protect employees in a climate which is growing vicious due. to expansion of the working force.

Another practice which must be eliminated is the use of so-called job shoppers to fill personnel vacancies in directly billed contracts. This is the practice whereby a prime contractor engages a vendor to provide personnel on what is presumed to be a temporary basis. The vendor takes a percentage of the fee paid for services and contributes.

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