ever be able to invest in an automobile, washing machine, television set, or home. The investment in durable goods is almost always bought on time by most Americans, and time payment is very precarious to purchase if you are not sure you are going to have a job by the time the next payment comes due.

Since 1948, there have been four periods in our history where the percentage growth of private sector employment fell in the course of the year. The last year (1970) is the fourth of those periods.

Throughout the period from 1948, including the current recession year, public sector employment has risen consistently. It has never fallen at all. Not only does the civil service system provide people with promise of tenure, but the economy seems to support stability in this sector better than it does in the private sector. It is a matter of record that the private sector is much more unstable. No matter how we manage it, given the present state of the art, the private sector is much more unstable than the public.

My last point is this: The propensity of public employers for central city locations means that, for very large numbers of disadvantaged households residing in the urban core, physical access to workplaces is maximized. The significance of this is even greater in light of the discovery that many private urban employees are increasingly to be found in suburban locations.

Let me conclude. We are only now beginning to even perceive the extent to which urban poverty is caused by underemployment of people willing to and capable of being given more remunerative work. It now appears that the large majority of those ghetto residents now able to work do work. Moreover, there is new evidence that large numbers of black ghetto workers have undertaken sufficient investment in themselves to have achieved levels of education which are very different from the levels associated with the black population outside of the ghetto and even with many whites.

According to preliminary estimates from the 1970 census, blacks in the country have just about caught up to the whites in average years of schooling. For both races the typical adult has more than 12 years of education. The point is that the typical black in America now has some college. In the ghetto areas of the country, which the Department of Labor has been studying very carefully over the last 4 years, the average level of schooling is rapidly approaching 12 years of school.

Nevertheless, the jobs to which ghetto workers have access are of uniformly poor quality. They pay wages which are substandard by a number of widely accepted and uncontroversial benchmarks. Many of those capable of working are unable to make work an attractive alternative to family splitting, which is often necessary in order to qualify for welfare-a badly needed second income, given the low wages available in the market.

There is ample evidence and ample research that indicates that the low-wage working poor are technically capable of performing very much more complicated tasks than the economy is now allowing them to perform.

The remedy must be sought in opening up new job markets to the poor, markets whose jobs are physically accessible to them, whose

availability is made known to them, and-unlike most of the administration's suggestions I am familiar with, such as those that Mr. Steiger and Mr. Esch mentioned-whose entry-level wages and promotional possibilities will in fact lead to significant improvements in their levels of living.

Elimination of short term unemployment is secondary. The important thing is to eliminate poverty. I have today attempted to demonstrate that one promising strategy for moving the ghetto poor out of the limited job market in which they have been trapped is the development of public service jobs.

Such a proposal would be based not only on income requirements of the poor themselves but also, in the words of Dr. Harold Shepphard, on the growing needs of all residents of urban areas for expanded public services. It is a point not frequently made (but which has been made by Dr. Shepphard) that the shortages of sanitation and police and firemen penalize urban private businesses as much as they penal

ize citizens.

It is clear from our data that the public service will be a major growth sector of the urban economy. Moreover, a substantial proportion of the new jobs will be located in close proximity to the ghetto. Thus, the emergence of the service economy age in America creates unparalleled opportunity to broaden employment prospects for poor workers.

Much investment has already been made by this administration in trying to open up the civil service system to the poor. We are also discovering that many of these "obstacles" are really illusions (one example: The widespread assumption across all of the United States that civil service exams must, by law, be written. This is actually untrue).

Clearly, Government decisionmakers can no longer ignore the rapid growth of the public sector as a potential source of new jobs that pay wages considerably in excess of the current earnings of disadvantaged workers. I urge you to consider future legislative action going far beyond the present emergency legislation, aimed at using comprehensive public service job programing as a weapon in the "war" on poverty.

Mr. DANIELS. Dr. Harrison, I thank you very much, and I wish to commend you for your testimony today. You may have omitted portions of your testimony. If you desire to supplement your oral testimony this morning by preparing a written statement to the committee, you may do so.

The Chair does not desire to ask any questions.

I now recognize the gentleman from California.

Mr. HAWKINS. Because of the time, I will forgo any questions. Also, because of the guidelines you stated, I don't think there is any time; but I do appreciate the testimony, and I do commend the witness. Mr. DANIELS. The gentleman from Wisconsin.

Mr. STEIGER. No, I will pass.

Mr. DANIELS. Mr. Forsythe?

Mr. FORSYTHE. No.

Mr. DANIELS. Thank you, Dr. Harrison.

Dr. HARRISON. I will submit a statement. I am sorry that I don't have it this morning.

Mr. DANIELS. If there is no objection, your statement will inserted at this point in the record. The committee will stand adjourned. We will reconvene tomorrow morning in room 2157.

(Whereupon, at 12 noon, the hearing was recessed to reconvene on Wednesday, March 3, 1971, in room 2157, at 10 a.m.) (The article referred to follows:)

PUBLIC SECTOR JOBS AND THE DISADVANTAGED-THE UNTAPPED POTENTIAL
OF PUBLIC EMPLOYMENT FOR THE POOR*

(By Bennett Harrison**)

INTRODUCTION

A number of recent research monographs have demonstrated the existence of a rapidly growing demand for public services, and the derived demand for public service workers. This will be a major theme in the forthcoming 1971 Manpower Report of the President. A fifth of all wage and salary employees in America already work in federal, state, and local government, and the incidence of public employment is increasing; one out of every four new jobs in the economy is in the public sector. The relative importance of government employment is even greater in the nation's cities, where in some cases, more than one out of every three new workers is engaged in the delivery of such crucial services as education, health protection, recreation, waste disposal, police and fire protection." (See Table I in appendices). It would seem obvious that improvements in the quality of national-and particularly of urban-life will require even greater expenditures on public services.

At the same time, the problem of poverty continues to plaque millions of American citizens-even many who are in the labor force. In 1966, 6.8 million persons worked 50-52 weeks but still earned less than $3,000. For these underemployed citizens-as for the 2 million who have given up looking, and for the larger number who are unemployed-the rapidly expanding demand for public service workers (primarily in state and local government) constitutes an important opportunity for advancement. This is especially true for the urban poor, whose residences are to a great extent still concentrated in the central city. While an increasing number of private establishments are leaving the city for a suburban or exurban location, public employers continue to be highly concentrated in or near the urban core, easily accessible from most central city low-income neighborhoods.

These two areas of national concern-the critical shortage of important public services and the needs of the disadvantaged for expanded work opportunitiesmay each carry the solution to the other. This is the rationale for a program to stimulate public employment of the disadvantaged.*

This discussion paper, originally prepared for the U.S. Office of Economic Opportunity will be published in a substantially extended version by the Urban Institute. Neither organization is any way responsible for the positions presented herein.

**Assistant professor of Economics, University of Maryland.

1 Victor Fuchs, The Service Economy (New York: National Bureau of Economic Research-Columbia University Press, 1969); Bennett Harrison, "Public Service Jobs for Urban Ghetto Residents", Good Government, Fall, 1969, reprinted in U.S. Senate Subcommittee on Manpower. Employment, and Poverty, Hearings, 91st Congress, 2nd session (April 1, 1970), pp. 1422-1449; Harold Sheppard, The Nature of the Job Problem and the Role of New Public Service Employment (Kalamazoo, Michigan: W. E. Upjohn Institute, 1969).

2 The U.S. Department of Labor projects an increase of 12.5 million new jobs in the service industries between 1966 and 1975, as against 2.7 million new jobs in the goodsproducing industries. And government alone is expected to contribute nearly a third of the new service jobs. Harrison, op. cit., p. 5.

3 Based on calculations for a selected sample of metropolitan areas, using 1962-1969 data from U.S. Department of Labor, Employment and Earnings. The 8-year average for 27 SMSA's was 34.8%.

4 Manpower Administration, U.S. Department of Labor, Public Service Careers Program: A General Description, August. 1969, p. 3.

• See, for example, the testimony of Mortimer Caplin, President of the National Civil Service League, before the Senate Subcommittee on Manpower, Employment and Poverty, Senate Report No. 91-1136, Employment and Training Opportunities Act of 1970 (S. 3867), 91st Congress, 2nd session, August 20, 1970, p. 9.

But there are obstacles to such a strategy for attacking poverty through public sector employment, and these go far beyond straightforward racial discrimination. Apart from local budgetary or fiscal considerations, there are many institutional barriers, frequently bound up with the administration of civil service. These often have little or nothing to do with race (although minorities apparently suffer disproportionately because of these barriers). Among the most serious of these institutional barriers are the lack of outreach recruiting, the nearly wholesale use of written exams for all classes of jobs, and the insistence upon frequently job-irrelevant educational credentials."

In assessing the possibilities for "brokering" the public service on behalf of the poor, it is important to distinguish between the need for changes in civil service administrative rules on the one hand, and laws governng public employment on the other. According to Jean Couturier, Executive Director of the National Civil Service League, "There is almost no need for change of a local or state civil service law to create job opportunities for the disadvantaged under merit principles. Almost all of the changes that are needed are either in attitudes or in unstated administrative policies and on rare occasions in rules and regulations. But almost never is there need for a change in law.""

Experimental programs are currently underway whose objective is to study various merit systems and to recommend institutional and procedural changes which, by modernizing local civil service, would also expand employment op portunities for the disadvantaged.

These projects are being implemented by the Department of Labor, through its Manpower Absorption Plan and Public Service Careers projects; through its Project Pace Maker; and by those private industries in which the poor have traditionally been employed. Moreover, the poor are technically qualified (or nearly so) for a substantial share of these public sector jobs.*

Second, government jobs pay substantially higher wages-especially at the entry level-than the poor are currently earning. In fact, there are relatively fewer "working poor" in the public sector than in the private sector.

Third, there are important non-wage benefits uniquely associated with public employment, including virtually automatic tenure and secular job stability. To a group such as the disadvantaged-many of whom have come to regard legal work opportunities as inevitably irregular-the stability of public employment may be exactly what is needed to motivate the development of new attitudes toward the world of work.

Fourth, the propensity of public employers for central city locations means that, for the very large numbers of disadvantaged households residing in the urban core, physical access to public work places is maximal. The significance of this is even greater in light of the fact that many private urban employers are increasingly to be found in suburban or exurban locations, inaccessible to all but the most fortunate residents of the central city ghettos.

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Fifth, the public service has historically served as Model Cities Administration of the Department of Housing and Urban Development, all in cooperation with the National Civil Service League. For nearly two years, teams of personnel specialists from the League have visited over 125 jurisdictions across the country. These site visits have led to the identification of both specific barriers to and potential opportunities for employment of the disadvantaged in the public sector. Several weeks ago, in their testimony before the Senate Subcommittee on Manpower, Employment and Poverty, Mayors Daley of Chicago, Ulman of Seattle. and D'Allesandro of Baltimore, all testified to the assistance rendered their cities by the National Civil Service League. Late in 1970, the League was asked by the Ford Foundation to serve as a national clearinghouse for information pertaining to public employment. Clearly, the notion that state and local civil service sTStems can and should be restructured to make a place for the poor has captured the imagination of a large number of important people.

But to what end? Why bother? Why public employment for the poor?

S. M. Miller. Breaking the Credentials Barrier (New York: The Ford Foundation. 1968): S. M. Miller and Marsha Kroll, "Strategies for Reducing Credentialism". Good Government, Summer. 1970.

7 Jean Couturier. "Governments Can Be the Employers of First Resort". Good Government, Summer. 1970, p. 4.

8 pp. 114-115.

Daniel Fusfeld, "The Basic Economics of the Urban and Racial Crisis", Review of Black Political Economy, Spring/Summer, 1970.

10 Bennett Harrison, "Metropolitan Suburbanization and Minority Economic Opportunity* A Review Article", forthcoming.

WHY PUBLIC EMPLOYMENT FOR THE POOR?

There are at least five reasons why a public employment program can be expected to improve the economic welfare of the disadvantaged, particularly for those living within the corporate boundaries of the Nation's cities.

First, the public service is growing much faster than the point of entry into the American world of work for many white ethnic groups. Indeed, many ethnic monopolies have been established in the past within various branches of the public service.

We shall now consider each of these points in turn.

I. Growth of public service jobs

We have already cited a Labor Department projection that (based upon recent trends) 4 million new public service jobs are expected to be developed over the decade 1966-1975, as compared with 8.5 million private and non-profit service jobs and only 2.7 million private sector goods-producing jobs. It should be pointed out that the tasks required for and the skills developed in public service work are similar to and are therefore likely to facilitate mobility into private sector service work.

Who are the employers in this large and growing market for public service workers? Among the three broad levels of government (federal, state, and local), the latter has been numerically the most significant in terms of new jobs created. "Local" government includes a whole host of jurisdictions, from counties and municipalities (including the city itself) to townships and "special districts" (such as local school districts). The 1950's was the period of most rapid growth in the number of such governments; by 1957, there were more than 18,000 among the nation's metropolitan areas, each an individual employer offering many different kinds of jobs to local residents.

According to a National Civil Service League survey of nearly 400 state and local jurisdictions in 1969-70," annual turnover rates in the non-federal public sector average a little over 20%; one out of every five jobs is vacated each year (during the same period, annual turnover in private manufacturing averaged about 60%, according to the Bureau of Labor Statistics). From his private sector studies. Ivar Berg concludes that turnover is to a significant degree a result of overqualification resulting from excessive reliance by employers on educational credentials. "Turnover was positively associated with educational achievement, and less educated technicians earned higher performance evaluations than their better educated peers".

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Preliminary findings by OEO Project PACE MAKER field survey teams indicate that the same phenomenon exists-and is perhaps even more serious-in the public sector. Since public sector turnover is apparently much lower than private sector (or at least manufacturing) turnover, we are led to suspect the presence in the public sector of important positive benefits which (at least to some extent) compete successfully with the "negative benefit" of job dissatisfaction caused by overqualification. This hypothesis is confirmed in Sections II and III below. The opposite contrast obtains for monthly vacancy rates. Compare the early 1970 rates in the NCSL's state and local government survey (mean: 6.0%, range: 0-30%) with those in private manufacturing in the nation's largest cities, as estimated by the B.L.S. for the same period (mean: 0.8%, range: 0.3-1.6%).

Based upon its sample survey, the League projects the existence of perhaps 400,000 total current vacancies in state and local government (many of which remain unfilled because of the near-bankruptcy of sub-federal public treasuries), and over 880,000 job openings each year (vacancies plus normal turnover).

The demand for public service workers by sub-federal governments will expand-especially if some form of wage subsidy, or expanded grant-in-aid or revenue-sharing can finally be introduced on a national basis. Potential acrossthe-board growth of local jurisdictions is exemplified by the results of NCSL interviews with officials of the City of Chicago, conducted under the League's Manpower Absorption Plan project for the U.S. Department of Labor. Each

11 This survey is reported in detail in the Spring, 1971 issue of the NCSL journal. Good Government, and is abstracted in a Research Note in Industrial Relations, Feb., 1971. 12 Ivar Berg, Education and Jobs: The Great Training Robbery (N.Y.: Praeger Publishers, 1970), p. 131.

13 Manpower Absorption Plan, Contract No. 82-09-70-24, Jacob Rutstein, Principal Investigator for NCSL.