Special Message to the Congress on Special Revenue Sharing for Manpower.

To the Congress of the United States:

Like the 1770s, which produced an American Revolution, the 1970s can be a decade of revolutionary change. We have an opportunity to build on the strengths of the federal system, and by so doing to forge a strong new partnership in which each level of government does what it does best, and in which each function of government is lodged at that level at which it can best be performed.

One of the keys to this reform is Revenue Sharing--General and Special, $16 billion in all.

Four weeks ago I asked the Congress to enact a $5 billion General Revenue Sharing program. It was essentially a proposal to take some of the tax dollars the Federal Government raises and use them as a transfusion for our hard-pressed States, counties and cities--to be spent as the people in each jurisdiction agree with their own elected officials makes the best sense.

Two days ago in my message on Law Enforcement Assistance, I presented to the Congress the first of six proposals that will account for a total of $11 billion in Special Revenue Sharing programs. Unlike General Revenue Sharing, which is new money without project restrictions, Special Revenue Sharing consists of $10 billion now going into present Federal grant programs, plus $1 billion in new funds, rescued from a thicket of narrow categories and earmarked for spending in six broad areas of national concern.

Today I am proposing legislation in the second major area of Special Revenue Sharing--Manpower. The Manpower Revenue Sharing Act of 1971 would:

--Provide $2 billion during the first full year of its operation--$4 for every $3 now being spent--to help move men and women into productive employment.

--Unify into one the many programs under which Federal manpower money is now channeled to State and local governments.

--Free city, county, and State budgets from matching and maintenance-of-effort encumbrances, and officials of those governments from intricate administrative procedures.

--Vest the power to shape local manpower assistance efforts in governments close to the people they assist.

MANPOWER ASSISTANCE: IN WHOSE HANDS?

Labor, like other economic resources, is allocated by the market under our system. But as the American economy has grown increasingly complex and technological, we have seen that the job market has imperfections frictions, lags, slack in the gears--whose costs in unemployment, underemployment and inadequate incomes must be reduced. A degree of cautious intervention in the market process over the long term is clearly a human imperative and a matter of national interest-as the Congress recognized nine years ago this month with a substantial commitment of Federal money and attention under the Manpower Development and Training Act of 1962. That Act, and the Economic Opportunity Act of 1964, currently include more than a dozen categorical grant programs in the manpower field, funded in Fiscal 1971 at $1.5 billion.

While these efforts proceed from the best of intentions, they are overcentralized, bureaucratic, remote from the people they mean to serve, over-guidelined, and far less effective than they might be in helping the unskilled and the disadvantaged. The reason: by and large, their direction does not belong in Federal hands.

Designing a manpower program that can best deliver its intended services starts with the recognition, one, that the "job market" is really thousands of interacting but separate markets spread all over the economic and geographic map of the United States, and two, that the "labor force" is actually 87 million individual men and women with a wide diversity of training needs. Under the circumstances it makes little sense for Washington to dominate decisions on manpower assistance-not when 50 States and thousands of local government units, each in touch with its own territory and close to its own people, stand ready to apply their know how if Washington will only help pay the bills.

PENALIZING DIVERSITY AND SUBSIDIZING BUREAUCRACY

I recognize that there are many Federal purposes for which categorical grants are still the best available approach. My Special Revenue Sharing proposals are targeted specifically at those program areas in which I believe the case for local decision is overriding.

Manpower is an area in which the need to adapt to diverse and changing local conditions is especially compelling, and in which the advantages of local control are correspondingly great.

When nationwide categorical programs are applied to diverse job markets, some cities and States may find their needs met nicely--but many others, inevitably, will come off second best. They will, in effect, be penalized for differing from the models according to which Federal programs are designed. They find themselves forced into funding projects of low local priority ahead of those of higher priorities simply because Federal program inflexibilities mean funding the available ones or none at all. Those who suffer as a result are not governmental units in the abstract but real people with bills to pay and families to feed. The injury is compounded when local funds, scarce at best, must be set aside to match--in effect, to buy into--the Federal money, if the money is not to be lost.

In one respect only do all States and cities fare equally under a system of narrow categorical grants: officials of all must, as a matter of survival, learn their way through a bureaucratic jungle. For example:

--Merely to describe one State's Federal manpower programs in 1970 required a jargon-heavy tome 1185 pages long.

--Last fall a businessmen's group attempting to list all the public manpower programs in New York City gave up after 44 entries, commenting that "attempting to unravel the intricate mass of detailed data on the individual programs has been an exhausting undertaking."

--Harried vocational school administrators must cope with a 930-page Labor Department manual and hundreds of pages more of Federal standards and conditions, to meet the requirements of a single program-MDTA institutional training.

In light of all this, Americans' discontent with government is no mystery. The Federal money put to low-priority uses, the captive local matching money, the waste of time by local officials in threading their way through Byzantine administrative tangles--all are unfair: to a Nation that deserves a healthy employment market, to people out of work who deserve effective job assistance, and to taxpayers who deserve a hundred cents worth of public benefits on every dollar government takes from them.

TO MAKE GOOD ON A GOOD IDEA

The active Federal commitment to manpower training and development was a good idea in 1962, when Congress in enacting MDTA expressed concern that "the problem of assuring sufficient employment opportunities will be compounded by the extraordinarily rapid growth of the labor force in the next decade." It is an even better idea today, with the labor force already enlarged by 19 percent in the nine years since, and with technological change still rapid. But one of the great lessons of the dramatic Federal Government growth in the 1960's is that even a good idea like this can fall short of its promise if the way in which it is carried out runs against the grain of the Federal system. By converting the Nation's manpower programs from categorical grants to Special Revenue Sharing, we can play to the strengths of the Federal partnership, teaming Federal dollars with State and local decision making. This is the purpose of the Manpower Revenue Sharing Act of 1971 which I am proposing today.

WHERE THE MONEY GOES

I have proposed that $2 billion be provided for the first full year of the Manpower Revenue Sharing Act, which would replace the Manpower Development and Training Act and manpower provisions of the Economic Opportunity Act on January I, 1972. This represents an increase of almost one-third over current levels of funding for the affected categorical grants. Since the need for job training and other manpower assistance expands as the Nation grows, the Act would set no ceiling on future appropriations.

Of this amount provided, 85 percent would be distributed to the States and to cities and counties with a population of 100,000 or more. Since jobs and workers cross city and county lines, bonus funds within the formula distribution would be awarded to consortia of local governments which embrace entire major labor market areas. Governments which can agree to act in concert in smaller urban areas would also qualify for funds. The remaining 15 percent would be made available to the Secretary of Labor to fund special activities.

The shared revenues would be allocated by statutory formula. Each State or local area's share would be determined by its proportionate number of workers, unemployed persons and low income adults.

WHAT ARE MANPOWER PROGRAMS?

Manpower programs develop job skills. They help the unemployed and underemployed, particularly welfare recipients and other disadvantaged persons, make the transition to better jobs, better pay and higher skill levels.

An effective program focuses on individual needs and available jobs. It embraces a wide range of manpower activities, providing combinations of services to move people toward their employment goals. Authorized manpower activities include:

--recruitment, counseling, testing, placement, and follow-up services;

--classroom instruction in both remedial education and occupational skills;

--training on the job with both public and private employers, aided by manpower subsidies;

--job opportunities, including work experience and short-term employment for special age groups and the temporary unemployed, and transitional public service employment at all levels of government;

--ancillary services like child care assistance, relocation assistance, and minor health services.

Decisions on the mix and specifics of State and local activities under this broad umbrella would be up to each government. However, payments and allowances for individuals would be limited to two consecutive years, in recognition of the fact that these manpower programs are designed not to provide long-term public support but rather to assist job seekers in making the transition to permanent or better jobs.

NEW FLEXIBILITY AND ACCOUNTABILITY

In keeping with the principles of Special Revenue Sharing, State and local governments would be given wide discretion in determining how the funds provided should be used.

This manpower program, unlike its predecessors, would have no exhaustive volumes of Federal standards to be met. There would be no towering piles of Federal program applications to complete and no frustrating delays at the Federal level. State and local money now tied down by matching requirements and maintenance of effort would be freed for spending elsewhere as community priorities might dictate.

Giving State and local officials full power to spend Federal manpower funds would sharply increase the citizen's ability to influence how the funds are spent. It would make government more responsive to legitimate demands for quality services.

To enhance public accountability for manpower programs, State and local governments would be required to publish a statement of program objectives and projected uses of funds each year, prior to receiving their shared revenues. These statements would include information on the area's economic and labor market conditions; targeted client groups; proposed activities; wages, allowances and other benefits; manpower agencies involved; and the positions and salaries of the program's administrators. In addition, the statements would review the previous year's programs.

Both State and local governments would be required to publish comments about each other's program statements. In particular, they would be responsible for coordinating and making full use of all other State and local manpower activities available. After full public disclosure and discussion they would be required to publish their final program statements for the coming year.

To increase the information available to the public, the Labor Department would publish evaluations of program effectiveness.

The people would have the hard facts needed to hold their public officials directly and readily accountable for the manner in which manpower programs are administered.

PROGRAMS AND PURPOSES

Manpower Revenue Sharing is a partnership. Washington puts up the purse and sets out the broad purposes of authorized spending, while program decisions are turned over to the statehouses, county governments and city halls. My proposal neither mandates nor terminates any programs. It provides that the continuation, expansion, or modification of each program would be determined, as it ought to be, by the test of performance alone--and determined by the State or community which the program serves. Programs that have proved themselves in practice could be continued with the use of the Federal funds provided. Indeed many current categorical programs probably would continue and expand in response to local needs once arbitrary Federal restrictions were removed. On the other hand, programs whose past claims of effectiveness are not justified by the record deserve to be replaced by others more responsive to community needs. Vesting the program authority in governments close to the people will make it harder for programs to coast along on their momentum from year to year, and easier to tailor manpower assistance to on-the-scene realities.

THE FEDERAL ROLE

The special activities financed by the 15 percent of manpower funds retained for use by the Secretary of Labor would include support and assistance for State and local programs through staff training and technical aid, through research, and through experimental and demonstration programs to develop new manpower techniques.

The Department of Labor would also maintain a comprehensive system of labor market information and computerized job banks to facilitate exchange of information among different areas. It would monitor State and local programs for fiscal accountability and compile comparative data on all programs to help the Congress and the public assess their effectiveness. In addition, the Labor Department would have funds to help support certain programs which operate most effectively across State and local boundaries.

This Act, like my other revenue sharing proposals, would include rigorous safeguards against all discrimination. The legislation I am recommending today stipulates that revenue shared and other funds expended by the Secretary of Labor under this Act would be considered Federal financial assistance within the meaning of Title VI of the Civil Rights Act of 1964.

MANPOWER POLICY AND PUBLIC SERVICE EMPLOYMENT

One of the most innovative features of my proposed Manpower Training Act of 1969 was an automatic "trigger" which provided more manpower funds when the national unemployment rate rose to 4.5 percent or more for three consecutive months.

The Manpower Revenue Sharing Act contains a similar feature. Triggered funds would be distributed by the Secretary of Labor to areas of high unemployment to provide additional training and employment opportunities.

Under such conditions many State and local governments might choose to use these funds to create temporary public service jobs to offset the rise in unemployment.

This is an acceptable and appropriate use of triggered funds--and of regular shared revenues for manpower programs.

Transitional and short-term public employment can be a useful component of the Nation's manpower policies. But public employment not linked to real jobs or not devoted to equipping the individual to compete in the labor market is only a palliative, not a solution for manpower problems.

Thus, this Act would also provide permanent authority for public service job creation as part of an overall manpower program--but with the proviso that such jobs must constitute transitional opportunities. Within a two-year period participants must be enabled to move into the public employer's regular payroll, or helped to obtain other public or private employment.

Public jobs created through manpower funds would thus be used to develop skills and abilities, with participants moving through such positions into permanent opportunities.

Federal funds already support almost 2 million jobs in State and local government. When enacted, General Revenue Sharing may support tens of thousands more.

Furthermore, last week the administration requested Congressional approval for the creation of at least 200,000 new public jobs for welfare recipients. A part of my welfare reform proposals, these new jobs would lead to non-subsidized employment for welfare recipients for whom other jobs are not available.

FITTING PROGRAMS TO PEOPLE

This new reliance on local flexibility and local initiative should benefit citizens and communities across the country. For example:

--This Act would allow city governments to bring jobless ghetto residents onto city payrolls in education, health, safety and anti-pollution work while preparing them to move into permanent jobs.

--This Act would allow State governments to reach out to isolated rural poor people with training and job programs shaped to their special needs.

--This Act would allow county governments to provide skill training and transitional employment to welfare recipients to move them toward self-support and new dignity.

It would, in short, allow each State or community to fit its programs to its people.

LOOKING AHEAD

In August 1969 I submitted the Manpower Training Act of 1969. It was one of three key proposals to begin reversing the tide of power which for a generation has flowed from the States and communities to Washington.

For over a year the Ninety-First Congress considered the proposed new manpower legislation, adding many new and creative ideas to our original proposals. Legislation was approved by both houses of Congress which entrusted important new manpower responsibilities to State and local governments. Unfortunately, the final bill also contained serious flaws, and I was forced to withhold my approval from it last December. With this message I am fulfilling my pledge then to submit new manpower legislation in 1971.

This bill builds upon the foundation that was laid during the last Congress.

It responds to Governors' and Mayors' appeals for increased responsibility and increased flexibility.

It makes manpower programs more readily accountable to the clients they serve and the taxpayers who support them.

It recognizes that transitional public service employment is an integral part of manpower policy--and places no ceiling on its extent within the manpower program.

It triggers extra Federal funds to counteract periods of rising unemployment.

In summary, this proposal is designed to give more effective help to those who need it, and to give Americans full return for their tax dollars spent on manpower assistance in the years ahead--full return in the form of unemployment brought down and kept down, and in the form of new income and achievement opportunities for millions of deserving men and women.

And its effects could reach far beyond the field of manpower: As it gives State and local governments the resources and authority to deal with their problems in a single area, it can build the confidence and competence of those governments in all areas. As it cuts away the layers of bureaucracy that have separated the people from one specific exercise of their governing power, it can help restore the people's faith in the democratic process generally. Teamed with my other Special and General Revenue Sharing proposals, it can help to launch the United States on a new era of revolutionary change for the better.

RICHARD NIXON

The White House

March 4, 1971

NOTE.: On the same day, the White House released two fact sheets and the transcript of a news briefing on the manpower special revenue sharing proposal by James D. Hodgson, Secretary, and Malcolm R. Lovell, Jr., Assistant Secretary for Manpower, Department of Labor.

On April 6, 1971, the White House released the transcript of a news briefing by Edwin L. Harper, Special Assistant to the President, on the hold harmless base line figures for States and localities under special revenue sharing, and a fact sheet on the figures for manpower special revenue sharing.