[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
SHRINKING WORKFORCE ENDANGERS AMERICA'S SMALL BUSINESSES: EXAMINING THE 
             NEED FOR THE SKILLED WORKFORCE ENHANCEMENT ACT

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                    WASHINGTON, DC, FEBRUARY 9, 2000

                               __________

                           Serial No. 106-42

                               __________

         Printed for the use of the Committee on Small Business








                    U.S. GOVERNMENT PRINTING OFFICE
65-505                      WASHINGTON : 2000






                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA M. CHRISTIAN-CHRISTENSEN, 
DAVID M. McINTOSH, Indiana               Virgin Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania      STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE F. NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                                     MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 9, 2000.................................     1

                               Witnesses

DeWine, Hon. Mike, Ohio, United States Senate....................     4
Bachman, William G., National Tooling and Machining Association..     7
Bettcher, Thomas, President & CEO, Copeland Global/Copeland 
  Corporation....................................................     8
Leto, Chris, Vice President, Tampa Brass & Aluminum..............    10
Gooding, John, Chairman & Chief Operating Officer, Gooding, 
  Simpson & Mackes, Inc..........................................    27
Holdsworth, Thomas W., Director, Skillsusa-Vica, Leesburg, 
  Virginia.......................................................    29
Murphy, Patrick, President, Crest Electrical Company.............    31
Pence, Randall G., Capitol Hill Advocates, Inc...................    33

                                Appendix

Opening statements:
    Talent, Hon. James...........................................    51
    Christian-Christensen, Hon. Donna............................    56
Prepared statements:
    DeWine, Hon. Mike............................................    57
    Bachman, William G...........................................    62
    Bettcher, Thomas.............................................    67
    Leto, Chris..................................................    73
    Gooding, John................................................    80
    Holdsworth, Thomas W.........................................    86
    Murphy, Patrick..............................................    94
    Pence, Randall G.............................................   101


SHRINKING WORKFORCE ENDANGERS AMERICA'S SMALL BUSINESSES: EXAMINING THE 
             NEED FOR THE SKILLED WORKFORCE ENHANCEMENT ACT

                              ----------                              


                      WEDNESDAY, FEBRUARY 9, 2000

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:02 a.m., in room 
2360, Rayburn House Office Building, Hon. Jim Talent (chair of 
the committee) presiding.
    Chairman Talent. Good morning. If we can convene the 
hearing.
    As we convene our hearing today, I am glad to report that 
the U.S. economy continues to perform extremely well. The 
growth is steady. Unemployment is low. Inflation remains 
relatively low. In fact, last Friday the Department of Labor 
announced that the unemployment rate for January was 4 percent, 
the lowest it has been since January of 1970.
    Despite this growing prosperity, in fact, to some extent 
because of it, we are faced with a severe shortage of skilled 
workers in trades and manufacturing. According to the results 
of a study conducted in 1999 by the National Association of 
Counties, 75 percent of the largest counties in America report 
that they face a shortage of skilled workers; 85 percent said 
that the shortage has increased over the last 5 years; and 97 
percent characterize the shortage as serious to very serious. 
Officials stated that the sectors of the economy most affected 
by the shortage of skilled workers include manufacturing and 
construction.
    This hearing will explore the growing shortage of highly 
skilled workers. Our witnesses from various trades will testify 
on the shortage of skilled workers, the effects on small 
business, the aging population of workers, and the high cost 
small employers incur in training highly skilled workers in 
their industries.
    Small business owners in particular cannot find workers to 
fill their current vacancies. Many companies provide 
competitive wages and benefits, but they still cannot find 
enough workers.
    In addition, the current workforce in these trades is 
aging. Most of the highly skilled trades find the average 
worker to be in their late 40s to early 50s. With this 
generation expected to begin retiring within the next 10 years, 
the shortage of workers will grow.
    Small employers must invest substantial time and money to 
provide training. On average, the annual cost of training in 
the highly skilled trades is $25,000 to $50,000 per trainee. 
This is an investment worth encouraging and worth making.
    Recent press articles reveal when small businesses take the 
time to provide training programs, they often find employees 
become skilled, committed and loyal to the companies. 
Accordingly, it is in our best interest to help small business 
who are dedicated to their trades train more employees.
    The purpose of this hearing is to examine H.R. 1824, the 
Skilled Workforce Enhancement Act, which I introduced on May 
14, 1999, and which has received strong bipartisan support from 
49 cosponsors. The Skilled Workforce Enhancement Act amends the 
Tax Code to allow small employers with 250 employees or less to 
take the $15,000 tax credit to offset job training costs in 
highly skilled trades.
    To assure training is effective, eligible employers must 
provide an employee with 2,000 hours of on-the-job training and 
necessary classroom training each year. In exchange, the 
employers are allowed to claim a $15,000 tax credit per trainee 
each year for up to 4 years. That is the provision of the bill 
as written. We will have different witnesses comment on various 
aspects of that as the hearing progresses.
    Under the Skilled Workforce Enhancement Act, the highly 
skilled trades include precision machinists, dye makers, tool 
and dye designers, roofing, masonry, heating, ventilating, air 
conditioning and refrigeration, plumbing, electrical 
contracting and foundry technicians. Originally limited to the 
tooling and machining industry, we have expanded the bill to 
include other trades for which highly skilled workers are in 
short and shrinking supply.
    We are pleased to have Senator Mike DeWine testify before 
the Committee this morning. Senator DeWine introduced companion 
legislation in the Senate last year. He and I and our 
cosponsors believe SWEA will assist small business owners in 
training much-needed workers and in keeping their shops open.
    The concept for the bill came to me from a constituent and 
friend in my district who will also testify today. As past 
president and owner of a machine company, Bill Bachman 
approached me with a severe shortage of skilled workers his 
industry faced and with an idea of a tax incentive to help 
remedy this growing problem.
    Bill, I want to thank you for bringing this idea to my 
attention and for continuing to push it. Indeed, I thank all 
the representatives of small business and labor here today who 
have been bringing this need to the attention of Congressmen. I 
believe the other witnesses will also thank you, since the 
growing shortage has affected so many skilled trades.
    A few years ago a friend who runs a small manufacturing 
business told me that if we don't do something within a few 
years there is not going to be a manufacturing sector in the 
United States because we are not going to have the workers that 
we need to work in the businesses. I am sure the construction 
industry representatives here will agree that that is a serious 
problem in their segment of the economy as well.
    The Skilled Workforce Enhancement Act will provide relief 
to small businesses with costly and surprisingly complicated 
training regimens. The bill allows employers to ensure 
themselves a continuing, capable workforce.
    I look forward to working with Senator DeWine, our 
distinguished Ranking Member Ms. Velazquez, our other witnesses 
and unions represented here today to help small business owners 
hire and train new highly skilled workers. We should do 
something now while today's generation of workers can train the 
next generation of skilled labor.
    I am pleased to recognize the gentlelady from New York for 
any comments she may wish to make.
    Ms. Velazquez. Thank you, Mr. Chairman.
    I would like to welcome today's witnesses, especially 
Senator Mike DeWine. Senator, I would like to thank you for all 
your hard work and leadership in the Senate in the area of 
worker training.
    Mr. Chairman, the United States is experiencing 
unprecedented prosperity as we continue to enjoy the greatest 
economic expansion in our Nation's history. It is important 
that we in Congress acknowledge that this expansion increases 
the demand for skilled workers.
    As the economy grows and more jobs become available, it is 
vital that we have a trained workforce able to fill newly 
created jobs. In fact, according to the U.S. Department of 
Labor, the United States is currently experiencing a shortage 
of service industry workers. This shortage is expected to last 
into the foreseeable future as the service industry continues 
to be the fastest growing sector of our economy. This is 
important for small business owners in the service industry who 
depend on highly skilled workers because they must expand 
effort and resources to locate pools of potential workers, 
recruit them, and then pay the additional costs associated with 
apprenticeship training. This has become so difficult that 
contractors at times have turned down work due to the lack of 
trained employees.
    I applaud Chairman Talent for recognizing this situation 
and introducing legislation that will give small businesses a 
tax credit for training workers in highly skilled trades.
    As a co-sponsor of this legislation, I believe it serves 
several important goals. First, it allows small businesses to 
recoup part of their investment spent training workers. This 
will serve as an incentive for businesses to hire unskilled and 
underskilled workers and train them.
    This leads to the second important goal, the investment in 
a skilled workforce.
    Finally, this tax credit will benefit the workers. The 
credit will provide an incentive for businesses to teach 
unskilled and underskilled workers a trade that will remain 
with them for life.
    It is important to make sure we continue to have the 
economic security our country has worked so hard to achieve. In 
doing so, we need to make sure we have the trained workers we 
need to keep up with our economy evolution in this millennium. 
By preparing today we can remedy what could be a larger problem 
for tomorrow.
    I support this legislation and look forward to hearing from 
our witnesses and in working with you, Mr. Chairman, to improve 
opportunities for this Nation's small businesses and their 
employees. Thank you.
    Chairman Talent. I thank the gentlelady and am grateful for 
her support for the bill and her advocacy in this area.
    We will go right to the first panel. Our first witness on 
it, the Committee is very pleased to have before us I think for 
the first time the Honorable Mike DeWine, the United States 
Senator from Ohio. Senator DeWine.

  STATEMENT OF THE HON. MIKE DEWINE, A U.S. SENATOR FROM THE 
                         STATE OF OHIO

    Senator DeWine. Mr. Chairman, thank you very much and thank 
you to the distinguished ranking minority member for your 
articulation of the need for this legislation.
    As you have pointed out, I have introduced companion 
legislation in the Senate. It has been a pleasure working with 
you on this bill, and I look forward to continuing in the weeks 
and months ahead as we push for passage of this much-needed 
piece of legislation.
    You both have outlined very well the need for this 
legislation. Let me just add a few comments.
    During the 105th Congress, we spent considerable time and 
effort getting the Workforce Investment Partnership Act that I 
sponsored in the Senate enacted into law. This law brings a 
flexible, locally driven, business-oriented solution to our 
Nation's system of Federal job training programs. But, Mr. 
Chairman, in spite of this law, our work is obviously still not 
done. We have a lot of work to do, and we need to follow up.
    This piece of legislation that we have introduced is a 
natural follow-up to that.
    As you have pointed out, our Nation is suffering from a 
dangerous shortage of skilled workers. For example, in 1999, 
the National Association of Counties conducted a survey of its 
large urban caucus, a caucus which in my home State of Ohio 
includes counties such as Cuyahoga--Stephanie Tubbs Jones' home 
area which she knows so well--Franklin County, Hamilton County, 
Summit County. And in this survey, 85 percent of the local 
officials responding said that there was a shortage of highly 
skilled workers in their own regions.
    Moreover, Mr. Chairman, 96 percent of these individuals 
characterize this shortage as serious or as very serious. And a 
majority indicated that this shortage was negatively affecting 
their county's ability to attract and retain business.
    In another study, Mr. Chairman, the National Institute of 
Metalworking Skills, an organization of which one of today's 
witnesses, Bill Bachman, is a board member, estimates there is 
a need for over 22,000 skilled workers in five regions of the 
country alone.
    In my home State of Ohio, the December 1, 1997, edition of 
the Cleveland Plain Dealer featured an article on the shortage 
of workers in just one county in Northeast Ohio, Lake County. 
This article featured an interview with Christopher Burton, a 
machine shop owner in Mentor, Ohio. He noted in this article 
that even with increased benefits he is still having problems 
finding new workers. This is what Mr. Burton said, ``we can't 
find experienced machinists at all.'' .
    Mr. Burton is not alone. This is a problem across this 
country. The same thing is happening all over our country. I am 
sure that our witnesses today on both panels will have similar 
stories.
    Mr. Chairman, as you have pointed out, this legislation 
would reward employers who provide training to workers such as 
precision machinists, dye makers, mold makers, tool and dye 
designers, heating and cooling contractors, plumbing 
contractors, pipe fitting contractors, roofers, masons, and 
others. These highly skilled trades are an essential part of 
our economy. They provide the parts used in manufacturing. They 
provide the services that allow our Nation's business to grow 
and expand. And they are truly the motor driving our Nation's 
unprecedented economic expansion. By giving a limited tax 
credit to provide training for these highly skilled workers, 
this bill would help keep this motor running.
    Mr. Chairman, I hope with your strong leadership, the help 
of this Committee, we can ensure the passage of this 
legislation. I very much appreciate you giving me the 
opportunity to come over from the Senate and appear before your 
distinguished Committee.
    Thank you.
    [Senator DeWine's statement may be found in appendix:]
    Chairman Talent. We thank you for coming, Mr. DeWine. The 
Committee understands you are on a tight schedule. We would 
love it if you could stay.
    Senator DeWine. I do appreciate that. We are in a 
conference talking about the budget.
    Chairman Talent. If you need to go----
    Senator DeWine. I would like to stay, actually.
    Chairman Talent. We understand.
    I will recognize the gentleman from New Jersey. Senator, if 
you could, the gentleman from New Jersey has one quick point he 
wants to make. If you could just wait for a second.
    Mr. Pascrell. Good morning, Senator. How are you?
    Senator DeWine. Good morning.
    Mr. Pascrell. What I find fascinating about this 
legislation is that it is--we are going in avery different 
direction, and we are talking about the last 3 or 4 years rather than 
talking about selective immigration. We need to understand that there 
are workers in the workforce that need to be trained for new jobs, and 
you are tying this in with I think something very, very important, Mr. 
Chairman, and that is the question of holding on to our manufacturing 
apparatus where we have no manufacturing or productive policies in many 
States and certainly on a national level. That is the first thing.
    I want to get into some trade difficulties that we have.
    On the example that you just brought out, on machinists 
jobs, we are beginning to do to that industry what we did to 
the textile industry and that is trade it away and export the 
jobs. I am glad that we are going to spend some time and 
provide some tax credits within the industry to train our own 
people to do these jobs. They are educable. We recognize that, 
and we don't need to go offshore to bring these people here to 
do these technical jobs, no matter how technical they may be. 
We need to train, and I want to commend both of you for 
recognizing that fact. This is not an addendum. This is a very 
critical and essential part of building and growing the 
economy.
    I thank you for introducing the legislation.
    Senator DeWine. Mr. Chairman, if I could just briefly 
respond to the Congressman's comments, which I think are right 
on point.
    I think what we have all found in our home States or home 
districts is that we have many people who are in a transition 
period. They may be 40, they may be 45 years of age, they may 
be younger, may be older who want to be trained, who want to 
stay at it and clearly who have the ability and the inclination 
and dedication to get that training if we could just get the 
training to them, and they can then continue to be even more 
productive members of society and continue to be highly well 
paid workers, which is what we want.
    Your comment about the industrial base in this country is 
absolutely correct. We see it in our home State of Ohio. 
Stephanie Tubbs Jones and I see it in the Cleveland area, so 
very important. That is one of the reasons, main reasons, we 
have the quality of life we have in this country, is our 
industrial base, and it depends on skilled workers.
    Chairman Talent. I was going to move on, but Ms. Tubbs 
Jones seeks recognition and, one Ohioian to another, I think 
she deserves it.
    Ms. Jones. Thank you, Mr. Chairman.
    Senator DeWine, thank you for coming to our Committee. I am 
in support of this legislation.
    I would just like to raise one issue both with the Chairman 
and Senator DeWine to keep in mind as we go through this 
process.
    The issue of accountability for the training action--I know 
we always like to believe that everybody will do the right 
thing, but somehow we need to include in this the issue of how 
to establish that training actually took place and that it's 
appropriate.
    The only example I can think of, Senator, is for several 
years in Ohio and across the country, there were various 
student loan programs where students took out loans which they 
were responsible for paying back, but never graduated from the 
program in which they had enrolled. And I am not casting 
aspersions on any company that would do this training. I think 
it is a great idea. But somehow we need to figure out how to 
ensure accountability. I don't necessarily have an answer, but 
I am prepared to work with whoever it is to see how we might 
include that in our legislation.
    I thank you very much for appearing and, Mr. Chairman, as 
well support you on the legislation.
    Chairman Talent. I appreciate the gentlelady's constructive 
comments.
    Mr. Chabot also had a comment.
    Mr. Chabot. Thank you. I will be very brief.
    Just as one Ohioian to a fellow Ohioian, I would like to 
thank and commend Senator DeWine for his leadership in this 
very important area.
    Senator DeWine. Thank you very much, Congressman.
    Chairman Talent. All right. We will go to our next witness, 
whose name has been mentioned before, Mr. Bill Bachman of St. 
Louis, on behalf of the National Tooling & Machining 
Association.
    Thank you, Bill, for coming.

 STATEMENT OF WILLIAM G. BACHMAN, ST. LOUIS, MO, ON BEHALF OF 
THE NATIONAL TOOLING & MACHINING ASSOCIATION, FORT WASHINGTON, 
                               MD

    Mr. Bachman. Thank you.
    Good morning, Mr. Chairman, members of the Committee. Thank 
you for the opportunity to testify on behalf of the 2,600 
member companies of the National Tooling & Machining 
Association, known as NTMA, regarding H.R. 1824, the Skilled 
Workforce Enhancement Act, which we in this industry consider 
absolutely critical to the successful training of highly 
skilled workers.
    My name is William G. Bachman, Sr., but I am just known as 
Bill, Sr., in the whole industry, probably throughout the 
United States. Before I retired in 1997, I was president of the 
company in St. Louis, which has been in business since 1927, 
and we employ 130 people, both men and women.
    To start this, one day I awakened to the fact that in the 
USA we are making a strategic advance to the rear when we 
consider our machinists, die makers, mold makers and die and 
mold designers. Only 15 percent of the members of the National 
Tooling & Machining Association, NTMA, have an apprenticeship 
program. Others are doing minor training as specialists, and a 
specialist is usually for one machine itself.
    At the time I was chairman of the NTMA National 
Apprenticeship Committee which then realized the pathetic 
situation we are in. After analysis of the situation, I called 
about 30 of our competitors from coast to coast to find out 
their overhead costs and if they were training apprentices. 
When the numbers were put together, the USA average cost to 
train an apprentice for 8,000 hours, which is 4 years, the cost 
is $201,000. That is an average throughout the United States. 
When we talked to our competitors, I asked non-trainers if they 
would get half of their cost back, would they train apprentices 
and without hesitation they all said, oh, sure.
    Prior attempts to alleviate our shortage of skilled workers 
have failed miserably. The welfare to work was presented as a 
good opportunity to find people to change from that entity to 
the workforce. Unfortunately, most every individual referred to 
our companies in our industry lacked the basic skills needed to 
begin an apprenticeship. The training conducted through the 
government programs produced a number of so-called skilled 
craftsmen. In reality, what those programs turned out were 
merely button pushers and machine operators.
    The importation of foreign workers widely used in big 
business is virtually impossible for a small metal shop to do. 
The requirements established by the Immigration and 
Naturalization Service were numerous and confusing. The Skilled 
Workforce Enhancement Act, SWEA,through a $15,000 tax credit 
per apprentice per year would give small employers much-needed 
incentive to train apprentices in-house. While $15,000 may sound like a 
lot of money, apprentices will repay the government in full through 
taxes within the 3 years of graduation.
    The Joint Tax Committee may score this proposal fairly 
high, but if we want to save the manufacturing infrastructure 
of this country from extinction, we must give small business 
this tool.
    I might add, there was a question in my invitation about 
whether or not as a private industry person I had any contracts 
with the government. I have had none for the two years you have 
requested, and I haven't had any for at least 10 years.
    I thank you for this opportunity.
    Chairman Talent. Thank you, Bill.
    [Mr. Bachman's statement may be found in appendix:]
    Chairman Talent. The next witness is Tom Bettcher, who is 
the President and Chief Operating Officer of Copeland Global/
Copeland Corporation of Sidney, Ohio; and he is appearing on 
behalf of the Air Conditioning and Refrigeration Institute.
    Mr. Bettcher.

  STATEMENT OF THOMAS BETTCHER, PRESIDENT AND CHIEF OPERATING 
 OFFICER, COPELAND GLOBAL/COPELAND CORPORATION, SIDNEY, OH, ON 
  BEHALF OF THE AIR CONDITIONING AND REFRIGERATION INSTITUTE, 
                         ARLINGTON, VA

    Mr. Bettcher. Thank you, Mr. Chairman. I, too, am honored 
to be here to speak to this issue.
    I have submitted written testimony, and I thought I would 
just speak to some of the key issues in that testimony today.
    First of all, let me describe Copeland, the company that I 
am CEO of. We have about 8,000 employees and 26 facilities, and 
our product is a compressor. The compressor is a key component 
of air conditioning and refrigeration systems. It is basically 
the engine of those systems. We are the largest manufacturers 
of compressors in the world, and that product ends up in air 
conditioning and equipment which must be installed by small 
businessmen, contractors throughout this country. Copeland is a 
subsidiary of Emerson Electric which has 120,000 workforce 
throughout the world.
    Today, as you mentioned, I am here representing the Air 
Conditioning and Refrigeration Institute, and that is a trade 
group representing 90 percent of the equipment for air 
conditioning and refrigeration, both residential and 
commercial, that gets installed in the United States. It 
employs about 150,000 people in the manufacturing of those 
products. More importantly, as you go beyond that into the 
distribution channel, the wholesalers, distributors, installers 
and servicing people, it is probably well over 500,000 people 
in the United States. We think we are a critical industry.
    Recent data has confirmed to us that the number one problem 
our industry faces is hiring new technical talent to come into 
the grassroots, the contractor-installer level. And, because of 
this, the Air Conditioning and Refrigeration Institute 
commissioned a task force; and I am the chairman of that task 
force to address this.
    We work with about 20 volunteers, as I am, who feel 
passionately about this issue. We have been working over the 
last year to come up with solutions. We have identified about 
40 different things we are doing as an industry with the rest 
of our trade associations to address this, and I think you 
would be impressed to know that the number one priority that we 
have concluded is to push and do everything we can to help this 
skilled workforce act go through. We think that is by far the 
most important thing that can happen to solve the problem. This 
will help small employers, as has already been mentioned, 
alleviate the cost of training which we agree is very 
substantial.
    And you might ask why am I here today. I am a big company. 
None of the financial benefit would go directly to the large 
companies that the Institute represents. All of it goes to the 
contractors. But, in our case, our success depends completely 
on the success of those contractors; and we just can't go 
forward without them. So we won't benefit directly, but we 
think it is important.
    There is some key statistics that have come up recently 
that have convinced us that this is the number one problem. One 
of those statistics, and this was reported by the Department of 
Labor, said that there was a 17 percent increase required in 
the number of installing contractors in the United States over 
the next 5 years. That means that we have to recruit new 
talent, 20,000 people a year, into our contracting base in 
order to get this equipment installed.
    A second key factor was reported by the Department of 
Education and that was that there was a 71 percent decline in 
the enrollment in vocational technical training during the 
periods of 1982 to 1996. So we have a huge erosion in the base.
    Finally, as has been mentioned earlier, our workforce in 
this area is in the 45- to 65-year-old age group. They are 
retiring. There is no new talent coming into this business. So 
we think this is critical.
    Another factor that we uncovered recently in a small survey 
was that the number one issue of our contractors is the 
inability to hire technical people. And it is a number one 
issue by a factor of about three times. So it is more important 
to them than price competition, than inflation, than health 
care. It is their number one issue. The industry needs to take 
action. As I have said, it is the number one issue to us.
    The negative impact to this if we don't move forward--there 
are several things. Number one, we simply can't get our 
equipment installed. Many of us can remember the hot summers 
and unfortunate situations that occurred in Chicago and other 
cities around this country. During July and August in many 
parts of this country, you can't get air conditioning equipment 
installed because there aren't people to put it in place.
    More importantly, another key factor is, when the equipment 
is installed, frequently it is done now with people who aren't 
properly trained, and the result of that is the equipment isn't 
efficient as it should be, which affects global warming and a 
whole lot of other factors. It can save this country money if 
we can get these technicians trained properly so the equipment 
is correctly installed.
    Another key factor is about 30 percent of the returns of 
our equipment from homeowners, from installations where they 
say there is a problem, are returned; and they are perfectly 
good equipment. The basic problem is it is not correctly 
installed. So we have a fundamental----
    Chairman Talent. How much do you say is returned?
    Mr. Bettcher. Thirty percent of the returns are--the 
compressors come back. They are perfectly fine. The issue is 
that people in this--because they haven't been able to properly 
train them through a good apprenticeship program, don't install 
the equipment correctly.
    So that is a huge impact on our industry, on the consumer, 
and the quality of our business. So I think this problem will 
only get worse, and I strongly encourage everything you can do 
to make this act a reality.
    Thank you.
    Chairman Talent. Thank you, Mr. Bettcher, for that 
testimony.
    [Mr. Bettcher's statement may be found in appendix.]
    Chairman Talent. Our final witness on this panel is Mr. 
Chris Leto, who is the Vice President of Tampa Brass & Aluminum 
in Tampa, Florida, appearing on behalf of the American 
Foundrymen's Society.

    STATEMENT OF CHRIS LETO, VICE PRESIDENT, TAMPA BRASS & 
  ALUMINUM, TAMPA, FL, ON BEHALF OF THE AMERICAN FOUNDRYMEN'S 
                    SOCIETY, DES PLAINES, IL

    Mr. Leto. Chairman Talent and members of the Committee, I 
appreciate the opportunity to testify before you today 
regarding the impact of the shortage of skilled workers on the 
foundry industry.
    My name is Chris Leto. I am Vice President of Tampa Brass & 
Aluminum Corporation. We are a small disadvantaged business 
located in Tampa, Florida. Our foundry was founded in 1957 by 
my grandfather, my father, and my uncle. The company has grown 
from three to 80 full-time workers.
    We produce aluminum and brass castings, machine them for 
equipment in industries such as communication, defense, 
electrical hardware and medical. We build such parts for 
lighting fixtures, satellite component parts and wings for 
missiles.
    Tampa Brass is a corporate member of the American 
Foundrymen's Society. Eighty percent of the 3,000 U.S. 
foundry's employ fewer than a hundred workers, and many are 
family-run operations.
    One of the most critical challenges facing the foundry 
industry is the growing skills shortage. Each day small 
foundries are faced with more and more job vacancies because 
there is no one qualified to fill these positions. We are 
spending large sums of money to recruit and train these 
employees.
    We applaud the chairman's leadership in addressing this 
job-skill-shortage issue and introducing the Skilled Workforce 
Enhancement Act H.R. 1824. This legislation recognizes the high 
cost placed on small businesses to train workers for skilled 
jobs by offering a tax credit. My company and AFS strongly 
support this bill.
    Although metal casting is a mature industry, it has become 
a refined modern-day process, and skilled craftsmen are 
essential to the production of castings at several points in 
the process.
    The first is the pattern maker. All castings begin with a 
blueprint and the skill of the craftsman to produce a precise 
pattern. Normally, a pattern maker serves as an apprentice at a 
foundry and must train 4 to 5 years to achieve journeyman 
status.
    Second is the mold maker. This is a pattern--foundry mold 
maker. He forms and prepares the mold to receive the molten 
metal. This can be an extremely complex task and requires 
expertise of years of on-the-job training.
    Third is the quality technician. He inspects the quality of 
the casting. The metal technician acquires certification by 
passing a series of written tests and through on-the-job 
experience. We have two level 3 technicians, the highest level; 
and it takes 6 years to achieve that status.
    And, finally, the castings need to be machined, which 
requires the skill of trained machinists. Participating in a 4-
year program along with on-the-job training is essential to 
become a certified machinist.
    For the past 3 months, my company has been actively 
recruiting six machinists, one metal quality technician, and 
one pattern maker--unsuccessfully, I might add. With the demand 
for skilled workers outpacing supply, the problem of how to 
meet the growing skills shortage is one of the greatest 
challenges facing my company and the foundry industry today.
    I would like to just share a few examples of how Tampa 
Brass is addressing this challenge.
    First, we offer a competitive and very generous wage and 
benefit package.
    Secondly, for the past 2 years, we have invested more 
resources into recruiting and on-the-job training.
    In 1999, we spent approximately $3,000 a month for 3 
consecutive months advertising in newspapers with no success. 
We only had one of 20 applicants come in that was qualified for 
the machinist job. For the past 6 months, we have engaged five 
different temporary agencies to help us locate 10 qualified 
machinists. Over those 6 months they were able to locate us 
six. However, we continue to have job openings for additional 
machinists, and the use of these agencies is extremely 
expensive. We pay them 55 percent over and above the employee's 
salary for the first 3 months they are with us.
    Tampa Brass is also investing resources to provide its 
workers with training both in-house and externally through 
technical colleges. In fact, we are currently sending two young 
employees through a 4-year program to become certified 
machinists.
    These company-sponsored training programs have showed our 
employees we are interested in their growth and that we value 
their abilities. By encouraging them to become involved in the 
training programs, these workers have more self-worth, better 
attitudes and consequently become better employees.
    The American Foundrymen's Society estimates this cost in 
the range of 25 to $50,000 per year. Typically, these training 
programs take 2 to 4 years to complete. The cost of these 
programs makes it nearly impossible for many small foundry 
shops to train new workers in these fields.
    We also have a drug-free workplace policy. In approximately 
three of 10 cases, applicants fail the drug test; and we still 
pay the $35 per test. H.R. 1824 would help small foundries 
offset some of the costs associated with training workers by 
providing $15,000 tax credit up to 4 years. We are the 
companies that need it most.
    More than half of the small foundries surveyed last year 
indicated they would take advantage of the tax credit set forth 
in H.R. 1824. This tax incentive would help alleviate the 
burden that the job shortage and high costs of training that 
are being placed on small businesses.
    In conclusion, foundries are working hard to recruit, 
train, and retain qualified skilled workers. In order for the 
foundry industry and other industries to compete in the global 
marketplace, we must work together to reverse this skills gap. 
No one sector can face these challenges alone, and the time to 
act is now.
    The Skilled Workforce Enhancement Act would serve to assist 
small businesses already providing formal training for good-
paying jobs but would also provide an incentive to those 
companies who have not yet implemented training. We urge those 
Committee members who have not sponsored H.R. 1824 to do so.
    I would be pleased to respond to any questions. Thank you.
    Chairman Talent. Thank you, Mr. Leto, for your very 
effective testimony.
    [Mr. Leto's statement may be found in appendix:]
    Chairman Talent. We have a lot of members here, so I am 
going to ask just a couple of questions, and then I will defer 
to the Ranking Member.
    Mr. Leto, would you just go over briefly for the Committee 
the facts you gave us about how you have been trying to recruit 
machinists, like how long have you been trying to recruit extra 
people, the kind of money you have been spending to get them? 
Would you just briefly recount that testimony again?
    Mr. Leto. Yes, sir. For a while, we went through the 
newspapers, the local newspapers, the Tampa Times, St. Pete 
Times. Those ads would cost us about $3,000 a month to run. And 
we received--out of 4 months, we had 20 guys come in, 20 
employees, prospective employees come in; and we only hired 
one. It just wasn't cost effective.
    Then we moved over to the temporary agencies, that they do 
all the work for you in locating the potential employees. But 
then you have to pay them a 55 percent percentage on top of 
what they pay--we pay the employee. So if he makes $10 an hour, 
then we pay the temp agency $15.50 for the first 3 months.
    Chairman Talent. A journeyman, like you mentioned your 
level 3 people, you have two of them.
    Mr. Leto. Yes, sir.
    Chairman Talent. What kind of money can you make working a 
year in your company at that level?
    Mr. Leto. Between $35,000 and $45,000 a year.
    Chairman Talent. Plus all the benefits.
    Mr. Leto. Yes, sir, correct.
    Chairman Talent. Just one more question for the panel, to 
try and establish the overview. Because, of course, one of the 
issues we are going to have here is how much this bill, quote, 
unquote, costs in terms of loss revenue.
    Now, my guess is that business people in your position--
and, Mr. Bettcher, you work for a very big company, but you 
have made some very compelling testimony on how this affects 
you because you make compressors for air conditioning that 
can't be installed. When you are thinking about capital 
investments as small companies or big companies, when you are 
thinking about how aggressively you are going to go after 
business opportunities here or abroad, is it true that in the 
back of your mind is this training issue? Look, there is no 
point in making the capital investment if we don't have the 
people to work the machines.
    What I am getting at--and discuss this a little bit--is 
how--I believe this is going to be the brake on this prosperity 
if we don't do something about it. Because you are all sitting 
there thinking there is no way we can continue expanding if we 
don't get the skilled help. Is that true?
    Mr. Leto. Yes, it is very much true. I do a lot of the 
sales and marketing for my company as well.
    One job that we are looking at right now that we just have 
an order for is going to add $2 million to our bottom line, our 
revenue. We are a $5.2 million company now. Where am I going to 
get the employees? This is part of a plan that we have got to 
start thinking about. That is why we started with the temporary 
agents 6 months ago. So it is very important.
    And one of the other costs that we have had to take care of 
is the overtime, because that is what is happening. These 
employees last year, our machinists, and there were 40 of them 
total, they worked between 45 and 50 hours a week for the 
entire year. It is good overtime money. It is not good for our 
bottom line, and it causes employee burnout.
    Chairman Talent. My guess is they probably would rather 
have a little less overtime. When these guys and gals retire, I 
am guessing--but they are probably not all spring chickens 
either, are they?
    Mr. Leto. That is correct. The average age of our employees 
is 40 years old. We have a few young guys. Those are the guys 
we are sending to the trade school, but we still do on-the-job 
training, classroom situation as it is for an hour a week 
possibly and sometimes we do Saturday classes, but, again, we 
pay them for the Saturdays they come in.
    Chairman Talent. I couldn't agree more with what Mr. 
Pascrell said. You all are competing abroad with companies that 
are getting directly subsidized by their governments; and this 
is a way, without getting into that whole issue, that we could 
help you all in competing with them in addition to all the 
other benefits.
    Mr. Bettcher. To your question, I would comment two things.
    One, I would make a rough estimate that in the peak season 
for air conditioning, let's say July and August, probably 5 to 
10 percent of what needs to get installed is not installed 
because of the lack of trained workers. So that is one thing 
that really affects all of that whole group of companies.
    The second thing I would comment on is that the training of 
these people is so inadequate at this point because of the 
quality of people coming in and the ability to train them well. 
My guess is 2 to 3 percent of the average company's cost is 
tied up in these warranty returns that don't need to exist. So 
our competitiveness as an industry is severely impacted by 
this. One of the number one variable or key costs that we work 
on is reducing the warranty cost, and it is tied up in this 
issue of training.
    Chairman Talent. Mr. Leto, if you advertised for, say, a 
human resources person or bookkeeper, do you think it would 
have been as difficult to get applicants?
    Mr. Leto. No, sir.
    Chairman Talent. And those are great fields.
    I will recognize the distinguished gentlelady from New 
York.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Mr. Bachman, I would like to start with the concern that 
was raised by the gentlelady from Ohio, Ms. Tubbs Jones. As 
drafted, H.R. 1824 does not provide specific standards for the 
training provided by the employer. Therefore, it is conceivable 
that any activity labeled an apprenticeship or training will 
make the employer eligible for the tax credit. Part of the 
reasoning behind this legislation is to make sure that we have 
a highly trained workforce, so we don't want employers getting 
tax credits for training that will not translate into a skill 
for the worker. In your opinion, should the legislation follow 
the definition of the qualified training program as established 
by the Labor Department's Bureau of Apprenticeship and Training 
or should the bill adopt another standard?
    Mr. Bachman. Thank you.
    I think the bill should take the existing standards. I was 
one of about 15 men 25, 30 years ago that went to the 
Department of Labor Bureau of Apprenticeship and Training. We 
have an apprenticeship training system, and it is signed by the 
Bureau of Apprenticeship and Training and by the people that we 
are working within the NTMA to do this.
    Now, we--those that are training are training by these 
rules, and you can't have the exactnames of the rules, but you 
should have rules that these people should train by and then they would 
then inform the proper people when they get through. Neither one of 
these gentlemen can use the same contract we have. However, all of our 
chapter members throughout the United States do, but we are training 
machinists, tool and die makers, computer designers. It is different 
from what they want. So you are going to have half a dozen or a dozen 
maybe different regulations so that these people do this properly.
    I agree with you. I think, without any regulation, people 
say, yeah, I have trained them. Off they go, and they really do 
nothing. All they want is the $15,000 tax credit.
    Ms. Velazquez. Thank you very much.
    Mr. Bettcher, would you please give the Committee an 
overview of what the apprenticeship in the air conditioning and 
refrigeration field entails, how trainee progress is monitored 
and how the program itself is monitored? In other words, who 
makes sure that the apprentices are being properly instructed?
    Mr. Bettcher. I think in our industry that is a program 
that needs to be more fully defined. We currently initiated 
what is called a North American Technician Excellence Program 
over the last 2 years, which is a certification program in our 
industry. That is just now rolling out across all of this 
contractor base. So the framework is there, but the 
implementation of that system is still in the beginning stages 
of that. But we do have a system of certification, and we do 
have training.
    Ms. Velazquez. You have a system--I am sorry?
    Mr. Bettcher. We do have a system defined of certification. 
We have training programs defined for the voc tech schools and 
tests that are--we administer to judge the qualifications of 
these people so there is a program in place. I think it would 
need to be adapted to the regulation that is being discussed 
today.
    Ms. Velazquez. Thank you. When you say you have a system in 
place, who monitors and who certifies?
    Mr. Bettcher. There is an organization that runs the tests 
that are run on--they run them periodically through the year 
across the country at different test sites. So there is an 
official testing program that goes on by the group that is 
sponsored by our trade association as well as some other trade 
associations. And that is called NATE, the North American 
Technician Excellence Program.
    Ms. Velazquez. But you agree with me that accountability is 
very important?
    Mr. Bettcher. Absolutely. I very much agree with that.
    Ms. Velazquez. Thank you.
    Mr. Leto, many in the construction industry believe that 
multiemployer training systems are the most cost-effective way 
for construction firms of any size to offer comprehensive 
training to their employees. By allowing businesses to pool 
their resources to provide a quality combination of classroom 
and on-the-job training, a multiemployer training system 
provides something individual employers would not be able to 
provide alone. Mr. Leto, does your company take part in 
multiemployer training and why or why not?
    Mr. Leto. We do not take part in that. I don't know that is 
available in our area for multiemployer training. What we do do 
in the quality technician part of it, the level 3 that I 
alluded to earlier, there is a level 1, a level 2, and level 3. 
Each person has to pass a series of tests and be on the job for 
2 years for a level 1, 2 years for level 2, and 2 more years 
for a level 3. If he doesn't pass the test, then he won't get 
to the level 3.
    However, in the level three, there is also an outside 
certification by a company in Florida that confirms what we 
have tested this employee for. For the machinists, we send them 
to a technical educational college across the bay, and they get 
a report card on a quarterly basis. That is a 4-year program, 
so we monitor their progress based on the report card.
    In addition to that, we sponsor them where--if they are 
working on--let's say they are working on blueprint reading 
this particular quarter. We as an employer will give them more 
jobs that would involve blueprint reading. So we kind of go 
along with the curriculum with the college. That is how we 
monitor.
    Ms. Velazquez. Thank you.
    Thank you, Mr. Chairman.
    Chairman Talent. My understanding of your business, Mr. 
Leto, is that more of the training is custom, more specific to 
the particular shop. There are basic skills you learn in these 
programs, but really it is the on the job in your particular 
shop where you get exactly what you want from the employees. Is 
that fair?
    Mr. Leto. Not necessarily. If we teach an employee, a 
machinist how to program, he can go just about to any machine 
shop and program if he learns how to program. It is the same 
with setup. It is the same with tool making. So I think, to 
answer your question, they can be used in any other shop.
    Chairman Talent. Sure. You learn the basic skills at one of 
these programs, and then you come in and do the on-the-job work 
in your shop.
    Mr. Leto. That is correct.
    Chairman Talent. I have Mr. Pitts next. I recognize him.
    Mr. Pitts. Thank you, Mr. Chairman.
    You each noted the high cost of training of new employees. 
What is the retention level of these new employees after you 
have spent money training them? Can you give us a ballpark 
figure?
    Mr. Bachman. A lot depends--on the retention, it depends on 
how you treat your employees. If you pay them the going wage 
relative to your area, if you are giving them the reasonable 
benies and you go with them and work with them, rather than 
just push them aside, they will stay.
    We had one fellow that left 2 years ago right after his 
apprenticeship was completed; and I thought, gee, that was 
fast. I walked in the shop about 2 months ago. There he was. He 
said, well, he knew the grass was greener on the other side of 
the street, but then after 2 years he found out it wasn't, so 
he is back again. So you retain your own people by the way you 
treat them, both economically and personally. We do not have a 
problem at our plant.
    Mr. Bettcher. In my case, I have a large company. I am not 
sure that is the question. The question is for the small 
businesses. I don't have the statistics for the contractors 
because they are separate from my company, but we can certainly 
research that and get information back to you to answer that 
question for the air conditioning group.
    Mr. Leto. Mr. Pitts, I don't know the exact percentage, but 
I can say that our training involves a little bit more than 
just a skill. We involve personal growth and family values 
since we are a family-owned business, and I agree with the 
first gentleman that it depends on how you treat the employees. 
But since we have put this program in, I bet our retention is 
above 80, 90 percent. It is that high.
    Mr. Pitts. I believe you noted that many potential trainees 
don't have the academic preparation in some areas like math and 
science. What is the average academic level of yourtrainees? 
Would a tax credit allow you to help train them in some of these?
    Mr. Leto. I think it would. I would say the average 
educational accomplishment of our machinists or the operators 
is maybe 2 or 3 years of high school.
    Mr. Bachman. As far as the machinists are concerned, we 
have--the shop work that you do, we call it lab work. Then we 
have 144 hours per year to take up and pick up anything that 
they are short on. Mostly we hire people who are graduates of a 
junior college, and they have had the blueprint reading, they 
have had trigonometry, plain trig but not special trig. That is 
one thing we add to it. They have a very small entree into 
metallurgy. We make them take a better metallurgy course.
    And die design, we do that inhouse because we have never 
found anybody in the academic world that knew enough about die 
design or mold design that could do them any real good. So we 
teach that within our own people. We pay our employees to stay 
at night and do this.
    It does vary a little bit per person, per apprentice, but 
basically we have to have all of these things, and we will get 
them one way or another, and we pay for all of their outside 
education when they have come to work for us.
    Mr. Pitts. Mr. Bettcher?
    Mr. Bettcher. I think, in our industry, the real targets 
are high school graduates or people with 1 or 2 years of voc 
tech training that we try to get into the contractor base.
    Mr. Pitts. Thank you, Mr. Chairman.
    Chairman Talent. Ms. McCarthy is next.
    Mrs. McCarthy. Thank you, Mr. Chairman.
    I thank you for your testimony.
    I come from Long Island, New York, and we have a lot of 
small businesses that are working in the areas that you are all 
talking about. And I have spent January meeting with all these 
business people, and they are talking about the same thing--
they can't find skilled workers.
    What we have done on the Island is work with the business 
people, having them come into the high schools, especially 
through the BOCEs programs, and tell these young people this is 
what, you know, we can offer you. This is the kind of education 
and training we can offer you.
    So far, it is working, but the problem that we are all 
going to be facing is, as the years go on, we are not going to 
have enough young people, and that is a fact of life right now. 
So we have to do whatever we can to help you.
    One of the things that I would like to talk about, and some 
of my colleagues brought that up, as we go into this global 
economy, there are going to be, unfortunately, certain jobs in 
this country that are not going to be available to the people 
that are already working there. And I am hoping, without making 
it really tough or anything else like that, that with the 
possibility of those that have been working in some of these 
factories that they might have first chance to come and work 
and be trained with companies like yours.
    And my concern was, obviously, those workers that are 45, 
50 even--because I look further down the road. These are good 
people that have worked all their lives and all of a sudden 
where they are supposed to be on the top end of their 
employment and they have to start all over again, it is going 
to really hurt their Social Security. People I don't think 
really start to think about this.
    So I happen to support this bill. I think it is a good 
bill. And, hopefully, you will work with us to clarify it even 
more, especially with the responsibility, because I think you 
can probably put more input. Sometimes when we do things here, 
we mess things up a little bit. So it is going to be important 
to hear all of your input and to have this go forward. I 
appreciate it.
    Mr. Bachman. The St. Louis chapter of NTMA sponsors one 
place in the job placement or job fair, and this job fair is in 
the greater St. Louis area, and we had 11,000 eighth graders. 
Now, there is nothing we can do with a junior or senior in high 
school other than go to a junior college and start taking some 
technical training, but they can get good technical training if 
they start in ninth grade because you have to start with your 
mathematics to get through even plain trig. And we have to have 
this sort of thing.
    What we did is we--one of the gentlemen from the companies 
made up a great wage chart, and this started from $7,000 for a 
flapjack flipper to $53,000 average throughout the country for 
a machinist. They didn't take into account die makers, mold 
makers, designers and so forth, the people who are higher paid.
    I went and stopped some of these teachers and the people 
who were doing the counseling for the ninth grade, and those 
are the people that really start the young people. Somebody has 
to explain to them that you have to start now. And I handed 
this chart out, and I thought it wasn't quite enough, so what I 
did is I took the W-2s from some of our people--of course, took 
the Social Security and their name off of it.
    Mrs. McCarthy. That is good.
    Mr. Bachman. All I did add took the classification. I 
couldn't do the other. But I handed it to the teachers and the 
people who were recommending all of these things, and they 
looked at these numbers, and they went from 40 to 75,000 a 
year. Now, St. Louis is a fairly high wage area, and there is 
maybe a dozen of them in the country, but they--the first thing 
they said, well, can I be a machinist or could I be a tool 
maker? I handed them my card. I said, if you want to, fine.
    They all backed off, of course; but I let them have the 
card. And I said, if you want to do something, go ahead and 
send them--call me and we will get a tour of the company. 
Because most of the counselors--not observers, the people who 
are teaching, are routing the customers, routing the whole 
curriculum, they have never been in a machine shop or a 
manufacturing plant period. They don't know anything about it, 
and this is where we are really hurting.
    I had one school, one--no, it is a high school--high school 
group. I went down about 60 miles south of St. Louis and went 
through there, told them what we are doing. The counselor who 
was in charge said, can we bring 25 people through your plant? 
Sure, I said. So we made arrangements, and she made a time.
    Two weeks before she was coming she said, how about 45 or 
50? And we ended up with three educators and the rest of them 
were students, first and second year, the junior and senior 
year of high school; and they went through this. None of the 
teachers had really been in a modern machine shop. They didn't 
realize. They thought it was a greasy old place. Everything is 
dirty. We showed them whereby we are measuring things by light 
to the accuracy of 20 millionths per year--I mean per inch. And 
they had no idea what this is all about.
    Mrs. McCarthy. I think also what we have to do is kind of 
reeducate people. I am on the Educational Committee, and I know 
I happen to believe in college education, but I also know with 
an awful lot of young people, they certainly are smart, and I 
will give you an example. My son did go to college, and he is a 
white collar worker. His two friends that are actually brighter 
than my son went into other fields of endeavor. Now, Kevin was 
an 85 percent student. These two young men were 95. My son is a 
bright young man, believe me. But what I am saying is, they 
went into your line of work; and they are making the $75,000 a 
year.
    So when I go and speak to my students, I say, certainly 
continue education, especially in themath and the sciences. 
But, you know, some people, like my son, doesn't like to get his hands 
dirty. There are others that love it, and that is where they should be 
encouraged to go.
    We have put such an emphasis on college, which is really 
terrific for a lot of people, but some people are just happier 
working with their hands. And we have taken away the pride, in 
my opinion, of those that want to work in the trades. I think 
that is a shame. Because when you go to other countries, there 
is a pride of working as an apprentice; and I think we in this 
country have to reinforce that with men like you going out and 
talking to people in school. There is nothing wrong with 
working in the trades. It can be an absolutely wonderful life.
    Mr. Bachman. To show you how clean it is, we have one man 
who comes in with a white coat and a tie. He tucks his tie in, 
takes the coat off--and white shirt. Works all day. Just rolls 
up his sleeves to his elbows. Works all day. Doesn't get dirty. 
Puts them back on. Off he goes. He is one of the top mold 
makers.
    It is not the dirty, cruddy job it is thought to be. Like 
you said, we open our doors. I have had as many as 80 people, 
students, come through the shop in one day.
    Mrs. McCarthy. My uncle owned a machine shop on Long Island 
many years ago so----
    Mr. Bachman. You know it.
    Mrs. McCarthy. I know it. Thank you.
    Mr. Bachman. Incidentally, I happen to be a registered 
professional engineer. I went to the engineering school after I 
got out of the Army Air Corps in WWII, and I went through in 3 
years. And some of the advisors, they take the top half, and 
they go to college; and, frankly, the bottom half, they just go 
to pot. They don't worry about them. And what they don't 
understand, that we don't want the bottom of the pile, we need 
people that can think. Just what you said. They are the ones 
that are going to come in and really do a good job and make 
good money. You can't take somebody that is illiterate and try 
to put him on an apprenticeship. It doesn't happen.
    Chairman Talent. I thank the gentlelady.
    This Committee in part is about people who, in many cases, 
didn't have the money or the inclination to go to college--but 
were people who hustled and worked and were risk takers and 
started businesses. The kinds of training that we are talking 
about with this bill is ideal for people who work in a company 
for a few years and then start their own. I haven't checked 
this, but my guess is we probably--some of the witnesses today 
are in that position. So this is--these kind of jobs, if they 
ever were jobs that were the ladder, you know, ended after a 
few rungs, and that is not the case anymore, and I thank the 
gentlelady for bringing that out.
    The next member to be recognized is the gentlelady from New 
York, Ms. Kelly.
    Mrs. Kelly. I am glad to see you all here. I happen to have 
a lot of fun in my district going through the various 
manufacturing places and walking and talking with the people 
who are on the lines doing that manufacture. I am just 
fascinated with the way things are made.
    I am also interested, Mr. Bachman, in the fact that you 
were talking about--in your testimony here, you were saying 
almost every welfare-to-work person that was referred to your 
company lacked that basic education. You were just talking 
about that a minute ago with my colleague. Would this tax 
credit we are talking about help you or do we have to do two 
parts to this? Do we have to try to also add something to bring 
those people that go to you, get them up to a basic skills 
level? Is that what I heard you say?
    Mr. Bachman. Partially, yes. The people that we take have 
had in either high school or junior college some machine shop 
and they have had some mathematics, like--they have to have 
something that they understand what they are looking at. It is 
a dangerous place to be if you don't know what is going on.
    Mrs. Kelly. What level math--I am really kind of throwing 
this out to all of you. What level of math are you talking 
about if you are in a machine shop would you need? What level 
is that going to be?
    Mr. Bachman. Plain trigonometry, not spherical. That is one 
level. If you have to get from here to here in a machine, it 
goes by rectangular coordinates. So you have to be able to 
calculate how far you go left and how far you go up to get 
there. Somebody has to calculate this thing.
    Now, they are done by computers. They are much faster, and 
the machine tools themselves can do it, but you have to know 
what is going on, why and how that gets there.
    Mrs. Kelly. What programs do you think that we need to put 
in place? What programs are out there that you--or what 
programs can we do to put in place to help you?
    Mr. Bachman. A fellow from Los Angeles and myself jointly 
made the training syllabus for mechanics--I keep saying 
mechanics--machinists, die makers, mold makers, and this will 
give you the whole rundown of what they have to have. We wrote 
this some 20 years ago. Personally, I think it needs upgrading 
again. Because this past year we just upgraded the apprentice 
standards, what you had to do, and that was done. But this 
syllabus to lead the people in training I think by now needs an 
upgrading.
    Mrs. Kelly. I have got three sons and a daughter. I was 
fascinated when my oldest two sons were in high school--rather 
in junior high--they had to take shop. They had a blast. They 
had a wonderful time making things. But all of that then was 
changed because they got slid into the college prep program and 
they never once looked back at that fun that they had.
    I think that the manufacture of things is a lot of fun, but 
it is tough, hard, dirty work, and it also requires a brain, as 
you pointed out. I am concerned that we are trying to give you 
a tax credit here in a way that it is going to be really 
effective as reaching those kids. I want to make sure that if 
we are going to do this, we are going to do it right. So I just 
want to say that you can all talk to me later about that.
    Mr. Bettcher, you talked about takeback. I have only got a 
little second here to talk for a minute. I am interested in 
that because I recognize also that major industries are 
beginning to do service in a way where they are not only 
servicing the things that they manufacture but they are 
servicing other manufacturers' things. I am wondering if they 
are putting that force in position because of exactly what you 
have talked about in your testimony and that is they have got 
to protect their own product and not--they are trying to reduce 
that takeback. Is that true?
    Mr. Bettcher. I think clearly that is a trend in the 
industry, to do a more aggressive job at controlling your own 
product. And so they can train people better and control that 
better if they do it themselves and then have a trained 
workforce. But it is just a fact of life----
    Mrs. Kelly. But they are going for other people's things, 
too. Is that just to keep those workers working?
    Mr. Bettcher. I think they are trying to grow and they are 
trying to expand their scope and have a bigger impact, let's 
say, on a homeowner so they can service all the appliances in a 
home, including the air conditioner.
    That is fine with us as long as those people are trained 
across that broader product line, and this bill would really 
help us ensure that those people get the broad training, that 
they can service the hot water heater and the air conditioner 
and the stove and the range. That is not simple, to know the 
ins and outs of all those pieces of equipment. So I think this 
bill will help in that regard.
    I wanted to make one comment about the training level 
coming into this program, and that isthat we are talking about 
a very broad range of trades here, from the very highly trained 
requirements that Mr. Bachman talked about. I would say that there is--
they are not all requiring that level of training. In our case, it is a 
technical product but not nearly the requirements of a machine and dye 
shop. A basic high school graduate with an interest in mechanical 
things and electricity and some good hands-on experience can be trained 
to do our service work very adequately.
    Mrs. Kelly. Mr. Leto, did you want to add anything to this?
    Mr. Leto. Only in the foundry aspect of it. The mold maker, 
probably more than anybody else, really doesn't need to have a 
high school education. He can learn. We have to train him on 
the job. We can train him, and that is what we do. It takes 
about 2 years. He can be a good mold maker.
    The pattern maker needs to have that trigonometry because 
he has to--he doesn't have the luxury of a program to help him 
go from point to point. He has to lay that out by hand.
    And the quality technician, he needs to have a basic 
understanding of metallurgy, so there is a higher education and 
skill there.
    But the levels, level 1, level 2, and level 3, what he 
needs to acquire can only be done on the job.
    Mrs. Kelly. Thank you very much.
    Mr. Bachman. Are you talking about sand molds?
    Mr. Leto. Yes.
    Mr. Bachman. We have two different kind of molds, as long 
as you understand that. We are making them out of tool steel, 
hardening them and polishing, all this sort of thing. So it is 
a completely different animal. And when I originally wrote this 
thing, all I had in mind was the machining and the manufacture 
areas.
    And I beg to differ with you, that the shops aren't as 
dirty--when I went to work for my dad and got out of college, 
he just threw my scholarship and stuff away and said, hey, go 
to work--and he handed me a couple of aprons--and learn. That 
is the way I had to do it, without this kind of training. You 
can have any kind of education that you can get, and you still 
have to start doing something with your hands before you are 
going to be good at this area.
    Mrs. Kelly. Mr. Bachman, my husband started with a hammer. 
I know all about how you start at the bottom, and I want to 
tell you----
    Mr. Bachman. But everybody else here doesn't.
    Mrs. Kelly. I want to tell you, I did, too. Not with a 
hammer, but I started with other tools. And I have to say that 
the concept, the problem is that people think that doing these 
jobs with their hands are just dirty jobs. They are not. They 
are not. They are really interesting jobs. It is just a matter, 
I think, a lot of it letting us do what you need to do, which 
is go out there and do it.
    Carolyn was talking about--I am sorry, my colleague was 
talking about inspiring these people, this workforce that is 
out there. A lot of people are in jobs that they are not happy 
about, and they should be looking, sometimes, I think at the 
jobs you are talking about.
    Thank you very much.
    Chairman Talent. Next on the Democratic side is Mr. Davis.
    Mr. Davis. Thank you very much, Mr. Chairman.
    And let me just say, gentlemen, at the offset that I 
appreciate all of your testimony and have found the discussion 
to be somewhat intriguing. I think all of us come from 
different experiences, and I come from the experience of a 
district that has lost more than 120,000 manufacturing jobs 
over the last 30 years.
    I also come from an area where the problem isn't what 
happens once you get into skilled work opportunities. It is the 
problem of some people not being able to get in. I am seeing 
many people not being able to get in because there seem to be, 
in many instances, especially with trade unions--and I am a 
trade unionist--there seem to be a family network. There seems 
to be an old boys' network. There seem to be a cousins', 
uncles' network. And so people can't get in unless they come 
with certain kinds of recommendations or they come from certain 
groups.
    And while I think the legislation has a tremendous amount 
of potential, I think my question becomes--one of my questions 
becomes, how can we assure that we are going to actually bring 
new people into the skilled workforce, I mean, new people who, 
for all practical purposes, have been actually shut out?
    I recall in my city where the unions decided to move a 
trades school out of town, Washburn Trade School, which had a 
reputation of being one of the best in the business, but once 
some requirements were put--that they had to let other people 
in who had not been getting in, they decided that it was in 
their interest to just move out of town, leave Dodge City. So I 
want to know, how can we assure that we are going to bring new 
people into the skilled workforce and then, Mr. Chairman, 
whether or not there might not be some ways that we can tie 
this legislation into some of the other things, like 
empowerment zones, like disadvantaged areas, disadvantaged 
businesses, or businesses located in certain areas and making 
sure that they get the assistance that they need through these 
tax credits. And so anybody can----
    Mr. Bachman. Our plant is in the middle--not in the middle 
of St. Louis, but it is downtown. St. Louis went from almost 
900,000 people down to 300 and some thousand people. They just 
all disappeared. We have several problems, and you can start 
naming them if you want, but they do not--there is nothing we 
can do about it as far as a small company.
    Now, we take and work with a junior college, a private 
junior college in St. Louis right in the middle of the area 
that was--looks like it was bombed out. They have many trades 
that they teach, and the area--if a person comes in and wants 
to go to the junior college and they don't really have the 
money--when I was retired from my business, whatever you want 
to call it, they gave an apprenticeship--I mean a scholarship 
to a person per year to go there.
    Now, they have--if you take a test and you have to have 
some ability--like in our case, the mechanical trades, you have 
to know, you know, your left hand from your right hand. Most of 
these young people have played with automobiles or something. 
That is usually the most common thing for young men. If they do 
this, the school now will take and give a catch-up course, so 
to speak, for a year free. All you have to do is go.
    And this has happened about 5 years ago, and I think they 
are doing real well. They bring a lot of people in there that 
could not afford to go to the school; and then, after that, 
then they take them and they look for people. Like Emerson, 
they give them $150,000 a year to help these people go through 
the school. And this is the way that we try to help those 
people that can't just walk in, plunk down $3,500 and say, hey, 
I want to go. It is happening in St. Louis, but a lot of it was 
lost before we got started.
    Mr. Bettcher. Mr. Davis, I make two comments about the air 
conditioning refrigeration business. Part of our program--we 
have got several things going on to try to get people into the 
industry. But to your question, we have identified the inner 
cities and the zip codes of this country where there is not 
this infatuation with 4 years of college for every person. 
Those are very, very key target areas for us because we think 
those are people that are very good candidatesfor our industry. 
So we plan to target those types of areas in the country.
    And the second thing that was commented on was the 
reduction in manufacturing. The other initiative we have taken 
is to say we want a package of material put together so that 
when a company announces a downsizing or a merger and they are 
going to lay off a lot of people, we want to be there the 
second day with a package that talks about our industry, the 
opportunity for training, and this kind of funding would be a 
perfect fit with that kind of an initiative to bring these 
people into a new trade.
    Mr. Leto. We do the same thing. We are a member of the 
greater Tampa Chamber of Commerce, so we are aware of companies 
that are relocating to our area.
    I agree with what you said. I think, if I understood it 
correctly, we are talking about diversity and race. Us being an 
8a contractor for the defense business, we are of Hispanic 
origin, and we have a mix of African Americans, Caucasians, 
Hispanics and women that work in the business. It is very 
difficult to find a lady that wants to work in the foundry 
business, because it is quite dirty, as opposed to the machine 
shop, where it needs to be temperature controlled.
    But there are also hub zones preferential that are 
involved. We are not in a hub zone, but we really don't have 
that luxury, to be that particular of who we hire. We need to 
hire the best person qualified for that job. And if it is a 
mold maker and we need to train that person, it really doesn't 
matter. If you came to our facility, you will see a very even 
distribution of African Americans, Caucasians, women, and 
Hispanics.
    Mr. Davis. And I think it is important that we look at 
different requirements, different entities. In some instances, 
obviously, the technical requirements are different. In the 
other instances, it becomes a matter of a willingness to invest 
in individuals. And what I hear you saying is there are some 
instances where you have the opportunity to do that, and a tax 
credit would certainly go a long way where it is helping your 
company to be able to make that investment, and it is a concept 
that I like and have a great deal of appreciation for.
    I think I am going to like this legislation. I think I am 
going to try and look for ways to make sure that it is targeted 
and focused in such a way that we can get the most mileage from 
it.
    I agree with all of those in terms of voc training and voc 
ed. I think all of us have had those experiences and we have 
all had the conceptualization of what people thought existed. 
Personally, I wish that I had more of it than just simply 
growing up that I knew how to handle a hammer a little bit 
better without hitting my finger.
    And I think we do need as my colleague from New York, 
Representative Kelly, suggested. Sure, we can help with young 
people from an overall vantage point, but in terms of the nitty 
gritty of what goes on in the industry, if these tax credits 
are going to be given, I want to make sure that they are given 
in such a way that we help to bring into the mainstream some of 
those many individuals who have been left behind, who have been 
cut out, and for all of the reasons that we already know are 
not there.
    When we talk about skilled tradesmen in many areas in my 
city where there is over a million African Americans and we 
talk about there being 25, 30 blacks in a skilled trade in the 
whole town, I mean, that is appalling. That is incredible. That 
is unbelievable. And we can just talk about things like tool 
and die makers. We can talk about things like plumbers. We can 
talk about almost any of the skilled trades, and I want to see 
us be able to function differently than what some of the trade 
unions have done in terms of who gets in and who does not.
    Mr. Bachman. Actually, aptitude tests which we desire 
before we hire somebody, because they are the people that 
know--not have the knowledge of education, but they know how to 
put things together, and it really doesn't make any difference. 
You can take a person out of ninth grade and have an aptitude 
test and they will--they can become a machinist or a die maker. 
Now, if they goof off for the next 4 years, then they are going 
to have to go back and do it over again. But their aptitude is 
there and they want to do it, they can do it. But aptitude is 
different than knowledge.
    Mr. Davis. And they can make a lot of money doing it, a 
decent life.
    Mr. Bachman. That is right.
    Chairman Talent. I thank the gentleman.
    I am going to recognize Mr. Toomey.
    Before I do, I want to remind the members we have another 
panel which we want to get on and testify, although I certainly 
don't want to restrict these lines of questioning. They are 
very constructive.
    Mr. Toomey?
    Ms. Napolitano?
    Ms. Napolitano. Thank you, Mr. Chair.
    I did read your testimony, and I was quite impressed. 
Because we long believed that we need to focus on stressing in 
the schools the math and sciences for our young people, which 
is one of the focuses that we are trying to revive in certain 
areas, especially those areas that are low income. Because we 
are finding out that a lot of our students, a lot of our young 
people, they have the ability, they have the mentality, but 
they don't have the opportunity.
    Now, in listening to some of the dialogue and reading some 
of the material, it brings to mind that somehow we need to 
probably get everybody to start focusing on the low area income 
schools, to provide speakers that have been successful, some of 
you are machinists, some of you are mold makers, some of those 
individuals to attract the eye and the ear of the youngster who 
will not be going to college, who might have the capability of 
doing well in your test, that might be the identified young 
person who might be going into the industry. But he needs to 
know where to go, who to talk to, and how to become--be put on 
that road, that path to be able to become the machinist or the 
mold maker or the engineer in your area.
    Have you done or has anybody come up with a video to be 
able to show schools the young machine shops or the ninth 
graders, tenth graders that might have an idea that they might 
be interested in that particular field, to show them what areas 
they may be able to fit into, what they will need, what kind of 
math they are going to need to fit into this particular 
industry? Does anybody have any idea----
    Mr. Bachman. How many of them do you want?
    Ms. Napolitano. I am sorry?
    Mr. Bachman. How many of them do you want?
    Ms. Napolitano. I would like to have some to be able to 
show in some of my schools, to give to the counselors.
    Mr. Bachman. The NTMA has I think three different ones, and 
we can take a choice.
    Ms. Napolitano. Are they geared to high schools?
    Mr. Bachman. They are geared to junior high school going 
into high school.
    Ms. Napolitano. Are any of those good material to put on 
cable, to be able to instruct the general public?
    Mr. Bachman. I think it would be, if the public will sit 
still long enough and really listen to it.
    Ms. Napolitano. Well, that is how we form public opinion, 
is to be able to inform and educate the general public first 
that you are having a lot of your current workers retire or 
leave the industry, that you need people who are successful in 
the math and sciences that will be able to enter this field and 
attract young people into the industry to fill in those slots.
    Mr. Bachman. I would be glad to get some for you. 
Afterwards, I will get your name and address and where to send 
them.
    Ms. Napolitano. Certainly. Ms. Krause over there will see 
you, because I will be leaving. I have another Committee 
meeting going on, but I needed to come here and talk to you.
    The welfare work is very intriguing to me, especially since 
I come from California and we now have a max of 5 years for an 
individual. How can we become more in tune with providing 
access to the welfare recipients, even women who might be 
willing to become the students and be able to be successful in 
entering machine shop? And there are women that I know who work 
in machine shops. They may not work in the foundries, but they 
do work in the machine shops. How can we begin not only to make 
them the entrepreneurs but be able to assist them because these 
are good-paying jobs, that they can provide income for their 
families?
    Mr. Bachman. Well, we have a school called the Cornerstone 
something, and it is--all government funds. And they are taught 
only how to run a machine, and those are what they call 
numerically controlled machines. They make the part, you put 
the part in, you press the button, it machines it, you take it 
out and put another part in. That is fine, but it is not 
making--it will be--that is a machine operator, we call it. And 
it does get something done. If you have that--if you need that 
kind of work.
    But now they--last year, they started taking additional 
courses. This was, I think, 3 months that they taught this 
person to operate this type of machine. Now, that doesn't take 
into account numerical controlled equipment. Now they have gone 
back and said, we will teach computer working, we will teach 
some mathematics, blueprint reading, the basics they need. And 
they take this into a 12-month session, and they allow them to 
do this.
    Now, these people, when they come out, they are probably 
apprenticeable, and if they want to go on or they can be a good 
machinist that way. So it is helping.
    All I am speaking for is St. Louis. That is mostly all I 
know. But they have decided and they have gotten the go-ahead 
to expand this thing. I think it is great because these people, 
who were pushed out into the industry with actually no 
information except to push the gold button and if something 
happened push the red button, they just don't have any real 
knowledge, and unless somebody is willing to take them under 
their arm and say, okay, here, we will teach you more. But they 
can through the government in that particular case, continue, 
but this is only started up really this year.
    Ms. Napolitano. So it is new. You don't really have any 
stats as to how it is working or it is being accepted?
    Mr. Bachman. No, but I bet my bottom dollar it will. I went 
through the classes. I saw what they are teaching. And if they 
require certain grades, fine, everything will work.
    Chairman Talent. Thank you.
    I thank the gentlelady and all the members for their 
interest and the witnesses in the first panel for their 
patience and their answers. It has been very constructive, and 
I will let them leave, and then ask the second panel to come 
forward, please. Thank you again.
    I have a hearing in the Armed Services Committee going on 
now that I have got to go over to, so I just want the members 
of the second panel to know it is not for lack of interest that 
I am going to have to leave for a while. I will ask Mrs. Kelly 
to take the chair.
    Mrs. Kelly [presiding]. I want to thank all of you for 
coming and being willing to testify here today.
    And, Mr. Gooding, I want you to know that Mr. Pitts was 
very anxious to be here to welcome you and to introduce you, 
and we are glad to have you here. I am sorry this is a very 
busy morning. Most of us--as you can see, most of us have many 
hearings and other things that we are really mandated to go to, 
so I apologize for the fact that I know he was trying--wanting 
to be here and tried to be here during the time when you would 
be here to be introduced. But we welcome all of you, and we 
look forward to your testimony.
    And this panel we have Mr. Gooding. We have Mr. Holdsworth, 
who is the Director of Communications from Leesburg, Virginia.
    Mr. Gooding, I am going to back up for a minute, because I 
didn't say that you are Chairman and CEO of Gooding, Simpson 
and Mackes, National Roofing Contractors Association. He is a 
member of the board of directors.
    Then we have Mr. Holdsworth, whom I have introduced.
    Mr. Murphy is here with the Crest Electrical Company. He is 
here on behalf of the Mechanical-Electrical-Sheet Metal 
Alliance in Washington.
    And Mr. Pence, Capitol Hill Advocates. He is here for the 
National Concrete Masonry Association of Herndon, Virginia.
    We welcome all of you. Thank you very much.
    Mrs. Kelly. I believe we will start with you, Mr. Gooding.

    STATEMENT OF JOHN GOODING, CHAIRMAN AND CHIEF OPERATING 
 OFFICER, GOODING, SIMPSON & MACKES, INC., EPHRATA, PA, MEMBER 
 OF THE BOARD OF DIRECTORS OF THE NATIONAL ROOFING CONTRACTORS 
   ASSOCIATION, WASHINGTON, DC, AND CHAIRMAN OF THE NATIONAL 
  ROOFING FOUNDATION'S ROOFING INDUSTRY ALLIANCE FOR PROGRESS

    Mr. Gooding. Chairman Talent and members of the Committee, 
my name is John Gooding; and I am chairman and CEO of Gooding, 
Simpson and Mackes, which performs commercial and industrial 
roofing work. I am also a board member of the National Roofing 
Contractors Association, NRCA, and chairman of the Roofing 
Industry Alliance for Progress, an industry-wide partnership 
established to analyze, select, recommend and provide oversight 
for projects addressing critical industry issues, including 
this shortage of skilled workers.
    We thank the Committee for holding this hearing; and I 
commend you in particular, Mr. Chairman, for introducing the 
Skilled Workforce Enhancement Act, SWEA. SWEA recognizes and 
addresses a serious lack of trained employees in the roofing 
industry. This has become so difficult at times contractors 
must turn down work.
    In response to the shortage of labor, NRCA and the Alliance 
for Progress have been pursuing numerous initiatives to help 
our members find, recruit, and train skilled roofers. These are 
described in my written statement and include a 31-module 
training program.
    Mr. Chairman, I would like to submit my written statement 
for the hearing record and summarize my remarks beginning at 
the bottom of page 4.
    For over 50 years Gooding, Simpson and Mackes has struggled 
with trying to recruit, train, andretain good employees. In our 
Pennsylvania location, we have been involved with the ABC, Associated 
Builders and Contractors, Apprenticeship Program for sheet metal 
workers for the last 30 years. This program involves 4 years of on-the-
job training and in-house training 6 hours per week throughout the 
normal school year. This program is dependent upon other contractors 
recruiting students interested in learning to become sheet metal 
journeymen and willing to give up two evenings a week without pay 
during the school year.
    SWEA might give us the financial freedom to pay students a 
small stipend for taking night school classes, thus recruiting 
more workers.
    In 1998, our company started a 2-year roofing 
apprenticeship program, supplying both our facility and 
instructor for the local ABC chapter. Our instructor used both 
the ABC Apprenticeship Training Program and a new NRCA training 
module to provide a very good classroom experience.
    Besides the classroom training, our employees are working 
approximately 2,000 hours on the job as well as attending 
monthly safety training and special programs put on by our 
insurance carrier and trainers during inclement weather.
    In addition, our Pennsylvania company has spent over 
$100,000 on a large training room that can hold 100 employees. 
We are now looking into building another facility for hands-on 
training in a classroom environment.
    In 1998, I also approached the New Castle County Delaware 
Vocational Technical Schools and asked if they would consider 
establishing a training program for roofing mechanics if I 
could help provide employment opportunities. They agreed to 
this proposal and sent their instructor to an NRCA training 
program. I then employed him during the summer to give him a 
better understanding of what is expected of his students and 
familiarize him with the tools, the equipment, and the 
products. Our Delaware company purchased and will continue to 
buy all the training modules produced by NRCA, and I personally 
plan to monitor this program as it unfolds.
    My long-term goal would be to hire students from the voc 
tech schools and also continue their training as well as 
educating unskilled employees by using the voc tech night 
classes and/or in-house training. The tax credit for training 
costs under SWEA would allow me to buy a van and go into 
Wilmington, Delaware, and Lancaster, Pennsylvania, to hire 
people who don't have transportation to get to our business 
location or our job sites, thus providing good jobs and 
excellent wages and benefits.
    Our employees typically work 45 hours a week throughout the 
year except on days of high wind, rain, and snow. Our average 
employee works 2,000 hours a year, but other companies' 
employees may work fewer hours per year depending on their 
geographic location.
    In closing, the shortage of skilled workers in the roofing 
industry is real and shows no sign of abating. For example, we 
purchased land and built our facility in Newark, Delaware, in 
1989. We anticipated having 100 employees on the payroll within 
10 years. Today, 11 years later, our workforce is only 35. 
Something must be done to encourage people to continue to come 
into our trade.
    Mr. Chairman, SWEA is a very important step in helping 
small roofing contractors attract the labor they need by giving 
them the incentive to train their employees in a formal program 
instead of continuing to complain and not achieve the results 
they want. NRCA urges every member of the Small Business 
Committee who is not already on SWEA to co-sponsor this 
legislation.
    I thank you for this opportunity to testify before you and 
would be happy to answer any questions.
    Mrs. Kelly. Thank you very much, Mr. Gooding.
    [Mr. Gooding's statement may be found in appendix:]
    Mrs. Kelly. Next, we have Mr. Holdsworth.

 STATEMENT OF THOMAS W. HOLDSWORTH, DIRECTOR OF COMMUNICATIONS 
   AND PUBLIC AFFAIRS AND DIRECTOR OF COLLEGE AND TECHNICAL 
             PROGRAMS, SKILLSUSA-VICA, LEESBURG, VA

    Mr. Holdsworth. Thank you. I make an observation. We could 
use a carpenter for this door over here.
    Thank you, Mr. Chairman; and thank you to this Committee 
for inviting me here this morning.
    I am Tom Holdsworth, Director of Communications and Public 
Affairs for SkillsUSA-VICA, a nationwide education association.
    SkillsUSA-VICA is one of America's largest public-private 
partnerships with nearly one quarter of a million student and 
teacher members annually. We enjoy the active support of over a 
thousand corporations, trade associations, labor unions and 
businesses at the national level alone.
    Our industry partners are very concerned about our Nation's 
shortage of both experienced and entry-level workers. According 
to the U.S. Bureau of Labor statistics, the demand for skilled 
workers has gone from 20 percent in 1950 to 65 percent of the 
labor force today. This increased demand results in a shortage 
of skilled workers and is even more difficult for small 
business.
    According to the Bureau of Labor statistics, construction 
trade jobs will increase by 8 percent from 1996 to 2006. That 
translates to 1,127,000 job openings due to growth or net 
replacements.
    A Harvard study shows the construction industry needs to 
replace 18,000 carpenters a year. Apprenticeship programs 
produce only 5,000 new carpenters annually.
    The demand for heating, air conditioning and refrigeration 
mechanics and installers will go up by 17 percent, or 104,000 
openings.
    Concerns from the machining sector have as much or more to 
do with quality as with quantity. While the overall number of 
employees will trend down slightly, tomorrow's metal workers 
must be more skilled to run increasingly sophisticated and 
efficient equipment.
    Small businesses have traditionally counted on vocational 
technical education as its largest provider of formal training 
for its workers. So the logical question is, how many students 
are in the education pipeline for these occupations? The answer 
is, not enough.
    Department of Education figures from the eighties and into 
the nineties show masonry enrollments declined by two-thirds, 
air conditioning refrigeration and heating by two-thirds, and 
metal trades by 60 percent. Carpentry enrollments also dropped.
    There are several reasons for these declines. Three of the 
most important are population, policy and perception.
    First is the simple matter of demographics. We have been 
going through the baby bust. There have been fewer high school 
students and young adults. The good news is that with the echo 
baby boom we are about to see that 16 to 24 age cohort 
increase.
    Second, young people are not encouraged to enter these 
professions. Since the early 1980s, and for some very good 
reasons, secondary public education has focused on academics 
and increased core graduation requirements. This shift in 
emphasis, however, has often changed theobjectives of 
vocational programs. Instead of teaching skilled proficiency for job 
entry, some vocational programs focus more on teaching applied 
academics. Cutbacks on time in class has meant students are taught 
about an occupation rather than developing skill proficiency. Because 
vocational courses are electives, if their enrollments decline, the 
program is closed. That effectively closes the door to an occupation in 
that school or college.
    Third is a public misperception of these occupations as 
careers. The second-class stereotype of blue collar workers is 
alive and doing damage. Too often, the public does not see the 
financial rewards of these occupations, nor do they see the 
career paths that lead from them. Vocational students that come 
from good vocational programs have career plans, and they have 
the skills when they graduate.
    By default, specific skilled training is being pushed to 
the postsecondary level. Here the average age of a student is 
28 or older. Their responsibilities are higher, and their 
budgets are tight. Postsecondary students are motivated and 
looking for ways to either start or change their careers.
    Now for some good news about training. The automotive 
industry saw a shortage of service technicians in their future, 
and they took action. This Committee would do well to study the 
AYES or Automotive Youth Education System. It is based on 
industry standards, manufacturer created, supported by the 
dealers--which are small businesses--and delivered through the 
schools. AYES puts 2 years of high school together with 2 more 
years at the postsecondary level and couples that with ongoing 
training and certification on the job. In short, they have a 
training system beginning with the recruitment and leading to 
continual professional development.
    Caterpillar has also created an intensive 2-year training 
program providing college instruction and on-the-job training 
for Cat dealer technicians. The point is, of course, 
Caterpillar was looking for a way to help small businesses, its 
dealerships who were facing technician shortages. The dealer 
service technician program is set to world-class standards and 
delivered through community colleges.
    In conclusion, I would like to tell you that SkillsUSA is 
conducting a nationwide awareness campaign this year called 
Building Skills for America. Our students are collecting 1 
million signatures from employers, employees and union members 
voicing their support for America's highly skilled workforce, 
also voicing their concern about the shortage thereof. We will 
be bringing those signatures to Washington in September, 2000. 
I hope we can count upon this Committee to recognize our 
students' work and the need of business and industry for a 
skilled workforce.
    Mr. Chairman and members of the Committee, I hope this bill 
will help small business, apprenticeships, colleges and, most 
of all, workers. Thank you for inviting me to appear before you 
this morning.
    Mrs. Kelly. Thank you very much, Mr. Holdsworth. I think it 
is really admirable that you are out there working right now in 
the schools with the students. That is where we have got to get 
them.
    [Mr. Holdsworth's statement may be found in appendix:]
    Mrs. Kelly. Mr. Murphy.

   STATEMENT OF PATRICK MURPHY, PRESIDENT, CREST ELECTRICAL 
COMPANY, ST. LOUIS, MO, ON BEHALF OF THE MECHANICAL-ELECTRICAL-
              SHEET METAL ALLIANCE, WASHINGTON, DC

    Mr. Murphy. Thank you.
    Mr. Chairman, members of the Committee, Ms. Kelly, Ms. 
Velazquez, my name is Patrick Murphy. I am the owner of Crest 
Electrical Company in St. Louis, Missouri. Crest Electrical is 
a family-owned business that has been operated since 1953. I 
have been the owner for 21 years, and I currently employ about 
220 electricians in the St. Louis area.
    I am a member of the National Electrical Contractors 
Association, NECA, and I am pleased to be here today on behalf 
of the Mechanical-Electrical-Sheet Metal Alliance to discuss 
the Skilled Workforce Enhancement Act.
    As a former member of our joint apprenticeship and training 
committee, I know firsthand the benefits of training excellence 
in the construction industry. I feel the quality of 
apprenticeship and training is important for my employees 
because it increases the speed and quality of their work, 
improves our customer relations, creates loyalty within our 
workforce and creates a pool of skilled labor to replace 
retired journeymen.
    Alliance contractors in my area have chosen to make a 
significant investment in the future of our industry. The three 
organizations of the Alliance are currently training 890 
apprentices and providing continuing education to nearly 3,000 
journeymen in the St. Louis area alone. The construction 
industry is currently facing a serious skilled worker shortage.
    The Alliance applauds Chairman Talent's initiative in 
attempting to promote and reward training programs in the 
skilled trades through SWEA. However, while we support the 
Committee's objective of helping small business develop an 
adequate, competent workforce, the proposal, as currently 
written, raises a number of issues and potential problems for 
Alliance employers, problems which could be resolved easily 
through some modifications in the legislative language.
    The multi-employer training system is the most cost-
effective way for construction firms of any size to offer 
extensive and comprehensive training to their employees. Multi-
employer training programs allow all construction employers, 
especially small businesses, to pool their resources to provide 
a quality combination classroom and on-the-job training 
utilizing resources that they, as individual employers, would 
not be able to afford alone.
    It is our understanding that businesses participating in 
collectively bargained multi-employer programs will be able to 
take advantage of the tax credit created by SWEA. However, this 
is not directly stated in the text of the legislation. We have 
been led to understand that this potential ambiguity will be 
clarified through report language, but we believe specific 
language in the bill itself is necessary in order to prevent 
any possible misunderstandings.
    Due to the critical level of skilled workforce shortage and 
to maintain consistency with the 1958 revenue ruling on 
deductible training expenses, we suggest allowing all employers 
who are party to an accredited joint multi-employer 
apprenticeship and training program to be considered eligible 
for the SWEA credit. This is particularly appropriate for an 
industry where the vast majority of the workforce may be 
working for one employer one day and another employer the next.
    SWEA already covers nearly all employers in the 
construction industry. According to the 1997 construction 
census, there were over 175,000 construction firms in the 
plumbing, heating, air conditioning, electrical and sheet metal 
trades. Of this number, only 339 businesses would not qualify 
for the SWEA tax credit.
    Simply because an activity is labeled apprenticeship or 
training program does not automaticallymake it so. Real 
training, especially in highly skilled trades, requires real effort and 
real commitment. SWEA uses Labor Department definitions for qualified, 
highly skilled trades. But it is unclear whether the measure fully 
adopts the equally important Bureau of Apprenticeship and Training 
definition of a qualified training program.
    This would not skew the program to only contractors using 
organized labor. Missouri, for example, has Bureau 
Apprenticeship Training certification for both union and non-
union training programs. St. Louis County has plans to require 
BAT-certified apprenticeship as part of its mechanical code 
requirements.
    Compliance with BAT certification is easy and 
uncomplicated. The Alliance suggests that in order to 
standardize definitions for training, compliance with BAT 
standards become a requirement for receiving the SWEA tax 
credit and appropriate industries.
    Alliance training programs which are exclusively multi-
employer in nature and which all are accredited through the BAT 
graduate an average of 80 percent of their enrolled 
apprentices. By comparison, other programs which use mixed 
methods for training graduate an average of only 20 percent of 
enrolled apprentices.
    SWEA limits the tax credit to programs that are a maximum 
of 4 years in length, denying the full benefit advantage to 5-
year programs. The Alliance feels this fails to address the 
very workforce development aspects intended by SWEA as rapidly 
advancing technology systems and facilities require more 
ongoing training. The Alliance strongly urges that 5-year 
programs qualify for the SWEA tax credit.
    Mr. Chairman, each of our organizations has invited you to 
tour our training facilities in your area. Thus far, your 
schedule has not allowed you to take advantage of this 
opportunity; and at this time we would like to renew our 
invitation and urge you to take advantage of it so you may see 
firsthand the type of instruction that is going on. Alliance 
firms have contributed to quality training in the mechanical, 
electrical, and sheet metal trades for over 50 years. The 
proposed SWEA tax credit would allow us to continue to enhance 
these quality training programs and to produce those 
desperately needed, highly skilled workers in response to the 
current workforce shortage.
    Thank you for the opportunity to testify, and I would be 
happy to answer any questions.
    Mrs. Kelly. Thank you very much, Mr. Murphy.
    [Mr. Murphy's statement may be found in appendix:]
    Mrs. Kelly. Mr. Pence.

STATEMENT OF RANDALL G. PENCE, CAPITOL HILL ADVOCATES, INC., ON 
 BEHALF OF THE NATIONAL CONCRETE MASONRY ASSOCIATION, HERNDON, 
                               VA

    Mr. Pence. Thank you, Mr. Chairman and members of the 
Committee.
    My name is Randall Pence. Thank you for your invitation to 
testify this morning on behalf of my client, the National 
Concrete Masonry Association regarding the Skilled Workforce 
Enhancement Act.
    NCMA is, frankly, in the same position as the ARI witness 
was in a few minutes ago. We don't really represent the people 
who install concrete masonry, but we do represent the people 
who produce it. So the financial interests examined here for 
NCMA are really tangential to what is happening here today, but 
we do have an intense interest in seeing that the products are 
installed competently in the future.
    The highly skilled workforce in America is indeed in 
jeopardy. You have heard that to a great extent today. 
Workforce recruitment is a prime topic in nearly every business 
confab in the industry. It casts a shadow on Main Street. Its 
impacts are being talked about on Wall Street. It is destined, 
we hope, to become an issue at both ends of Pennsylvania Avenue 
quite soon.
    Employers in every district in America share this key 
concern for the future of their businesses. They know that 
without skilled workers there is no skilled work. They are 
focused on our action here today.
    There is already major support for H.R. 1824, and that 
support grows with every industry executive who hears about it.
    Without question, the need to increase the number of new 
masons is the foremost issue confronting the masonry issue 
today. A highly skilled, qualified mason is essential to 
competently erect a structure using masonry. Without a mason, 
there is no masonry structure. Period. The trade of masonry, of 
course, is feeling the pinch as much as any other industry 
dependent on highly skilled workers.
    Let me offer some facts and figures important to the 
masonry industry. According to the masonry industry's most 
recent study, the U.S. suffered a shortfall of at least 6300 
workers in skilled masons in 1995 and perhaps up to as many as 
13,000. Further, the shortfall has been growing steadily since 
that time. At the same time, the average age of masons and the 
average age of new mason apprentices are both rising rapidly. 
In one recent 5-year span, census figures and industry data 
showed the average age of masons rose from 37.7 years of age 
into the low 40s.
    Now, what is most disturbing about these numbers is that 
the industry may actually be underestimating the speed of the 
growing problem. There is clear evidence of upward age 
concentration in the industry. This signals an upcoming cluster 
of retirements. The acute impact on the industry could be 
enormous at that time.
    Studies also show that the average age of new apprentices 
entering the trade is rising as well. The masonry trade is 
missing the high quality high school students in that critical 
period immediately following graduation when career paths are 
traditionally chosen.
    Costs, of course, are also a key limiting factor for 
training among masonry and small businesses. NCMA estimates a 
cost in the range of 25,000 to $40,000 per year to train a new 
mason. Survey data shows that H.R. 1824 could indeed have a 
strong positive impact on the cost equation. Respondents say 
that this bill would allow them to take on an additional three 
to four apprentices per company on average.
    Now, spread across the entire country, this bill could go a 
long way toward reversing the disturbing trends we have been 
talking about this morning.
    Regarding some key issues in the bill, some may suggest 
that H.R. 1824 be limited solely to BAT certified programs or 
that a similar restriction be added. NCMA respectively does not 
support such a provision at this time. We recognize that BAT 
certified union programs do a fine job of training masons. 
However, there are also many training programs run by industry 
without BAT involvement oversight or standards. These programs 
produce fine masons as well and should be fully eligible for 
the H.R. 1824 tax credit.
    Both industry and labor programs have strong support in 
NCMA. The only problem is that both are not producing enough 
masons to satisfy demand. It is that problem that H.R. 1824 
attacks in a comprehensive and inclusive manner.
    At this time H.R. 1824 does not discriminate. It is labor/
industry neutral and that is a key point to solidifying and 
maintaining the growing support for H.R. 1824 outside the 
Beltway. NCMA sees a great deal of wisdom in that approach and 
we hope to see it retained.
    Further, on an issue that I know was brought up before to 
the previous panel regarding multi-employer training facilities 
being eligible, let me say for the record that NCMA supports 
the proposal to ensure that multi-employer training facilities 
will indeed be eligible for the act.
    Mr. Chairman, before closing, as a former Senate staffer, I 
think it is important to recognize those who suffer for our 
benefit. Over the last several months I have had the pleasure 
of working with Ligia McWilliams and Melissa Decker. Their 
strong support, their professionalism and hard work has been 
instrumental in propelling this bill forward. We all appreciate 
their skillful work.
    In conclusion I would like to urge the Congress to consider 
the skilled workforce in America as an important national human 
resource that needs maintenance. We ask that Congress pass H.R. 
1824 this year and start rebuilding the skilled workforce as 
quickly as possible.
    Once again I applaud your strong action and foresight on 
this issue and I appreciate this opportunity to share my views 
for the National Concrete Masonry Association on H.R. 1824.
    [Mr. Pence's statement may be found in appendix:]
    Mrs. Kelly. Thank you very much, Mr. Pence.
    I am going to hold my questions and go to Ms. Velazquez.
    Ms. Velazquez. Thank you. Mr. Gooding, in your testimony, 
you mentioned that you like to see the minimum number of 
training hours required for the tax credit under this bill 
reduced from 2,000 to 1,500 hours to be more reasonable for 
your industry. Could you please explain why this request would 
be more reasonable and then whether you want a change be made 
across the board or just specifically for the roofing industry?
    Mr. Gooding. The reason I would like to see this change is 
because many of the contractors, particularly members of NRCA, 
work in northern climates and unfortunately they just cannot 
get the hours in. When you get north of the Mason-Dixon line--
we are fortunate. We are in southeastern Pennsylvania and we 
have no problem getting the 2,000 hours but even in the 
northern part of our State, it becomes almost impossible 
because of the cold weather to contend with. But that also 
involves the other trades such as masons and sheet metal 
mechanics and anybody who is working outside, they are going to 
be limited with bad weather. You even go out in the 
northwestern States, they have the same identical problem.
    Ms. Velazquez. Well, reducing----
    Mr. Gooding. So I think it should be reduced not 
necessarily just for our trade but for all trades.
    Ms. Velazquez. But don't you agree with me that we will be 
cheating the workers of valuable training? Would you feel 
comfortable the 1,500 hours will be enough to really have the 
workers trained in that field?
    Mr. Gooding. I think the 1,500 hours may be enough but then 
the program, in particular our case, the roofing, we have 2 
years. Maybe that would have to be extended to 3 years to get 
the hours, get the training involved. Instead of limiting it to 
a 2-year program, possibly a 3-year program in that particular 
case.
    Ms. Velazquez. Do you feel comfortable that 1,500 hours 
will provide----
    Mr. Gooding. I view in our particular case in our trade.
    Ms. Velazquez. What about the other fields?
    Mr. Gooding. I can't honestly speak for the other fields.
    Ms. Velazquez. What you are telling me you don't feel sure 
that this should be made across the board?
    Mr. Gooding. I guess you are correct in that statement.
    Ms. Velazquez. Thank you.
    Mr. Holdsworth, it is my understanding that under current 
tax law, businesses may deduct costs for training if they are, 
quote, ordinary and necessary expenses paid or incurred in 
carrying on any trade or business. The Tax Code includes as the 
cost of doing business employee salaries and training costs if 
they qualify as ordinary and necessary. Would you please 
explain to the Committee why the current law falls short in 
providing the necessary incentive for businesses to train 
unskilled workers?
    Mr. Holdsworth. Representative, I am afraid you have asked 
me a question I am wholly unqualified to answer. I know nothing 
about the tax law relative to this education. I came to speak 
strictly to the need in education and the supply of people 
coming through the system, but as to this customary and 
ordinary, I do not know anything about it.
    Ms. Velazquez. Okay. Thank you.
    Mr. Murphy, in terms of years, how long are the 
apprenticeship programs in the industry groups you are 
representing here today?
    Mr. Murphy. I can speak specifically for the electricians 
is a 5-year program and I believe that the sheet metal and 
pipefitters, plumbers, they are all 5-year programs.
    Ms. Velazquez. Can you please estimate the graduation rate 
for the apprenticeship program for the industry groups that you 
represent?
    Mr. Murphy. As I said in my testimony, in the multi-
employer plans which I represent, overall is greater than 80 
percent. I know in our area in St. Louis, our rate is probably 
over 90 percent.
    Ms. Velazquez. How is the graduation rate monitored?
    Mr. Murphy. It is monitored by the Department of Labor. 
They are a regular participant in our plan but through the 
number of people that come into the plan, those that graduate, 
we follow and keep statistics on them.
    Ms. Velazquez. Thank you.
    Mr. Pence, you already answered my question in your 
testimony. Thank you.
    Mrs. Kelly. Thank you very much, Ms. Velazquez. I am going 
to go--I would like to go back to the issue that Ms. Velazquez 
raised, Mr. Gooding, about the number of hours, cheating 
workers. Since I live in the Northeast and since my husband is 
in--as you heard earlier started with a hammer in his hand, I 
know that there are a lot of workers that can't get out there 
on the roofs, that can't get out there doing a lot of things in 
bad weather. And you can't train them on the job in bad weather 
because it is a hazard. So my question to you is, do you think 
that this bill, we might want to try and tweak this bill a 
little bit to allow some flexibility in there somehow so that--
because right now you can get credit up to 4 years. If you can 
get credit for up to 4 years, should we perhaps think about 
helping folks who are affected by certain things like weather 
conditions or suppose a major flood in a river somewhere else 
in the Nation, if they can't get it in in 1 year or 2 years, 
then they could extend 3 years or 4 years. So I don't see how 
workers are being cheated here if we have it in the bill at 4 
years and I am asking you really do we need to tweak this bill 
or is it okay as it is?
    Mr. Gooding. I would like to see it tweaked. I really 
would. I feel right now when we havebad weather, we are 
training some of our individuals but here again, we are very fortunate 
in our particular area. I think by tweaking the bill, giving the 
contractors the ability to stretch that program out to the 4 years, you 
will end up with skilled mechanics.
    Mrs. Kelly. That is really what we are after.
    Mr. Gooding. That is all we are after. We are looking for 
people to fill those spots.
    Mrs. Kelly. I just wanted to make sure that that was 
sensible.
    Ms. Velaquez. I would just like to, if you allow me to 
follow up with another question that is related to the one that 
you just asked. Mr. Murphy, don't you agree with me that we 
should change the bill to include those 5-year programs?
    Mr. Murphy. Absolutely. Our programs are a major investment 
on our part for all 5 years and we certainly feel as though it 
would be appropriate if your program is 5 years to have the 
credit available for all years that you do spend training.
    Mrs. Kelly. Thank you.
    Mr. Murphy, since we are at you at this point, I am going 
to skip over and just--Mr. Holdsworth, I am coming back to you. 
Right now I just want to ask Mr. Murphy a couple of questions. 
I have got to get to your testimony here because there are a 
couple of things I wrote myself notes on. You represent the 
Mechanical-Electrical-Sheet Metal Alliance people, right?
    Mr. Murphy. Correct.
    Mrs. Kelly. I actually have seen some of the--union 
training programs in my area; they have been for other trades 
but I think they are just great programs. They are very good. 
My question is really about the BAT standards. What makes the 
BAT program the--I am interested in why the BAT program is the 
one set that you recommend rather than having a lot of people 
have an input? I think that we are finding that the training 
itself benefits from having a lot of people involved and 
certainly the union programs benefit from having a lot of 
people working in and out of the training programs, having the 
trainees go out to a lot of different people. And I am 
interested in why you think that this--we should have 
everything fall under the BAT. It is one of those things that I 
think--I am trying to grab my question here. It is really--it 
really is a question of industry standards and I am worried 
about there being a national standard versus the industry 
standard.
    What I am trying to drive at, in various parts of the 
country standards are different. If we have something that is 
imposed from the top, it gives no ability for those folks down 
below to have a say in what their people are being trained at. 
That is really what I am after.
    Mr. Murphy. I think I understand where you are going. 
Certainly we are looking for real training to take place and 
not just the term of a trainee or an apprentice. We feel it is 
very critical if this tax credit is going to be available that 
companies that receive the credit are in fact doing the job 
that they should be doing and doing real training. The BAT 
standards do recognize, I believe, somewhere in the 
neighborhood of 800 different training programs in the country, 
trade programs and if someone has a program and wants to take 
it to the Department of Labor, the Bureau of Apprenticeship and 
Training for certification, they can certainly do that and that 
is an open process. Our concern is simply that we don't want 
people that are not doing a good job and are not doing an 
adequate job of training to receive credits for very minor 
amounts of training. It is very easy to call someone a trainee 
and provide very limited training--in other words in our 
program, I pay out of our company funds for our people that 
attend school one day a week during the day. It is a full-day 
program and I pay their salary as if they are at work so that--
I am getting four days of work out of a five-day week with our 
apprentices and we also contribute 30 cents per man-hour. Our 
company is spending over $200,000 a year direct out of pocket 
on training for our employees. And it is a very large expense 
and I want to be certain that, you know, we are held to certain 
standards by the Department of Labor in our program. I want to 
be sure that anyone receiving this credit, we all do, we want 
to see them--be sure that they are doing the job that you want 
done.
    Mrs. Kelly. Mr. Murphy, I have a real hard time grasping 
the concept that anybody with a training program would be 
training at a lesser level. That just doesn't make sense to me. 
They need highly skilled workers. Why would they train at a 
lower level. I want to ask Mr. Pence and Mr. Gooding really the 
same question that I asked Mr. Murphy if you can figure out 
what that question was. I know it was long.
    Mr. Pence. I think we would find--we have talked today 
about one specific program, the BAT certification program, 
under the Department of Labor. I think if you keep the record 
open for the next 10 days or so, you are going to be flooded 
with letters from other entities, industry entities out there 
who will say--hold their hands up and say, ``we have the best 
program'' or ``we have a very good program and we should not be 
cut out''.
    I think everyone here in the room today is in agreement. 
Nobody is interested in funding or supporting sham programs or 
programs that are not doing a very good job of training people 
for any specific skilled occupation. For example, in the 
masonry trade, if you have somebody who doesn't know what he is 
doing building a wall, you can imagine it is not going to be a 
very good showcase for the industry. That wall may come down. 
After the mortar is dried, you have a mess. So it is something 
you strive very hard to avoid in the industry for cost and 
other reasons. So I think we are all in agreement we are 
talking about good training. I think also to the issue of the 
1,500 hours which I think we need to flesh out further before 
we leave today, that we are talking about serious high-quality 
training programs. The question is who has the best program. We 
would submit that nobody really has the single best program.
    Going through your press clips in the packet that staff has 
provided you, you will notice some programs that actually go 
beyond the BAT standards in some cases. I recall reading one 
article about a program that required I believe 200 hours of 
training instead of 144 as required under BAT. Under the flimsy 
rationale that more is always better, perhaps that should be 
the standard we should adopt. Rather than institute this 
automatic friction between labor versus non-labor programs, 
there might be a middle ground here talking about a certain 
baseline of criteria that people should follow to ensure, if 
that is the major concern of the Committee, to ensure that we 
are not talking about sham programs. We are talking about bona 
fide serious skilled workforce training programs that should be 
deserving of this tax credit. I think there could be some work 
we could do there. But I think to avoid the issue that cleaves 
between the labor and non-labor world, we might be able to stay 
away from a specific industry standard or specific BAT standard 
with all the problems that comes with that kind of delineation.
    Mrs. Kelly. Thanks very much, Mr. Pence.
    Mr. Gooding?
    Mr. Gooding. I also agree with Mr. Pence. I think it is 
incumbent upon the industries themselves to develop this 
curriculum. We are out there. We are not interested in the sham 
program at all. We need to train skilled workers and we are 
going to do everything within our power to make sure it is done 
properly. Similarly, he has a problem, if he builds a wall and 
it falls down, he has got a major problem. If my people don't 
install a roof properly, we have a lot of problems, a lot of 
interior damage which is very costly to me. So it is really 
incumbent uponme to give them the best training possible and we 
are constantly doing that and we just want the ability through this act 
to be able to take unskilled people and work with them and give them 
that opportunity to become skilled craftsmen.
    Mrs. Kelly. Thank you very much, Mr. Gooding.
    Mr. Pence. Could I bring up one other issue very quickly 
while we are still on this. Another issue that was brought up 
with the last panel was the issue of accountability. And 
obviously accountability is always something we want to make 
sure how you fulfill missions and so forth. It raises for me, 
just looking at the proposals we are talking about today, who 
we would be accountable to in this particular case. I think 
that is going to also require some serious thought because that 
is another area where you have this natural cleavage between 
the labor union versus non-labor world, which is what I would 
suggest we all try to avoid for the betterment of everybody 
here. Everybody at the table is going to benefit from passage 
of H.R. 1824 with the amendments we are talking about today and 
we should try to avoid these other issues. So I think in terms 
of determining a body to whom to be accountable, that is going 
to take some work as well.
    Mrs. Kelly. Thanks, Mr. Pence.
    Mr. Gooding, just one quick question. Is this program that 
you run certified by BAT?
    Mr. Gooding. The one we are running in Pennsylvania is 
certified by BAT but we are also intermixing the NRCA modules 
as well. We are trying to pick and choose what is best for our 
locale. Our roofing practices that are done in Pennsylvania may 
be completely different in some aspects to what is done in 
southern California. So we have 31 modules to choose from. We 
may only as a contractor in Pennsylvania use 25 of those 
modules and they may use a different 25 somewhere else in the 
United States.
    Mrs. Kelly. You are finding a certain flexibility works for 
you.
    Mr. Gooding. Absolutely. We need to have flexibility.
    Mrs. Kelly. Mr. Murphy, would your number of workers, do 
you think, increase if we were able to give this tax credit?
    Mr. Murphy. I certainly think there would be more incentive 
for the businesses to employ additional apprentices. We have 
unfortunately some businesses within our contractor group, some 
companies that don't like to hire apprentices and bring them in 
because they feel I am paying for the school time and I am not 
getting work all the time so I will let somebody else do the 
training and I will get them after they are already through the 
program. So I think this would encourage more companies to 
participate in the program and hopefully expand the 
opportunities for the apprentices.
    I want to go back just a second on the BAT thing. For 
instance, in Missouri there are both union and non-union BAT 
certified programs. Just so you understand, BAT operates in all 
50 States. There are offices in every State and they are out 
there and this is a program that is already in place and it is 
working and they are certifying people so we don't have to 
create anything to certify.
    Mrs. Kelly. Yet Mr. Gooding is finding it better to have a 
little flexibility drawn into there. That is probably worth our 
looking at. Do you have a shortage right now, Mr. Murphy, of 
workers in your business?
    Mr. Murphy. We certainly do. It is limiting our abilities 
currently to take on additional work. There are jobs in St. 
Louis that are having very few bidders and sometimes no bidders 
simply because everybody is busy. We have--out of our workforce 
right now we have 20 workers that are from out of State that 
have come, travelers as they are called, that are in St. Louis 
right now working from all across the country are coming in and 
taking jobs in St. Louis simply because their areas are slow at 
the time.
    Mrs. Kelly. I want to ask you a minute about the business 
of the tax credit versus tax deduction. And that is what I was 
digging in my notes here as I was reading your testimony, I had 
written this note last night. I want to know, I know because of 
my experience in the field within my own family that not all 
businesses take this tax deduction and I wonder if you can tell 
me what you think is the reason.
    Mr. Murphy. They do not take----
    Mrs. Kelly. In your testimony, you say that simply put, all 
businesses may deduct their costs of training under current tax 
law. I am quoting from your testimony. But all businesses don't 
do that and I am wondering if you can tell me why you think 
they don't.
    Mr. Murphy. I would have no idea why you wouldn't. For 
instance, in our case, the wages that we pay the apprentices 
while they are in school and the funding that we put into the 
apprenticeship program on a cents per hour basis, those are all 
deductible as part of our labor costs on the jobs. And then 
beyond that, our safety training programs we do and other extra 
classes and things that we send people to, those are all 
deductible items for us. Frankly, I can't imagine why a 
business wouldn't unless they are just sloppy and not taking 
advantage of what is out there.
    Mrs. Kelly. Could I throw that out to the rest of the panel 
here. I have my own supposition here but perhaps somebody here 
would like to answer that.
    Mr. Pence. Sometimes you don't take a deduction because you 
are not making money against which to deduct it, which is not a 
good situation. Section 162 is available to anybody, multi-
employer or non-multi-employer for all training costs. One 
thing I would say is that with section 162, the above-the-line 
deduction for employment costs and training costs does apply 
across the board. That is one of the issues I discussed with 
staff previously. If you choose to allow a BAT only standard 
for the tax credit, we think it would be something in the 
nature of setting a precedent or dividing up the benefits 
whereas above the line on section 162, labor union and industry 
training programs today can all deduct those costs. By changing 
H.R. 1824 to a situation whereby only BAT-certified qualifies, 
I think it is a substantial difference from the existing law it 
is today.
    Mrs. Kelly. Mr. Pence, have you any idea what the average 
amount of tax deduction is that businesses currently take on 
these training programs?
    Mr. Pence. My understanding is it is full deductibility, 
all costs for employment or training costs. Other tax experts 
in the room or from JCT might be able to answer that question 
but in terms of the actual dollar amounts how much companies 
normally take, I would suggest they take the maximum possible 
which would be the full employment cost.
    Ms. Velazquez. Chairwoman, I would like to ask a question.
    Mrs. Kelly. Yes.
    Ms. Velazquez. Mr. Murphy, I would like you to explain or 
Mr. Pence, when you say that businesses deduct employees' 
salaries and training costs, why then this legislation is 
necessary to provide the type of incentives to train unskilled 
workers?
    Mr. Murphy. I think what we are trying to do is trying to 
expand the opportunities and as I said earlier, trying to 
encourage people to take in additional workers. Hearing some of 
the earlier testimony about people trying to hire for their 
companies, I got the impression they were tryingto hire people 
that were already trained by somebody else. What we are trying to do is 
we are trying to encourage--rather than advertising for a skilled 
position, we are trying to--in our case we take kids from high school 
and college and beyond and bring them up and raise them up to the level 
that we are after and so we are trying to encourage companies to do 
more of that training.
    Ms. Velazquez. Mr. Pence.
    Mr. Pence. As a matter of the Tax Code, tax credits are 
always worth a great deal more than tax deductions above the 
line. The tax deduction above the line is always subject to 
other provisions that may--adjustments that may reduce the 
value of your tax deductions. The below the line tax credit is 
a dollar for dollar reduction in your taxes. So it has a much 
greater financial impact on the company to take the tax credit 
as opposed to a tax deduction.
    Ms. Velazquez. Thank you.
    Mrs. Kelly. Thank you. I have just got a couple more 
questions here. Again, I have been--I understand from Mr. 
Murphy that you think that we need to explicitly state that 
multi-employer programs are going to be covered in this bill. I 
believe I read that in your testimony. It is my understanding 
that House legislative counsel clarified that multi-employer 
programs for training apprentices are going to be eligible to 
receive the SWEA tax credit and so I am not sure why we need to 
explicitly state this. Can you answer that?
    Mr. Murphy. I think one of the issues that we had with that 
was that the--we have some employer--some of our larger 
employers and I talk about the quantity of these companies, out 
of 175,000 companies that are in the trades that I represent, 
there are only 330 or so that are above this 250-employee 
level. In other words, we have a lot of very small businesses 
but the larger companies as well, the few that there are, we 
would like to see them included. They contribute to this 
program as much as we do on a cents per hour basis and we would 
like to be sure that they can also receive the credit and since 
they are funding it just like any of the other members.
    Mrs. Kelly. Thank you.
    Mr. Holdsworth, I told you I had a question for you. As a 
nonprofit educational organization, you can't lobby Congress 
for this bill but you are here today to give us some 
educational information and I am glad of it because I think we 
really need it. Do you support the concept of this legislation 
and do you think it can help alleviate the current shortage of 
the highly skilled trades?
    Mr. Holdsworth. Yes, I personally do. I liked what I saw 
here very much. I am not as I said earlier conversant in the 
Tax Code as you have got some other people up here that are 
much better at that than I. But I do see the need and I do look 
for solutions, and I personally see something here that is 
needed. We have people who do need training and we don't get a 
highly skilled workforce by simply putting them on the job or 
running them through a simple high school vocational program. 
We at the vocational level view ourselves to be entry level 
preapprenticeship training. Apprenticeships are where the 
rubber really meets the road in this country in terms of high 
skilled workers. So if this legislation is something that is 
going to help develop that kind of activity, I am all for it.
    Mrs. Kelly. Thank you very much. One final question for 
you, Mr. Pence. Is the shortage of highly skilled workers as 
acute as the shortage of lesser skilled workers and how do the 
costs of the training of the highly skilled workers compare 
with those of the training of lesser skilled workers?
    Mr. Pence. It is an interesting dynamic out there because 
we see lots of news reports about skilled and unskilled workers 
on the news these days. One of the issues we try to impart in 
our testimony is that the issue of skilled workforce training 
and the shortfalls that develop in skilled workforce training 
is really a more intractable issue, and from an economic 
standpoint we think a more dangerous issue, that needs 
attention on a rapid basis. The reason is these are not 
programs that can be solved by having a weekend job fair and 
putting somebody on board. These are training programs that are 
in all cases, and under this legislation before us today, last 
for a period of years, at least 2 years and up to--if the bill 
is changed, up to 5 years. So it is going to take a long lead 
time to get people into the system and get them trained. You 
are going to have to pull off skilled workers off their 
profitable jobs and put them on to overseeing in many cases the 
new trainees coming into the program. So it can take 2, 3, 4 
years before you really see the fruits of today's recruitment, 
skilled workers that you can send out on their own to work on 
the most profitable jobs in the economy today.
    If I could take care of one matter here before we leave 
this issue. We talked earlier at the very first part of the 
questions about the hours to change from 2,000 to 1,500. When 
you work on legislation, you find out things you didn't know. 
Our intent was to come up with a program that would benefit 
full-time training programs. We operated under the assumption 
that that meant 2,000 hours per year, a number which seems to 
have come into the vernacular of work life these days. After 
doing research with IRS and other elements of the government, 
we found out there is no requirement in law for 2,000 hours as 
defining full-time employment. So we had a bit of a conundrum 
here. We might have had the 2,000 hours in the bill with no 
real rationale or reason for it to be there.
    We also talked about the issue of some of the industries, 
including the masonry industry, being conducted outside and you 
are subject of course to weather delays, things beyond control. 
So we were searching for a mechanism or a criterion that would 
keep us in the range of serious full-time employment designed 
to create skilled workers that are going to be in the career 
for many, many years. Serious employment. And we came up with 
the idea that 1,500 hours might be the appropriate threshold 
meeting with the weather delay problems that some of us face 
but still being--somebody who is working for 1,500 hours is 
certainly not a part-time employee and is probably working 
toward a career in that particular trade. So that is the 
genesis of coming up with 1,500 hours. We support that at NCMA 
and would like to see something along those lines put in the 
bill to take care of all the problems we just addressed.
    Mrs. Kelly. I think that what you have said is very 
interesting and that is really what we were talking about here 
with Mr. Murphy and Mr. Gooding. I think that it would be 
interesting to hear from Mr. Murphy and Mr. Gooding in light of 
what you just said. Would you like to respond to that, Mr. 
Gooding?
    Mr. Gooding. I agree completely that the 1,500 hours would 
work out perfectly in our trade, especially with some of the 
contractors in the areas we talked about previously. I mean, 
our problem is really just getting--we can't find skilled 
workers period in our trade so we have to start with unskilled 
and train them, but my problem is that I am not looking for an 
awful lot. I am looking for somebody that has a desire to work, 
that are not on drugs, they have a pulse and they are willing 
to climb a ladder. That is all I am asking. I can't get them 
but if I had this tax credit, it is going to give me the 
impetus as well as other contractors to get out there and 
accomplish this. We are not asking for a lot in our particular 
industry but this act would be great to help get those 
contractors out there and get these people off the streets that 
are underemployed and get them in our workforce.
    Mrs. Kelly. Mr. Murphy, do you want to address that?
    Mr. Murphy. Yes, I think my only concern with the 2,000 
hour limitation is I agree what we are trying to do here is 
full-time programs and if I look at situations where we work 40 
hours a week in our trade, we do not have makeup days for 
Saturday if it rains and many of the outside trades do. It 
would be very easy for someone to miss a week's time throughout 
the year somewhere and if now we fell in and it became that 
they worked 1,960 hours, you know, I would hate to lose the 
credit over having missed a week's time over a period of a 
year. In construction, it is very frequent that you will have 
some lost time due to conditions beyond your control, so I do 
want to be certain that we have--that we are covered for minor 
missed time throughout the year and we have some flexibility 
and we are not oh, gee, you only have 1,875 hours this year, 
you don't get the credit and that would be a shame.
    Ms. Velazquez. Can I ask another question. What is the 
magic in the number of 1,500? Where do you get at that number? 
Why not 1,700 or 1,600, 1,650. Why 1,500?
    Mr. Pence. I think among the coalition of staff who have 
been working on the issue, there was a little bit of a ballpark 
guess involved in this due to talking with the members of the 
associations and understanding that there is a bit of a track 
record here. The idea here is not to create a tax credit that 
somebody is going to lose inadvertently. The feeling is that 
1,500 hours is going to at least meet the threshold of serious 
employment but is not going to force you to lose the credit 
because of unforeseen consequences.
    Mrs. Kelly. I would like to reclaim my time for a minute. 
Are you finished?
    Ms. Velazquez. With your knowledge of the Department of 
Labor standards, would you think that that would conform with 
what they have in place?
    Mr. Murphy. The 1,500 hour would conform?
    Ms. Velazquez. Yes.
    Mr. Murphy. Frankly, I don't know. I would have to get back 
to you on that.
    [The information may be found in appendix:]
    Chairman Talent [presiding]. The other gentlelady from New 
York.
    Mrs. Kelly. I am interested in this hour situation from 
another standpoint and that is if you are taking people who are 
having to learn a skill and become skilled, what amount of 
hours--has anybody done any studies that you know of, Mr. 
Pence, that indicate the number of hours after which somebody 
is going to look at that training program and say, hey, I just 
cannot do it, that is too long? There is a discouragement 
factor that can be built into that training I think and we have 
to be cognizant of that as well.
    Mr. Pence. Are you talking about the psychological or 
marketing aspects to the trainees?
    Mrs. Kelly. I am thinking about Mr. Holdsworth here who is 
talking about going into schools and training and reaching 
people and we were talking earlier about reaching out to people 
in schools saying look, you can do this, you don't have to go 
to college to do it. This is a good trade. You are going to 
make a lot of money in this, really doing the kinds of PR that 
we need to try to bring people into the trades, but if they 
then are told, if you join this trade you are going to have to 
go out and put in 5 years of 2,000 hours every single year, are 
you talking about a lot of hours? And people may look at their 
lives--I am thinking about my kids. I am thinking that they may 
look at their lives and say, I am just not going to put 10,000, 
20,000 hours into this job. I want the job. It is a good job 
but I am not sure that that amount of training--that I want to 
take that much schooling.
    I don't know, Mr. Holdworth, you may want to jump in here 
too.
    Mr. Holdsworth. I do have this observation which is 
probably not a very good one to make at this moment. There is 
something about seat time and competency. Seat time doesn't 
assure competency. There are some people who are going to learn 
something in a hundred hours and it is going to take somebody 
else 300 hours. So it seems to me that the standard that we 
probably should be looking at--instead of the traditional 
education model of somebody sitting in a seat for a semester--
and rather ask what are the standards that we are working 
toward and has that individual achieved that competency? It 
becomes a little more difficult.
    It is easier within your legislation to say X number of 
hours covers everybody. You don't have to get into some of that 
standard stuff. But I don't like to leave it on that seat time 
because you are right, there are going to be students who are 
going to say, man, that is a long time. On the other hand, I 
know that there are apprenticeships, National Tooling & 
Machining Association for example has their apprenticeships, 
the students are going to school full-time during the evening 
and they are working full-time during the day. So their college 
is being paid for and they are getting their apprenticeships. I 
certainly hope this legislation would cover that kind of an 
arrangement.
    Mrs. Kelly. I just watched my husband study as a journeymen 
carpenter with that hammer in his hand and it was a long time.
    Mr. Murphy. Addressing your issue over the 5-year period 
now, in our program, when an apprentice comes in they start out 
at a base wage. Then every thousand hours as they progress 
through the program they get increases until they reach their 
full journeyman status after 10,000 hours of training. The 
first 2\1/2\ years they spend the day a week in school and it 
is not just in a chair. We have labs where there have been pipe 
and pull wire and makeup control modules and do fiber-optic 
work and telecommunications work and so forth. So there is a 
lots of hands on and book learning. And then we have grades. 
This is like regular school. You have tests and grades and you 
have got to pass or you get out of the program. It is a regular 
schooling program but you have one day a week for 2\1/2\ years 
in school and then the rest of the time you are on-the-job 
training.
    Mrs. Kelly. But you are saying you also get a carrot at the 
end of that stick so to speak. You get more money as you get up 
in the program.
    Mr. Murphy. Every thousand hours you are going to get an 
increase in your wage.
    Mrs. Kelly. Thank you.
    Chairman Talent. I thank the gentlelady and I want to just 
say I regret not being able to be here for most of this panel. 
I had another hearing that was getting on. I do understand that 
you covered most of the issues and I am not going to make 
everybody rehash them. We will leave the record open for 10 
days if people have additional questions and we will continue 
working on this bill and those who want to go can.
    One thing I want to get into and maybe refocus this hearing 
right at the end, let me ask you all, what do you envision 
happening if we don't do something effective in the government 
to help you with this? What solutions are you going to be able 
to develop or are you going to be able to develop? As this 
problem pinches more and more, what are we going to see? 
Businesses going out of business? Businesses not expanding? Let 
me just--sitting here as a person who is not always in love 
with government solutions, is the market going to come up with 
something if we just sit tight and do nothing? Are you all 
going to be able to figure out some way around this? Tell me 
what is going to happen where you see the current trends taking 
us unless something changes it, and whether you think something 
might change it outside of some government actionand then I 
will let you all go run your businesses.
    Mr. Murphy. What we are seeing in St. Louis happening is 
projects are taking longer to come on-line. Buildings will get 
to a point and we will need iron workers, sprinkler fitters, 
pipefitters, whomever, and they simply aren't available. So we 
are stretching out the time on the jobs, whether it takes 2 
years to finish a job instead of 18 months. There is financial 
impact there on the owner and on the revenue generation from 
that building.
    So I think that that is one of the things that you will 
see. I mean, things are just going to take longer and what we 
have seen over the past 10 years is people want buildings 
faster and faster and faster, and if we start going backwards 
on that, they are not going to be very happy with that and 
perhaps do less building and find other ways of making it 
happen.
    Mr. Pence. I would have to say in most cases you are going 
to see it is going to be Economics 101, things we learned about 
in the first year of economics in college. You are going to see 
inflationary factors as we have to increase wages to attract 
more people and keep people in the skilled occupations. We are 
going to see--somebody mentioned earlier this morning and I 
think it is absolutely correct--employee burnout because you 
are going to see a lot more people, the ones who are working, 
are going to be working more overtime hours. That is good for 
the paycheck in the near term. In the long term I am not sure 
it is best for that worker. We will see construction delays and 
cost increases.
    One factor I think we have to keep in mind here in 
Washington, D.C., is that one of the biggest customers if not 
the biggest customer out there is the taxpayer. At the local, 
State, and Federal levels, government construction is one of 
the major costs for the taxpayers. So anything that increases 
construction delays and the appurtenant cost increases in 
government construction as well as in the private sector is a 
major concern to all policymakers at all levels of government.
    Chairman Talent. Mr. Holdsworth, you want to comment?
    Mr. Holdsworth. Of course I come at it from the education 
side. I am going to add here that you are going to see issues 
in terms of quality of what is produced. We have heard that 
referenced in an earlier panel this morning and I concur with 
that. I have heard that from industry. They say: ``Our problem 
is our products are not being appropriately applied''. I am 
very concerned when I see the recruitment side of things in 
this country in vocational education. We are seeing students 
who are not being encouraged to go into vocational education. 
You talked about government a moment ago and I realize 
education is not really within the purview of this Committee, 
but we have education policy in this country and practice that 
has tended to discourage young people from going into these 
occupations. As a matter of fact, there are occasions when if 
we stop and look at it, education is encouraged to keep 
students within their own high schools, for example, rather 
than sending them off to the area vocational center because 
they keep the tax dollars right there at that school.
    So what we have seen--and I have heard this a long time 
from industry--is ``My goodness, the people that they are 
sending over for vocational training are the ones that the 
schools basically will pay to send there. They call them `road 
scholars' ''. They are the ones administrators will pay to get 
rid of, put on the road and send someplace else. When we are 
drawing from a shrinking force of qualified people, the quality 
is going to fall apart. We also are going to have a vision of 
what a skilled worker and it is not very good.
    I will take also this observation. I am working with 
students all of the time. They look at a high-tech computer-
driven economy, people making money on IPOs and so on. Let's 
face it, a lot of the students who we want to go into 
vocational education are the sharp ones and they have got lots 
of options today they didn't once have. They say; `` I can go 
on over here and make a bundle instead of doing that''. So we 
have got to find some way to make it attractive to be over 
there and that is becoming a very, very difficult problem, I 
think, for many of these industries.
    Chairman Talent. You don't see, I take it, from your 
comments anything on the horizon out there where you can say to 
yourself, oh, boy, we have been worried for these years but 
this is coming now and it is going to fix it?
    Mr. Holdsworth. I am not seeing it. I am not seeing it 
right now.
    Chairman Talent. This problem is not something that just 
sprung up last month or 6 months ago. Everybody has seen this 
coming for sometime. Mr. Pence, you mentioned about costs of 
wages going up and it is still not alleviating the problem. Is 
that a fair statement to this point?
    Mr. Pence. Yes , a fair statement. We are here today 
because whatever has been done in the past is not working and 
we need to do more.
    Chairman Talent. Do you have a comment, Mr. Gooding?
    Mr. Gooding. The only comment I have we are seeing employee 
burnout. In some cases we have men working literally two shifts 
to satisfy customers. We are finding out customers have asked 
us to do what we can. In some cases they are even changing 
their budgets because the fact that we can't get there in time. 
We are driving wages, just skyrocketing wages. We have roofers 
that are making 55, 65, $70,000 a year but where does it stop? 
I have moved up my base starting rate 2.25 cents an hour in the 
last 8 months and I have only recruited two employees. I have 
$2,000 signing bonuses. I am doing everything I can but we are 
still not getting those people that we need.
    Mr. Holdsworth. I do have another comment. It sounds 
awfully doom and gloom here. Let me bring something else in for 
just a minute. An interesting phenomenon is happening out 
there. In community colleges, the largest new enrollment area 
are called ``reverse transfers''. They are 4-year graduates. 
They are going back to community college to learn job skills. I 
think some of the stereotypes are breaking down. I think there 
does need to be more activity within the education community 
and business community to get to parents and to those people 
who are helping to make the decisions and say there are other 
options. These are challenging careers. They are well paid 
careers and they are careers that lead somewhere. I've talked 
to parents who see their children going into masonry and they 
believe their children will be hod carriers for the rest of 
their lives. That student today may be a hod carrier, tomorrow 
may be a subcontractor and a few years from now a contractor, 
and that is a leader in the community. People aren't seeing 
that right now.
    Mr. Pence. If I could add one last comment. This bill is 
seen in the industries as the number one answer that may help 
turn the situation around. I can't overstate there is real 
excitement growing about this bill as the information spreads 
outside the Beltway and more and more business leaders learn 
about it. In the survey that we have done at NCMA, they are 
telling us this bill alone will spur them to hire three to four 
more masons per company. Now, that is an outstanding response. 
People are coming to us at confabs and on the street and saying 
``this is really an excellent bill''. ``How can we get on 
board?''. People I have never heard from before from other 
industries are calling me asking what is this wonderful 
legislation about, how do we get on board and how do we help. I 
think it is a good message to take back to the constituency in 
the districts. I think they are looking for an answer like this 
that really ``bull's eyes'' the issue that they are facing 
every day.
    Chairman Talent. We really need some method here of being 
able to count those perhapssomewhat less direct or, I don't 
want to say intangible, less direct benefits of a bill like that that 
will result among other things bringing money into the Treasury at the 
same time as we are looking at directly how much this is going to, 
quote-unquote, cost the government. This is a struggle, of course, we 
are engaged in now how much this bill is going to cost and yet 
everything you have said tells me that if we don't do something like 
this or, at a minimum, if something like this speeds up trends that 
would otherwise occur in the marketplace, Mr. Holdsworth, because 
perhaps the passage of this bill generates publicity so that parents 
and counselors out there say, wait a minute, we need to look at this 
all over again. If it speeds the process up by a couple of years, it 
has got to generate more in terms of more projects you can do, Mr. 
Murphy, more people employed at higher wages, paying more taxes, less 
cost to the taxpayer because of delay in our construction projects. My 
guess is and it is just a gut guess, this bill pays for itself 
probably. And yet we are locked in this struggle internally here where 
we are not allowed really to take that into account in terms of scoring 
this bill. It is very unfortunate. The people who are most familiar 
with the situation believe so strongly it is going to have these very 
beneficial aspects to it.
    Mr. Holdsworth. I just have this observation as well. The 
average age of a college--community college student is 28 or 
older. That student graduated from high school when he or she 
was 18. There have been 10 years that that student has been 
underemployed. I can do this only anecdotally, but I can't tell 
you how often I have talked with students who have said: ``I 
have been bouncing around, do you want fries with that? And now 
at the age of 28 I have got a family, I have got 
responsibilities, I have got these things''. If this bill is 
able to get that student to work at the age of 20 or 21 instead 
of going back to school at 28, you have performed a tremendous 
service in terms of tax revenue because that person is now 
producing.
    Chairman Talent. I agree. I think it is real important to 
understand the bills we pass here occur of course in the 
broader context of what is going on out there in the country. I 
do think, not to be all gloom and doom, that there is a 
reaction setting in. You mentioned the community colleges and 
certainly in my area and in my State, they are stepping up and 
responding. State authorities are beginning to understand this. 
You are seeing the proprietary schools going into these trades 
and expanding them and working out arrangements with local 
trade associations to get machines on loans so they can train 
people. One of the ones in my area worked out a cooperative 
arrangement to get welding equipment so they can teach people 
that. But if we can help by putting this bill into that overall 
mosaic, if you will, and help complete it faster, it will have 
a tremendously positive impact; and, on the other hand, if the 
downside is true and this response is not coming quickly and we 
really begin seeing the impact in construction or manufacturing 
of this shortage of these skilled employees and the potential 
for the economy is very negative. So this is at a minimum a 
very wise hedge against possible recessionary influences 
against this kind of situation.
    Mr. Gooding, I didn't intend this to last so long but what 
the heck, I am the chairman.
    Mr. Gooding. Mr. Chairman, the only thing I would like to 
add to this is the welfare-to-work program as we see it in our 
particular industry hasn't produced the people that we need and 
I think that your bill will certainly change that dramatically 
and I just hope and pray that it is accomplished in a very 
short order because we offer good benefits, but unfortunately 
we have just run out of ideas of how to get those employees to 
at least knock on the door.
    Chairman Talent. Mr. Pence, and then I will close this.
    Mr. Pence. I think your earlier comment about the dynamic 
scoring barrier, if we get past that somehow, it might be 
possible this bill would come up as a plus when all things are 
considered. We, just talking about it among staff and among the 
coalition, the numbers we have been seeing are clustering in an 
area that are not very expensive. We don't have the numbers 
back from JCT of course yet, but if they are at all close of 
what we have been talking about in our caucuses, this bill is 
not going to be that expensive and with dynamic scoring we 
would be in the plus range and home free.
    Chairman Talent. It would be great. Let's close this by 
bringing home what Ms. Velazquez and I were talking before 
about what this Committee is about and why we really try to 
make it about people and real opportunities for real people, 
both small business people and their employees. If this bill 
has the impact of enabling small business people to grow and 
expand and have more opportunities, and of enabling their 
employees, individuals, somebody hired in their late 20s 
wondering how they are going to be able to put food on the 
table for their family, and now the local machine shop or 
electrical shop is able to say to them we will send you to the 
community college, we will give you the on-the-job training, 
your whole life turns around now.
    These are real people that we can help with this and I 
agree with you, Mr. Pence, what will end up being no cost to 
the government, and it is these kinds of things that we try and 
look for on the Committee. We do try and confront problems in 
legislation, concerns people have on a straightforward basis. 
Usually we can work them out and I am grateful to you all for 
being here.
    Unless the gentlelady has any further comments or 
questions, I will adjourn the hearing.
    [Whereupon, at 12:50 p.m., the Committee was adjourned.]
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