[House Hearing, 115 Congress] [From the U.S. Government Publishing Office] JOBS AND OPPORTUNITY: LOCAL PERSPECTIVES ON THE JOBS GAP ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON HUMAN RESOURCES OF THE COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION __________ APRIL 12, 2018 __________ Serial No. 115-HR05 __________ Printed for the use of the Committee on Ways and Means [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] __________ U.S. GOVERNMENT PUBLISHING OFFICE 33-809 WASHINGTON : 2019 ----------------------------------------------------------------------------------- COMMITTEE ON WAYS AND MEANS KEVIN BRADY, Texas, Chairman SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts DEVIN NUNES, California SANDER M. LEVIN, Michigan DAVID G. REICHERT, Washington JOHN LEWIS, Georgia PETER J. ROSKAM, Illinois LLOYD DOGGETT, Texas VERN BUCHANAN, Florida MIKE THOMPSON, California ADRIAN SMITH, Nebraska JOHN B. LARSON, Connecticut LYNN JENKINS, Kansas EARL BLUMENAUER, Oregon ERIK PAULSEN, Minnesota RON KIND, Wisconsin KENNY MARCHANT, Texas BILL PASCRELL, JR., New Jersey DIANE BLACK, Tennessee JOSEPH CROWLEY, New York TOM REED, New York DANNY DAVIS, Illinois MIKE KELLY, Pennsylvania LINDA SANCHEZ, California JIM RENACCI, Ohio BRIAN HIGGINS, New York PAT MEEHAN, Pennsylvania TERRI SEWELL, Alabama KRISTI NOEM, South Dakota SUZAN DELBENE, Washington GEORGE HOLDING, North Carolina JUDY CHU, California JASON SMITH, Missouri TOM RICE, South Carolina DAVID SCHWEIKERT, Arizona JACKIE WALORSKI, Indiana CARLOS CURBELO, Florida MIKE BISHOP, Michigan DARIN LAHOOD, Illinois Gary Andres, Staff Director Brandon Casey, Minority Chief Counsel ______ SUBCOMMITTEE ON HUMAN RESOURCES ADRIAN SMITH, Nebraska, Chairman JASON SMITH, Missouri DANNY DAVIS, Illinois JACKIE WALORSKI, Indiana LLOYD DOGGETT, Texas CARLOS CURBELO, Florida TERRI SEWELL, Alabama MIKE BISHOP, Michigan JUDY CHU, California DAVID G. REICHERT, Washington TOM REED, New York C O N T E N T S __________ Page Advisory of April 12, 2018, announcing the hearing............... 2 WITNESSES Connie Wilhelm, Chief Executive Officer, Home Builders Association of Central Arizona................................. 8 Toby Thomas, President, Austin Electric Services, LLC............ 13 Brian Potaczek, Electrician, Austin Electric Services, LLC....... 17 Kelly Tessitore, Vice President of Advancement, Jewish Vocational Service........................................................ 20 Heather Terenzio, Chief Executive Officer, Techtonic Group, LLC.. 26 Tony Girifalco, Executive Vice President, Delaware Valley Industrial Resource Center..................................... 50 Justin Welner, Vice President for Human Resources, Spirit AeroSystems.................................................... 57 Andrew Wells, Director, Workforce Development Center, Chicago Urban League................................................... 64 Peter Barrett, Senior Vice President, Marketing and Corporate Development, Smoker Craft, Incorporated........................ 68 JOBS AND OPPORTUNITY: LOCAL PERSPECTIVES ON THE JOBS GAP ---------- THURSDAY, APRIL 12, 2018 U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Human Resources, Washington, DC. The Subcommittee met, pursuant to notice, at 2:02 p.m., in Room 1100, Longworth House Office Building, Hon. Adrian Smith [Chairman of the Subcommittee] presiding. [The advisory announcing the hearing follows:] ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON HUMAN RESOURCES CONTACT: (202) 225-3625 FOR IMMEDIATE RELEASE Thursday, April 12, 2018 HR-05 Chairman Smith Announces Human Resources Subcommittee Hearing on Jobs and Opportunity: Local Perspectives on the Jobs Gap House Ways and Means Human Resources Subcommittee Chairman Adrian Smith (R-NE), announced today that the Subcommittee will hold a hearing entitled ``Jobs and Opportunity: Local Perspectives on the Jobs Gap'' on Thursday, April 12, at 2:00 p.m. in room 1100 of the Longworth House Office Building. This hearing will highlight employers' demand for workers and the need to get more Americans into the labor force. In view of the limited time to hear witnesses, oral testimony at this hearing will be from invited witnesses only. However, any individual or organization may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, http:// waysandmeans.house.gov, select ``Hearings.'' Select the hearing for which you would like to make a submission, and click on the link entitled, ``Click here to provide a submission for the record.'' Once you have followed the online instructions, submit all requested information. 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Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. Note: All Committee advisories and news releases are available at http://www.waysandmeans.house.gov/Chairman SMITH. The Subcommittee will come to order. Good afternoon, and welcome to the first in an important series of hearings the Human Resources Subcommittee will be holding to focus on jobs and opportunity. The purpose of these hearings is to demonstrate how as our economy continues to strengthen following the enactment of the Tax Cuts and Jobs Act, employers' demand for workers is growing and our Human Services programs have a role in supporting the next wave of workers needed to continue this economic growth. On Tuesday, the President signed an Executive Order directing agencies to seek new opportunities to reorient our welfare system toward economic opportunity. I agree with the President on this matter and appreciate his bringing the right tone at the right time to this conversation. There is a chart here. During these hearings, we are going to be talking a lot about the jobs gap, the difference between employers' demand for workers, shown as job openings in the chart, and the declining number of individuals in the workforce, shown as the labor force participation rate. The space in the middle separating these two lines is what we are calling the jobs gap. Addressing the jobs gap is about accessing economic growth and opportunity for those on the sidelines of the American workforce. This is particularly important given the healthy labor market and low unemployment rate we are seeing as a result of businesses creating jobs and expanding after the enactment of the new tax law. [The submission for the Record of Hon. Adrian Smith follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Just this week, The Washington Post editorial board highlighted this issue by saying, ``American employers in an array of industries, manufacturing, agriculture, trucking, home building, energy, food service, retail, and others are warning a long brewing labor shortage is reaching crisis proportions.'' The Wall Street Journal reported if every last jobless citizen in the 12 Midwestern States filled an open job in the region, 180,000 positions would still be left unfilled. What do employers and job openings have to do with the programs under the Human Resources Subcommittee? A lot, actually. We know when individuals and parents are working full-time, the poverty rate drops to just 3 percent. We know when workers are matched to employers with the supports provided by programs under the Subcommittee, such as child care, case management, and transportation, that job opportunities and the American dream can become a reality for more Americans. Last year, the Subcommittee set the stage for this discussion today. Those hearings were about people on the sidelines. We heard from experts who examine the declining unemployment of working-age men who told us there are more than 7 million men in America not working or looking for work. We also heard about the troubling trend we are seeing among our youth and young adults, those 16 to 24 years old. We learned that there are 5.5 million not in school and also not working. This hearing takes the next step to see how this reality is translating for employers and workers at the local level. Now we see employers getting more involved by investing in apprenticeships, training, and helping individuals get connected to supportive services to address barriers to employment. What is different now is a strong economy fueled by the Tax Cuts and Jobs Act. This isn't about charity or government programs. We will hear from our witnesses there is a strong business case, meaning it is in the best interest of their business to invest in building the workforce. Today, we will hear from Connie Wilhelm, Chief Executive Officer at the Home Builders Association of Central Arizona. Ms. Wilhelm runs a large Home Builders Association representing employers with growing workforce needs. As a way to address this, her association has partnered with Arizona correctional facilities to prepare inmates for jobs after release by getting them access to training in the construction trades and addressing needs for transportation, housing, and soft skills. She is not running a social services agency either. This is a mutually beneficial partnership which supplies home builders with much-needed workers and gives inmates marketable skills they can use to find employment when they are released. It is win-win. We are also very excited to hear from Mr. Potaczek--did I get that right--okay, sorry about that--the embodiment of the partnerships we are referencing. He is now working as an electrician at Austin Electric after participating in training at the Arizona Department of Corrections' Employment Center. I am grateful to him for sharing his story and helping our Subcommittee gain a fuller picture of the issue at hand. My top priority for this Subcommittee and this Congress continues to be ensuring greater opportunity for all Americans. This hearing features two panels of witnesses who are experiencing real workforce challenges and have stepped up to show ways we can get individuals back into the labor force. Today, I am excited to learn from our witnesses about their experiences and what is working in local communities, so we can translate these lessons into better public policies which help families escape poverty and climb the economic ladder. With that, I recognize Ranking Member Davis for 5 minutes for his opening statement. Mr. Davis. Mr. DAVIS. Thank you very much, Mr. Chairman, and I want to thank you for holding this hearing. And I believe that this area of work is one of the most important that is needed to be done in our country. This month marks the 50th anniversary of the assassination of Dr. Martin Luther King, Jr. His work remains unfinished. At the time of his assassination, Dr. King was focusing the civil rights movement on economic justice and the opportunity gap that exists in this country. Indeed, I am proud to represent North Lawndale, the community in which Dr. King lived as he directed attention to the structure barriers that keep groups of Americans poor. If communities lack quality education, economic opportunity is limited. If communities lack transportation, affordable housing, and employers offering good jobs, economic opportunity is limited. If communities lack substance abuse services or job training programs, economic opportunity is limited. I hope we can agree that if we have a gap between available jobs and the Americans searching for opportunities, it is our obligation to close the gap by knocking down the obstacles keeping people from work, not by vilifying workers who have fallen on hard times and who need our help to overcome barriers. The Executive Order the President issued yesterday which instructs agencies to find ways to cut services and basic necessities for people who are poor or don't have jobs is exactly the wrong approach. For our Subcommittee, the right approach must include addressing structural barriers in the Temporary Assistance for Needy Families programs or TANF. Otherwise, our policies will fail our rural, urban, and suburban constituents who hit these barriers daily and are being left behind. I work closely with a number of programs in Chicago that work alongside employers to provide real opportunities for people who have been left behind by the labor market and are hitting walls every time they try to get a good job to make a better life. When I talk to these outstanding workforce development programs, I am struck by how few of them get any support from TANF, which is in this Subcommittee's jurisdiction. TANF provides $16.5 billion a year in State grants which are supposed to support work and ensure that low-income families can access basic necessities like food and housing. If TANF is not supporting these local education and training programs that lift work, are open to good jobs, and put them on a path to better things, that is TANF's failure and Congress has set TANF up for failure. TANF includes arbitrary limits on education and training, even though we know a lack of skills and credentials is a key reason why many struggling parents cannot find good jobs. TANF provides States with incentives to reduce the number of families being helped, but no incentives to knock down barriers or provide real opportunities for parents to find good jobs that will lift their children out of poverty. And TANF's investment in children and families is shrinking every year, as States divert TANF funds to fill budget gaps, and the Federal Government funding is not adjusted for inflation. Right now, TANF is creating additional roadblocks to good jobs for people who are already facing barriers. Our Subcommittee has the chance to make TANF a key to unlocking economic opportunities and continuing Dr. King's work. I look forward to hearing from our witnesses about how we can lift out of poverty and close the economic gap. Again, Mr. Chairman, I thank you for this hearing and yield back the balance of my time. Chairman SMITH. Thank you, Dr. Davis. I appreciate your comments. Without objection, other Members' opening statements will be made a part of the record. I would like to welcome our first panel of witnesses to the table and recognize Mr. Schweikert for the purpose of introducing his constituents from Arizona. Mr. SCHWEIKERT. Thank you, Mr. Chairman, though you actually covered part of it. This is sort of a special occasion for me. Ms. Wilhelm, Connie, is actually one of my oldest friends. Not a comment about age, but I have known her probably the majority of my life. Her brilliant son is actually an intern in our office. But she is unique in the fact she is running a very large Home Builders Association and is a true pioneer as a woman doing that. But she also had an amazing vision here of could we reach into parts of our communities that have had a tough time, and in this case those who have been in correctional facilities, and bring them into our shortage of labor. Toby Thomas is the President of Austin Electric. He is one of the partners with Connie Wilhelm and the Central Arizona Home Builders Association in bringing this program together and training. And Brian--and it is Potaczek--Potaczek is, actually I am very proud of him coming here because sometimes walking into a room like this can be somewhat intimidating, but he has a very important story for us to hear. Because as we are looking at the most recent U6 crosstabs, we are actually seeing something amazing happen, and those who have been marginalized, particularly those with felonies, are actually getting opportunities to work, and I believe we are about to hear about a program that is working. Thank you, Mr. Chairman. Chairman SMITH. Thank you. The remaining witnesses on our panel include Ms. Kelly Tessitore--you are not just saying yes--okay, okay--Vice President of Advancement at Jewish Vocational Serice in Boston, Massachusetts; and Ms. Heather Terenzio, Chief Executive Officer of the Techtonic Group from Boulder, Colorado. Witnesses are reminded to limit their oral statements to 5 minutes. You will see the indicator there. Once you see that yellow light, just kind of bring the flight in for a safe landing and wrap that up by the time the 5 minutes conclude. So, all your statements will be included in the record. And so, we will begin with Ms. Wilhelm. You may begin when you are ready. STATEMENT OF CONNIE WILHELM, CHIEF EXECUTIVE OFFICER, HOME BUILDERS ASSOCIATION OF CENTRAL ARIZONA Ms. WILHELM. Chairman Smith, Ranking Member Davis, and Members of the Subcommittee, it is an honor to be with you here today to provide a brief overview of a workforce development program for ex-offenders during their last couple months of incarceration. I represent the Home Builders Association of Central Arizona. And not unlike other growing markets, the biggest obstacle that builders face in satisfying the demand for new homes is the labor to build them. So, in early 2016, the Association launched a number of initiatives on workforce development, including a partnership with the Arizona Department of Corrections. The key to our partnership with Corrections is that it is employer-centric. We initially traveled throughout the State holding hiring fairs at prisons with companies representing residential plumbing, electrical, masonry, framing, and drywall trades, seeking inmates releasing into the Phoenix market. Participating employers were required to have paid training programs and be willing to work with this population's unique challenges of parole, drug tests, and transportation. In March of 2017, as part of a statewide effort to reduce recidivism, Governor Ducey established three Second Chance Centers within the correctional facilities for those inmates releasing in 60 days who had a moderate to high probability of recidivating. This collaboration between the Arizona Department of Corrections and the Department of Economic Security consists of a 10-week training program to prepare and equip inmates with the career and life skills they need to succeed after release. Since studies have shown that employment is the most direct link to reducing recidivism, job fairs and connecting with employers is a huge part of this effort. At our first construction job fair at the Second Chance Center outside Phoenix, we found that many inmates had construction experience and others were eager to learn a construction trade. Shortly thereafter, we piloted training for two trades, electrical and painting, at the Center. The Lewis Second Chance Center is currently expanding for 100 to 275 inmates, and we are expanding our career training offerings from two trades to six trades at this center. We will now offer training in electrical, drywall, framing, door and trim, masonry, and plumbing. Our employers provide the trainers, curriculum, material, and tools for their specific trade. Two of the three instructors for the electrical class were former felons, which provided real-life examples of success for the inmates. While 6 to 8 weeks of training is not a lot, it's enough to familiarize the inmate with the trade, learn how to work safely, and to establish a relationship with the potential employer. Additional training is provided once they are released and employed. Participating inmates also have the opportunity to earn an OSHA 10-hour card. Working with this population, however, has not been without its challenges. The majority of inmates are released to a halfway house and are on parole for up to 6 months, so it is a major challenge to find employers that are willing to take a chance on an ex-offender. We have had several employers join our program only to leave after one bad incident with a former offender. We have also had employers tell us they don't want the liability of hiring felons. To address that concern, last week, Governor Ducey signed a bill we initiated which helps protect employers from liability solely for hiring an ex-offender. Without question, the biggest challenge ex-offenders face in the Phoenix metro area when trying to get a job is transportation. Many have suspended driver's licenses because of civil court fines or penalties. To overcome that obstacle, we worked with the courts to pursue legislation to allow for a restricted driver's license that allows them to drive to work, to meet their parole officers, and to seek medical care. This bill was also signed into law last week. Since we started our recruitment and job training programs, our employers have hired over 300 ex-offenders and we expect that number to increase significantly with our additional onsite training. During the 5 months of piloted training, 80 inmates completed training and approximately 40 percent of them were hired by the companies who trained them. Since last March, over 817 individuals have graduated from a Second Chance Center and 54 percent of them have successfully gained employment upon release. Additionally, Arizona has seen a 10 percent drop in released inmates going back to prison on a technical violation and is experiencing the largest drop in the number of inmates in prisons since 1974. We are excited about the future of this partnership and the opportunity to offer careers in construction to ex-offenders. [The prepared statement of Ms. Wilhelm follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. Great timing. I understand Mr. Thomas and Mr. Potaczek will be splitting their time, so begin when you are ready. STATEMENT OF TOBY THOMAS, PRESIDENT, AUSTIN ELECTRIC SERVICES, LLC Mr. THOMAS. Mr. Chairman, Ranking Member Davis, Members of the Subcommittee, thank you for your invitation to speak here today about the workforce development and our work with the Home Builders Association of Central Arizona and the Arizona Department of Corrections. As the housing market began to recover, we quickly identified that we had a labor shortage. As production demands increased, so too did the shortage of qualified workers. To grow our business and capitalize on the increase in demand, we began an in-house training program to teach people who want a new career to wire new homes. In rolling out our training program, we found the single biggest challenge was attracting individuals who wanted to learn a new skill. After an exhausting 6-month recruitment effort, we simply could not find enough people with an interest in construction to grow our workforce in the numbers that we needed. In early 2016, we contracted with Connie Wilhelm and the Home Builders Association. Prior to our introduction, Ms. Wilhelm had been working on several solutions to address the labor shortage. One of her initiatives was to work with the Arizona Department of Corrections. Over the next several months, we participated in job fairs at prisons across Arizona. Through these job fairs, we were excited to learn that there's an eager population willing and ready to learn a new trade. Through our partnership with the Home Builders Association and Department of Corrections, for the past 10 months, we have operated a 60-day training program at the Lewis Prison outside of Phoenix. During this training, we teach wiring, blueprint reading, and other applicable skills. In addition, we teach conflict resolution lessons to improve character building abilities that will not only enhance them in the workforce, but in their personal lives and the community as well. Today, we have trained and hired 86 former offenders from our training program and have about an 80 percent retention rate. Although we have had immense success with the program, we have had some challenges. The most glaring are transportation, housing, and proper attire. These challenges can have a direct effect on an individual's ability to succeed on the job. Then there are the psychological aspects. While trainees are in the program, we have their undivided attention. Once they are released, there are outside influences that could have negative impacts both professionally and personally. Fortunately, this has been the exception to our program and has led to the workforce expansion that we planned for. More importantly, the program has exceeded all of my expectations with the impact it has had on individual lives and the community at large. We are excited to continue the program and grow our company. [The prepared statement of Mr. Thomas follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] STATEMENT OF BRIAN POTACZEK, ELECTRICIAN, AUSTIN ELECTRIC SERVICES, LLC Mr. POTACZEK. Thank you, Chairman Smith, and all Members of this Committee for allowing me to speak to you today about programs such as Sunrise Employment Center in Arizona Department of Corrections. My name is Brian Potaczek and I would like to share the impact this program has had on my life and how it has made me a part of society and helped me regain my family and friends back into my life. Before completing this program, I can truthfully say that I had no positive direction in life, along with no sense of hope that I could make things better. I never was a drug user. However, when I was 19, I had all four of my wisdom teeth pulled and was prescribed opioids for pain. The next thing I knew, I was hooked. Being an avid drug user of prescription pills for 6 years, I slowly but surely had seen my life declining before my eyes. I ended up losing everything I owned and loved and ended up incarcerated for 6 years due to the desire to do whatever it took to keep getting high. After another two prison stints because of my addiction, I finally came across a program that I desired and wanted more than anything to complete and that was the Sunrise Employment Center in Arizona Department of Corrections. Many companies came to this Employment Center, but one that truly had me fascinated was Austin Electric. After listening to the guests speak about the criteria and requirements, I quickly signed up for the training program and never looked back. One thing that caught my attention was how they would talk about the company as a family, and how they would help us out and do whatever it took to make us successful. In the training program, I learned the tools and knowledge of how to be an electrician, which is something I had never done before and never imagined doing. Upon my release, I was hired and started work that week. I was given rides to and from work and maintained a job with this company. I started with Austin at $13 an hour and now I'm making $22 an hour after 7 short months. I can truthfully say from firsthand experience that this program has made many success stories and only will continue to make more. It instills a sense of hope in the lost, a family for those who need one, and the motivation to be a better person of society. It is amazing when you can work with others in the program and slowly but surely see their life changing. That is something that always encourages me to stay on the right track. I never really had goals after being released from prison until I entered the program. Since then, I have rebuilt my trust with my family and friends and have regained their love and encouragement. Not only have I obtained employment with Austin Electric upon my release, I have also been able to support myself and not become another statistic by going back to prison. I am doing things now that I never thought I would, like going to have coffee with my mom, buying Girl Scout cookies, or just giving back to the community. Staying out of prison has been the best success story of my life. And every day I wake up, it is a success, and I measure it by that. Every day I am out of prison is something I look forward to. Thank you. [The prepared statement of Mr. Potaczek follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. Thank you very much. A very compelling story. Thank you. Ms. Tessitore. STATEMENT OF KELLY TESSITORE, VICE PRESIDENT OF ADVANCEMENT, JEWISH VOCATIONAL SERVICE Ms. TESSITORE. Good afternoon, Chairman Smith, Ranking Member Davis, and Members of the Subcommittee. I am Kelly Tessitore and I am the Vice President of Advancement at Jewish Vocational Service in Boston, which is a nonprofit, community- based organization in workforce development. I began my career at JVS in 1996, the same year as the 1996 welfare reform. And since then, I have designed and operated dozens of programs for low-income populations. I would like to talk to you today about my experience helping people strengthen skills, access jobs, and build careers. Last year at JVS, we served 15,000 individuals in our skills training, education, and job placement programs, including through our one-stop career center. Our greatest strength is our deep relationships with employers. We placed job candidates with more than 1,200 employers last year and we worked with 20 more to provide on- site training to 1,600 incumbent workers. Our employer partners tell us they can't find enough workers with the skills they need, and in many cases, they are facing critical labor shortages. The current low unemployment rate is encouraging employers to look at hiring populations they haven't considered previously, which is great, but employers need skilled workers. To provide those workers and because we believe that the best way to lift people out of poverty is to equip them with in-demand skills, we partner with employers to build training programs. Let me walk you through one of our programs. Our pharmacy technician program includes training on medications and anatomy, pharmacy law, hospital basics, customer service, and inventory. We partner with pharmacy leaders CVS and Walgreens to provide an externship to each participant. These externships give students real-world experience that helps them adjust to work before taking on a full-time job, and they give CVS and Walgreens access to a pool of trained applicants that can meet their skill needs. The 12-week program prepares graduates to take and pass the national Pharmacy Technician Certification Exam. We cover the exam fees and our graduates pass the certification exam at higher rates than the national average. Pharmacy technicians earn $31,000-$44,000 on average nationally per year. Last year, 8 out of every 10 students enrolled in our program were hired. And the pharmacy technician program is just the first step on a career pathway, including pharmacy or nursing school, specialized certifications, or even store management. Although Pharm Tech and other career pathway programs at JVS are highly effective at moving people out of poverty, they don't serve many TANF recipients. On average, fewer than 10 percent of participants in our programs are on TANF. We have an excellent relationship with our State TANF authority. We have spent a lot of time thinking together about why TANF doesn't move people into work and how we could change it. I think at the end of the day there are three major issues. First, TANF emphasizes job placement and de-emphasizes skills, even though we have 20 years of research showing that ``work first'' doesn't work. Although employers can't find workers with the skills they need to fill their critical labor shortages, the structure of TANF restricts education and training activities. TANF hasn't been updated in 20 years and it hasn't kept up with the way that employers are hiring now, and we need changes that will allow and support skills acquisition. Second, TANF is overly complicated for both clients and systems to administer. It counts the wrong things and it doesn't focus on work and skill development. TANF has become a benefits processing program focused on preventing abuse, rather than a transitional catalyst to work. In my 22 years of working with low-income populations, I can tell you that most of the people I have met do in fact want to work, desperately want to work, but they don't want their economic situation to worsen when they leave cash assistance. Earnings from work affect TANF, which affects childcare, which affects housing, which affects food stamps, and the interaction of those things makes work risky, instead of the safer choice for people on public assistance. We have to change the paradigm about how the benefit programs interact so that they can work together to launch people into economic mobility. I am not talking about growing TANF, but once people are on the caseload, we need to keep them engaged and continuing on a path to self-sufficiency. If we want people to use TANF as a transitional catalyst to work, we need to change the rules so that we can incentivize work, allow for training and skill development, and make it clear to participants how working will affect their future benefits. Finally, work requirements. I have operated at least a dozen programs that feature a work requirement, and in all cases, the very real struggle is that compliance becomes the primary deliverable and outcomes take a backseat. To maximize results, work requirements efforts should one, focus on outcomes, like increasing self-sufficiency rather than outputs like participation hours; two, focus on labor market demand and local employer needs; three, make it easier to align adult basic education, job training, post-secondary education, and support services like childcare and transportation assistance; four, certify programs as compliant with the work requirement rather than counting individual participation hours; and five, coordinate and recognize reciprocal compliance with other programs such as SNAP, WIOA, and Medicaid. Thank you. [The prepared statement of Ms. Tessitore follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. Thank you. Ms. Terenzio. STATEMENT OF HEATHER TERENZIO, CHIEF EXECUTIVE OFFICER, TECHTONIC GROUP, LLC Ms. TERENZIO. Thank you for having me here today to speak about a new way to build talent in high-tech fields. I believe we have an innovative, low-cost way to get Americans to work in high-paying technology jobs without a college degree and without acquiring any debt. My name is Heather Terenzio. I am the Chief Executive Officer and founder of Techtonic Group, a software development company based in Boulder, Colorado. I have been the Chief Executive Officer of a technology company for 15 years. Our company works on writing software code for websites and mobile applications. Our clients have been everyone from venture-backed start-ups to Fortune 1000 companies. I have an Ivy League degree and was an engineer, but most of what I learned about writing software I learned on the job. Over the years, I have worked with other Ivy Leaguers, college graduates, and people with all different kinds of backgrounds. And the one thing that I have learned is that if you have a desire and an aptitude for software development you can be a great software developer. About 4 years ago, I was giving a talk at a vocational school in Boulder about careers in software development. And at the end of the talk, a young man approached me. He said, ``Your company sounds so cool. I have been teaching myself to code for 10 years, but I only have a GED, so I can't find a job. But I promise if you hired me and gave me a chance, you would never regret it.'' And so right then and there, I said, ``I will see you on Monday.'' And we learned that he had grown up in the foster care system, that his mother was in jail, and he had bounced around a lot as a kid. The one thing that gave him solace was playing computer games, and teaching himself how to write code, and build his own games. He absorbed everything we taught him about building software in a production environment and quickly became a contributing member of our team. About 4 months into his job with us, he walked into my office and said, ``Thank you so much for this job. I am so grateful to be here. You have changed the course of my life.'' And I thought, in my 15 years in this industry, nobody had ever said that to me. So right then and there, I said, ``Do you have any friends? This is a really interesting thing that is happening here.'' It turns out there were a lot of people out there like him. We decided to explore further and called our program an apprenticeship program, and we did this kind of tongue-in-cheek because we were training people using a paired program just like a journeyman and his apprentice might in the trades. We soon realized that apprenticeship had a Federal designation and decided to make it official. We worked closely with the Department of Labor to modify the application process to relevant companies like us and we became an official apprenticeship with the Department of Labor. We were the first software apprenticeship in the United States. We are still the only one in Colorado and we are still only one of a handful in the whole United States. For our class now, we have formalized our selection process and our training. For our last class, we had 500 applications for 10 spots. We have now had over 50 apprentices come through our program. We now offer a service to our clients where they can hire us to build their software, and at the end of our engagement, they can hire in those apprentices as their own. It is a win for everyone. Our clients get their software written with a senior team while we train apprentices. Our apprentices work on real-world projects while working toward a career in software development. Our clients can acquire our team of fully-trained and diverse talent as their own full-time employees. We have had apprentices come through our program who are now working for companies like Lockheed Martin, IBM, Zayo, and Pivotal Labs. Our program is able to attract a more diverse talent pool than a software boot camp or a college because we partner with our local government and foundations to pay our apprentices a salary while they are actually in our program. We are currently 75 percent women, minorities, and veterans, and they are paid a livable wage throughout the entire program. We recently closed on a Series A round with a likeminded venture fund and we have plans to grow aggressively this program in the next couple of years. Software development developers are in high demand. Unemployment rates for software developers are under 2 percent. A college degree is not required to be a great software developer. We strongly believe that programs like our apprenticeship are a cost-effective, no debt pathway to a high- paying, middle-class job in a desirable field with unlimited career potential. Thank you for your time and attention here today. [The prepared statement of Ms. Terenzio follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. Thank you. Great perspectives. It is exciting to hear success stories, inspiring, in fact, from different perspectives, so I am very grateful. Mr. Potaczek, again, thank you for being here and sharing your personal story and being open to providing all of us up here with a better understanding of the challenges and opportunities facing individuals transitioning back into the labor force. One of our Committee's priorities is to ensure that Federal programs are providing the right incentives and supportive services to help folks escape poverty and move up the economic ladder. Can you speak a little more about the transition back into the labor force and perhaps even some of the concerns you had upon or during that return to the workforce? Mr. POTACZEK. Transitioning back into society and working, it is a difficult challenge; transportation, you know, boots for the job, tools. With this program, it has kind of given me a head start at that. They gave me transportation. They gave us work clothes like shirts. The tools, they gave us the tools to get started. So instead of getting out of incarceration with a lot of things on my mind, I knew that if I just did the right steps, by the time I got out, if I called them and asked to get hired, I would be hired, and I would have a jumpstart on things. And one of the things that always got me, the times I got out and went back, was I had so much on my plate I felt like it was hard for me to stay focused. When you are working, and you are--they give you the tools and whatever you need to work, it was a lot easier for me to stay out there and be part of society with working. And I noticed that I was working so hard that I didn't have time to want to do anything else. I would go home, and I would sleep, and I would get up and go to work. And then I noticed that my money started going to good things. It started going to society, it started going to my family, clothing, tools. I mean, that is all part of living nowadays. It is not--my time, assets, it was all going to positive things and I have never been able to say that my whole life. Chairman SMITH. Very good. And can you say again, you were released and then you, the next day, was it, that you reported for work? Mr. POTACZEK. I was released, I think, on a Friday and the weekend was--or maybe it was a Monday. I was released on Monday, and I called up Austin Electric, and I was employed at my interview the next Monday and started work. And that is another thing. I have gotten out before and I have called, I went and applied to 20, 30 places, I mean, fast food, every place you can think of. I never got one call back and it really kind of left me in distraught. It messed with my mind a little bit. And I am afraid of failure and I tend to shut down as a human when I see failure, so this program has given me a sense of hope. It has given me a family that I didn't have at the time, friends, motivation, inspiration, and success. And I am sitting here today, I thought I would never be here. I mean, you could tell me 8 years ago you are going to be sitting in that chair and I would tell you absolutely not. And the thing about it is the knowledge, you have to want it. That is the thing. An individual has to want to do the right thing, to be better, to learn more. It is on both ends. It is not on, you know, just my end or their end. Working together, and putting something positive into something, and making it grow has done a lot for me. Chairman SMITH. Very good. Mr. Thomas, would you care to add anything in terms of maybe the training that took place and how you kind of envisioned being able to use the skills that were required? Mr. THOMAS. Sure. So, when we started the program when we actually connected with Connie, you know, the first phase of the program was we would go to various Arizona prisons. And the biggest challenge we had in doing that was most of the inmates that were interested that would come to our table and show interest in our trade weren't getting released until 2021 or 2022. And, unfortunately, the problem that we have, the shortage of manpower that we have, it is effective today. It is not a tomorrow problem, it is a today problem. So, we looked at it and said, well, you know, what would be really ideal would be to actually have a training program while they are incarcerated. So, we started the program and it has been very successful. You know, at the end of the day, the only requirement we have is that they have to have the desire to want to learn and the ability to show up and put their best foot forward each and every day. Chairman SMITH. Very good. Thank you again for your perspectives. And in the interest of time, I will now recognize the Ranking Member, Dr. Davis, for 5 minutes for questions he might have. Mr. DAVIS. Thank you very much, Mr. Chairman. And I must tell you that this is one of the most pleasant hearings that I have ever participated in, and one of the reasons is that I have personally spent a great deal of time working with programs like these and to see the kind of success that you have experienced just reinforces my belief that there is much more success to be had. So, I commend all of you, I thank all of you, and I just know that if we can put into the programs themselves what is needed for people to experience the kind of successes that you have had, and especially when we talk about individuals who have been incarcerated, who have prison records. Mr. Potaczek, do you still have what is called a record, or have you been able to have anything done with that? Mr. POTACZEK. I am still--I have completed parole and I still have a record. I think I will for a while until I can, I guess I don't really know the process to get it dropped. That has always, I mean, even getting housing or something, it has always had an effect on me having a record, they can look that up. Mr. DAVIS. Ms. Wilhelm, let me ask you, is there much opportunity that you would expect him to be able to get his record expunged or get executive clemency or anything where he will not have a record? Ms. WILHELM. That is one of the things we are looking at right now. We keep trying to remove these obstacles for them as they get out and get released. We have not really looked into that. I know that there are other people in the social justice area that have looked at that type of thing and we will continue to try to work with them. I think that is a major obstacle that we need to take a serious look at. Mr. DAVIS. Thank you. Ms. Tessitore, you mentioned that work requirements make programs focus on compliance sometimes instead of work. Could you elaborate a little bit on that? Ms. TESSITORE. Sure. For TANF, we have to complete a monthly form for each person showing the hours attended on each day. A better system would be to ask us--``during this month, was this client active in your program?'' And we could say yes instead of spending hours and hours combing through all of our attendance records to compile those. For ABAWDS who are receiving SNAP, their standard is 80 hours a month and they actually have a restriction on how many hours they can spend in job search versus an education and training component, so we have to count up their hours that are job search and their hours that are education and training. We pull information from four sources, from our One-Stop database for workshops they have attended, from our client database for meetings we have had with them and other activities, from CRI which is the software they can log into that has a unique user ID and records their time spent doing Career Ready 101, and for their self-certification of the small job search portion. We compile all of that and then those records must be transmitted securely to the TANF authority, which is not a simple matter either. There are multiple steps on how you safeguard people's personally-identifiable information and transmit securely. Mr. DAVIS. Thank you. Ms. Wilhelm, can I ask you, where do you get your funding? Who funds your program? Ms. WILHELM. The individual employers provide and pay for the trainers, the curriculum, the tools for the program, and our association which is a trade association funded by builders and trades is paying for all of the equipment that is out there. Mr. DAVIS. I will tell you, your stock just went up another notch. [Laughter.] Ms. WILHELM. Thank you. I appreciate that. Mr. DAVIS. Ms. Terenzio, let me ask you the last question. The work is technical that you train people for. How is it received in terms of them being able to get jobs? Ms. TERENZIO. Well, once they get into our program, as long as they successfully complete the initial class we put them through, we will hire them as a full-time employee with us. And then once they are with us, we will put them on a client project and the client also has the option to hire them as a full-time employee from our program. So, it is actually kind of you get to work with the person before you actually have to commit to hiring them, so it is almost guaranteed. Mr. DAVIS. Thank you very much, Mr. Chairman. I yield back. Chairman SMITH. Thank you. Ms. Walorski. Ms. WALORSKI. Thank you, Mr. Chairman. Mr. Potaczek, thank you so much for coming. You did a great job. Ms. Terenzio, you say in your testimony you have been successful in taking people that don't have degrees and teaching them to be software developers. The Subcommittee held a hearing last year examining the 1 in 7 16- to 24-year-olds that are neither in school nor working. We heard stories from groups that help these young people train for, find, and keep jobs and we heard firsthand from one bright young lady who had been through one of these programs. One takeaway from that hearing for me was that sometimes we put too much pressure on kids to go to a 4-year university right out of high school whether they are ready or not, and worse, we imply that anything less is failure. This mindset does more harm than good. The pressure we keep on these kids can lead to failure because they get discouraged, throw up their hands, and say, ``I am not smart enough. I am not going to do this, and it is over.'' Maybe they needed a few years of community college, maybe they needed a 4-year degree, maybe apprenticeships and trade schools were a better route. Whatever the case, the discouragement leads to discouragement. I also took away from that the power of human connection, and if someone comes alongside that person, that disengaged person, coaches them, believes in them, all that doubt washes away and they can be successful. So first, I want to applaud you for working to bring people into an industry that, from the outside looking in, probably looks like an unclimbable mountain for somebody without a degree. I want to ask you, what are the untapped talent pools that you look at? How do you engage them? For our most disadvantaged and disengaged people in the shadows, do you think there is hope to be able to connect them to apprenticeships like yours and these other talent pipelines to reconnect to the workforce so they can build a better life for themselves and their families? Ms. TERENZIO. Thank you. So, the beauty about software development is that if you are a great software developer, once you are in this industry, nobody really cares where you went to school and what your background is. And our office in Boulder is actually, was across the parking lot from the Google office. And we have a theory that people who come to our office feel supported, see people all around them who came from the jail system or the foster system, all different kinds of backgrounds, and they are succeeding with us. And so, it is very much a culture of if they can make it, so can I. And so, I think it gives people that kind of motivation to know that other people with different kinds of backgrounds can also make it in this kind of career. And the word in our program has gotten out very quickly. We work really closely with our workforce centers, with nonprofits, with foundations all within Colorado. And every time we even just open up on our social media that we have a new class starting, we instantly get 500 applications. Ms. WALORSKI. And pardon me for the interruption, but do you immediately connect them? So, when they come on your program and they may come from that shaky kind of a past where they may not have a whole lot of confidence or feel like they have failed something for no reason, do you connect them with the human interaction then? Is there somebody that is absolutely connected to keep making sure that they are moving forward? Ms. TERENZIO. Yeah. We do have a mentor system within our company so that you are paired up with people. And, actually, you are paired up with somebody who was just an apprentice a year before you, so they know where you came from, they have a really close firsthand knowledge of where they were just about a year ago and that person is actually responsible for training them on what they have just learned and getting them integrated into our company. And we are a for-profit company, so we are pretty motivated to get people integrated and productive as fast as possible. And so, we are putting them on projects, we are exposing them to clients, we are exposing them to work going on within our company, we are trying them out on different kinds of projects because we want them to be working and we want them to be effective really quickly within our company. But, again, I think it is more the culture that we have created of achievement and that everybody from every kind of background can make it with us. Ms. WALORSKI. Interesting. Thank you. Mr. Potaczek, you mentioned something that struck me because I really believe this, and you are a glowing example. But can you just speak for a couple seconds on, you talked about the employer, the electrical company that you work for was like a family, and what struck you when you--because you said, you know, you were out for a week, you looked at fast food and all those other places, but when you engaged with these folks, what struck you about that? I mean, did you really see that, ``Oh, my gosh, I am actually going to work for the person''? Just, do you have any thoughts on that? Mr. POTACZEK. Absolutely. When they came and visited us, and they got to talk and speak about what the requirements were and what they were looking for, they said that they instill a sense of family in people and I have had nothing but a family orientation with this company. And I am not saying that all companies will bring that. I hope they do, you know. I can't say that. They have supplied me with the tools, I didn't have to worry about the tools. I am getting picked up for work. I mean, I have never had a company that would do that for me. Ms. WALORSKI. Did you feel like on days that maybe, you know, you had questions or whatever, there was a person you could connect to that was not going to give up on you? Mr. POTACZEK. All the time. Ms. WALORSKI. That is awesome. Mr. POTACZEK. I have been able to call anyone for help. Ms. WALORSKI. That is awesome. Thank you so much. Thanks to the panel. And I yield back, Mr. Chairman. Thank you. Chairman SMITH. Thank you. Ms. Chu. Ms. CHU. Thank you. Ms. Tessitore, thank you for joining us to speak about your successful workforce development program, but I was shocked when you said that less than 10 percent of your participants are on TANF. Many of the programs that have been discussed today provide great opportunities for individuals if they have stability already in other parts of their lives, but what if they don't? Individuals need to have support such as childcare, housing, and transportation in order to come to work and to carry out their duties and that can be difficult. Say, for instance, in my home of Los Angeles county, the average cost annually of childcare for an infant at a family childcare home is $9,186 and it is $8,579 for preschoolers. The average single-family household cost to rent is expected to hit $1,416 a month, which is an 8 percent increase from last year and could only increase I think. At the same time, TANF has not been indexed for inflation, making it increasingly more difficult for low-income people to meet their basic needs. So how does your program work with others in the community or utilize government resources to ensure that the basic needs of your participants are met while they pursue training and how could TANF be changed to be more effective in this regard? Ms. TESSITORE. So, thank you for your question. Honestly, programs don't work well to move people off of TANF, resources need to be aligned. In order to move off of TANF, and to move successfully into work, people need some understanding of what benefits and supports will be affected when, and how those things interact. They need to be able to pay a reduced cost for childcare for a period of time, and a reduced cost for housing for a period of time. We have spent a lot of time, with the TANF authority and other agencies, thinking about what those risky points are for people, what are those points at which multiple things are falling away from you, and that work actually doesn't make sense for you, and trying to put in place things that would help with that. I think also incentivizing work would help. Changing the way, and this is something that our TANF authority has proposed to our State legislature, changing the way, maybe disregarding income for the first 6 months or a higher disregard rate for earned income than for other income that you are considering in the caseload, changing the way assets are considered, looking at the grant amounts and aligning for different categories so that there's not--you actually get more money if you are not in a work participation program, which unfortunately TANF is so byzantine that that actually is happening to people. A higher benefit amount if you are not work-required is something that is happening. It really needs to be a thoughtful design so that both the participant and the people trying to help the participant can predict reasonably what is going to happen to their income and their supports as they transition into work, and participants do need support for a period of time. There have been initiatives like the Secure Jobs Initiative in Massachusetts, which is a partnership between housing and the TANF authority and philanthropy. It was actually started by philanthropy, and then it was picked up by the State legislature to bring together all of the services that a family needs in order to transition successfully out of all of those things and they have done a lot of good work by planning together what those steps are going to be for participants. Ms. CHU. And can you say more about the assets? You said something about an asset should be determined differently. Ms. TESSITORE. Yeah. I think that in, some of it may be specific to Massachusetts, but every State is doing it somewhat differently, the way we, the amount that you disregard for an asset. I think it is that a car is exempted, your first car up to a certain value, but the second car is also in there. So, looking at the asset limits that we allow people to have, they are quite low, so if you have a car worth more than $2,500 or $5,000, you are over the asset limit and not eligible. I can't speak exactly. Ms. CHU. And what if your client had healthcare needs? I mean, thank goodness we have the Affordable Care Act, but there are some of those who are trying to get into the workforce that could have healthcare needs and mental healthcare needs. And as a psychologist, I am very cognizant of the fact that there could be a need for services to treat depression or substance abuse. What do you do in that regard? Ms. TESSITORE. So, I will say that we are very, very fortunate in Massachusetts to have had universal healthcare for many years now and we do not see this as a major problem because we have universal healthcare. So, people would be maybe transitioning from the type of healthcare that they have, but they would not be threatened with the loss of healthcare in Massachusetts. Ms. CHU. And for those who have been addicted? Because I think TANF bars individuals from receiving assistance if they have a drug conviction. Ms. TESSITORE. I can't speak about that. I'm sorry. I don't know. Ms. CHU. Well, thank you. I yield back. Chairman SMITH. Thank you. Mr. Schweikert. Mr. SCHWEIKERT. Thank you, Mr. Chairman. Mr. Thomas, particularly, and maybe this is somewhat unique to Arizona in our Phoenix market, but we actually have jobs desperately looking for workers. Can you first, and I want to walk you around because you will see some of the different views sometimes on the Committee when you have an environment that desperately wants to give you a job, but why have you had such difficulties? Why did you have to move to this level of creativity? What is your environment like? Tell me about the jobs that are still looking for someone? Mr. THOMAS. Well, I think, and I can't remember who alluded to it earlier, I think it was Ms. Walorski, we have created this environment with this younger generation, you know, that without a college degree you have no chance of success in life. And so, I think that there's this feeling toward construction, for example, or against the skill trades, that it is, you know, substandard I guess, if you will. And when we started our training program in mid-2015, one of the biggest challenges we had was simply finding people who were interested in the skill trades. So, for us, you know, finding a population, you know, that was more than willing and ready to come learn was a great success, right? Mr. SCHWEIKERT. If you, tomorrow, could find those willing to either go through the training or had the skill set, how many positions do you think you have or are still available in the Phoenix market? Mr. THOMAS. Well, in the Phoenix market, I would say it is thousands. For us personally, I mean, we could probably hire between another 200 or 300 and still have capacity for more, to be honest with you. Mr. SCHWEIKERT. In your top end, I don't know if you would call them a journeyman or what, but how much can a highly- skilled, someone that has been in the profession a decade and learned their craft, make? Mr. THOMAS. So, our top guy last year, a field guy, made about $140,000 a year. Mr. SCHWEIKERT. Okay. So, there is this really interesting thing, you know, if you are willing to sit down and look at what we call the U6 data in unemployment, we are still just hovering at about what we call a 63 percent labor force participation. We still have, as of today's report, 1.8 million folks on long-term unemployment and then those who have fallen off. And yet, I hear story after story after story from, you know, my community that we have thousands of jobs and just need people. It is so--this is--I am looking for a solution. Mr. THOMAS. Aren't we all? [Laughter.] Mr. SCHWEIKERT. Yeah. Ms. Wilhelm, Connie, what do you see happening with the rest of the homebuilding community in the Phoenix market? Ms. WILHELM. Well, I am hoping we are going to continue to expand our program and hire more ex-offenders. It doesn't help to just solve the electrical situation, you know, because we are all part of a system and I need framers, you know, I need everybody along the way so that we are all building our workforce together so that there are no bumps in the road and there is nobody that has to be laid off because the other trade is not there. So, you know, this is a ready and willing population that I have seen nowhere else. I have been to a lot of job fairs in a lot of different environments and I have never seen the hope and the gratitude that has been expressed by the incarcerated. And, you know, I tell you, it is an honor to be able to provide jobs for them. Mr. SCHWEIKERT. Brian, how do we tell your story to others that may be in a tough position that there is opportunity and hope? Mr. POTACZEK. I think you could take me to them and I could talk to them and tell them my personal experience. [Laughter.] Mr. SCHWEIKERT. You are pretty good at this. Hopefully, one day you are not planning on running for my job. [Laughter.] Mr. POTACZEK. I feel that seeing gives a lot of faith. You can read a story and not believe it. For others, like I said, I would like to go into the prisons one day and tell them my success story. And that is with the two other trainers that were at the program, they were ex-felons. And to see them and hear their success stories really made me want to achieve it, and the hope that they have for me and instilled on me, I mean, like I said, it is a family-oriented thing. Mr. SCHWEIKERT. This is a really uncomfortable question, but I grew up in a household where my mother was a substance abuse counselor, so you know those sorts of things. What is the key to staying sober? Is it the fact that there is work and opportunity and is it that hope? What do you think the key is for our brothers and sisters out there that have had such a tough time? Mr. POTACZEK. I love that question. For me, the key to staying sober has been working and seeing how much my family appreciates what I have done for myself. You have to want it for yourself. You have to want to be sober. But to see people that I have never met, my family being proud of me and to say they are proud of me, it brings me to tears. I have never been like that. Mr. SCHWEIKERT. Brian, we are all proud of you. Thank you, Mr. Chairman. Chairman SMITH. Thank you. Ms. Sewell. Ms. SEWELL. Thank you, Mr. Chairman. And I want to thank all of our panelists. This has truly been a very inspirational, uplifting panel. When I first became a Member of Congress, my top priority was job creation. I grew up in my district and my district is in Alabama. It includes Birmingham, and Montgomery, and Selma, my hometown, so it is an old civil rights district. But the reality is a family of four in my district only makes $32,000 and the highest unemployment in the State of Alabama is in my district. So being able to figure out ways that I can close the skills gap and get people opportunity is really, really important. In fact, we have made a commitment to do a job fair annually and to move it around my district because Birmingham's needs may be different than the rural parts of my district's needs. And I have to tell you, every time we have had a job fair, it has grown bigger and bigger. More jobseekers and more employers are willing to come. But so often, the jobs go unfilled, so you get a lot of folks who feel a little frustrated because the skills that are being looked for these days are more, you know, technical and are computer-related. And for someone who has been a displaced steel worker, to tell them to go back and learn something new, it is hard. It really is hard. So, I guess my question--I have two questions. Ms. Wilhelm, I actually have a really great homebuilders association in Alabama. They are awesome. They have an apprenticeship program. But how do I encourage them to branch out and actually take a risk and hire felons? Ms. WILHELM. Tell them to call me. [Laughter.] I would be happy to share our experiences with them. And that is one of the reasons we wanted to come today because, you know, hopefully we can be a model for other areas, and you do have to take a chance, and it is worth it. Ms. SEWELL. So how did you convince the homebuilders in Arizona to do it? I mean, did you guys purposely decide to do a second chance? Ms. WILHELM. I have been there for a number of years working with them. And every board meeting, I would hear, ``We need workers, we need workers, we need workers,'' and I was running out of options. I had been to refugee relocation agencies. I had been to a lot of high schools and everything. We were moving, and I ran across a binder where I had participated in a task force with corrections. And I remember that I had gone and seen some of their construction programs, so I just called them up. Ms. SEWELL. Did you? Ms. WILHELM. And said, ``I would like to see what you are doing in the prisons. I would like to bring some of my trades out and look at what you are teaching them.'' Ms. SEWELL. Was there resistance from your trades? Ms. WILHELM. I had to talk to them about the opportunity. I don't know that I would say there was--there was hesitation, certainly. I mean, we are going into a correctional facility, you know. Ms. SEWELL. But success breeds success, obviously. Ms. WILHELM. Yes, yes. But it was definitely worth it. And, you know, what is really important is that you have a really strong commitment by the employer, and they were all in. I mean, they had to have a paid training program, they had to understand how it is to work with this population and that the challenges are a little different. They had to be able to work with us to try to overcome those challenges. Ms. SEWELL. What do you think is the biggest barrier as a-- so I am sure you had strict requirements of who can come into your program, were some of the requirements barriers in and of themselves? Ms. WILHELM. From the employers' standpoint? Ms. SEWELL. Yes. Ms. WILHELM. They had to have a paid training program because we were going in and trying to give these women and men hope, and a lot of them didn't have the skills but we still wanted them in. It was very interesting because as we did our hiring fairs, we heard from a lot of them telling me, ``Oh, I used to work for so-and-so. Are they still in business?'' So, it was very enlightening for us to see that there was a lot of skill there that we wanted to capture. Ms. SEWELL. Mr. Thomas, so how did your company decide to participate in a program and what are the requirements of that program? I really want to try to encourage the employers that I represent back home to take a risk. Mr. THOMAS. Well, and that is what it is. I mean, it definitely is an investment. Ms. SEWELL. Not a risk but an investment. Mr. THOMAS. I mean, and that is the way we--that is the approach we took is that it is an investment, you know. We are either going to pay today or we are really going to pay tomorrow. So, for us, it was really, it was an easy sell. I mean, it was, look, it is a great population. They are healthy and willing to try this, you know, to try our trade. Ms. SEWELL. What is your success rate? I mean, not everyone is going to be brought in. Mr. THOMAS. We have had about an 80 percent retainage rate, which is, by all standards, a fantastic rate. Ms. SEWELL. Eighty percent? That is great. Absolutely. Well, Brian, you are truly an inspiration and I just want to encourage you to tell your story because no one can tell your story better than you, but your story speaks to so many people's, you know, barriers and their own roadblocks. So best of luck in everything. Mr. POTACZEK. Thank you, thank you. Chairman SMITH. Thank you. Mr. LaHood. Mr. LAHOOD. Thank you, Mr. Chairman. And I want to thank the witnesses for being here today for this important hearing and for your testimony. In a prior life, I spent 10 years as a State and Federal prosecutor. And I am not proud of it, but I sent a lot of people to prison and jail, and I know that system very well. And I also served in our State legislature in Illinois and was very involved with criminal justice reform. We have talked a lot about how we find that balance between safety of our community, letting people out of prison early, getting them back into our communities, but also protecting society, and that political balance has been difficult. And, frankly, we haven't had much success in doing that at the Federal level with criminal justice reform. And, you know, in the State of Illinois, our goal with our criminal justice reform was to get 25 percent of our current State prison population out and figure out how to do that, particularly the nonviolent offenders. And, again, everybody wants to be tough on crime when you run for office, and so finding that balance is important. And so, I am listening to your testimony today, and particularly, Brian, your testimony, and trying to find that right balance. And, Mr. Thomas, I read that I think you have 86 former offenders working for you and you have had, as you just mentioned to Ms. Sewell, an 80 percent retention rate. And I wonder if you have suggestions on that balance between protecting our citizenry and safety, but also giving people a chance. Mr. THOMAS. Sure. So, you know, you had mentioned the safety factor. You know, I mean, obviously, we want to protect our communities. The best way to protect them is to give them purpose. And so many of these inmates that I have had interaction with over the last, you know, 18 to 24 months, the biggest thing was just the fact that they wanted somebody who believed in them. Most of the inmates that we have hired, they are not bad people. Let me rephrase that. All of them are not bad people. They have made some poor choices in life. I think the best way to serve them is to give them that belief that they can do it. We have also made it a point that, you know, all of our managers get in touch with them at least every day to some degree. So, I think, to answer your question, it is really about just giving them purpose. I think, ultimately, it is going to create the safety for our communities. Mr. LAHOOD. Well, I tend to agree with you. Being wanted or having a purpose is a big part of that. I am curious, you mentioned that your managers interact with them. Obviously, we have a parole system as Brian mentioned earlier. We have lots of integration systems. I am curious, do you feel that your managers are much more involved in aspects of their life or is it just related to what they do workwise? Mr. THOMAS. Oh, no, it is absolutely, if they have any issue that they are dealing with, whether it is personally or professionally, they are there to mentor them really, in essence, that is what they are there for. I do think it is more effective, just from an employer's perspective, in the sense that it is more personable. You know, the parole board or the probation officers that they see, you know, those are just individuals that are there to do their job, to make sure that they are staying in line, whereas our managers are more, are there to support them, you know, in their personal life as well so there is a significant difference. And I think that has really, truly been one of the successes of this whole program is that it is not just teaching them a trade. It is, you know, they are mentoring them. And I can tell you, I have had a number of managers come to us and just tell us how it has impacted their lives personally as well. You know, they feel like they are really doing something beyond just for themselves or just for the company. Mr. LAHOOD. And it sounds like, from what you are saying, in some ways, they are kind of a life coach, right, on some of those core decisions that are being made. Mr. THOMAS. Exactly made. Mr. LAHOOD. So, I am curious on that. I mean, do you give them training, your managers, or how do they acquire those skills to engage in that? Mr. THOMAS. No, I don't give them the skills personally. I mean, you know, obviously, it is something that we meet once a month and have a discussion around. Some of the managers will bring to us, you know, maybe some of the problems that some of the particular inmates are having and we kind of all work together to come up with a viable solution for them. We have had individuals that couldn't find housing, so we stepped up and we basically paid for their housing to get them over the hump. So, it is a combination of, I think, a lot of different things. A lot of it is just learning on the fly, you know. A lot of these guys are just learning it as they are--because everybody is a different case, right? I mean, everybody is an individual, so all the problems are individually different too, so---- Mr. LAHOOD. Well, thank you for what you do, and for trying to help your community, and for sharing here today. I appreciate it very much. Mr. THOMAS. You bet. Chairman SMITH. Thank you. That is an amazing background. Oh, sorry, one more. My apologies. Mr. BISHOP. Wow. Chairman SMITH. Mr. Bishop is recognized. [Laughter.] Mr. BISHOP. I am a low man on the totem pole. I won't be long. First of all, thank you all for being here today. I am grateful, and we are all benefitted by your testimony. In my previous life, I was a prosecutor. I have been in and out of courts and had some time to spend in the prison system with folks, not personally, but in my role as a prosecutor. I don't know that there are any services within the prison system that will prepare folks, inmates, for leaving. And I am wondering, Brian, what would it have been like if you had left without this, this transition into this beautiful opportunity that you have had? Mr. POTACZEK. I had already had results with being released and being reincarcerated because I didn't have job stability. I mean, for me, that is what it comes down to is job stability and everything else comes past that, paying your fines with work, clothing, dental, health insurance, not using access, or I mean, it is just, it is better. For me with the job stability, everything else just kind of fell in place after that. Mr. BISHOP. That hits close to home for me because I have an 18-year-old at home too and he just had wisdom teeth out, and he came home with a prescription for an opioid. And I didn't, I purposely did not fill it because I just thought it was incredibly, let us just say, negligent on the part of the doctor for having prescribed it. It was way over prescription, as far as I was concerned. But I know what happens all the time and this is a message that we need to get out to a lot of parents who are in the same situation. But I wondered if I might ask the panel, there is a study by a Princeton economist, Alan Krueger, and he found that the increase in prescribing rates can account for between 20 and 25 percent of the approximately 5-point drop in labor force participation between 1999 and 2015. Is that real? This is where the opioid crisis and the job issue interact. It is amazing to me that that is indeed an issue and it is that big of an issue. So, I don't know, does anybody feel inspired to answer that question? Ms. WILHELM. I would be happy to talk a little bit about our experience. I would say probably 90 plus percentage of the people we interact with are incarcerated for some drugs or drug-related offenses and it is a huge problem. And I think one of the reasons that sometimes they are not successful, even after they know they have a job getting out, just actually showing up and whatever, is that intervention into them going out and starting to use again, so it is a huge crisis. And then sometimes they will work for a week, get their first paycheck, and they are gone, and they are out buying drugs again. So, no, we see it every day, not just in this population, but in the workforce certainly. Mr. POTACZEK. My experience with it, you know, I got my wisdom teeth pulled and I just started doing the pills. I was coming from a good family, my mom is supportive, not on drugs, came from a good community, and that spiraled me down and I lost everything just from that. I lost my job, so I believe in it. I believe there is others out there and I believe it is affecting our communities really, really bad. And I have seen it from firsthand experience and I have had experiences with talking to other inmates about the same stories, how it just gets out of control. Mr. BISHOP. That is incredible testimony. And I have heard the same thing, I just didn't know it was at this level, that it had had that kind of impact. Ms. Terenzio, you have a program that you participate in called Skillful. And the Skillful, I think it is the Skillful State Network? Ms. TERENZIO. Mm-hmm. Mr. BISHOP. Can you share with us what that is about? It sounds like a very interesting program for States. Ms. TERENZIO. Yeah. Skillful's mission is to have employers consider employees based on their skills, not necessarily their background and degrees. And so, we work with them pretty closely as a model of basically what a company can look like if you consider people just based on what they can do and not necessarily what their pedigree looks like. And so, we helped them kind of get the word out. We are a case study for them. We support each other, you know, through literature and speaking engagements, and so we have worked pretty closely with them just in kind of getting the word out to other employers about what you can do if you don't just consider degrees on every job application. Mr. BISHOP. So how many States are you in and how is this funded? Ms. TERENZIO. Our particular program or Skillful? Mr. BISHOP. Skillful. Ms. TERENZIO. Skillful is an offshoot of the Markle Foundation based out of New York City and they are just expanding. But we just, we partner with them. We are not a part, we are not actually Skillful, so we are just an apprenticeship program through the Department of Labor. And we are currently in Colorado, but we are looking, we are looking at rural-sourcing kind of jobs, so we are also looking at creating opportunity in rural areas where we can use our apprenticeship program to train people and maybe instead of Silicon Valley or going to India for software development, they actually go to rural parts of America to write their software. Mr. BISHOP. That's fascinating. Thank you very much. Chairman SMITH. Thank you. So, you are saying someone could show up with a Nebraska Huskers attire on and still get a job in Boulder, Colorado? Ms. TERENZIO. Correct. [Laughter.] Chairman SMITH. Very good, very good. Thank you so much. Really, your insight, your perspectives, and these are great stories. Thank you again, Brian, for sharing your story and thanks to all of you. It involves everyone here, the complexities of the system that we need to look at, and I think this hearing is particularly instructive for us as we try to work together to move forward for the betterment of our country through the betterment of individuals and some second chances, or third, or fourth from time to time as well. So, thank you very much for your participation here today. Thanks. We will now focus on the second panel of witnesses. So, as we are shifting positions here, I will say that, unfortunately, one of our witnesses was unable to attend today, a Mr. Tony Girifalco, and he is the Executive Vice President of the Delaware Valley Industrial Resource Center in Philadelphia, Pennsylvania. I do ask for unanimous consent that his written statement be made a part of the record. Without objection, we will do that. [The prepared statement of Mr. Girifalco follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. I now recognize Ms. Jenkins for the purpose of introducing her constituent from Kansas. Ms. JENKINS. Thank you, Mr. Chairman. It is my pleasure to introduce Justin Welner from Spirit AeroSystems based out of Wichita, Kansas. Spirit AeroSystems designs and builds aero structures for both commercial and defense customers and is the largest private employer in my home State of Kansas. Mr. Welner serves as Spirit's Vice President for Human Resources and the Environmental Health and Safety Department. He has worked for his entire career in the aerospace industry, having previously worked for Bomabardier Learjet, where he served as Director of Human Resources in addition to holding numerous other leadership roles during his nearly 20 years with the company. Mr. Welner, thank you for being here today. We are looking forward to hearing your expertise in this subject area. Welcome. I yield back, Mr. Chairman. Chairman SMITH. Thank you, Ms. Jenkins. Dr. Davis for the introduction of your constituent. Mr. DAVIS. Thank you very much. And it is my pleasure to introduce Mr. Andrew Wells. Not only am I pleased to do so because of his expertise and knowledge, but he also grew up in the community where I live, which is on the west side of Chicago which is known as one of the most poverty-stricken areas in the country, an area where the riots occurred after the assassination of Dr. King and an area that has been called a microcosm of what is wrong with urban America, and that has been for many years. The Chicago Urban League has been around since the early 1900s and then intimately engaged in program development that is designed to lift the country out of its position of need to a position of productivity. So, Mr. Wells, thank you so much for being here, and I am delighted that the Urban League is doing the work that you do. Chairman SMITH. Thank you. I would like to recognize Ms. Walorski for the purpose of introducing her constituent from Indiana. Ms. WALORSKI. Thank you, Mr. Chairman. I have the pleasure of introducing Peter Barrett. Peter is the Senior Vice President of Marketing and Corporate Development at Smoker Craft in New Paris, Indiana. Smoker Craft is a multigeneration, family-owned boat manufacturer located in my district. Peter has been with the company since 1996 and is carrying on the family tradition as the fourth-generation owner/employee. I love visiting Peter at his company, Smoker Craft, and hearing from Peter and his employees, and I am delighted that he is with us today to share his insights on the jobs gap. Thank you, Mr. Chairman. Ms. WILHELM. Thank you. Chairman SMITH. And witnesses are reminded to limit their oral statements to 5 minutes. All of your written statements will be included in the record. We will begin with Mr. Welner. You may begin when you are ready. STATEMENT OF JUSTIN WELNER, VICE PRESIDENT FOR HUMAN RESOURCES, SPIRIT AEROSYSTEMS Mr. WELNER. Chairman Smith, Ranking Member Davis, and Members of the Ways and Means Committee, thank you for allowing me to testify today about the workforce pipeline challenges facing our company along with other advanced manufacturing businesses across our country. Spirit AeroSystems designs and builds large, complex aerostructures for both commercial and defense customers. Our largest customers include Boeing and Airbus, and in 2016 we were named as one of seven suppliers on the B-21 Raider program for the Air Force. With headquarters in Wichita, Kansas, Spirit operates manufacturing sites in Oklahoma, North Carolina, Europe, and Asia. Our core products include fuselages, pylons, nacelles, and wing components. Spirit is the largest private-sector employer in the State of Kansas with more than 11,500 employees. Last December, our company announced we would be expanding our Wichita operations by adding 1,000 new jobs over 2 years and investing $1 billion over 5 years in capital projects. This was driven by production rate increases on existing programs as well as new programs in the areas of defense and fabrication. Building a talented workforce from today's labor pool is one of the largest challenges our company faces as we hire to keep up with natural attrition rates and seek to expand our base employment to meet production requirements of our customers. Before I explain our experience with workforce constraints, I want to provide additional context for what we are up against. At our Wichita site, we employ about 7,500 line-workers. These include sheet metal mechanics, assembly mechanics, CNC operators, and composite tech who fabricate, build, and assemble large metallic and composite aircraft structures. At our four U.S. sites, we have hired more than 4,000 front-line employees since 2015, about 1,000 of those in the last 3 months. But like many other advanced manufacturers, we are faced with an aging workforce. And what keeps me up at night is the fact that within 5 years, 40 percent of my entire workforce will be retirement-eligible. The enormity of this reality and the challenge it poses for us, along with thousands of other advanced manufacturers, cannot be overstated. Spirit has been hiring as quickly as possible to fill open positions, but we are struggling to find qualified workers with the skillsets needed in today's aerospace manufacturing environment. Three years ago, it was customary for us to hire someone and put them through 2 to 3 weeks of training depending on the experience level of that new employee. Today, we have retooled and expanded our in-house training programs that now last up to 7 weeks, so when we recruit and hire somebody, it is 7 weeks before they hit the shop floor and actually produce any real work and it is several additional weeks before they become fully productive. The challenge we are experiencing is not isolated to a State or regional problem. It is a national problem, and we are nearing the verge of what could become a watershed moment for our country as we determine what we want the future of manufacturing to look like in the United States. How we respond and our ability to proactively pursue collaborative solutions will define our success. While I've described some of our industry's obstacles to filling open jobs, I want to pivot for a moment and share with you some of the solutions we have deployed to help to try to overcome those barriers. We are investing millions of dollars into an expanded in- house training program that includes growing our training department by 30 people. Their focus is on improving the skillsets of the new hires and getting them better prepared to be successful on the shop floor. We have expanded our recruitment efforts to reach well beyond the State border and we are now offering very generous relocation packages for experienced hourly employees. While we have had some isolated examples of success with this, most hourly workers come from two-income families and are well- rooted in the communities in which they reside. In the last few months, we have launched a retiree and alumni program where former employees are now hired to come back to work as a workplace coach to mentor and guide less experienced mechanics as they begin to navigate the complexities of the manufacturing environment. For several years, Spirit has had an apprenticeship program with the International Brotherhood of Electrical Workers, and this year, we are launching several additional apprenticeship programs with the International Association of Machinists and Aerospace Workers. In addition, for many years, we have worked cooperatively with the technical colleges located near our manufacturing facilities to guide and shape curriculum programs that meet the needs of our industry. We have intensified that engagement based on the tightening of the labor market. Last year for the first time, we started a high school intern program to bring high school students into the factory and introduce them to careers in manufacturing. Based on the success of that program, we will be doubling the size of that program this year. One other strategy that was targeted toward high school students that has helped is the Excel in Career Technical Education initiative, which is more commonly referred to as Kansas Senate Bill 155. That law took effect in 2012 and pays for students to obtain technical certifications and credentials before they graduate high school. We have hired many students through this program. But while all of these initiatives are helping address the challenge faced by our industry, unfortunately they are not yielding nearly enough potential workers. So, I would like to conclude by highlighting a few additional opportunities that this Committee and Congress could consider to further assist aerospace and advanced manufacturing. The first thing is for leaders to understand that if our country cannot solve the workforce problem and talent pipeline issues, our U.S. industrial base will erode because businesses will be forced to move work to countries that can satisfy production demand. This is not a threat targeted at our elected leaders. It is a threat we all face together, given the realities of operating in a global economy. A second thing for us all to address is the need to better promote the dignity of career paths in technical fields such as advanced manufacturing. All too often, parents and our education system encourage students to seek post-secondary education through a 4-year degree, and we ignore career paths that require vocational training. And finally, I would encourage this Committee and Congress to consider options that allow Pell Grants to be used for students seeking certifications and credentials in technical programs that are less than 16 weeks long. By limiting qualifying students from receiving Pell Grants for credentialed technical training programs that are under 16 weeks, we create an unnecessary barrier for lower-income students to achieve success through a career in manufacturing. I appreciate being invited to testify on behalf of Spirit AeroSystems. This Committee is faced with many challenges of national significance. We are grateful for the work you did on tax reform and we are grateful you are spending time to further explore ways to help the private sector address these workforce challenges. Thank you for your leadership on these matters. I look forward to answering your questions. [The prepared statement of Mr. Welner follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. Thank you, Mr. Welner. Mr. Wells, you are recognized. STATEMENT OF ANDREW WELLS, DIRECTOR, WORKFORCE DEVELOPMENT CENTER, CHICAGO URBAN LEAGUE Mr. WELLS. Thank you, Chairman Smith, Ranking Member Davis, and Members of the Subcommittee for the opportunity to offer testimony here today. My name is Andrew Wells and I am the Director of Workforce Development at the Chicago Urban League. In my role at the Chicago Urban League, I am tasked with the very important job of connecting people to employment opportunities, training, and career pathways to high-growth sectors. In the 100 years our organization has been in service to the African American community, this has been a staple of our work. Employment is the most essential building block in individual and community economic growth. A good job helps to alleviate household poverty and a strong job market gets more people in a community working and more dollars circulating locally and nationally. The Chicago Urban League focuses specifically on assisting individuals in the highest areas of need, in racially concentrated areas of poverty, the areas that have the highest unemployment rates in the city, located primarily on the South and West sides of Chicago. Youth and adults living in racially concentrated areas of poverty, however, have a significant number of barriers to accessing jobs. One, there is a significant employment spatial mismatch. Strong central business districts and suburban employment cores house many of the best opportunities for workers. In places like Chicago, where jobs are located are not where African Americans most in need of jobs live. Someone who doesn't live near transportation or who lacks a car might have a very difficult time getting to work. The distance might be too considerable to manage working, child, and household obligations. The pay may not be adequate to overcome increased costs related to commute and child care. All of these barriers conspire to reduce a person's ability to both find and keep a good job. The collateral consequences of criminal records significantly impede employment opportunities. We know that employment is a critical part of the re-entry process, and yet there are barriers at all levels of hiring and promotion throughout all industries and sectors. Skills, job readiness and training programs need to be more abundant. These skills need to be targeted in areas of growth, like green and emerging industries. The Chicago Urban League strongly encourages more training opportunities for youth and adults from the most disadvantaged neighborhoods to build on their employability skills. But that is not the only answer. We also need to do the following. Enact an employment subsidies program that would place unemployed individuals in the private sectors, private and public sectors, including those with criminal records. Expand apprenticeships, summer and employment opportunity programs for youth. Increase workforce training opportunities for African American adults and match them with employment through public and private partnerships. Reduce the collateral consequences of a criminal record and barriers to employment through sound criminal justice reforms. Create or expand transportation subsidies to ensure that workers can get to their places of employment. Create small business incubators in racially concentrated areas of poverty to bring local, accessible jobs to these disinvested communities. Last, but not least, ensure equity in public education. Illinois has the worst disparities for funding in the Nation when it comes to equity for low-income minority students. Providing youth with good quality education will go a long way toward improving access to jobs, to quality jobs by preparing youth to get jobs. I know that this will not be easy. I know this takes political and community will to accomplish. But we all know how critical increasing employment opportunities are to our neighborhoods and to cities across the country. Expanding these opportunities will not only increase employment in our most under-resourced communities, but also reduce crime, decrease household poverty, increase home ownership, and build community wealth. We cannot continue to accept that, in great cities like Chicago, the highest unemployment rate for people of color in the Nation is the norm. We must do what is right to ensure equal access to opportunity for all American citizens. Thank you. I would like to just share this one thing. We operated a transportation construction apprenticeship highway program for about 3 years. We trained 598 individuals in this, in this program, most of whom were ex-offenders or came from disadvantaged neighborhoods. I want to share this one success story because this is why I keep doing the work that I do. There was a young lady, and I will call her Ms. Dewberry, who was a single mother with three children. Literally, she was making decisions at the gas pump on whether to put gas in her car or to put food on the table. At the time that she applied to the Chicago Urban League, she worked at Monterrey Security making $11.54 an hour. Now, mind you, she has three kids. So, I did her interview when she enrolled in the program and I asked her, I said, ``Well, you already have a job.'' I said, ``Why are you enrolling in a program?'' She said, ``Well, Mr. Wells,'' she said, ``I can't continue.'' She said, ``I don't know what to do.'' She said, ``Every night, I am crying. I can't take care of my kids off of $11.54 an hour.'' Well, I enrolled her in the program and she ended up becoming the best laborer, the best apprentice at the Chicago Urban League. And right now, this young lady is making $37.50 an hour and it changed her life. Not only did it change her life, but it changed the lives of so many other people who came through our doors. If you have quality training programs that can provide real skills that employers can use, it works. So, I just want to leave you with that. [The prepared statement of Mr. Wells follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. Thank you. Thank you, Mr. Wells. Mr. Barrett. STATEMENT OF PETER BARRETT, SENIOR VICE PRESIDENT, MARKETING AND CORPORATE DEVELOPMENT, SMOKER CRAFT, INCORPORATED Mr. BARRETT. Good afternoon. Thank you, Chairman Smith, Ranking Member Davis, and Members of the Subcommittee, for the opportunity to appear before you today to discuss an issue important to my business and the recreational boating industry, workforce development. My name is Peter Barrett. I am proud to represent Smoker Craft, Incorporated, a boat manufacturer located in New Paris, Indiana. Founded in 1903, we are a fourth-generation family-owned and operated business that builds pontoon boats, fiberglass boats, aluminum fishing boats under the brand names Smoker Craft, Starcraft, Sunchaser, and Sylvan. Last year, Smoker Craft built and distributed over 11,000 boats to our worldwide dealer network. Our company employs over 690 people at our two manufacturing and transportation locations. The recreational boating industry is an important driver of the U.S. economy, with an annual economic impact of more than $121.5 billion. Our industry is uniquely American. Our industry is a uniquely American-made product. Ninety-five percent of boats sold in the United States are made in the United States. Behind a fun day on the water with family and friends are American businesses and manufacturing jobs. Our manufacturing is unique to the boat business and employees must have a broad range of skills. Our highly-skilled employees must weld, rivet, and fiberglass laminate. Less- skilled workers need the skills to read a tape measure, utilize simple power tools, and follow basic instructions. Our jobs do not require a 4-year degree. They pay well and have great benefits. A solid employee can quickly move up and establish a career in our organization. The boating industry is strong and many of our 300-plus dealers report that 2017 was their best year ever. Many dealers have indicated that they could sell more product if we could meet the demand. We have plenty of work. Today, our backlog is 20 percent larger than last year. Unfortunately, we will be challenged to meet this demand and will struggle to continue to grow if we cannot find skilled employees. Our current employment situation is troubling, and the future looks even worse. We are located in a region with lower unemployment and higher job opening rates than the rest of the country. With an aging workforce and a small pool of qualified workers to recruit from, we are concerned with the future prospect of finding skilled workers, a critical component for our growth as a business. Last month, we thanked an employee named Frank Perales for 50 years of service on our aluminum riveted line. Frank is dedicated to our company and an excellent boat builder. His ability to quickly solve problems, coupled with a strong work ethic, have made him a model employee. As we presented his gift, he said he would like to retire in a year or two. Unfortunately, replacing someone like Frank might require two people to achieve the same level of production. If we could find the right person, Frank should be mentoring his replacement right now. Beyond the production line, a similar issue impacts our transportation division. Our drivers haul boats around the country and into Canada. The long days and nights on the road coupled with unloading boats upon arrival is exhausting for our older drivers. Many of our senior drivers face further challenges in adapting to the use of electronic log books and have changed jobs or retired simply to avoid learning new technical skills. Replacing these drivers is difficult as younger people show little interest in this career path and we need our boats delivered. The future challenge we see is attracting and training the younger employee for our workplace. Our area, once known for its strong family farm work ethic, is struggling to find young people with the grit and desire to participate in American manufacturing. Very well-designed skills training programs have been tried through our local community college but have failed as employers can't wait for live bodies, trained or untrained. As participation in these programs dwindled, funding was frozen. The concept of workforce training programs is vital to bridging the jobs gap we are facing today and in the future. Simply put, we need skilled workers. Our industry needs welders, riveters, assembly people, and truck drivers. Shop classes need to return, and exposure to careers in manufacturing through internships and apprenticeships should be encouraged. Careers in the trades need to be recognized and glorified. Our workforce is the backbone of this country. We need to support the expansion of career and technical education or CTE, just as we support 4-year and graduate education. I am pleased to see Congress taking steps in the recently passed Appropriations legislation to support the Department of Labor and Department of Education programs that promote access, completion, and affordability of workforce training efforts. The funding and support is crucial to States and localities trying to meet the needs of employers such as Smoker Craft, Incorporated. Thank you again for the opportunity to appear before you today. I look forward to answering your questions. [The prepared statement of Mr. Barrett follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman SMITH. Thank you, Mr. Barrett, and thank you to our entire panel. It is, again, great to hear your perspective, your expertise as well. We know that there is oftentimes the challenge of, you know, we know that folks need a job and want to work, there are openings out there, and bringing everyone together is oftentimes more difficult than one would think. America is a big country, too. And geographically, there can be some distances that are problematic or a challenge, even in the city. And transportation can be a challenge with a worker getting to a job site. I am proud to say Nebraska, I think, has done fairly well in terms of advancing these causes. I am glad that Forbes recently has ranked Nebraska the fourth best place to do business, but I know that I still hear from many employers who face the challenge of job openings that remain unfilled. And so, we know, as Mr. Wells already indicated, that some community partnerships can really deliver positive results, positive outcomes, increasing wages. I mean, not only getting someone perhaps into a job, and you know, that might just be checking a box, but when you really look at raising oneself up out of poverty, it means increasing wages and that drive to see higher wages with time, with time and effort. So, I was wondering if others on the panel, and certainly, Mr. Wells, if you want to add emphasis as well to the community partnerships that have been formed that bring folks in need, whether it is the job opening, whether it is the unemployed individual, or the underemployed individual as was mentioned before, can you point to some specific community partnerships that have been particularly successful? Mr. WELLS. Sure. So right now, at the Chicago Urban League, we have two projects running with ComEd. ComEd is one of the largest electric suppliers in the Midwest, specifically in Illinois. And one of the projects is called Construct. It is an 11- week training program to equip individuals with the skills to go into the electrical construction industry. So, we partner with about seven other agencies and 47 companies are a part of this project. The 47 companies pay into the program to create that pipeline of individuals. The 47 companies are subcontractors with ComEd, so we are essentially building that pipeline for those companies who claim that, hey, we don't have talented workers, we need skilled workers, so we are creating it for them. Another project that I am running with ComEd is the solar PV installation jobs training program. We currently have a cohort of 15. It just started April 6th and this is a project that we received $1 million for to train one hundred people over the course of 4 years. We have other partnerships with corporations such as AT&T, in which we do digital literacy training to eliminate the digital divide and then to also provide individuals to their call center jobs and other technical jobs. We work with Comcast. We have a relationship with them. We train people for jobs at Comcast. We just renewed our contract with them. And I recently received a contract with the Chicago Transit Authority, in which we are training individuals similar to a project that we are running with Construct where it is, this one is 8 weeks and it is training people to become bus operators and also call center representatives. Chairman SMITH. Very good. Mr. Welner. Mr. WELNER. Yes. So, we work with the Kansas Workforce Alliance to bring in the underemployed and put them through a training program. In fact, we have a Camp Grant to help do that. We have been fairly successful with it. The challenge that we face is that the manufacturing environment isn't necessarily appealing to some people. It is a 5-day, sometimes 6-days a week job. We are a heavily-unionized company, so you start on second shift based on seniority and that brings some challenges with it as well. But, nonetheless, we are absolutely exploring every avenue we can to find workers including looking for community partnerships to get to everybody we possibly can. Chairman SMITH. Very good. Mr. Barrett. Mr. BARRETT. We have explored several different avenues over the years. But, unfortunately, we have found that being where we are in the pecking order in Elkhart County makes it more difficult in our line of work. As you may have seen in the Wall Street Journal article, the focal hub of manufacturing is the RV industry in Elkhart County. And the boat business, we are a little bit different. We are classified with RV, but we are a different animal. We tend to work at a slower pace. Our boats tend to be a little bit more customized than an RV. Our pace attracts entry level employees that can work a little bit slower, but at the same time, we tend to pay a little bit less. So being in that place in the employment pecking order, the more valuable or the more skilled employees tend to go to RV first and then they filter down to us. So, what happens is typically the vocational schools will feed RV before us. We have tried several programs to capitalize on job placement, but we just have not had much luck. Chairman SMITH. Okay. Thank you. I now recognize Dr. Davis for 5 minutes of questions. Mr. DAVIS. Thank you, Mr. Chairman. Mr. Welner, do the high schools and community colleges in the area where your plants and facilities are located, are they preparing individuals for work in the manufacturing areas? Mr. WELNER. So certainly, the community colleges and the vocational schools are trying. The challenge is getting the students into them, right? We do have some high school programs that are starting to take positive effect in terms of partnering with a technical school and allowing students to get their technical certifications or credentials while they are in high school. The big challenge seems to be the lack of interest in that generation in this type of work. We are starting to push all the way down into the middle schools and elementary schools, starting to talk to kids about the positive benefits of careers in manufacturing. And we don't think of it as just a job, we think of it as a career. When I started 25 years ago at Learjet, I started as a payroll clerk at $8.50 an hour, coming out of a 4-year school with a degree in finance. That wasn't my aiming point, but it was a way in the door, and that is the promise we are trying to talk to these kids about. And if you look at most of our leaders in the manufacturing world, they started on the shop floor, so it can absolutely be a career and not just a job, but we have to get the kids interested in it. Mr. DAVIS. So, if there was perhaps more focus put on recruitment, because many of the individuals who end up in need of TANF are individuals who have gone past or didn't complete or did not follow the high school curriculum to the point, so I am just thinking that some additional recruitment of this population group, especially young adults who have no skill but fit the category and the requirements for TANF assistance, I think would probably be---- Mr. WELNER. I think that would be great. I think we have lost a lot of the shop classes in the school system. When I came through the school system, you could take a mechanical shop class, you could take a woodworking class. All of that is gone. So, the kids that maybe the regular curriculum isn't right for, they don't have anywhere to go. Mr. DAVIS. Mr. Wells, I know that the Urban League does not officially have a training program that is directly related to TANF recipients, but you do get them, right? Mr. WELLS. That is correct. Mr. DAVIS. I understand people do come who meet the criteria to be a TANF recipient. Are you able to connect them in any way with TANF or to pursue resources through TANF that could benefit them? Mr. WELLS. I'm sorry. Are you saying, are you talking specifically about TANF participants that come through Chicago Urban League's doors and connecting them to different resources? Mr. DAVIS. Right. Mr. WELLS. Yes. So, we do an assessment to figure out what the need is, if they come through our doors and they are interested in some type of training. Right now, we run several of them. We have the Ready to Work Grant in which we provide technology training. We have training in supply chain management. We have construction training to increase minority participation in the trades. So, it depends on what, it depends on what they want to do and if they qualify for that, for those programs and then we will enroll them in the programs. Mr. DAVIS. Well, let me just, I have been particularly warmed with the coming with that as an activity relative to helping individuals get into the electrical area, so let me just commend the Urban League for that affiliation. Thank you very much, and I yield back to the Chairman the balance of my time. Mr. WELLS. Thank you. Chairman SMITH. Thank you. Ms. Walorski. Ms. WALORSKI. Thank you, Mr. Chairman. And to Peter's point, there was an article that he referenced in the Wall Street Journal last week, and the headline is ``The Future of America's Economy Looks a Lot Like Elkhart, Indiana,'' and Peter is right down the road from Elkhart in my district. The article says, ``High school students skip college for factory jobs that offer great pay and benefits. Workers are so flush that car dealers can't keep new pickups on the lot. At the same time, employers can't hold onto employees.'' It points out that the unemployment rate is essentially zero because there are 9,500 jobs available in this place in Elkhart. So, Peter, to your point, as we talk about that, there are challenges between this article and your testimony. Which is the hardest to do, find workers, teach them skills, or retain them? What is the toughest part of those three for you? Mr. BARRETT. That is a really tough choice because all three are exceptionally difficult. Retaining employees has been very difficult. I will give you an example that happened on Monday. I walked into my office and an employee who had been with us for 20 years came to me, with tears in his eyes to tell me he was leaving. Our employees are family, and so when a 20- year employee comes to us and he is saying that he is going to leave, that is a big deal. Martin has worked for us for 20 years. He drives a forklift. He found a job across town for $10 more an hour. Our industry and our company doesn't have the means to be able to raise rates that abruptly, to get into a wage war and to chase employees. So we just lost a really good employee who I would love to still have, and as I said, he is part of the family. This is one of many heartbreaking stories where we are losing good employees with longevity. They are leaving good benefits and stability in a short-term wage war. Ms. WALORSKI. And let me ask you this. With 2017 being a record year you talked about, and with tax cuts, with more money in folks' pockets, looking at things they want to be involved in, do you need to hire more workers? And what if you found enough workers, what would that do for your company? Mr. BARRETT. If we found more workers we would certainly bring our factory up to full capacity. We have three different product lines, pontoons, aluminum fishing boats, as well as fiberglass. Our aluminum fishing boat's welded line could use several more employees. Right now, we have 44 openings which need to be filled. Also, if we could get more employees in the Elkhart area it would help relieve the supply chain. It is not just our business, but it is the supply chain underneath us that is suffering, too. So, if our console supplier can't build consoles due to an employee shortage, we can't build those boats that day. Ms. WALORSKI. I appreciate it. I yield back, Mr. Chairman. Chairman SMITH. Thank you. Mr. Curbelo. Mr. CURBELO. Thank you so much, Mr. Chairman. And thank you all for being here to discuss this very important topic with us. We are focused on how we can help some of the most vulnerable, needy people in our country. And I have been fortunate to team up with Dr. Davis, this Congress, to figure out how we can perhaps modify or leverage our existing social welfare programs such as TANF to open new doors, provide new opportunities to those who are on the sidelines as Chairman Brady tends to say. Do you all have any ideas as to how we might be able to use those programs, not just to help people get by, but to help get them into the workforce, to help them get up on their feet, and hopefully eventually become independent of all these programs? Anyone who wants to take it. Mr. WELLS. I think one of the things that needs to happen is an exception needs to be made for those who are interested in enrolling in a skills training program. So, if they are interested in it, the 20-hour stipulation each week, that needs to come down because most of the training programs go past 20 hours, so I think an exception needs to be made in order for them to get an industry-recognized credential and go into some type of good-paying job. Mr. CURBELO. Does anyone else want to add to that? Do you have any thoughts on wage support for employers who contract higher, TANF beneficiaries for example? Mr. WELNER. We are not really involved with that. Most of the people we hire have to have some credentials from a skills standpoint because we are building very complex aerostructures that require precision and training, so my company is not very involved in that, so I can't add much to it. Mr. CURBELO. Thank you, Mr. Chairman. Chairman SMITH. Thank you. Thank you to everyone here for your participation. It means a lot that you would share your perspective. And please be advised that Members will have 2 weeks to submit written questions to be answered later in writing. Those questions and your answers will be made part of the formal hearing record. With that, the Subcommittee stands adjourned. [Whereupon, at 3:58 p.m., the Subcommittee was adjourned.] [all]