As Congress contemplated, and I think it was in 202 (c) (8) of the Trade Act of 1974, this is the kind of serious problem that has to be prevented.

Certainly, when an industry gets as impacted as the footwear industry is now, we will be above 50 percent, we have gone way past a percentage that would be acceptable. The American consumer is suffering the consequences of inadequate supply of domestically made shoes that offer the fit, the comfort, the size range that is only available from domestically made shoes.

Those shoes, as you or your wife would experience, those shoes are rarely even displayed to you. The retailer is only making available on a visible basis the imported shoes on which they take a much higher markup.

Mr. STEIGER. Thank you very, very much.

Mr. FISHER. Mr. Frenzel.

Mr. FRENZEL. Thank you, Mr. Chairman.

Mr. FRENZEL. What is the average wage in the shoe industry? Mr. RICHARDSON. The average is just short of $4 an hour at this time, Mr. Frenzel.

Mr. FRENZEL. Do you have some industry problems which are occasioned by movement within the United States as well as by competition from the outside?

Mr. RICHARDSON. You are thinking in terms of historic patterns such as the textile industry saw in its movement from the northern tier of States into the southern States?

Mr. FRENZEL. Yes.

Mr. RICHARDSON. There was a time when I think we could define an effort of a movement of certain shoe companies to get to certain low-wage States, but when the differential between where a State requires $4.50 an hour and a State where it may require $3.90 an hour, that 60-cent differential is nothing compared to the differential of just closing up your plant, say, in Minnesota and going to Taiwan or Korea or Brazil. Brazil, with 54-cents-an-hour labor, seems a lot more appealing to the shoe manufacturer, so inclined, than going to Mississippi where the wages would be slightly less.

Mr. NEHMER. I might add shoes are produced in 42 of the 50 States. There are certain States like Pennsylvania, which is No. 1, New Hampshire where shoes are the No. 1 manufacturing industry of the State. Tennessee, Missouri are all very important shoe areas, and Arkansas.

Mr. FRENZEL. There are trends as have been apparent in the industry you cited.

Mr. RICHARDSON. Yes, but I think you are talking about an historic experience that was at the turn of the century. Initially all of the shoe industry was in New England. The discovery of the shoemaking machinery that makes shoes took place in the greater Boston area. From that time through the year 1900, you saw an industry develop, evolve, and to some extent leave New England. By around the year 1900, I would say 34 percent of the shoe manufacturing was in the New England area. Now New England has about 26 percent. There has not been that much of a movement out of the New England States into the South since many, many decades ago.

Mr. FRENZEL. I appreciate having that information. On the other hand, is it fair to say some of the more modern plants are no longer in New England?

Mr. RICHARDSON. I was interested in the comment of Governor Thomson. I am sure that he is more familiar with the shoe manufacturing plants throughout New Hampshire than I am. However, I feel I am familiar with a number of them. I don't think that you can find any area of the country that you can distinguish for having more or less old or new shoe manufacturing facilities.

The shoe manufacturing facilities in the United States, by and large, are new. We certainly are the most productive Nation on earth. We have a productivity rate of at least 125 percent compared to Canada, our closest competitor. Canada has a 25-percent tariif on shoes. We have 8 on ours.

Mr. FRENZEL. So adjustment assistance offered to the shoe industry should be as effective in one part of the country, or as ineffective?

Mr. RICHARDSON. Since our position basically, Mr. Frenzel, is that adjustment assistance represents no form of relief for the shoe industry. we would say it would be equally ineffective.

Mr. FRENZEL. But it would be equal?

Mr. RICHARDSON. Yes, sir.

Mr. FRENZEL. But it would not make any difference. If it were attractive, it would be as attractive in Boston or Washington as it would be in Tennessee or Pennsylvania?

Mr. RICHARDSON. The only community I am aware of that has applied for adjustment assistance since the passage of the 1974 act was a town in Missouri.

Mr. NEHMER. If you look at the firms and the workers and where they are located in this industry who have been certified to receive adjustment assistance, you find a few firms in New England, one in Georgia just recently, one in Missouri that I am aware of, and the workers who have been certified in this industry have been in a whole raft of States throughout the United States.

I think the answer would have to be there would be no difference geographically as far as the effectiveness of adjustment assistance in this industry.

Mr. FRENZEL. Thank you very much.

Mr. VANIK. We certainly appreciate your testimony and the time you have taken to be here.

Thank you very, very much.

Mr. RICHARDSON. We appreciate the opportunity to be with you gentlemen.

Mr. VANIK. We know we have some work to do.

Mr. RICHARDSON. We are deeply concerned.

Mr. VANIK. The next witness is Leonard Woodcock, of the United Automobile Workers. Mr. Woodcock, we would be very pleased to have you testify at this time.

Let me say we appreciate the work you are doing on behalf of all of us. We hope your recent mission will have rewarding results. We are grateful, and we will be pleased to have your statement on the adjustment assistance.

STATEMENT OF LEONARD WOODCOCK, PRESIDENT, UNITED AUTOMOBILE, AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW), ACCOMPANIED BY LEONARD PAGE, UAW LEGAL DEPARTMENT, AND HELEN KRAMER, UAW INTERNATIONAL TRADE SECTION

Mr. WOODCOCK. Thank you, Mr. Chairman.

My name is Leonard Woodcock. I am President of the International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, UAW. We represent approximately 1,400,000 UAW members in the United States and Canada.

I welcome this opportunity to testify before this subcommittee on the operation and effectiveness of adjustment assistance programs under the Trade Act of 1974 and to bring to your attention some of the problems UAW members have experienced in the administration of those programs.

However, before we get into the problems, I must say that the UAW is generally satisfied that the 1974 act appears to have finally established some real commitment to provide adjustment assistance to workers adversely affected by imports. The current legislation is a clear improvement over the mythical workers adjustment programs of the Trade Expansion Act of 1962.

Despite this improvement, many problems still remain. If this country intends to promote liberal trade policies, then all workers injured by those policies must receive Federal adjustment assistance. The security of an American worker's family is far more dependent on his or her job than is the case for a worker in other industrialized countries. In the face of persistent high unemployment, inadequate social security and health insurance systems, it is not surprising that many workers become protectionist when their only option is an inadequate or incomplete adjustment assistance program. Inequities in the present program can only lead workers to cry even louder for quotas and tariff increases.

Our presentation today will comment on the current amendments being considered and suggest other areas where relief or new approaches are needed. Some of these problems have previously been brought to the House's attention in my testimony of April 14, 1976, in oversight hearings on the Canadian-American automotive agreement before the Subcommittee on Labor Standards of the Committee on Education and Labor.

First I would like to make some general observations about trade policy, full employment, and national planning.

I. THE NEED FOR A FULL EMPLOYMENT POLICY AND NATIONAL PLANNING

Experience since the trade liberalization measures of the Trade. Expansion Act of 1962 has taught us that there is no automatic connection between liberal trade policies and full employment. Even in a full employment economy an adjustment assistance program will be necessary to lessen the social and human costs of displacement caused by increased foreign competition. In a high unemployment

economy such as ours today, however, the trade adjustment assistance program cannot work effectively. In the absence of adequate alternative employment opportunities, the provisions for job training and relocation allowances become moot. This is true independently of the inadequacies in the existing program, which fails to deliver the benefits provided for in the law.

International comparisons show that adjustment to changes in international competitiveness takes place much less painfully when the domestic economy is expanding rapidly. Serious trade adjustment problems are most likely to arise where overall economic growth in the framework of existing policies is insufficient to bring about a rapid reallocation of resources.

There is no substitute for monetary and fiscal policies geared to sustaining an adequate level of total demand for goods and services, but these are insufficient by themselves. Policies are also needed to induce diversification and the establishment of new forms of jobcreating activity. This leads us to conclude that our existing institutions are inadequate to cope with our problems of high unemployment and economic dislocation coupled with inflation. We suggest that what the American people need is not more rhetoric about budget balancing and market forces, but rather the passage of legislation committing the Federal Government to measures guaranteeing the right of every American who wants to work a job at decent remuneration. Implementing this guarantee will require, among other things, a system of national economic planning oriented to regional development programs.

The existing trade adjustment program provides only illusory assistance to communities and firms impacted by increased imports. It is no accident that, to date, not a single community has been certified to receive adjustment assistance. The reason is not that no communities have been adversely affected, but rather that the requirements written into the law are so restrictive that no community can qualify. The legislative history suggests that this was intentional.

The record on adjustment assistance to firms also shows that this part of the program has been ineffective. Adjustment assistance to firms should be aimed at enabling those firms deemed capable of competing with imports to survive and eliminating others without unnecessary hardship. In every industry there are some line of production and some firms that can survive in a liberal trade situation. They may need to increase their scale of operations in order to generate enough cash flow to finance investment in plant and in research and development and marketing operations. It would be difficult to do this without public assistance, because import-impacted industries cannot easily raise funds from the private capital market or from commercial banks.

An investment bank subsidized by public funds may be the solution. Experience with the "New Deal's" Reconstruction Finance Corporation should be reviewed in this connection.

A full employment program must include legislation to deal with adjustment assistance needs that go beyond international trade effects; for example, plant closing situations and energy-related dislocations. We advocate an approach whereby employers would be

required to give advance notification to affected employees and communities of any transfer, closing, or reduction in operations. The Department of Labor should be responsible for providing comprehensive adjustment assistance. to the affected workers and communities.

TRAINING AND EMPLOYMENT SERVICES

A greatly expanded Federal commitment to vocational guidance and training programs is essential to reach the goal of full employment without inflation.

Because of the indifference of State employment agencies to the trade adjustment assistance program. it has been reduced to a special kind of unemployment insurance. With very few exceptions, the State agencies pay no attention to the parts of the program relating to employment services, training, job search, and relocation aliowances. The pitifully small number of workers who have received these services and benefits is an absolute disgrace, largely attributable to State inadequacies.

In major cases of import-related unemployment the Department of Labor should establish a task force in the community to centralize and coordinate all the adjustment assistance programs. The community task force could actively seek new employers and maintain a comprehensive training program. The benefits of the firm assistance program should be made available to new employers to attract them. to an import-impacted area and thereby create new jobs.

Labor market specialists have long recognized that the public employment services operated in conjunction with the unemployment insurance program have not been effective instruments of job placement. One obvious reason is that most job openings are not posted by employers at the State employment offices. This suggests that a first step in improving job placement services is adoption of legislation requiring employers to register all job openings with the public employment service.

Further, administration of vocational guidance and training programs would be more effective if they were integrated with the job placement services under one agency roof. Existing federally-financed job training programs are not only inadequate in scope, but are scattered among different administering agencies. Under the Comprehensive Employment and Training Act of 1973-CETA-programs have been decentralized and decategorized. The result is to make it more difficult for job seekers to obtain information about available vocational guidance and training programs and to actually enroll in them.

Sweden's economy is much more dependent than ours on international trade. Nevertheless, Sweden has enjoyed an unemployment rate of less than 2 percent even during the present world recession. One of the reasons is that a full 3 percent of the Swedish labor force has been enrolled in vocational training courses intended to improve the individual's chances of finding work and to help supply employers with trained workers.

In our country special attention must be given to those groups which are presently considered "unemployable"; that is, the func