Achieving the goals of the Employment act of 1946--thirtieth anniversary review

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i4th Congress JOINT COMMITTEE PRINT
2d Session



ACHIEVING THE GOALS OF THE
EMPLOYMENT ACT OF 1946-
THIRTIETH ANNIVERSARY REVIEW


Volume 1-Employment


PAPER No. 2
THE CANADIAN JOB CREATION MODEL AND ITS
APPLICABILITY TO THE UNITED STATES


A STUDY
PREPARED FOR THE USE OF THE

SUBCO:MMITTEE ON ECONOMIC GROWTH
OF THE

JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES





a4J' A ^
JANUARY 21, 1976 APR i


Printed for the use of the Joint Economic Co *"" (
____ -_AI4
U.S. GOVERNMENT PRINTING OFFICE
63-793 WASHINGTON : 1976

For sale by the Superintendent of Documents, U.S. Government Printing Ofice
Washington, D.C. 20402 Price $1.30





















JOINT ECONOMIC COMMITTEE
(Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.)

HUBERT H. HUMPHREY, Minnesota, Chairman
WRIGHT PATMAN, Texas, Vice Chairman
SENATE HOUSE OF REPRESENTATIVES
JOHN SPARKMAN, Alabama RICHARD BOLL ING, Missouri
WILLIAM PROXMIRE, Wisconsin HENRY S. REUSS, Wisconsin
ABRAHAM RIBICOFF, Connecticut WILLIAM S. MOORHEAD, Pennsylvania
LLOYD M. BENTSEN, JR., Texas LEE H. HAMILTON, Indiana
EDWARD M. KENNEDY, Massachusetts GILLIS W. LONG, Louisiana
JACOB K. JAVITS, New York CLARENCE J. BROWN, Ohio
CHARLES H. PERCY, Illinois GARRY BROWN, Michigan
ROBERT TAFT, JR., Ohio MARGARET M. HECKLER, Massachusetts
PAUL J. FANNIN, Arizona JOHN H. ROUSSELOT, California
JOHN R. STARK, Executive Director

SENIOR STAFF ECONOMISTS
JERRY J. JASINOWSKI JOHN R. KARLIK
LOUGHLIN F. MCHUGH COURTENAY M. SLATER
RICHARD F. KAUFMAN, General Counsel

ECONOMISTS

WILLIAM R. BUECHNER WILLIAM A. Cox LUCY A. FALCONE
ROBERT D. HAMRIN SARAH JACKSON L. DOUGLAS LEE
RALPH L. SCHLOSSTEIN GEORGE R. TYLER LARRY YUSPEH

MINORITY
GEORGE D. KRUMBHAAIt, Jr. (Counsel) M. CATHERINE MILLER



SUBCOMMITTEE ON ECONOMIC GROWTH
* LLOYD M. BENTSEN, JR., Texas, Chairman
.".4' / '/ SEATE HOUSE OF REPRESENTATIVES
WILt-IAM PROxMof1i, Wisconsin WILLIAM S. MOORHEAD, Pennsylvania
ABRAHAI RIBICO~F', (nnecticut CLARENCE J. BROWN, Ohio
'HUBERT H. HUMPHR-EV Minnesota MARGARET M. HECKLER, Massachusetts
SEDWARD M. KENNEDYs, .aujsachusetts
SJACOB K. JAVIT NeY6Trk
CI H'LES H. PERC Y, *Ilioii
I(TI)
S... .--
/ > i '\ "
\~t 4^e to***'












LETTERS OF TRANSMITTAL

JANUARY 19, 1976.

To the Members of the Joint Economic Committee:
Transmitted herewith is a study entitled "The Canadian Job Crea-
tion Model and Its Applicability to the United States." This study
was prepared for the Subcommittee on Economic Growth as part of
the Committee's observance of the 30th anniversary of the Employ-
ment Act of 1946. It is one of a number of studies being undertaken
to assist the Committee in developing recommendations for more ade-
quately fulfilling the Employment Act goals of "maximum employ-
ment, production, and purchasing power."
This study describes the Canadian experience with a program of
locally initiated temporary work projects and discusses the possible
use of a similar program in the United States as part of an effort to
deal with the high unemployment levels which have resulted from
the 1974-75 recession. I believe Members of the Joint Economic Com-
mittee and other Members of Congress will find this study most help-
ful and informative.
The views expressed in the study are those of the author and do not
necessarily represent the views of the Members of the Joint Economic
Committee or of the committee staff.
HUBERT H. HUMPHREY,
Chairman, Joint Economic Committee.

JA NUARY 15, 1976.
Hon. HUBERT H. IIHUMPHREY,
Chairman, Joint Economic Committee,
U.S. Congress, Washington, D.C.
DEAR MR. CHAIRMAN: Transmitted herewith is a study by Dr.
Thomas A. Barocci of the Massachusetts Institute of Technology en-
titled "The Canadian Job Creation Model and Its Applicability to
the United States" together with a comment on the study by Dr. Sam-
uel A. Rea, Jr., of the University of Toronto. This is the second in a
series of studies being prepared for the Subcommittee on Economic
Growth dealing with economic growth and employment opportunities.
These studies form part of the Joint Economic Committee's 30th an-
niversary study series, in which you have asked all the subcommittees
to participate.
Dr. Barocci's study describes and evaluates the Canadian local in-
itiatives program, a program of locally initiated work projects in-
tended to provide temporary employment for those who would other*
wise be seasonally unemployed. He concludes that the program has
worked well in Canada and that many aspects of the program would
lend themselves to an immediate effort in the United States to create
(III)





IV

additional job opportunities for those presently temporarily unem-
ployed as a result of the recent recession. In his comment on Dr.
Barocci's study, Dr. Rea expresses a more skeptical view of the value
of public service employment programs as an element in counter-
cyclical economic policy.
I would like to take this opportunity to thank Dr. Barocci and
Dr. Rea for the work which they have done to assist the Subcommittee.
I believe this study will be of great value to all those who are involved
in the evaluation of alternative policy proposals for dealing with the
present high level of unemployment.
The views expressed in the study and in the comment are those of
the authors and do not necessarily represent the views of the Members
of the Subcommittee on Economic Growth.
LLOYD M. BENTSEN, Jr.,
Chairman, Subcommittee on Economic Growth.














CONTENTS

Page
Letters of transmittal ----------------------------------- ---------

THE CANADIAN JOB CREATION MODEL AND ITS
APPLICABILITY TO THE UNITED STATES
Abstract ---------------------------------------------------------- 1
Introduction_--__--------------------------------------------- 2
The local initiative program -_-------------------------------------- 4
Administration of LIP --------------------------------------5
Assessment of the performance of LIP------------------------------- 8
Allocation of funds under LIP----------------------------------- 8
Project sponsors ---------------------------------------------_ 8
Economic impact of LIP ---------------------------------------- 10
Summary ------------------------------------------------ 12
The local employment assistance program ---------------------------- 13
Administration of LEAP------------------------------------- 14
LEAP summary evaluation ----------------------------------------- 15
Public employment programs in the United States and the efficacy of the
Canadian model ------------------------------------------------- 16
Administrative framework of CETA jobs programs --------------- 17
Target population --------------------------------------------- 19
Output of PJP programs_ -------------------------------------_ 21
Maintenance of effort ------------------------------------------ 23
Implementation of the LIP model---------------------------------- 25
New legislation_----- ----------_ --25
Antipoverty and LEAP ---------------------------------------- 26
Amendments to CETA----------------------------------------- 26
"Eligible applicants" ----------------------------------26
Manpower Services Council--------------------------------- 27
Priority groups-------------------------------------------- 28
Capital improvement projects-- ---------------------------- 28
Emergency employment provisions ---------------------------- 29
Funding levels for countercyclical jobs programs---------------------- 31
Summary-------- ------------------------ ------------ 32
Appendixes:
A. Sampling of LIP projects ------------------------------------ 34
B. LIP application form --------------------------------------- 37
C. A sampling of LEAP projects -------------------------------- 39
Comment by Dr. Samuel A. Rea, Jr_-------------------------- ----- 41
(V)




















Digitized by the Internet Archive
in 2013














http://archive.org/details/anniievif00unit











THE CANADIAN JOB CREATION MODEL AND ITS
APPLICABILITY TO THE UNITED STATES
By Thomas A. Barocci*


ABSTRACT
A discussion of the legal, philosophical and economic foiidations
of the Canadian job creation programs is followed by a brief evalu-
ation of these programs. The primary emphasis of the paper addresses
the issue of the applicability of the Canadian administrative provi-
sions to the presently operating job creation programs in the United
States, funded under the Comprehensive Employment and Training
Act of 1973 (CETA). Specific attention is given to the problematic
aspects of CETA and how these might be eliminated by incorporation
of the Canadian "model" into CETA amendments or entirely new
public jobs legislation.
The analysis concludes with a positive, albeit qualified, reconmmien-
dation for the adoption of the Canadian "model" in the United States.
*Thomas A. Barocci is on the faculties of the Massachusetts Institute of Technology
and of the Regional Institute on Employment, Training and Labor Market Policy at Boston
University.
(1)










INTRODUCTION
With almost 8 million Americans officially counted as unemployed
and the likelihood of a return to near-full employment before the end
of the decade very doubtful, there are few who question the need for
expansion of public jobs programs (PJP'S). Many are calling for a
revision of the presently used method of funding and administering
of Comprehensive Employment and Training Act (CETA) programs.
PJP's have, in the past, demonstrated substantial employment and
economic impact, especially when compared to alternative fiscal tools.
Thus, they are likely to be included as at least one component of any
countercyclical policy program initiated in Congress. It is equally
probable that even the most avid proponents of PJP will argue
strongly for revision or complete change in the processes of funding.
administration and implementation of the present programs. It is to
this "reconstructing' problem with special reference to the Canadiani
"model" of job creation that this report is addressed.
This report consists of three parts:
1. The legal, philosophical and economic foundation of the pres-
ently operating job creation programs in Canada.
2. A brief evaluation of the first three years of the operation of
the Canadian programs.
3. The applicability of the Canadian models for use in the United
States with special attention given to the problems in opera-
tion of current Public Service Employment (PSE) programs
in the United States.
Tie third section also discusses revisions needed to incorporate the
Canadian "model" under the existing Titles II and VI of CETA and
two optional pieces of legislation.
As a cautionary preface, several relevant differences between the
United States and Canada should be pointed out. First, the population
(and labor force) of Canada is approximately one-tenth the size of
the U.S. Thus, when discussing implementation, funding and admin-
istration we must keep in mind that it would take much larger amounts
of money and administrative effort to launch a program of similar
effectiveness in this country. There are, of course, possible economies
of scale to be realized. Secondly, the authorization and funding levels
of the Canadian job creation programs are determined by Cabinet
decision made as often as twice yearly. Consequently, the funding
levels and rules governing the projects (and their administration) are
infinitely more flexible than is presently possible under the job cre-
ation model we are working with in the United States. The Canadian
system is almost elegant in its simplicity while the system under CETA
tends to be crushed by its own bureaucratic weight. This problem is
addressed in the text.
(2)






3

In 1971 the unemployment rate in Canada was about 6 percent. In
response to this situation, the Cabinet made a decision to launch the
first of the programs discussed in this study, Local Initiatives Pro-
gr am (LIP), under the aegis of the Department of Manpower and
Immigration. The Local Employment Assistance Program (LEAP).
the second program described in this study, followed one year later.











































63-793-75---2












THE LOCAL INITIATIVE PROGRAM
As its name implies, the LIP program sponsors projects which
originate with the project sponsors themselves. Thus, from the start
the various undertakings must have importance and purpose for at
least one person in the community and are then subject to approval
by a variety of governmental agencies.
In addition to project initiation outside of government agencies,
there are two other (and possibly more important) objectives of the
program. First, the initial design was to create a program that would
reduce the seasonal, regional and area specific unemployment in
Canada. Because of certain geographic and industrial characteristics
of the Canadian economy, Canada suffers a disproportionate amount
of seasonal unemployment. It was at this problem that the LIP pro-
gram was initially aimed. Secondly, the projects must in some way
"enhance the quality of life" in Canada. This is loosely interpreted to
mean that the projects must provide a good or service which was pre-
viously not available (or unavailable at a reasonable cost) or must
utilize facilities which were available but untapped. Projects range
from the obvious, such as day care centers, to the innovative, such as
provision of tutoring centers for newly arrived immigrants. (A sum-
mary list of the types of projects is supplied in Appendix A.)
LIP projects are limited only in that they are not to be profit-
making endeavors-any revenue generated from. the project is charged
against project expenses.1 Projects can be aimed toward self-support
either through revenues generated or support from other funding
sources.
Each project application submitted must allow for the provision of
at least 15 man-months of employment for persons who would other-
wise have been unable to find a job. Projects are accepted only if the
type of skill needed on the project is already available among the
cadre of unemployed workers in the community. No provision for
training is involved-primarily due to the short time span and the
availability of alternative training programs through the Canadian
Department of Manpower and Immigration.
Every person hired on a project must be referred through the
Canadian Manpower Centers-the U.S. equivalent is the Division of
Employment Security-and priority is given to those who are receiv-
ing unemployment benefits or welfare payments.2 Any person who is
a citizen or landed immigrant is eligible unless that person is a member
of the immediate family of a project sponsor (in this case special
permission from the Minister is required.)
1 There have been, however. proposals to initiate an Entrepreneurial LIP Program so
that certain projects with profit-making ability and long-range prospects can be funded for
longer periods of time.
2 The Unemployment Insurance System in Canada differs from the U.S. system in that
the employees, government and employers pay into the system-it is not completely
employer-funded, as in the United States.
(4)





5

The LIP wage schedule aims at paying participants the going local
wage for similar work (not interpreted as the "Davis-Bacon" wage
rate as it often is in the United States). The sponsors and/or project
managers can earn up to $140 per week, while employee participants
earnings must average $115 per week. In addition, the government
contributes $22 per week to cover administrative costs and "employer"
contributions for unemployment insurance benefits.
The maximum funding level provided by the government is pres-
ently at $75,000 for an entire project. This has been reduced from a
1971 maximum level of $500,000 and a 1972 level of $20,00,000. The
funding levels for the first four "seasons" of the LIP project are shown
in Table 1.
TABLE 1.-LIP FUNDING, NUMBER OF PROJECTS, MAN-WEEKS OF EMPLOYMENT, JOBS CREATED, AND COST PER
MAN-YEAR
Total
funds Number of Jobs Man-weeks Amount per
(millions) projects created employment man-year
1971-72.--........................... i $190.0 5,567 92,231 1,598,000 $6,182
1972-73----........ -----------...... 1206.0 5,818 85,426 1,824,400 5,871
1973-74.............................. 72.8 3,401 30,358 626, 880 6,038
1974-75.----.. -----...........--..... 85.0 4,191 30,362 624,863 7,073
I Includes extra money appropriated for project extensions: $40,000,000 in 1971-72, and $36,000,000 in 1972-73.

It has not been made clear why the overall funding level was lowered
substantially between 1971-72 and the present program. Representa-
tives of the Canadian Manpower Office indicated that the decision
was political and not based on the "worth" of the program. Apparently
it was a step taken to eliminate the large efforts communities were pro-
posing as a means to increase their "revenue sharing" pot. Decreasing
the maximum for any one project insured the funding of more and
smaller projects.
ADMINISTRATION OF LIP
The agency responsible for the administration of the LIP program
is the Job Creation Branch of the Department of Manpower and Im-
migration. The application form consists of one page (the flip side is
optional) to be filled out by the applicant and forwarded to one of the
ten branch offices of the Job Creation Branch. (A copy of the applica-
tion form is shown in Appendix B). The application sheet asks only
for a reasonably detailed budget of salaries and other expenses, along
with the expected number of man-weeks of employment and the extra
revenues (if any) that the project might generate. The assumption
is that the project's justification will come out in the review process
and in the active support of the project by the community or province
in which it originated.
When the job creation office receives the application it makes photo-
copies to be sent to the following offices or agencies:
The member of Parliament representing the constituency,
The Canada Manpower Center serving the area,
The Provincial Government,
s The majority of the projects are funded at a level considerably less than even the
teduced ma'imum of $75,000; See Appendix A.





6

Other Federal departments which might have an interest,
The Constituency Advisory Group, and
The applicant, indicating official acknowledgement of receipt.
Each of the above parties submit their opinion of the project to the
Job Creation Branch which then forwards all comments to the Con-
stituency Advisory Group (CAG).
The CAG's were first set up with the 1973-74 program in order to
insure local consultation on the proposed projects. Each CAG is com-
posed of 11 members (changed from 9 members in 1973-74) nominated
by the local member of Parliament, to represent a broad base of com-
munity interests. The CAG's take the inputs of all the parties sending
comments and arrange the projects in order of priority for funding.
The Federal Government has approved approximately '95 percent of
the CAG-recommended projects. It should be pointed out that the
Member of Parliament does not have to set up a CAG-if this is the
case then the project selection is the responsibility of the program of-
ficials (usually in consultation with the Member of Parliament).
Sending the proposals to the other Federal agencies that might be
interested is done in order to avoid overlap and conflicting projects
in an area. For example, the Interior Department may have been plan-
ning a fire road, while the local group who proposed a LIP project to
do the same was not aware of the plans.
All plans, due to the seasonal design of the program, must be sub-
mitted by Oct. 1 of the year and be ready to begin as early as Dec. 1,
but not later than Jan. 31. The maximum length of funding for any
one LIP project is 26 weeks, although some have been granted" special
circumstance" extensions.
If a project is approved, the sponsor officially becomes an "employer"
with all the responsibilities for accounting and payment into the Unem-
ployment Insurance fund (for all participants but the sponsor). The
sponsor must then use the Canadian Manpower Centers for the recruit-
ment of all staff and make sure the project is in compliance with all
Federal and provincial laws in reference to building permits, licenses
and wages. The Job Creation Branch offers help on any and all ad-
ministrative problems.
The funding of the project is made in installments with an initial
payment, covering the first two months of operation, sent with the
award. The remainder of the payments are made on a monthly basis
depending on whether the monthly reports are received and approved
by the Job Creation Branch (and sometimes checked in the field by a
member of the Job Creation Branch staff). All of the rules and regula-
tions are carefully laid out in a sponsor's handbook, distributed when
the project is approved.
The termination of LIP projects is automatic at the end of the 26-
week period, unless the project has become self-supporting or the
community (or provincial government) includes it permanently in
the budget. The participants do not expect to be retained, as the de-
sign of the program is to take care of seasonal employment problems.
The participants are, however, eligible for unemployment insurance
benefits in that the project sponsor has paid into the fund during the
26-week period.4
SIt is worthwhile to point out that the Job. Creation Branch figures out the, appropriate
rate for each project and takes care of the Workman's Compensation premiums for each
project participation.





7

In sum, the administrative procedures employed in the LIP program
appear to be as simplified as possible, while still retaining enough con-
trol and review to minimize the possibility of fraud. There are no elab-
orate rules and regulations, but rather a simple set of guiding princi-
ples which are interpreted ad hoc when necessary by the staff of the
Job Creation Office of the Department of Manpower and Immigration.











ASSESSMENT OF THE PERFORMANCE OF LIP
The information upon which the brief evaluation of the activities of
LIP is based is all of a secondary nature. The author has not conducted
nor has he been involved in the data gathering. Much of the informa-
tion used in this section is provided by the Canadian government in
the form of published data on participant characteristic and program
costs and should be reliable. Value judgments presented are the sole
responsibility of the author and not the "official" word from the
Canadian Department of IManpower and Immigration.
ALLOCATION OF FUNDS UNDER LIP
The allocation and distribution of funds under the LIP program is
a very simple procedure. An estimate of unemployment is made for
each of the 41 economic regions. The difference between this number
and the expected number of unemployed persons at a 4 percent "full"
employment level is calculated. The number of persons counted as
"excess" unemployed is then multiplied by the national dollar alloca-
tion per unemployed person. In 1974-75, this figure was approximately
$262. Each of the regions is to receive a minimum of $75,000, enough
for at least one LIP project. This system contrasts with the present
allocation system employed under CETA which resulted from com-
promises reached in Congress over rural versus urban areas and States
with high versus States with lower population and unemployment.

PROJECT SPONSORs
As indicated above, there are no special provisions for project spon-
sors-any individual or non-profit group or agency may apply.
Following is a list of the 1973-74 project sponsors cross-tabulated with
the type of project activity.
(8)

















TABLE 2.-LIP ACTIVITIES BY PROGRAM SPONSORS, 1973-74

[Percent distribution]

Sponsor
Local Other Indian Service and Business Recreation
govern- govern- and welfare and labor and leisure
ment ment Eskimo Cultural Religious organiza- organiza- Citizens organiza-
Activity bodies agencies groups groups groups tions tions committees tions Individuals Total

Building construction............................. 3.5 1.3 3.2 0.9 2.3 2.3 0.4 2.8 3.5 1.6 21. 8
Nonbuilding constriiction ....... .......... ---------5.7 .9 1.3 .2 .2 .4 .3 1.5 2.6 2.4 15. 5
Lands, parks, and forestry.......................... 3.1 .8 .8 .4 .1 .2 .3 .4 1.2 1.2 8. 5
Artistic and cultural -----..--------....--.......-. 1 .2 .3 1.9 0 .2 .1 .2 .2 1.7 4. 9
Education --..-................................... .2 1.2 .2 .5 .2 2.3 .3 .7 .4 2.5 8.5
Information-----................................. .1 .1 .1 .2 0 .3 .2 .9 0 .9 2. 8
Social services--.................................. 1.0 .7 1.5 .7 .7 6.4 1.1 4.4 1. 1 10.7 28.3
Health services .......................-........... 0 .2 0 0 0 .5 .1 0 .2 1. 1
Sports and recreation---.......................... .7 .4 .1 .2 0 .1 .2 .4 1.9 .9 4. 9
Research---.......................... ......... .6 .3 0 .6 0 .4 .3 .4 .2 .9 3.7
Total-------------.......................... 15.0 6.1 7.5 5.6 3.5 13.1 3.3 11.8 11.2 23.0 100.0

Source: Canadian Department of Manpower and Immigration.





10

The data on the 1973-74 programs shows that individuals are the
most frequent sponsors and social services the most frequent activity.
A recent conversation with a Canadian LIP official revealed that in
the 1974-75 project year, 35 percent of the projects were sponsored by
individuals. The stark contrast between LIP and CETA is that only
about 21 percent of the LIP projects were sponsored by government
agencies. Of those sponsored by government agencies, the majority
were related to construction activity. This reflects the fact that LIP
funds cannot be used for capital equipment and materials. Govern-
mental units were most able to supply the necessary additional re-
sources. A University of Calgary study of LIP projects showed that
38 percent of the sample projects were receiving funds from other
sources-a tangible expression of the willingness of the communities
to become directly involved in the LIP projects.
In 50 percent of the cases studied it was found that a public or pri-
vate agency provided the same or similar services as the LIP project.
However, this may not indicate an oversupply since the Calgary study
also showed that 81 percent of the users of LIP services knew of no
alternative in the community. The bulk of the duplication was in large
cities and most of those who were involved in organizations which sup-
plied the same or similar services did not view the LIP projects with
disfavor.
An accurate measure of community attitudes toward LIP is difficult
to obtain, but a sample cross-section of the communities surveyed
showed that about 69 percent were favorable. 25 percent were unaware
of the project and 6 percent registered unfavorable opinions.

ECONOM3IC In-PACT OF LIP
LIP, by design, is a program to reduce seasonal unemployment in
Canada and thus its economic impact cannot be judged by simply list-
ing changes in the overall unemployment rate.
About 70 percent of the LIP jobs lasted 24 weeks or less while 30
percent had a tenure exceeding the "regular" seasonal unemployment
span in Canada. Estimates made by Prof. Fred Lazar I at York Uni-
versity indicate that the LIP program increased the overall level of
employment during the winter months between 1 and 114 percent and
reduced the total level of unemployment by approximately 5 percent.
These figures assume that each job created under LIP is a net addition
to the employment pool. This may not be true if any of the projects
would have been undertaken in the absence of the program. Unfor-
tunately, there is not a direct method of measuring this.
One of the most remarkable aspects of the LIP program is the fact
that it has created and filled such a large number of jobs in so short a
period of time. For example, in the 1972-73 year there were some
86.000 jobs created and filled in less than two months. The program is
not as large now but still operates effectively in the given time frame.
In order to duplicate this effort in the United States we would have to
create and fill almost 1 million jobs in 2 months.
The LIP projects created one man-year of employment for each
7.,000 expended (see Table 1). There are several reasons for this low
figure. First, the wages paid must average $115/week-about 10 to 20
1 Fred Lazar, unpublished, nntitled paper, Dept. of Economics, York University, January,
1975.





11

percent less than the Canadian national full-time average. Secondly.
the administrative costs are minimal, since there is no large 1public
bureaucracy set up to deal with and plan the programs. Thirdly. the
projects are labor intensive, and thus only a small percentage of tlhe
goverinment funds were used for materials and other ope rational ex-
penses.
Since the LIP program is specifically designed to take up the sea-
sonal slack in employment, one would expect tliat most of those wIo
obtained the LIP jobs would come from the ranks of the officially un-1-
employed. The only data the author could obtain relating to employ-
ment status prior to a LIP job refers to tlie 1972-7,3 year. The infonrma-
tion shows a favorable picture, in that 72 percent of the participants
were either unemployed or expecting layoff in the immnediate future.
Table 3 shows the characteristics of the participants by sex and labor
force status.
TABLE 3.-LABOR FORCE STATUS AND SEX OF LIP PARTICIPANTS, 1972-73
LABOR FORCE STATUS OF LIP WORKERS IMMEDIATELY PRIOR TO LIP (1972-73)
[In percent]

Male Female Total

Employed steady, full time ---- --.--------...... --- ---- ----------- 7.2 6.3 6.9
Employed steady, part time ...-- ...---- ...-. ..---..--- ------------ 1.7 4.2 2.5
Employed full tim expecting lay off .. -----------------. --------- 9. 6.6 8.9
Employed part time, expecting lay off..--------------------------. --. 2.1 2.8 2.3
Unemoloyed-------- ------------------------------------67.1 46.1 60.6
Housekeeping ----.----------_----------------------------_.---. .7 22.4 7.3
Retired ....-.....-.. ----------------- --------- 1. 1 .5 .9
At school . -------------.--- .-------------------.-----------. 4.7 5.1 4 9
Other ....--....------------------------------------------- 5.6 6.0 5.7
Total..--.-----.--..--.-- .....--..--------------- -- 10. 100.0 100.0

The classification "at school" might also indicate a favorable em-
ployment addition in that, these persons were likely to be entering tie
labor force and certainly all would not have been able to find jobs in
the absence of LIP. Further, the housekeepers and part-time workers
who came to the LIP projects may have really needed the full-time
positions. These "new entrants" may simply have been discouraged by
the job market prospects, and therefore part of the "hidden" unem-
ployed.
Although LIP was not designed as an antipoverty program. it
disproportionately benefited those most in need of enmployment and
earnings. Some 67 percent of the males in LIP were collecting unem-
ployment or welfare benefits and 43 )percent lived in families who had
income levels below the poverty line. Drawing persons from public as-
sistance programs has the additional advantage of savings to direct
government transfer payments plus the taxes paid by these persons
while they are working. The exact amount of savings to the govern-
ment in the form of reduced unemployment insurance (-I) benefits
and welfare costs is extremely difficult to calculate. Some may return
to 1I after the program and others to welfare. It is, however, safe to
assume that the net costs are substantially less than the full appropria-
tions.2

2 Estimates of the net costs of job creation in the United States have recently h",en sup-
plied by the Congressional Budget Office. The estimates run from 61 to 7.i percent for the
initial impact and 53 to 72 percent after 24 months. See : "Temporary Measures To Stiiu-
late Employment: An Evaluation of Some Alternatives", Congressional Budget Offce.
September 1975.
63-793-75- 3





12

The University of Calgary study found that 62 percent of the males
and 70 percent of the females became unemployed after LIP in
1972-73. This suggests that LIP did not really fulfill its goal of get-
ting to the seasonally unemployed, since one would expect them to re-
turn to their regular job at the termination of LIP. However, this
finding does not diminish the efficacy of using this model as a counter-
cyclical device.
SUMMARY
The above discussion only points out some of the highlights of the
program characteristics and employment accomplishiments. It is not
meant to be a detailed evluation but rather an aid in understanding the
model for consideration as an "export" to the United States.
It is fair to say that, with the amount of money available and the
time span given, the Canadian Department of Manpower and Im-
migration set up an efficient network for the creation of jobs. In addi-
tion, the projects are visible and undertaken at the suggestion of the
community. Before discussing the possibilities for the LIP model in
the United States, the LEAP program is discussed and briefly
evaluated.












THE LOCAL EMPLOYMENT ASSISTANCE PROGRAM
(LEAP)
One year after the initiation of the LIP program, the Canadian
Department of Manpower and Inmmigration launched another pro-
gram (again without specific law but at the mandate of the Cabinet).
This program, designated the Local Employment Assistance Pro-
gram, is aimed at the problems of chronically unemployed persons
rather than the seasonal disparity goal of the LIP program. The
program is described by the Job Creation Branch as "low profile"
since, rather than solicit proposals from the public, it employs LEAP
agents in the various Job Creation offices to take the lead role in
project initiation. This process is ustually undertaken with the assist-
ance of any private or governmental agency in the area that is
concerned with the problems of the disadvantaged popiulation.
Once target groups and a project are identified, the LEAP staff
immediately attempts to integrate participants into the final stages
of planning and start-up. This period includes tle solicitation of
additional funds or other support from both private and not-for-
prolit agencies. In some instances the LEAP projects have involved
the startup of a small business specifically designed to offer a needed
good or service and. often, with the intention of the project to become
self-supporting. The LEAP staff members have indicated that they
turn over management to the participants as soon as possible.
Any person who participates in a LEAP project has access to any
of the training programs offered through the Department (analogous
to the training programs offered under Title 1 of CETA).
The target group for LEAP projects is similar to those defined as
"disadvantaged" under present U.S. poverty and manpower programs
(that is: people who would likely remain unemployed under "normal"
labor market circumstances). The brochure for the LEAP program
indicates the following:
... the program focuses on the support of a limited number of
projects which demonstrate ways of creating long-term employ-
ment for persons who are unemployed because-
1. They have limited job skills;
2. They live in a geographic area where job opportunities
are limited;
3. They are the subject of racial or cultural prejudices; or
4. They have physical, social or mental disabilities which
create barriers to employment, such as chronic de-
pendency, a criminal record, alcoholism, retardation
or physical handicaps.
It is obvious that the definition of possible participants for the pro-
gram can be interpreted as loosely as the Job Creation Branch sees
fit. On this count, LEAP is similar to Title II of CETA eligibility
criteria.
(13)





14

ADMINmISTRATION OFr LEAP
Once the Job Creation Branch identifies a geographic area or
specific target group, they then work with a local group, a non-profit
organization, community or citizen group, voluntary agency, or even
an individual is designing a project proposal.1
The funding level of the LEAP projects cannot exceed $200,000/
year, with a maximum funding of three years: In some instances a
startup time of six months and up to $100,000 is given to the project
if longer planning is deemed necessary. The maximum funding level
for any one project is $350,000, although most of the projects are
funded at a level considerably less than the maximum allowed.2
Wages paid to participants can be no higher than those prevailing
for similar occupations in the area. Federal funds are used for the
payment of wages, fringe benefits, employer contribution to unem-
ployment insurance and "reasonable" administrative costs. In some
cases, the cost of expert supervision, counseling, evaluation or special
training is allowed, as long as it doesn't exceed 20 percent of the total
project costs.
Proposals may be submitted at any time of year and the person or
group designing the project is encouraged to take time to plan care-
fully. The project staff of the Job Creation office are assigned to
projects to aid in the development as well as participate in the
monitoring after the project begins. Close attention is given to each
project and a maximum ratio of one monitor to eight projects is
maintained.
The LEAP program is basically experimental and funded at a
level of approximately $12 million for the 1974-75 season. This would
be equivalent to a funding of approximately $120 million in the
United States-a very small program compared to other social
expenditures.
1In some instances, spontaneous proposals from groups or committees not identified by
the LEAP staff will be considered for funding. This, however, is the exception rather than
thP rule.
2 See Appendix C for a sampling list of LEAP projects and their funding levels.












LEAP SUMMARY EVALUATION
LEAP, as mentioned above, is a small program with an allocation
for 1974-75 of only $12 million, enough to create about 1,700 jobs.
LEAP is aimed primarily at the "disadvantaged" and the data avail-
able shows that over 70 percent of those hired in a non-managerial role
were earning less than the official poverty line. About 14 percent of the
non-managers were employed full time prior to LEAP.
The LEAP projects are divided into two categories: "preparation"
and "retention" projects. The latter are designed to retain the original
participants over the life of the project (up to 3 years) and the former
to prepare the participants as soon as possible for re-entry into the
regular job market. The funded projects were split about half and half,
although the preparation projects had a much larger proportion of
managers. This reflects the emphasis on training and transition of the
"preparation" projects. The majority of the "preparation" projects
were sponsored by community agencies, while the "retention" projects
were divided somewhat randomly among native groups, cooperatives,
citizen groups, service clubs and the like. Of those who left the projects,
over 40 percent immediately secured other employment. The next
largest category of turnover shows 13 percent in the "dismissed"
classification.
Reflecting the "investment" nature of the LEAP program is the fact
that over 70 percent of the projects were expected to become com-
mercially viable over the funding period (i.e., to become revenue pro-
ducing and independent of outside financial resources). Whether this
will happen is not certain since none have been in operation for the
full three-year funding period. The "retention" projects are more
likely to become financially independent, while the "preparation" proj-
ects, almost by definition are not, since they lose their most experienced
and able workers as soon as they can place them in other jobs.
LEAP operates on a community development model, in that these
"businesses" are funded in the initial stages by government money.
They have neither the credit rating nor the certainty of success that
is needed to obtain funding in the private market. The outcomes should
be watched closely, since this type of project is being proposed in many
States in the form of a State-funded development bank. Many models
of this have been put forward, but none have been put into operation
in the United States.
(15)











PUBLIC EMPLOYMENT PROGRAMS IN THE UNITED
STATES AND THE EFFICACY OF THE CANADIAN
MODEL
This section of the paper discusses the current efforts in the United
States to use public employment programs as a counter-cyclical tool.
Special emphasis is given to the problems encountered since the pas-
sage of the Emergency Jobs and Unemployment Assistance Act of
1974 (Title VI of CETA). The problems are discussed in reference
to the possibility of substituting the Canadian job creation model
(LIP) for the present structure.
Although antipoverty job creation models with "transition" goals
are important and (in the author's opinion) in need of expansion, this
discussion centers on counter-cyclical strategies. In addition, it is pos-
sible to at least partially achieve the goals of anti-poverty job creation
in the context of a counter-recessional program.
The main goals of a counter-recessionary jobs program are: (1) to
provide as many jobs as possible for those out of work as a result of
cyclical changes in the economy, and (2) to provide stimulus to the
economy through increases in purchasing power. There are several
secondary but important considerations. Job creation should be done
in a manner that will best stabilize the rate of inflation and result in
the least displacement of workers already funded under the current
State, local and federal budgets. Also important is that the output
of the jobs is needed and visible.
Other considerations of PJP's center around the structure and cost
of the administrative network and the categories of persons hired. In
terms of administration, the simplicity and cost of the operation are
most important. In reference to the target groups, the countercyclical
strategy considerations are not clear cut since they may conflict with
inflation stabilization goals, need criteria and the possibility of pro-
longing a return to "normal" labor market activity. This will depend
on the wages paid and the duration of public jobs. Although detailed
discussion of all the above aspects of countercyclical PJP programs
is out of the purview of this paper, the factors mentioned above are
discussed in reference to the possible use of the Canadian LIP model.
Much of the confusion and criticism of the present PSE programs is
misplaced. Those who look at the programs as an antipoverty effort
are disappointed. The guidelines are "loose" enough and the pressure
for speed of implementation was strong enough to point the program
away from an antipoverty stance and in the direction of a purely
counter-cyclical posture. On the other hand, those who viewed it as
a form of counter-cyclicnl revenue sharing desigrned to ease the burden
on UI rolls criticize PSE for the attention given to "transition" re-
quirements and selection of those most in need of earnings. The
problem originates from the lack of explicit goals offered in the various
titles of the legislation. Further, even if the purposes of various

(16)






17

titles of CETA were explicit, the Act allows the option of transferring
funds from one title to another. Any additional piece of legislation
or additional funding should certainly make clear exactly what the
"intent" of the program is, and to whom the positions should be
directed. Presently, the water between Title I's goal of assisting the
disadvantaged through training, Title II's anti-poverty job creation
and Title VI's countercyclical intention, is very muddy.
The main criticisms of the CETA PJP titles center around the ad-
iministrative framework, the target groups, the "output" of those
hired and the "maintenance of effort" provisions. Each of these is con-
sidered in turn.

AD3MINISTRATIvE FRAMEWORK OF CETA Jons PPROGRAMS
The manpower a an anti-poverty programs of the 1960's created on
alphabet soup of programs, strategies, delivery systems, and target
groups. All were designed with the intentions of providing needed
services, income supplements and training while at the same time
guarding against duplication and emphasizing coordination. One
would be hard pressed to find a student of these programs who would
defend keeping the initial format.
The attempt to coordinate categorical programs under the umbrella
of "manpower" was carried through in the form of CETA and its
amendments. The basic idea behind CETA was that local govern-
ments have a better grasp of the problems and needs of their con-
stituents than does the Federal Government. This premise, however,
left unanswered the question of administrative capability. Local gov-
ernments simply lacked sufficient numbers of staff skilled in manpower
program management. As a result the initial CETA programs took
much time to get underway. Just as the process was gaining some
momentum, new funds were appropriated by Congress. The CETA
Title II money came available about July 1, 1974. the same time that
the $250 million additional funds authorized under the Emergency
Employment Act of 1971 extension came available. Within another 6
months, the allocations under Title VI of CETA were appropriated.
The result of this sudden influx of Federal dollars was enormous
pressure on local governments to hire PSE enrollees, often in excess
of local agencies' capacity to manage.'
Several points are important:
1. The sheer size of the legislative provisions, guidelines and
regulations literally made it impossible for the Prime Spon-
sor staffs to interpret whether they were to operate by the
"law" or under the Labor Department guidelines-often
different in "intent" if not in letter.
2. The time frame not only disallowed the possibility of care-
ful planning but also "forced" many public administrative
units to come up with "need" immediately.
3. The amount of money available under Titles II and YT and
the EEA extension completely overwhelmed the Title I
"training" aspects of CETA-designed to be its central
focus.
1 Many Prime Sponsors were not able to "spend" the appropriations within the period
of time mandated by the Department of Labor. Many newspaper stories around the country
mentioned this fact as an indication of the failure of P.S.E. programs.






18

4. Following from numbers 1 and 2 above came the problems
of inability of the sponsoring agencies to allocate or raise
additional money to supplement the wage costs paid by the
jobs programs. This simple fact precluded, almost entirely,
the use of projects and instead concentrated almost all of
the effort in "add ons" to civil service or quasi-civil service
rolls. In many cases this led to charges of violation of the
maintenance of effort provisions of the law.
The administrative framework of the LIP program offers an at-
tractive alternative to these problems. First, the application forms
are one or two pages long and the planning work is done entirely on
an ad hoc basis by those who will be involved directly in the project.
There are no volumes of rules and regulations nor is the likelihood of
duplication of effort strong, since all projects go through a Constitu-
ency Advisory Group.
Essentially, the LIP program puts the burden of finding community
support and other funding on the persons who are proposing a project
rather than on bureaucracies already straining under the problems of
implementation of CEA titles I and II.
If the U.S. adopted the LIP "public initiative proposal" approach,
it would have to be decided whether existing Prime Sponsor adminis-
trative networks could or should handle this type of system for PJP.
The U.S. Department of Labor would be a logical possibility to be the
fiscal agents of the projects. Due to their experience under categorical
programs, Labor Department offices already have the expertise neces-
sary for fiscal management and monitoring procedures. In the author's
opinion, Prime Sponsors could best carry through their main func-
tion-the planning, design and implementation of training programs-
in a much more effective manner if they did not have to deal with the
temporary burden of counter-recessionary job creation. They should,
however, retain the responsibility for the anti-poverty iob creation
programs, since this is a direct part of the training and placement
efforts of their operations.
The simplicity of administration of the LIP program is due to the
application itself, to the approval procedures and to the rules and
regulations in general. Thus, LIP operates more efficiently than the
current Title VI administration network.
Another administrative function is that of transferability of money
under one Title to another Title of CETA. In response to the prob-
lems of money for tools and ecuinment in many of the Prime Snonsor
networks, the allocations under Title VI wpre transferred to Title I
programs. nsually the "work enperience" section. (Title I allows 20 per-
cent administrative costs and Title VI, only 10 percent.) The lawmak-
ers, with all good intentions, indicated that if a Prime Sponsor wanted
to engrage in more training and work experience programs (including
OJT) they could transfer the allocations under Title II to Title I.
These provisions were in turn used in the transfer of Title VI funds.
The two accomplishments of this transfer were both of dubious value.
First, it allowed the Prime Sponsors to allocate a larger percentage
of money for administrative purposes. In some instances, this was
effective in that it enabled the purchasing or leasing of uniforms, tools
and equipment, thereby increasing the likelihood of visible and con-
crete accomplishments under the program. The option was also made





19

possible to simply hire more staff to administer the program. No ex-
plicit evaluation of this can be made. Secondly, if a Title VI hired
person is classified as a "work experience" participant under Title I
(and is usually performing the same jobs as those created under Title
VI), then that person is later categorized as a "formner training pro-
gram participant" and, under current guidelines, is near the top of
the list for participation in any other public job program. In extreme
cases, a person hired under EEA in 1971 could have been on the pay-
roll in a Title II program, then transferred to a Title I work experi-
ence program and then be placed in line for a Title VI slot. There are
documented cases of this occurring in Massachusetts. Althougli this
program-hopping is not against the letter of the law of (1ETA. it
certainly does not conform with the spirit.
Separation of the countercyclical job creation programs fromu ('ETA
would elimlinate this problem. The LIP program gives no priority to
previolus participants. Again the confusion over thle counter-recession
or anti-poverty nature of the programs of ('ETA lecomes important.
A final administrative problemi in CETA' was that of "over-hiring."
It is not yet clear how common this has been, but a specific case in
Mal ssachusetts will bring the problem to light. In the initial stages of
Title VI implementation, the "sub-grantees" (a smaller unit, un(ler
the Balance of State Prime Sponsor, left over from the administrative
network of EEA) were hiring people at a rate in expectation of full
year funding, without awareness of funding overlaps and available
lag mloney. As a result, one of the sub-grantees hired 660 persons when
in fact the accounting procedures later indicated that there was only
en(lough money to hire about 550. Thus, the Balance of State Prime
Sponsor had to supply-and where they got the extra money is not
certain-an additional $100,000 to keep those people on the payroll.
The newspapers called it mismanagement, while the Prime Sponsor
defended it with the explanation that the director of the subgrantees
office had been overzealous in response to the mandate to hire. Again,
the LIP framework circumvents this problem by giving a specific grant
for a specific period of time for a specified number of people. Over-
hiring simply could not be a problem.

TARGET P(OPULATION
For all intents and purposes, the restrictions on entry into public jobs
programs became operationally insignificant with the advent of Title
VI. The reasons for this are twofold. First, the "transition" require-
ments were essentially dropped from the guidelines and, second, the
entry requirements for unemployed persons were dropped from 30 to
15 days. The bill gave preference to those who had exhausted their TI
benefits (up to 65 weeks in some states) and the long term (15 weeks)
unemployed. The lifting of restrictive requirements on entry was di-
rectly in line with the countercyclical intent of Title VI. However. even
though a countercyclical program is specifically designed to aid those
out of work due to the recession, other considerations are still impor-
tant. Persons out of work are not all in the same situation. Some have
assets, eligibility for up to 65 weeks of UI, supplemental unemploy-
ment benefits, regular seasonal lay-offs, and so on. In the extreme, one
could say that all the persons who are unemployed, save a fractional
3 or 4 percent, would be working if the economy were operating at full
63-793-75-----4





20

capacity. Thus, the issue of who among the unemployed should be hired
is not as simple as it may seem. Methods of selection among the unem-
ployed are tangled with problems. Some are worthy of elaboration,
regardless of the model of public job creation.
Nationwide, unemployment insurance benefits average about $65 per
week, with a maximum duration of up to 65 weeks, depending on the
state laws. In the United States, UI benefits are paid from state trust
funds maintained by employer contributions, and this tax is based on
their "experience rating." In addition, employers pay a fixed tax rate
to the federal government. This money is used to partially fund federal
extensions to the UI program. In the areas of the country which were
hit hardest by the recession, the employers' rates are all at or near the
maximum possible under the present schedule. Thus, we have witnessed
many States which have had to borrow money from the federal trust
to pay even the regular state-mandated benefits.
The portion of UI benefits which are funded from the Federal UI
trust can be saved, in part, by the funding of a PJP. This represents
a net savings to the trust. This "savings" should be considered for use
in the funding of PJP slots, possibly by using the Williams amend-
ment to the Social Security Act which allows for use of the federal
portion of UI payments to subsidize training endeavors.
Finally, consideration should be given to allowing persons eligible
for UI to take their "entitlement" and apply it toward a salary in a
PJP slot, if they so choose. If this is not legally possible with the state
portion of UI funds, we might conclude that on the basis of need, those
who are eligible for state benefits should be last in line, rather than
first, for any additional PJP slots.
The net savings benefits of PJP programs emerge more clearly
when dealing with the welfare population, since all of the savings ac-
crue to federal or state general funds, and thus. represent a net savings
to the general tax-paying public.
In terms of countercyclical strategy there are two other considera-
tions which lend support to hiring those most in need of income rather
than anyone who is unemployed. First, the net aggregate demand
stimulus is higher if the net increase in the person's income is greater.
For example, if a person is collecting $100 per week in UI benefits
and is hired for a $200 per week PJP slot. we see a net increase in the
purchasing power of $100 per week (a bit less, actually, since taxes
must be paid on PJP slots while UI is tax-free). But if a person is
given a job who is collecting $50 per week in welfare or has exhausted
UI benefits, we see a $150 or $200 per week addition to purchasing
power.2 These arguments. of course, hold only if the increased income
is financed by reducing the budget surplus (enlarging the deficit)
rather than by raising taxes to pay for the program.
Another important consideration is that the impact of the recession
falls disproportionately upon the lower income segments of the econ-
omy. This is well-documented in the literature of economics.3 The im-
plication, on equity grounds, is that a disproportionate amount of the
available funds should also be targeted to the lower income groups.
2 These arguments are more fully developed in a paper entitled "The Equity. Efficiency
and Economic Stabilization Aspects of Public Employment Programs," May, 1975, avail-
able from the author.
f See Edward M. Gramlich, "The Distributional Effects of Higher Unemployment."
Brookings Papers on Economic Activity, Vol. 2, 1974, p. 293 ff.





21

The problems discussed above are not directly addressed by the LIP
program; in fact, almost the opposite is true. Those most skilled in
"grantsmanship" are likely to obtain funds and these persons are
usually the "most employable" and least needy of the unemployed
pool. A provision for employment in LIP is that the person be regis-
tered with the employment office, even if not collecting benefits. One
possible way to solve this problem is to specify that a certain portion
of those to be hired in a PJP project come from the following groups:
Those who have exhausted UI benefits;
Those who are on federally funded extensions of UIT benefits;
and
Those who are collecting in any public assistance program.
In addition, applicants should also be screened on the basis of "faiim-
ily income," rather than on personal income. One could find little
support or justification for the spouse of a $25,000/year executive
receiving a position in a PJP.
Use of stricter criteria in hiring would not only make the progra ms
more equitable, but may aid in realizing greater net increases in pur-
chasing power. These criteria could be incorporated in the LIP model
through use of a simple formula on the percentage of persons from
any of the most disadvantaged groups in terms of present and po-
tential transfer income.
All persons hired in LIP make payments to the 17I fund and are
eligible to collect benefits if they cannot find a job when the project
terminates. Thought should be given to including a provision for con-
tinuation of federally-funded extensions for participants in any new
PP program or strategy. A variation on this theme is put forward by
Michael Wiseman, who recommends a lump-sum bonus for those who
find a regular job. The "bonus" would increase the incentive to find
regular employment and reverse the alledged negative employment in-
centive of the current JI system.4 This suggestion by Wiseman would
be an excellent addition to any PJP, even one operating under the LIP
model, since it is unlikely that there will be any shortage in applicants
for PJP jobs in the next few years.
Even if the LIP model is incorporated into U.S. PJP programs.
target group problems will prevail unless more thoughtful and re-
strictive regulations are included. Special attention should be given to
the supplementation of the PJP funding by the federal UI fund and
realignment of the priority groups. Family need and availability of
alternative sources of income should be considered in assigning "sig-
nificant segments."
OUTPUT OF PJP PROGRAiMS
Job creation in the public sector has been stigmatized by many as
"make work." "leaf-raking," and so on. In some iistanlces the criti(.lSils
are fair, and in others it is simply the result of not understanding wlat
the persons involved are doing. This stems from "built-in" problemtis
of the CETA program. The "loose" guidelines and Department of
Labor pressures to hire quickly often lead the hiring agents, usually
local or State government, to "make work" if they have nothing on the
agenda prevented by budget problems. The jobs concentrate as addi-
4 Michael Wiseman, "On Giving a Job: The Implementation and Allocation of Public
Service Employment," Joint Economic Committee, Congress of the United States, August.
1975.





22

tions to the staffs of service organizations and are essentially invisible
to the taxpaying public. Secondly, there have been many cases of nepo-
tism. political rewards or the like. Thirdly, many of the workers (and
their output) have not been represented as net additions to the number
employed or to the community betterment.
The fact that the vast majority of PSE slots were additions to public
sector service organizations is not per se negative since the need for
)public services is still far from saturated. However, the fact that no
new money was provided for capital equipment and facilities often
precluded the addition of previously unprovided services. The net addi-
tion of one or two staff persons to a public sector organization is un-
likely to generate any enthusiasm or add to the "output of the agency."
This scheme for finding jobs also renders priorities for the function
and placement of new personnel to the discretion of the local politicians
or bureaucrats. Again, this is not necessarily negative, but certainly
not optimal.
The LIP model would take the best of this forim of job creation and
leave the worst behind. The community organizations and even the
public bureaucracies could apply for grants in the same manner as
everyone else and, if deemed worthwhile, they would be funded. The
LIP model would simply inject a co)mpetitive facet into the provision
of necessary but absent public services. An additional benefit would be
the circumvention of the whole system of civil service, since the jobs
would be of limited duration without the polemics of "transition."
Much less feather-ruffling of the unions and taxpayers would be
provoked.
The issues of "cronyism." "nepotism," and political wards will not
be solved by the injection of a new model of PJP. These could be
diminished if the projects were smaller in magnitude, if there were
no guarantees for continued employment in the public sector, and if
projects were subject to a set of rules as simple as those written along
with any "breakfast food giveaway" (i.e.. any relatives of employees
of X company or its advertising agencies may not be etc.). The situa-
tion would be further improved if wages paid were less than similar
jobs in the private and public sector. In addition, use of target criteria
for "long term" unemployed or those under the extended UI benefits
would have a minimizing impact on the whole issue.
Most important in relation to the "output" of the PSE programs is
the risibii;ty question. The lack of popularity of PSE programs, in
the author's opinion, centers around the fact that the taxpayers do
not see any net addition to the community in terms of facilities or
services. The project approach of LIP virtually guarantees visibility
1b having signs indicating that the work is being carried out under
a LIP grant, and by making sure the press is aware of projects.
The press then also serves as a built-in monitoring system.
The potential "snowball" effect of visible PJP projects is very large.
If one conlmunity has renovated old homes, landscaped the park or
cleaned up the subway, they are certain to gain favorable publicity.
At the same time, the officials in the next town or State are going to
be asked what improvements are being carried out in their community.
The potential is incredible. One only has to inspect (or use) accom-
plishments of the PJP's under the New Deal program to realize just
how much can be done.






23

Further, if the projects are planned and initiated by the collunlllity
(whether by one person or a group) the need must be present. Partic-
ipation in decisions on the spending of tax money has to be one of
the most satisfying experiences that jobless persons can have.
The critics of PSE often argue that the bulk of the projects under
any PSE program are projects that the taxpayers would not want
badly enough to pay for through increased taxes. This argument
is insubstantial on several levels. First, the decisions made in local
and state budget committees regarding priorities are certainly not
always what the "taxpayers" would choose. Seconidlv, the tax burden
in some cities and states (New York City and Boston, for example)
are already so high that even if something in great demand were
not already provided, it is highly unlikely that it could be undertaken
during the current recessionary period. Fnally, those who make deci-
sions concerning the allocation of public funds are not always aware-
of the real needs. The simple act of project proposal would bring
"neighborhood" or individual desires to the attention of at least
the advisory group making project decisions.
The use of the LIP model would not contribute to the swelling of
public bureaucracies with additions to staffs that often have little
marginal impact; it would lend itself to a decrease in the "cronyism"
that pervades certain present PSE programs, and would produce
visible output in areas deemed important by the general populace,
rather than by the local officials or bureaucrats.

MAINTENANCE OF EFFORT
With a recession comes not only a drop in the employment, but also
a decrease in the tax revenues of government units. Coupled with this
comes an incredible increase in the need for social welfare services,
crime prevention, and medical care. The devastating human problems
caused by poverty and joblessness are exacerbated by the State and
local financial inability to increase services to the necessary extent.
In the midst of the fiscal crisis, many of the States sought budlget and
employment cuts along with tax increases. At the same time they were
given large sums of money through the Prime Sponsors to hire persons
to work in the public sector. This clearly is not the right fiscal time to
inject a massive dose of money and expect strict compliance with
maintenance of effort provisions.
As a result, we can easily document the fact that many of the posi-
tions created under CETA were simply replacement funding for state
or local jobs. There is nothing wrong with revenue sharing, particu-
larly countercyclical revenue sharing but not in the guise of a public
jobs program.5
The model of adding persons to the public payroll within the con-
fines of the civil service system can be a very effective anti-poverty
effort, but it can only hope to be effective in times of expanding employ-
ment and general economic prosnerity. Clearly, we are not enjoying
these conditions now, nor are we likely to for several years.
5 Lecrislatton to provide connter-cyclical grants to State and local governments was
introduced In the present Coneress by Senators Humphrey and Muskie and Ronres~nttire
William Moorhbad. At the time this stndy went to press. this leIislation, which had beern
incorporated into H.R. 5247, was awaiting final House action on the conference report.





24

The LIP project approach virtually guarantees that each and every
one of the jobs will be a net addition to the employment pool since
none of the projects had even so much as an organizational structure
prior to funding. Further, the persons hired had to be taken from the
UI rolls and obviously could not be "transferred" from one job title
to another in the same governmental unit.
Estimates vary widely on the use of PSE jobs to finance state and
local existing positions; some go as high as 80 or 90 percent. If the
states and localities are in need of special temporary loans or additional
revenue sharing, this should be (and, as rated, is being) seriously con-
sidered in Congress, but not under the aegis of a public jobs program.
With an explicit goal of job creation and a tacit goal of revenue
sharing, any program is likely to do a poor job on both counts.












IMPLEMENTATION OF TIIE LIP MODEL
It must be mentioned at the outset that there are no provisions in
'the current CETA legislation which prevent a Prime Sponsor from
taking the LIP model and incorporating it into their distribution of
funds allocated under Titles II and VI (possibly even under Title I:
"Work Experience"). However, present administrative arrange-
ments, voluminous rules and regulations, planning structu res and past
experience make it unlikely that the LIP approach would be imple-
mented by Prime Sponsors. In addition, the limited jurisdiction of the
Prime Sponsors and the fact that the Federal government is not pres-
ently a hiring agent precludes any projects which cross Prime Sponsor
or state lines. Most important of all is the simple fact that a change in
structure takes an enormous amount of effort and the Prime Sponsors
are unlikely to embark in a new direction unless they are legally obli-
gated to do so.'
Alternatives to offering the existing Prime Sponsor network incen-
tives to implement LIP can take several forms. The first is to draft a
new piece of legislation which would incorporate the elements of the
LIP program suiting the current economic situation. Secondly, re-
vision of the rules and procedures of planning and hiring could be
added to any new appropriations for public jobs programs under
CETA. Thirdly, a combination of "emergency appropriations" and
guidelines with an experimental flavor could be adapted while drafting
and planning of new legislation is occurring. Each of these is discussed
in turn.
NEW LEGISLATION
Presently there are at least two bills in committee in the U.S. House
*of Representatives that directly address the question of programs for
the provision of additional public service employment. Rep. Daniels
introduced a bill which specifically addresses the issue of enlarging
and strengthening the countercyclical aspect of the CETA legisla-
tion. Rep. Esch has introduced a bill which takes an even broader
approach by calling for far reaching changes in both Titles I and VI
of CETA.
Under the original Daniels' proposal private non-profit organiza-
tions could apply directly to the Sec. of Labor for a grant to imple-
ment a public employment project. Under the initial Esch proposal
the same agencies would have to apply through the Prime Sponsor
network. The Daniels proposal also allows for the Prime Sponsors
to apply to the Secretary of Labor, thereby injecting an element of
competition into the process of countercyclical funding. It is obvious
that the Daniels bill relies heavily on the Canadian model, although
1 Despite these difficulties. some suceessful examples of the use of CETA funds for ter-
Porary work projects do exist. Some of these are described in "Creating Job.s Through the
Project Approach in New Eneland" by William Spring (Joint Economic Committee. Con-
gress of the United States, forthcoming).
(25)






26

it does not carry this concept to the point where individuals are
allowed to propose projects.
Both bills allow for increased administrative expenses-a worth-
while inclusion if the increased funding is used for materials and
equipment.
In sum, each of the bills offers a reasonably attractive alternative
to the present countercyclical aspect of the CETA structure, but
neither goes far enough in explicitly delineating the difference between
the manpower responsibilities of the Prime Sponsors and the need for
the Federal government to take the lead in administration and fund-
ing of countercyclical jobs programs.

ANTITOVERTY AND LEAP
In addition to the provisions of the bills discussed above, consider-
ation should be given to setting aside a certain portion of the funds
appropriated for public jobs programs to be used as the anti-poverty
aspect. For this purpose, the LEAP model should be seriously con-
sidered. It has all the advantages of the LIP program except that the
target groups, the duration and the funding level would be increased
with a special emphasis on making the projects ongoing. The posture
of a community development effort should be incorporated and funding
levels should be raised to at least $250,000 per year per project. This
approach would facilitate interstate or regional projects if it were
offered through the Office of the Secretary of Labor and administered
through the regional office of the U.S. Department of Labor.
Given that the purpose of a LEAP type program is different from
the countercyclical nature of the LIP model. special allocation for-
mulas should be incorporated. These formulas must take into account
the .stfwtural employment problems of an area rather than the
cyclical problems. Use of this simple criteria would require funds to be
targeted at the depressed areas. primarily the cities. Specific provisions
of this nature would possibly tip the balance back to the inner cities to
counteract the funding problems of CETA which have resulted in a
disproportionate flow of funds to the suburbs.
The LEAP model could be incorporated in new legislation or be
included as a subsection of the needed amendments to CETA.

AMENDTMENTS TO CETA
In order to insure the use of the LIP model in the absence of an
entirely new piece of legislation, several provisions of CETA would
have to be reworded and/or replaced. The major changes needed
would fall into the following categories: 1. "Eligible applicants": 2.
"Manpower Services Council Authority"; 3. priority groups, and
4. capital improvement projects.

1. "Eligible Applicants"
Presently, "eligible applicants" for grants under CETA are Prime
Sponsors as defined in Section 102, A, B, & C. This provision prevents
the direct application of any unit of government, individual or com-
munity group for direct funding of a project proposal. It also elimi-
nates any possibility of the Federal Government taking on the func-
tion of a program clearinghouse, agency or employer.





27

In addition to the present Prime Sponsor definition as eligible appli-
cant the proposed amendments should include provision for an appli-
cation by any individual, conmmunity group, government agency or'
consortium. This then would facilitate the use of the D)epartment of
Labor Regional Offices s mIonIitoring agnts in the saiie manner as
Prime Sponsors are iow monitoitored. The Labor I)el)art iitent could also
serve as fiscal agent if these provisions were cllanlged. ,This aIen1d-
ment would not exclde tlie Prime Sponisor from obtaining control
over all of the funds allocated to the specific area b)ut would inject an
element of competition into the allocation of funds for the counter-
cyclical emplloyment portion of ('ETA appropriations. The applica-
tions of the Prime Sponsors could be considered for approval in the
same manner as the remainder of the redefined "eligible applicants."
Further, to insure the "project" a)pproach (as opposed to the
"add-on' model which characterizes the present PSE structure), a
limitation on funds expended on any one project should be included.
For examl)le, if there were a $100,000 to $150,000 limit for each year
of a project, a variety of approaches would be assured.2
Inclusion of a new definition of "eligible app lican t" would not neces-
sarily disrupt the pIresent operation of CETA: the application for
Title I and Title II programs could be operated in the same manner as
at present. The change would come in the applications for Title VI
funds (or for any further countercyclically oriented funding). The
Prime Sponsors would submit, as thiey do now, plans to the Depart-
ment of Labor for Titles I and II and prepare and submlit separate
proposals for Title VI, as would the newly defined group of "eligible
applicants."
In order to implement the above, a change in the CETA legislation
regarding the transfer of funds from one title to another would have
to be altered to render impossible the transfer of countercyclical jobs
appropriations to other titles. This would require substantial amend-
ments to Section 99.34 of CETA, particularly subsections "e" and "d".
The above change in "eligible applicant" definition should be viewed
as the compromise position, since the most efficient method in terms of
approval and administration would be the circumvention of Prime
Sponsors altogether in reference to the allocation of countercyclical
PJP funds.
2. Mlanpower Services Council
The most logical screening mechanism which could be employed if
the LIP model is incoorporated into CETA is in the Manpower Serv-
ices Council (MSC). The structure of these councils is described in
Section 107 of CETA. This council could act as the final screening
mechanism for applications for PJP's. The MSC is independent of the
Prime Sponsors and incorporates representatives of virtually every
interest group in the State. The advantage of using the MISC as the
final screening device is two-fold. First, by the time the final screening
stage is reached, the staffs and council operations should be in place
and able to handle the job quickly. Secondly, the make up and design
of the MSC is similar to that of the Constituency Advisory Group of
the Canadian situation. Further, the MSC's are already familiar with
2 The inclusion of special provisions for larger funding levels is recommended for projects
-which cross state or prime sponsor jurisdictions.





28

the process of funding and application review as they have been re-
sponsible, in most states, for the allocation of the Governor's five per-
cent discretionary funds. Use of the MSC would also facilitate the
desirable goal of final approval responsibility resting with the U.S.
Department of Labor.
The above suggestion would require an addition to Section 107 of
CETA indicating the broadened responsibility. A spin-off of this
amendment to CETA is that an increased interest in membership and
in the activities of the MSC's is virtually assured. Although data is
not available at this time, the consensus of persons familiar with var-
ious MSC appears to be unanimous regarding the underutilization of
this legislatively-mandated group.

3. Priority Groups
The author's recommendations on needed changes in priority groups
is discussed earlier in this report and need not be repeated here. The
sections of CETA that would have to be changed to accomodate the
recommendations are Sections 99, 36. a, b. For the reasons specified
earlier, priority should be given to those who have exhausted their
ITT benefits, who are collecting public assistance or who are on the
UTI roles undver the Federally funded portion. In addition, special con-
sideration should be included in the law in reference to family income
rather than just to individual situation.3

4. Capital Improvement Projects
With the. present CETA regulations, the "project" approach in areas
other than the provision of services is very difficult because there are
special limitations in the Act in reference to the percentage of money
which must be allocated to wages and because of references to the
Davis-Bacon Act. In order to accomplish the goals of visibility and
communiity betterment, the author believes that these provisions should
be changed or eliminated. The most common complaint of persons ad-
ministering the CETA PSE programs relates to the amount of money
available for the purchase of tools, materials and equipment. At pres-
ent, Title VI allows for only 10 percent of total funds to be used for
purposes other than wages. This, as pointed out earlier, has led some
of the Prime Sponsors to "transfer" the money to Title I "work ex-
perience" programs under which they are allowed 20 percent. This
problem should be directly addressed in designing new models for pub-
lic employment programs.
Few would disagree with the notion that wages must be comple-
mented with some tools, materials and equipment; the question is how
much. Ideally, the PSE appropriations would be complemented with
countercyclical revenue sharing funds. However, this is unlikely to
EhaT)len with specific reference to the use of the funds in conjunction
with the jobs program.
Expansion of the percentage of funds allowed for administration,
tools, materials and equipment to 25 percent of the total wage bill
would serve to increase the flexibility of design and value to commu-
SMichael Wiseman. op. cit., employing a model to maximize the "wolfare" impnet of
PSE proairams. concludep, that. in a countercyclical program, targeting the jobs to house-
hold heads would be the most effective.





29

nity. Increased purchasing would also prov ide added stinmulus to the
private sector. The guideline might be 10 percent niaximnum for ad-
m1inistration and 15 percent for direct purchases or leasing.4
Another problem in implementing the "project" approach is the
reference in CETA to the wage provisions of the Davis-Bacon Act.
Section 99.53 (b) of CETA reads as follows:
Participants in programs or projects of any construction, alternation or repair,
including painting and decorating of projects, buildings and works which are
federally assisted under this act, shall be paid wages and rates not less than those
prevailing on construction in the locality as determined by the Secretary in ac-
cordance with the Davis-Bacon Act, as amended (40 U.S.C. 276-276a-5).
At the same time, CETA indicates that the maximum rate of pay on
the PSE projects is $10,000 per year. Obviously this provision, if
strictly adhered to, precludes the possibility of construction work since
there are very few areas in the country where the rates for construc-
tion workers are less than $10,000 per year. There are, however, pos-
sible ways to circumvent these restrictive aspects of the current CETA
law and remain within its legal boundaries.
A reasonable solution would be to include a provision in CETA tliat
allowed a percentage of the employees on projlects to be paid in accord-
ance with the Davis-Bacon Act, even if th:e wge exceeded the )0,000
limit. The remainder of people hired could tlhen be termed "learners
or "trainees," and their wage could be calculated in the mannmer in
which apprentices are now paid under forial apprienticeship programs
(us;ually 50 percent of the journeyman's wage rate).
Another possibility, though an unlikely one, is for the Secretary of
Labor to use the power given him under Davis-Bacon to waive the
requirements. This has been done in certain model cities programsl
using the justification that the work was year-round and not, therefore,
subject to seasonal layoff as is common in the construction industry
(and reflected in the negotiated wage).
This section describes what the author believes to be the main road
blocks to the implementation of the LIP model under the current
CETA legislation. The likelihood of obtaining the necessary amend-
ments to CETA is a matter open to speculation.

EMERGENCY EMPLOYMENT PROVISIONS

A third possibility for the implementation of the LIP model would
be carried out under an "experimental" design with the Labor Depart-
ment taking responsibility for administration and monitoring. The
Emergency Employment Act of 1971 was passed and implemented in a
very short period of time, and we can learn from the experience.
If the countercyclical jobs program were passed as an emergency
piece of legislation with very simple guidelines for implementation. tlhe
LIP model could be of use since it would not directly attack the idea of
decentralized manpower programs nor "take the money away from
them." 5
4 One innovative project undertaken in Massachusetts to clean up the hanks of a river
solved part of this problem by arranging n an greement with a local military h:ise to utilize
the idle equipment (and operators) residing on the base. This model should be discussed
with the Defense Department.
Thel Joint Economic Committee in its 1975 midyear report recommends emerincy
legislation to establish a large scale program of locally-initiated temporary work proj.cts.
The Committee envisions such a program as a complement to the existing CETA programs,
not a substitute.




30

Administration could be accomplished through the Regional Offices
of the Labor Department and publicity to solicit proposals could be
achieved through the media-at no real expense. The recent advertis-
ing campaign of a well-known oil company regarding ideas for mass
transportation illustrate the incredible response that can be generated
by using television to solicit ideas. The solicitation of project proposals
milght be done in the same manner.
If this emergency piece of legislation is adopted. I would recommend
that the previously discussed amendmlents to the CETA be incorpo-
rated. In addition, the U.S. counterpart of the Constituency Advisory
Groups could be formulated quickly by either using the present Man-
power Services Council or by having eachl Representative (or Sena-
tor) immediately establish area conmmittees to screen and finalize the
proposals.
Another useful addition which could lie made if a specific piece of
emergency employment legislation were drafted and passed would be
the inclusion of a provision to keep the funding triggered by the unem-
ployment rate within n a area. not the national rale. It is unlikely that
the various states or regions will recover from this recession in the
same temporal framework. The unequal dispersion of unemployment
at the present time well illustrates this point. The provision could then
serve as the model for a permanent countercyclical jobs program with
one year project tenure.
An emergency piece of legislation would have to give consideration
to the present CETA program, particularly Title VI. This could be
done by simply not requesting any new Title VI appronriations and by
continuing the funding levels of the remainder of CETA.











FUNDING LEVELS FOR COUNTERCYCLICAL JOBS
PROGRAMS
In a sense, detailed discussion of the needed funding levels for
PJP's under the present economic conditions is academic. The amount
of money appropriated for these programs is dependent on the will-
ingness of Congress and the White House to engage in deficit spending.
The recent report by the Congressional Budget Committee on alterna-
tive jobs programs estimates that 80,000-125,000 jobs are initially
created by each 1 billion dollar appropriation.1 Even if the program
were aimed at employing one out of every 20 workers officially counted
as unemployed the appropriation would have to be in the neighbor-
hood of 4 to 5 billion dollars for each year. There is no need to go into
detail regarding the efficacy of public jobs programs in stimulating
employment during a recession, since this is well-laid out in the Budget
Office report. The important questions center on the model for pro-
viding the jobs and the level of funding. As is argued in this report
and summarized in the next section, the Canadian LIP model of
employment creation offers a means by which we can circumvent the
majority of negative aspects of current CETA efforts.
The funding level needed and the level that is likely to be realized
are far apart given the present "mood" of Congress and the White
House. To operate a program of the same magnitude as the 1975-
76 LIP program would require appropriations of about $2 billion,
while a program to employ even 5 per cent of those currently unem-
ployed would cost between $4 and $5 billion. According to the Con-
gressional Budget Office study, a program funded at the $4 to $5
billion level would employ between 350,000 and 750,000 persons with a
net outlay after 24 months of approximately 53 percent of the total
appropriation. An investment of this size will certainly not eliminate
the current problems of unemployment, but would represent a sound
investment in the future economic and social environment of the
country.
1 Congressional Budget Office, op. cit.
(31)











SUMMARY
The major criticisms of public employment programs under current
legislation center on three related areas: maintenance of effort, the
output of the programs, and the long-run benefits to those who partici-
pate in the programs. The chief criticism of the programs from the
fiscal "conservative" viewpoint is indicated in the concluding section
of a booklet published by the American Enterprise Institute:
The effect of public employment programs on unemployment and increasing of
public services turns out to depend on the extent to which federal funds displace
state and local funds. A review of the evidence suggests that in the long run 60
to 90 percent of the public employment program funds would merely displace
state and local funds . Apparently public employment programs add consider-
able fewer jobs than the nominal number of slots they fund. 1
The author then goes on to "concede" that displacement is some-
what smaller in "countercyclical programs" than in long-run pro-
grams. Without conceding the conservative argument-and the con-
crete evidence is not yet in-the use of the LIP model would signif-
icantly decrease the possibility of substituting federal for local tax
dollars.
The success of the LIP program in Canada cannot automatically be
duplicated in the United States. The advantages offered by the LIP
model, however, can be replicated in the United States with the likely
benefits outweighing the costs of altering the current structure of our
countercyclical public jobs programs.
On the administrative side of the issue, the Canadian model offers
a simple and workable substitute for the cumbersome methods of ad-
ministration employed under CETA. The responsibility for justifica-
tion of proposals is placed with the applicants, not with already over-
burdened public bureaucracies. The limitation on the size of the proj-
jects would make the monitoring process less complicated and would
also allow for easy cancellation of projects not operating as designed.
Further. the problems of ongoing funding and administration are eli-
minated under the LIP model since all projects must have an automat-
ic termination date. Application or extension are considered along
with any new proposals.
The Canadian model also avoids both the problems associated with
civil service regulations and the choice of swelling the permanent
bureaucracy.
Another side benefit of implementation of the LIP model is that the
CETA operation, as presently in place, could concentrate its efforts
in the areas of training, retraining and other programs specifically
related to anti-poverty efforts. New legislation funding countercyclical
programs separate from anti-poverty programs automatically elimi-
nates the "gray" area now present and assures that each "type" of pro-
gram is run with clear delineation of its goals.
1 Alan Fechter, "Public Employment Programs." American Enterprise Institute, 1975.
(32)





33

As mentioned above, the maintenance of effort questions are also
remedied since the project approach and the application procedures, if
strictly adhered to, virtually assure that the positions will be net
additions to the employment pool. This development may lead in-
directly to more pressure from the states and localities for the Federal
government to institute counter-cyclical revenue sharing. This too is
desirable and necessary in the current economic climate.
Although the possibility of nepotism and cronyism still exists under
the Canadian model, it would be lessened if clear specifications on tar-
get groups and eligibility were written into any amendmients or new
legislation. The Wiseman study demonstrates that there are many fac-
tors which must be taken into account in the selection of participants.
Even in a strictly countercyclical program, the needs of applicants
and their families should be considered.
The costs of the Canadian model would not be any more and would
possibly be less per person hired than the present structure. We may
find a decrease in administrative costs and even a lower average salary
than the $7,800 per year goal of CETA. The salary levels allowable
under new legislation should be carefully considered so as to allow for
incentive to return to "normal" work as soon as possible. Even if the
target average wage were lowered to $7,000 per year, this would still
exceed the annual earnings of 20 million full-time American workers.
On the other hand, the wages must be high enough to induce people to
leave the unemployment insurance roles and desire participation in the
programs. A wage somewhere in between the UI benefits and that of
comparable work in private industry should be the target.
Since the LIP model would allow for public agencies to apply for
grants, it would facilitate the added benefit of injecting some competi-
tion into the provision of public goods and services. If a neighborhood
association can plan and operate a project more efficiently than a state
or local government unit, they should be given the opportunity to do so.
LIP also facilitates projects which cross city, state and Prime Spon-
sor lines. At present this is not possible, save the very unusual circum-
stances of Prime Sponsor cooperation. The opportunity for special
railroad or other regional projects would be possible.
There are few who question the efficacy of public jobs programs as
an effective countercyclical tool, but many who justifiably criticize its
current implementation. The majority of the problems in the present
system of PJP's could be virtually eliminated with the adoption of
the Canadian model. Serious attention must be given to the expansion
of public jobs programs in general and to the adoption of the Cana-
dian model in particular.













Appendix A. A SAMPLING OF LIP PROJECTS
Blind River-General Clean-up Improvement Campaign: $54,000; 15 P.; AK
11879; K-01.
Contact: John W. Cook, Box 640, Blind River, POR 1BO, 356-2252.
Cleaning and brushing of the parks and beaches in the area, operation and
maintenance of the Blind River Arena and painting and improvements to the
municipal buildings.
Bobcaygeon-Bobcaygeon Community Improvement Programs: $12,000: 6 P.;
AK16571: K-60.
Contact: L. E. Shea, Bobcaygeon. 738-2282.
Improve local community centre, construct park bleachers and tables, im-
prove fire hall and park buildings.
Bognor-Elm Tree and Brush Removal: $12,000; 4 P.; AK10392; K-11.
Contact: W. E. Manning, Bognor, 376-0549.
Removal of dead elms and brush along township roads.
Bolton-Bolton Camp LIP: $11,000; 3 P.; AK10442: K-44.
Contact: E. K. Smith, 22 Wellesley St. E., Toronto, 922-3126.
Improve the facilities of Bolton Camp for underprivileged individuals
through conservation measures and maintenance of facilities.
Bonfield-Remodeling of recently acquired municipal centre: $22,000; 8 P.;
AK1882, K-50.
Contact: J. Foisy, Town Hall. Bonfield. 776-24.
Remodel municipal centre to provide office space and other required facili-
ties.
Bracebridge-Hubbard's Cupboard: $9,000; 3 P. AK21688; K-43.
Contact: A. Malton, Box 847, Bracebridge. 645-5378.
Recycle clothing to assist low income persons, provide training facilities
for handicapped under auspices of ARC Industries.
Brampton-Contract Centre-Telecare: $22,000; 7 P.; AK18601; K-44.
Contact: Mrs. M. Fulton, 44 Nelson St. W., Brampton. 459-7777.
Establish a 24 hour telephone and walk-in service for those seeking coun-
selling and direction: determine available community services and act as a
referral source for these services.
Hamilton-Hamilton Activity Prevocational Programme: $53,000; 17 P.; AK-
12000; K-15.
Contact: Frank Hasek, 614 Fennell Ave. East, 385-3977.
Operate a programme of horticultural work therapy for discharged patients
of mental institutions thereby promoting their integration with the com-
munity.
Hanover-Community Adventure Playgrounds: $16.000; 5 P.; AK12521; K-03.
Contact: William Brown, Box 187, Hanover, 364-3399.
Construct adventure playgrounds at seven schools for use by school
children and the community.
Harriston-Renovating Interior of Town Hall: $8,000; 5 P.; AK15797; K-64.
Contact: G. Hubbard, Box 10, Harriston, 338-3404.
Undertake major renovations to the main entrance hallway and auditorium
stage of the Town Hall.
Harrow-Essex County in Review: $17,000; 5 P.; AK19187: K-06.
Contact: Robert Alan Burite, P.O. Box 329, Harrow, 738-4368.
Operate in Historical Resources Centre, located at the High School, and
to collect and present historic artifacts to the general public.
Harwich-401 Harwich Conservation Area Improvements: $21,000; 6 P.; AK-
18478 ; K-24.
Contact: A. J. Read, 41 Fourth St., Chatham, 354-7310.
Construct camping areas, nature trails, two large fishing docks and a
bridge; construct partitions and additional storage space in the service
building.
(34)







35

Hepworth-Environmental Enhancement: $10,000; 3 P.; AK14519; K-03.
Contact: W. R. Smith, R.R. #2, Hepworth, 422-1551.
Clear and brush park lands, establish nature trails, set up picnic areas.
Hepworth-Whispering Pines Family Camp: $8,000; 4 P.; AK13131; K-03.
Contact: James R. MacKay, Box 192, Owen Sound, 371-0838.
Develop 30 additional trailer sites at Family Campsite and Trailer Park.
Orangeville-Dufferin Developmental Care Services: $13,000; 4 P.; AK15060;
K-44.
Contact: Mrs. Barbara Schneider, R.R. #4, Grand Valley, 928-2960.
Provide services to families having a pre-school retarded member; estab-
lish ground-work for a pre-school nursery for the mentally retarded, visit
homes of retarded children.
Oraping Falls-Service to the Elderly: $11,000; 3 P.; AK22926; K-32.
Contact: G. Gorham, Box 13, Levack, 966-2713.
Provide practical services to the elderly.
Orillia-Helping Hands, Orillia: $27,000; 8 P.; AK17801; K-54.
Contact: Betty Forward, 20 Hughes Road, Orillia, 323-1223.
Care for chronically ill, perform maintenance work in homes of the elderly,
provide transportation for the handicapped and elderly, provide services such
as snow shovelling, wood cutting etc., provide 24 hr. telephone service.
Orillia-Halfway House For Alcoholics: $18,000; 5 P.; AK12802; K-54.
Contact: Mr. T. S. Parish, 135 West St. S., Orillia, 325-3566.
Equip a garage-workshop which will provide therapeutic benefits to the
residents of the Halfway House; teach skills to facilitate the residents re-
entry into society.
Orillia-Orillia Public Library Local History Project: $7,000; 3 P.; AK15896;
K-54.
Contact: Katherine McKinnon, 36 Mississauga St. W., Orillia, 325-2338.
Compile material related to Stephen Leacock, local history; make folders
to preserve rare documents; gather information about Orillia and district
women who have made notable contributions to the community.
Orillia-Inter-Reserve Recreation: $11,000: 3 P.; AK26117; K-54.
Contact: Mr. Merle Pehahmagabow, Box 636, Orillia, 325-2709.
Employ persons to help organize recreation committees on the reserves
and plan recreation activities.
Orillia-"Y" Tax-Aid: $22,000, 11 P.; AK19435; K-54.
Contact: W .G. Wood, 18 Peter St. N., Orillia, 325-7567.
Provide assistance to needy persons in filing Federal Income Tax returns;
carry out repairs to Orillia YMCA summer camp.
Sarnia-Community Outreach '75: $36,000; 10 P.; AK21027; K-51.
Contact: Ellis Earl Brown, Box 41, Sarnia, 337-3231.
In a preventative action program, provide group counselling for parents
and adolescents; assist the Volunteer Bureau in the co-ordination of its
activities.
Sarnia-Newspaper Index: $24,000; 7 P.; AK12877; K-51.
Contact: R. T. Bradley, 124 S. Christina St., Sarnia, 337-3291.
Produce an historical index of events and happenings in Lambton County
for use as a research and to scholars and members of the general public.
Sarnia-Community Centre Improvement: $11,000; 4 P.; AK16043; K-51.
Contact: Richard Chowen, 2109 London Rd., Sarnia, 542-5578.
Complete the painting of the interior of the Township Community Centre:
landscape and plant trees in recently acquired, undeveloped tracts for use
as parkland.
Sarnia-Lambton College Industrial Fire School: $30,000; 9 P.; AK18098; K-51.
Contact: G. C. Hansen, 240 N. East St., Sarnia, 344-2445.
Provide labour for site preparation of a training facility for full time
and voluntary firefighters in Lambton County.
Sarnia-Nursery School Workers Project: $11,000; 3 P.; AK18056; K-51.
Contact: Rev. C. W. Lewis, 350 Indian Road, Sarnia, 344-1781.
Enable Sarnia nurseries to respond to demand of increased service by pro-
viding an additional qualified worker.
Sarnia-Community Inspiration: $43,000; 12 P.; AK12794; K-51.







36

Contact: Gerald Maness, 978 Tashmoo Ave., Sarnia, 344-5371.
Provide a weekly newspaper for the community to keep all age groups
informed of upcoming events; undertake a renovation of band owned build-
ings and senior citizen home.
Sa rnia-Recreational Park: $45,000; 15 P.; AK12505; K-51.
Contact: Gerald Maness, 978 Tashnoo Ave., Sarnia, 344-5371.
Clear additional park area on the Sarnia reserve; construct bridge walks
and a building that can be used for the display of Indian crafts.
Windsor-Respond: $11,000; 3 P.; AK10319; K-65.
Contact: Gordon S. Smith, 870 Ottawa St., Windsor, 252-2110.
Organize a drop-in centre for the mentally handicapped, providing recrea-
tional and social activities; support mentally handicapped persons residing
independently in the community.
Windsor-Kayahara Youth Centre: $11,000: 3 P.; AK14212; K-65.
Contact: James D. MacDonald, 308 Ramsay St., Amherstburg, 736-5227.
Provide young people of the Windsor area an opportunity to meet socially
for participation in recreation programs, physical fitness, health education
and other counselling.
Windsor-Native Court Worker Project: $9,000: 3 P.; AK23957; K-65.
Contact: Mary Rose Amaro, 1696 Cadillac St., Windsor, 944-3422.
Identify gaps in existing services for native peoples in the fields of justice,
probation and corrections; demonstrate the need for continuing full time
courtworkers.
Windsor-Partners in Canada: $17,000; 5 P.: AK11051; K-66.
Contact: J. F. Johnston, 1485 Janette Ave., Windsor, 253-2481.
Study the contribution of specific ethnic groups to the community and
prepare multi-media kits and ethnic artifacts for use in local schools and
libraries.
Windsor-Recreation for the Handicapped and Aged: $36,000; 10 P.; AK21852;
K-66.
Contact: Madeleine Harden, 511 Pelissier St., Windsor, 258-9622.
Provide skill-building and recreational activities for aged and disabled'
people; promoting a fuller integration into the community.
Windsor-Kontact : $11,000; 3 P.; AK17595; K-66.
Contact: D. Russell Anderson, 1787 Walker Rd., Windsor, 254-5441.
Provide information and assistance to the families of incarcerated persons,
creating educational and recreational programmes for its members.










'INANCIAL SUMMARY-. Appendix B. LIP APPLICATION FORM __tero,

* 0n.the r'ver.;e side of this paje is a Budgcetng Workshoet which you may uso if you feel it will be of some help in determining your project's total costs. Whether you use the Budgeting HWokshect or not, ploeso comnplete the entire
ir tt cial SJnmrn.vy shet.
tA,'Ai' NIOV W M.sno o nf su'conlt.iator0 omalavye. mrnt not ho incihldnd hero.
To al To dintrmn wholhnr you, oroposid budol S3aitf s i ho ruin't of lh o isOs m, io vil bo noc i.t. a :bo wo: k ol tIhO
roBr, No. of Weoks to mn r.ok W. ck TTotnl atlowable amounts for wages and oithr costs which LIP can aJv ar. co Bn ;a Iso to Daoor d C :S:
STy f Woker Workcers be worked to be woe Wages
PiRmd Tye o Woir ______________ ________
*- by each worked -Ato
WAGES



EE.. C~t1RT~Tl.'v~El I z I Z V I Io 4 GO
-O TI ot al7 |iht a a4 1 3 0 fO3 1V 0 miIbu l, frn t4 3t t0S s i lS X T7lSl ^- s 2 1 0 45










iOTHIER -------- -- ~------ --- --- ------ _____-
______ *_____ tl ashl -o -o I so o3 e.U ak if e________ _________ M L3O
i'ORnDG'F wZrPiy wage tm rou t 5140? snv *rut*P'v the rw*., o, :0"

40 PROGRi~M MUTPSEIZSORS h:&*lmum 2.3 fo 00 4 0 wr 14 05 11b 14o 0 -a 5n
40 -D I Pi nP Z 19 38 105 43 70 0 1. 4
R)Gn'? iIUPE wVISORi LPwll Day ho )r-u ntt ch 3O 2098
40 g 19 38 I s 43 TO













U I E IS^.* _ '.L, or 157 I n-I, .t A yOUr 0.0l1.1 "or. -^a- -~ ,n"-'v--0--'- -0 --* ------ *"*- P n f i o u..... )0 t i u $ 140 f

TTtot'^.n pI^o. .,a5 T~a M .,li.^aliio. ____. ...........
1E Ba3l S-Total other cols to.' I on Icli S 43 S



--l-..h. ~ -- \it \ \ >.Y C OSTS IiL'll m,)n .-r tel iii A mo u rn /vPt' S 4 O 2 4
O T H E R ----- -------- ------ -- -y- -
COSTS Ainu.abA X n4- 0 Z




By add ng the amountS in Iost** 1 is I .bov( v.*,;q '.' <.o-, ,, ,*. i hJve 2- 3 73
^ .maxlun i> atlovable LIP oniti AuM O 10 YOur i l vi Ch voi I <
















TOTAL 2.800 r imev ,, d, Li' 9. ..... i ... to.... I a .... -
183 202593 3S7 ____2__ ______ i p.., ,__


TOYLO U V LNEFmI f Total owa !see i-del t, ,, 1575 v o, .(. v 1. ,1
Ianx C Woirk Sh Gt t ofr Ioosd int/ f llt *. Ovi ". If !o t Vi s( ? iP.i 1 , i t ,1 0i :*** ti, I tt, ly J
[Tr^ *nco **Z'r to aind TraveIltineg I.dn* or" C I -i- t

ARO$SP-OJCTLE OCOF TICKETS THEORTEST PSKSEADTRO Y s Y S o
I--DtRU COMMUNIT C.E /74E OMFRTO 5 0
"n.n, HFydro aard Water -


EXPESCS ---S TOTAL f 750
Hta lte t and SUorlies 1 5 00

'i*r.'sIo-e .dt Postage 90 o >0 ct o rte ll ? aon p,1l "l 2 4 (a ? 3

-___r____<_ ____ REQ U CSTEO _. __ .._ n. ..o_ .._ ..o ,o ... .. ..._- ov .. -. ,.
LIP -A 1 4REUE.STED


.*so* u. 1 50 CONTnIBUTION Anlo-Able Lr con117itl.n 4.1 b. -* S 2 4 3 4

TOTAL s 2.8 00 >* 2 800 The ri Wclca lur onl.ulion oir (o oic. v.,il . ..n.,l .I rl I
----*O f co t*l O atlw^.lLi t* t l c tr o l nt-h ,* uit i t* ic* rt?.r. |^. .r
TOTAL OTHEn COS1S {ADO C + 1 et 37 e5 *. 4375 -

CROSS PROJECT COSTS (ADO B Ef ( 24 673 46 + QGST z 4 &to
mii. 1214 (7/741 5 ___1fl










LOCAL INITIATIVCS PIOCRAM 1974-75 RI)E AU R CRERTIOi CE\TRE
BUDGETING WORKSHEETU IM C
WEEK COMMENCING (enter Dteos at top of columns) ____ -- OFF P'oIsc( No.
f I ust c .
DEC EC. EC DEC TRU 31M TAM TRM FEB FEB FEB FEB MRR MR mnftR mRR MRR RPR APR RPR APR MRY MAY MAY ONLY
1, IS 23 5 1- 19 2(- 2 9 I(* Z-3 ? 9 1& 2.G 3 30 Co 13 20 E 4 11 1i
-* ToIal Wo kl/ Total
I'jMI.- Yj
V _Tyo of Worker 2 3 4 S 6 7 9 10 1 1_ 13 14 is o I 17 18 19 20 21 22 23 24 25 2G x _
40 ___ica.t ) I I I I I S Is I I Z I I I I I I I 24 130 3 1 0
40 SECRETRRY I I I 1 I I 1 I I I I I I I I I I I I I I 24 I00 2400

4 PROGRP M SUPERVI150RS a a Z a a a - a2- 2 -. 7 2 2 2 2- 4(o too - (a0
-5_SPORTS__ -



20 BOKKEEPER OPRTZiE / f / .l l/ 1/1 OIL ft O 1/2O L It/ olt I/Z 4/& I/ i / *y- '12 /a Il It 1/2 I/ ?- l/ I 1 O2 aIS 193F








TOTAL > (a & e' t'lz f'Y 8'/ z 8'/2. 8' fl/ a YR 72 8Y?2 8'/ 8a' B'/ 87l 8/ZY 8 '/Y 82 Y 8? Y'/a f/2 L 'V2 Y'/? Y'/2 3 183 20298 (


EMPLOYEE BENEFITS OTIIER EXPENSES

,,10on ra Swl FORl MONTH OF Z DEC TRM FEB MRR RPR MRY TOTALS
Trainsortation and Travo lling
Total__
for Projict Office Rentat 1 50 150 15100 I1 50 100 8 50

U.i.C. ( I.961 392 not. t vHy o, Water

C.P.P./QOP.P. 1 .81 3 (5 Elquiprrnt Rnont3a

Huath In8ufanco Materiols and Sutlies 1000 I100 100 10 100 100 1 500

V~Pe.,n Prv (l1 a I Toluphono and Postoue I I I Is IS 15 0O
Inluanco Z0 20 ao0 0 20 20 |I o

Pink Chnroua IS 15 I 5 IS 15 15 Q0
MiO alilnLoutu (Spuci$y)
RETARL OF TERATRE LGETTIG1G ISO I 1 0


TOTA 1575 TTA 00 300 300 300 300 400 Zg00
A OT24 17-OTALS
MAN. 12144t7-74)













Appendix C. A SAMPLING OF LEAP PROJECTS

LOCAL EMPLOYMENT ASSISTANCE PROGRAM

APPROVED PROJECTS
1. The first project approved and in operation under the Local Employment
Assistance Program was the St. John's Goodwill Centre in St. John's, New-
foundland. This project is providing employment for six disabled people for six
months at a cost of $10,080. The new employees are sorting and cleaning donated
clothing, and repairing donated furniture, for resale at reasonable prices to low
income groups. The project is expected to be self-sufficient at the end of six
months. 11-0001-1.
2. The Dundas County Co-operative is sponsored by Seaway Community Serv-
ices, Morrisburg, Ontario. Eight people are employed from severely depressed
rural communities at an annual cost of $60,882.
Project workers are concentrating on the establishment of a co-op salvage
operation and crafts workshop. The initial development period began on March 27
and the actual project was launched in early June.
Although the group have much to learn about the operation of a co-op busi-
ness, their progress to date has been satisfying. 31-0013-1.
3. Springboard Workshop, sponsored by the Christian Resource Centre in
Toronto, has signed a contract for a 12-month period during which 15 day-
parolees from the Joyceville institution will operate a workship in woodcraft
production. Special emphasis will be given to experiences which will fully re-
integrate the parolees into society as responsible self-supporting individuals.
The project itself is expected to become self-supporting in about two years. The
contract is for $118,449.07. 31-0029-1.
4. Total Education in Vancouver has signed a contract to employ ten people,
eight of them low-income, alienated, school drop-outs, to provide a repair and
home maintenance service, transportation and other assistance to low-income
homeowners in a depressed area of the city. The contract, covering a period of
52 weeks is for $74.140. 51-0004-1.
5. A contract is in force with the Bouctouche Bay Oyster Co-operatire Limited
of Kent County, New Brunswick, to employ and train twenty-four very low-
income people in developing an oyster farming enterprise. The contract covers
24 people for six months and 5 of them for a full year. The rest will undergo
training under CMIP during the winter months when work on the oyster beds
is not possible. The enterprise expects to become self-sustaining in about thirty
months. The cost for the first six months will be about $80,646.30. 14-0011-1.
6. The St. John's, Newfoundland, Craft Training and Production Centre will
employ six young socially-handicapped persons, some of them ex-convicts, for
an initial six-month development period, to establish a craft production and
marketing project. The cost. covering six months is $20,100. 11-0008-1.
7. A contract has been signed with the Ward V Resources Council in the
northern, part of the City of Halifax. a depressed area. The approved six-month
development period will employ and train four long-term unemployed men in
rink operation, including ice-making. Supportive counselling services will be
provided as required to ensure that the men and their families learn to face the
realities of the world of work. The initial contract is for $14,400. 12-0006-1.
8. Another contract signed with the Logan Heights Environmental Committee
of Winnipeg involves the employment of thirty people from the low-income core
area of Winnipeg. Many could be called multi-problem unemployed. They will
redecorate and renovate the houses of pensioners and low-income homeowners
in the area and build small items of furniture for these same low-income
groups. This is a democratically-managed project which, under the Local Initia-
tives Program, has had considerable success in Integrating its workers into the
regular labour force. The contract for the first 10 months is for $150,000. 41-
0011-1.
(39)





40

9. The Occupational Training Centre (SNAP) in Charlottetown, P.E.I., a
community organization established to meet the special educational needs of
mentally and physically handicapped adults, will hire seven mentally-handi-
capped citizens to paint the homes of peopled with fixed incomes, senior citizens
and welfare recipients. The federal contribution is $9,048. for a six-month
development phase. Former LIP project. 13-0001-1.
10. A project submitted jointly by Corner Brook After Care Services and West
Coast Council of John Howard Society of Newfoundland proposes, to develop
employment opportunities for 10 ex-inmates by starting a business which will
produce handicrafts as well as collect, salvage and resell items of clothing,
household goods and appliances. Businessmen within the area have promised
to employ graduates of the project. Total federal contribution is $63,065. for 1
year. 11-0011-1.
11. A contract has been signed with the Montreal Co-operative Employment
Project. Staff members will employ those interested in co-operative employment,
and send them to a camp to learn the roles involved in an employment co-opera-
tive. Participants will include the young, alienated and low-income school drop-
outs. With the experience gained, the individual will become involved in setting
up and working in a co-operative enterprise in which he/she has been trained.
The project involves 24 people with a federal grant of $129.548. 21-0016-1.
12. In Manitoba, the Roseau River Indian Band has begun a Beekeeper's
Course which will involve the breeding of bees and the production and market-
ing of honey. This project will benefit nine natives who are at present receiving
social assistance. The training and capital equipment expenses are to be sup-
plied by DIAND. Total LEAP contribution is $17,875. for 19 weeks. A former
LIP project M-1296. 41-0029-1.
13. The Recycling Workshop, Toronto, contract has been signed for a six-
month development phase. The project is to employ unskilled workers in a
woodworking shop converting waste material into marketable day-care toys
and furniture. This phase does not include marketing but the building of pro-
totypes for experimentation and display. Sales of these will help determine
their market potential. It will create 18 jobs with a federal contribution of
$87,275. 31-0061-1.
14. A contract has been signed with the Kitchener House Automotive Training
Centre for 13 weeks with a fund allocation of $13,302. This training centre will
involve six ex-inmates in automotive work training co-ordinated with train-
ing offered at the community college and within the federal penitentiary. Shell
Limited is leasing the service station and has offered the graduates of the pro-
gram employment in other locations with Shell. 31-0007-1.
15. Operation Mustardseed, sponsored by the City Centre Co-operative Club
of Regina, proposes to hire 30 people in the following areas: painting, carpentry,
electrical and small appliance repair, furniture refinishing and upholstery.
Recruiting will be from referrals made by CMCs, John Howard Society, Al-
coholic Foundation, Provincial Correctional Centre and Welfare Department.
With federal assistance of $149,591. The project plans to reintegrate the chroni-
cally unemployed into the work force (alcoholics, the emotionally and physi-
cally handicapped, unskilled, uneducated, ex-imates, etc.). 42-0009-1.












COMMENT ON THE CANADIAN JOB CREATION MODEL
AND ITS APPLICABILITY TO THE UNITED STATES

By S.AMUEL A. REA, Jr.*
Baroccis paper brings to mind two important questions: should
public job programs (PJP's) be used as a countercyclical or anti-
poverty program and is the Canadian LIP program a desirable model
to follow? Barocci takes for granted that PJP's are desirable. The
opening statement that "there are few who question the need for public
jobs programs" is undoubtedly not true. The advantages of the LIP
model depend in part on the specific goals that PJP's are supposed
to achieve, and the desirability of PJP's in general. The goals set out
for PJP's are discussed in this comment followed by a short discussion
of the ability of LIP to meet these goals.

OBJECTIVES OF PUBLIC JOB PROGRAMS
In a paper prepared for the Joint Economic Committee Michael
Wiseman describes two primary types of PJP programs, antipoverty
programs designed to improve the long run position of the partici-
pant, and counterrecession programs designed for income mainte-
nance during contractions of economic activity.' The antipoverty
type of PJP described by Wiseman is really a form of training
program. Work experience is intended to increase the human capital
of the participants. This approach to investment and human capital
may or may not be effective.
Wiseman's dichotomy emphasizes the income distribution effects
of the programs, but the countercyclical programs may also serve as
the vehicle by which government transfers are increased so as to offset
a decrease in aggregate demand. Consideration of the aggregate de-
mand effects is important because PJP's may be very useful tools for
stimulating demand in specific regions. They also may create more
jobs per dollar of expenditure than other forms of public expenditure
or transfer.
The objectives of PJP's should be expanded to include the follow-
ing: (1) provide countercyclical income support for those temporarily
poor. (2) provide income support for those prematurely poor. (3)
increase the human capital of the disadvantaged (the permanent
poor). (4) provide a means of increasing aggregate demand in a
general recession or in a depressed region. (5) provide public services.
(6) maintain work effort of income maintenance recipients. It is quite
clear that the objectives may conflict with each other. A program that
attempts to provide the best public services will hire the more quali-
*Thp author la Assistant Professor of Economics at the University of Toronto. He is
gratefnl to DoinT Hartle and David Stnger for their comments.
1 Michael Wiseman, On nGivinq a Job: The Tmnlementation ffnd Alloeftio of Public 8eri-
(re Employment, If.. Congress. Joint Economic Committee, 1975.
(41)





42

fied applicants rather than those in need of job experience are those
with the lowest incomes. A specific project may increase demand in a
depressed region but may not be the best project from an output
point of view. In regards to the last objective the wage paid in a PJP
must be high enough to entice unemployed insurance recipients to
work, but not too high that they will never want to work in the
private sector. The wage rate will also affect the type of applicant
to the program.

THIE ADVANTAGES AND DISADVANTAGES OF LIP
I would argue that a PJP is an inferior way to meet the objectives
listed above when compared to -a tax cut, a government expenditure
chosen on the merits of the project, or a well-designed income mainte-
nance program. However, the question discussed by Barocci is whether
LIP would be superior to alternative PJP programs in the U.S. Since
Barocci evaluates LIP primarily from an administrative point of
view. I will concentrate on how it meets the objectives listed above.
LIP has three characteristics which make it somewhat unique. First,
the projects can be initiated by anyone, including individuals; second,
the projects are of short duration: and third, the projects must take
place during the winter months. A less unique characteristic is that
the projects must employ only those registered as unemployed. at rates
of pay that are only slightly greater than the maximum weekly unem-
ployment benefits.
The fact that projects are initiated by the public means that needed
services may be provided and imaginative new approaches to social
problems may be suggested. This is an attractive characteristic of the
program, but in practice it conflicts with the income maintenance
objective. Only those with talent at grantsmanship are likely to apply.
One Constituency Advisory Group chairman reported to me that a
high proportion of the applications came from middle class house-
wives who were formerly out of the labour force and from unemployed
actors. Those not in the labour force could register with the manpower
centre after the project was accepted. This experience took place in
an urban environment, but it illustrates a problem inherent in the
LIP approach.
The short duration of the LIP projects is desirable because it pre-
vents the formation of a constituency that is permanently attached
to public jobs. It also implies a short start up time and makes the pro-
gram timely in terms of its anti-cyclical or anti-seasonal objectives.
On the other hand it means that social service projects are unlikely
to be of much use. The program is rut off just about the time it has
attracted clients. Services such as daycare centres must be provided
on a long term basis because they influence a client's long run decision,
such as whether to look for work or have a child. If a long run deci-
sion is based on the availability of the service, its discontinuation may
cause more hardship than the absence of the service entirely.
The LIP program was designed to combat the seasonal and regional
unemployment program in Canada. The unemployment problem in
the United States is usually thought of as cyclical or structural, not
seasonal. This aspect of LIP may not be needed in tihe United States.
The public is said to support PJP's because the recipients are work-





43

ing for their income maintenance support and because outpult is gen-
erated. Barocci argues that a more visible PJP program will be more
popular. In at least one case in Canada, the Constituency Advisory
Group returned some of the funds because the group felt that the
money would not be well spent. In other cases opposition meumblers of
Parliament felt that it was politically advantageous to have nlotlhing
to do with the program. This casts doubt on the political popularity of
some of the projects.
The biggest argument against LIP, or any PJP, is the cost. Pro-
fessor Gregory Jump at the University of Toronto has estimated with
tie Quarterly Forecasting Model that unemployment would lhave bee(
.1 percentage points higher if the funds used for LIP were instlead used
to increase government expenditures on goods and services. The ex-
penditures at an average annual rate were $168 million in tlhe 1971-
1973 period. In the U.S. this would correspond to roughly 16.8 billion
dollars, transferred from other programs, to reduce the unemploy-
ment rate by 1 percentage point. Part of the reason for the small effect
is that many of the participants come from out of the labour force.
Jump's estimate suggests that as an unemployment-reducing device
the program was inefficient.

CONCLUSION
One can conclude that except for administrative efficiency Canada's
LIP program is not a particularly effective method of meeting the
objectives set out for public job programs. Furthermore, in order to
have an appreciable effect on the unemployment rate it would have to
operate on a massive scale and diminishing returns would certainly
reduce the quality of the projects undertaken. The primary advantage
of LIP when compared to other public job programs may be that it is
easier to get rid of.




UNIVERSITY OF FLORIDA

3 1262 09113 3610
3 1262 09113 3610