m. - - - RESOLUTION 040171 - Resolution authorizing the Committee on Labor and Civil Service to hold public hearings to examine and investigate the high number of unemployed people in Philadelphia and the effects this has on their families, the viability of business, commerce and the City's declining population base and to recommend policies, programs and practices that are intended to help reverse this trend. - - - PRESENT: COUNCILMAN JUAN F. RAMOS, Chair COUNCILMAN W. , Vice Chair COUNCILMAN FRANK. J. DiCICCO COUNCILMAN JACK KELLY COUNCILMAN DAVID COHEN COUNCIL MEMBERS ALSO PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Majority Leader COUNCILWOMAN DONNA REED MILLER Councilman Darrell Clarke - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters 1835 Market Street, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 Resolution 040171 - 3/15/04 P R O C E E D I N G S - - - COMMITTEE CHAIR RAMOS: Good morning, everyone. My name is Juan Ramos. I'm Chairman of the Committee on Labor and Civil Service. , is here present, and to my left, Councilman Frank DiCicco. Very shortly I'll be joined by Councilman Jack Kelly. This is a public hearing of the Committee on Labor and Civil Service, considering Resolution Number 040171. The resolution reads, authorizing the committee on Labor and Civil Service to hold public hearings to examine and investigate the high number of unemployed people in Philadelphia and the effects this has on their families, the viability of business, commerce and the City's declining population base, and to recommend policies, programs and practices that are intended to 3 Resolution 040171 - 3/15/04 help reverse this trend. At this time I would like to make a statement. This hearing was called because I believe and the rest of this committee, and City Council concurs, that as a city we must all be concerned about the high number of unemployed citizens in Philadelphia and the effect that unemployment has on families, neighborhoods, and the local economy. Through these hearings, we hope to examine, investigate the issues of unemployment from various perspectives, including the economic forces that cause businesses to close down shop. We want to get a sense of why some businesses are moving out of the City or laying off employees. We also want to know the human side of unemployment, how are individuals and families coping with their situation, now that they no longer have the same income as before; what unexpected consequences do they face now that they are unemployed. 4 Resolution 040171 - 3/15/04 For example, some hard-working people who are now unemployed are facing the possibility of losing their home through mortgage foreclosure. So, you will be hearing from Sheriff of the City of Philadelphia John Green on why he is calling for a moratorium on mortgage foreclosures, something that hasn't happened in over ten years. You will also be hearing from men who have paid their debt to society. However, many ex-offenders are not given the opportunity to compete for even the most menial jobs. One of the most important things in a person's life is their job. Without a job a person has difficulties providing food and shelter for themselves and their families. Their way of life changes dramatically, and the added stress can cause health and self-esteem problems. When this situation is multiplied by the tens of thousands of citizens who are 5 Resolution 040171 - 3/15/04 now faced with unemployment in Philadelphia, it is easy to see that the whole City's affected in one way or the other. So it is important for all of us, for all citizens, to take notice; to examine, investigate and try to understand the issue; and to do everything we can to help the unemployed. This means that the City must change its tax policies, as the Tax Reform Commission has recommended. Then we must take a look at this.
If we need to offer incentives for companies to come to Philadelphia or not to leave Philadelphia, then we must figure a way to be competitive. For instance, I just introduced a bill that will ensure that the City does not contract any service jobs to companies that outsource these jobs to other countries. We must fight to keep the jobs here in Philadelphia. These hearings are just a part of 6 Resolution 040171 - 3/15/04 the discussion, but they are an important part. Because we don't have a handle of what the real problems are, then it's tough to develop solutions. And there are solutions out there. In fact, we will be remiss if we only looked at the problem and didn't consider some of the available solutions. So during this hearing, we will also discuss various programs which seek to address the unemployment problem by providing job training, counseling, and even job opportunities. Today Professor Arthur Shostak, Director of Drexel University Center for Employment Futures, has submitted written testimony that suggests ways that the City can prepare for the future by taking steps that will anticipate and take advantage of economic trends. Our hope with this hearing is that we will be able to better understand this issue, and hopefully at the end of the day will be able to recommend policies, 7 Resolution 040171 - 3/15/04 programs and practices that will help reverse the current trend. Thank you very much for being a part of these proceedings and for taking the time to share your knowledge and experiences. At this time I'd like to call before us Sandy Vito, Deputy Secretary of Labor and Industry for the state of Pennsylvania.
Thank you, Councilman Ramos and Councilman Goode and DiCicco for asking the Department of Labor and Industry to testify this morning. City Council is right -- COMMITTEE CHAIR RAMOS: Would you please state your name.
My name is Sandy Vito. I'm the Deputy Secretary for Work Force Development with the Pennsylvania Department of Labor and Industry. City Council is right to be 8 Resolution 040171 - 3/15/04 concerned about the large-scale unemployment in the City and the region. We are enduring a national phenomenon commonly referred to as a jobless recovery. Despite an official end of the recession, the number of private sector jobs continue to decrease, even though we are more than months into a 10 so-called recovery. 11 Mirroring national trends, 12 Pennsylvania has at least 90,000 fewer jobs 13 today than it did at the start of the 14 recession in March of 2001. And despite 15 predictions to the contrary, we continue to 16 lose jobs. 17 Metropolitan areas have been hardest 18 hit by escalating unemployment. 7 percent, up from 2003, and higher than both the national and state unemployment rates. More than 50,000 Philadelphians are actively looking for work. Unemployment 9 Resolution 040171 - 3/15/04 among African Americans and other minorities is as high as a staggering nine percent. In addition, labor force participation rates -- that's the number of people who are considered to be participating in the labor force -- continues to decline, which indicates that there are a growing number of people who are discouraged from job search activities and have exited the labor market. And unfortunately they don't get counted in the statistics as they're currently calculated. An illustration of the jobless recovery. In 2002, although the number of business starts in Philadelphia exceeded business closings, closings accounted for a loss of more than 15,000 jobs, while starts accounted for just over 12,000 jobs, for a net loss of 3,000 jobs. When Secretary Schmarin first assumed his role just over a year ago, he found a backlog of more than 16,000 people waiting for unemployment compensation 10 Resolution 040171 - 3/15/04 hearings. I'm happy to report that just a year in, we've made significant progress, reducing that number by at least 4,000, and changing the time that people wait for a hearing from weeks to the months that it formerly took. Yet, unfortunately, many of the people who have lost their jobs since the recession have not been able to find jobs at their former occupations or at similar wages. More than 35 percent of unemployed workers have exhausted their benefits in Pennsylvania. In Philadelphia the unemployment exhaustion rate is 55 percent. That means that people lose their benefits before they find new jobs. So while we at Labor and Industry are doing all we can to expedite unemployment compensation, the economic situation for workers remains very difficult. While the news for Philadelphia and 11 Resolution 040171 - 3/15/04 of course the nation is bleak, we should recognize that Philadelphia enjoys some competitive advantages. First, we have a hard-working citizenry with a formidable work ethic. Second, we have at least three sectors that have higher employment concentration than other regions in the nation. Both life sciences, including health care and biomedical industries, the finance section, and construction represent three areas of potential growth, including employment and higher wage jobs. Third, our post-secondary educational institutions are second to none and provide real opportunities to upgrade the skills and educational attainment of the existing work force and the next generation of workers. While the region has potential for growth, action is required. The global economy represents new opportunities, but also represents real human costs and an equal number of challenges. 12 Resolution 040171 - 3/15/04 So, what can be done? First, the time for economic stimulus is right now. As you know, Governor Rendell offered an economic stimulus plan a year ago when he first took office.
The Pennsylvania Legislature has taken action on some important components of the plan, including the Keystone Innovation Zones, which support economic development adjacent to universities in order to support the important innovation and technology transfer to the private sector. The Elm Street Program, also supported by the Governor and the Legislature, will offer $7 million to local communities to revitalize residential neighborhoods adjacent to commercial corridors. But many important stimulus programs have withered due to inaction by the Legislature. Governor Rendell's economic stimulus plan would jump start the economy by 13 Resolution 040171 - 3/15/04 issuing nearly $3 billion in bonds and loan guarantees over the next three years, leveraging these funds to generate a minimum of $5 billion in private investment in economic development projects across the state, directing investments to blighted rural urban and suburban sites, also making Pennsylvania a leader in real estate and business development. Some of the important initiatives yet to be passed that would help stimulate our economy and provide much needed assistance to Philadelphia and the entire state include the business in our Sites Program, $300 million in a revolving loan fund for local communities to use to redevelop sites into productive use. An increase in the Redevelopment Assistance Fund to allow increased state investment in economic growth, the Pennsylvania Opportunity Fund which has two components. Historically, Pennsylvania has lagged behind in access to capital 14 Resolution 040171 - 3/15/04 investment. The two parts of the fund will increase capital and thereby increase job creation. The first part, the Real Estate Construction Fund, will provide gap financing for real estate projects with their focus on rehabilitation of sites that will attract new tenants and foster new business startups. Similarly, the Venture Capital Fund, if passed, would infuse the state with $500 million in new investment for new businesses and business expansion. Both of these provide important job creation opportunities for Philadelphia and the entire State of Pennsylvania. Job creation is essential in this time of economic change, and the Governor's stimulus plan is needed now to help the tens of thousands of workers seeking jobs in Philadelphia and all of Pennsylvania. Work force development, the area that I'm directly responsible for, and investment in our workers is an important 15 Resolution 040171 - 3/15/04 complement to economic stimulus. The Commonwealth of Pennsylvania invests more than $630 million in employment education and training programs. And as you may know, Governor Rendell recently worked with the Pennsylvania Congressional Delegation to secure $41 million for the year to assist workers who have lost their jobs through increased international trade competition. Philadelphia receives roughly $52 million for employment and training programs, and has provided training for more than 3,500 people. Given economic conditions and the new economy, educational attainment levels, and Pennsylvania's current educational attainment levels, it's clear that more money is needed to upgrade the skills of our work force. And we have called on national leaders to increase funding to work force development programs. But it's equally important that we spend existing money 16 Resolution 040171 - 3/15/04 wisely. Career advancement opportunities or career ladders within firms have all but disintegrated. Most workers change jobs an average of eight to nine times over the course of their employable years. This is a stark difference from 40 years ago when people entered as an entry level worker and worked their way up in a firm. The new economic realities create the need for new strategies.
To that end, we've launched important new initiatives designed to increase competitiveness in our critical industries and to increase the ability of our citizens to compete for higher wage, higher skilled jobs. As I've talked about before, we've identified major industry clusters within the state that represent distinct opportunities for Pennsylvania and the various regions. This is part of a critical component designed to meet employer demand for 17 Resolution 040171 - 3/15/04 skilled workers and Pennsylvanian's need for higher wage jobs, self-sufficiency and career advancement. Using this information, the work force development system can promote regional industry partnerships, which are multi-employer/employee consortia, designed to learn the specific needs of the industry cluster. Issues such as labor force shortages, skill gaps and retention rates can be addressed through the industry partnerships, focusing scarce work force development education and training resources on industry and worker priorities. Industry partnerships can also develop career pathways or career ladders between firms, just as they were once available in side firms. Some successful examples in the strategy exists in the region, particularly with regard to health careers. I believe you will hear later today 18 Resolution 040171 - 3/15/04 from the manager of the Life Science CareerLink. This site is intended to assist the unemployed, underemployed, and disadvantaged workers find suitable employment in health careers, and to develop, through education and training, the skills needed to compete for jobs and advance their careers in an industry sector that provides not only real opportunity but that has a worker shortage. Similarly, the Commonwealth recently provided seed funding for the development of an industry partner in the manufacturing sector. This partnership is charged with grappling with specific work force needs of manufacturers, learning what the common training needs are for multiple employers, and gearing training and education dollars to meet the need, and as a result, helping our workers compete for good jobs at family sustaining wages. In the upcoming months you'll hear 19 Resolution 040171 - 3/15/04 about efforts to expand post-secondary education and increase the ability of Pennsylvanian's to gain marketable credentials. Already in this region you have a model community college consortium that works with Drexel University, to assist people in attaining important educational credentials, credentials and degrees that combine skill specific training with academic instruction. This initiative recognizes the importance of post-secondary education and the need for workers to possess skills, knowledge and problem-solving ability. We live in a new economic environment, in an environment marked by increasing global competition, cost pressures, and the need for skilled workers. Our strategies for combating unemployment must address this new environment and focus on making our industries competitive, while providing 20 Resolution 040171 - 3/15/04 opportunities for our residents, opportunities that have to include jobs, lifelong learning, careers, and career advancement. Thank you. COMMITTEE CHAIR RAMOS: Thank you, Miss Vito. Do you have copies of your testimony?
I don't with me, but I can send it to you, if that's okay. COMMITTEE CHAIR RAMOS: Can you please do so?
Absolutely. COMMITTEE CHAIR RAMOS: You talked about the Governor's economic stimulus plan and the inaction of the Legislature. Can you tell us where that stands today?
I'm sorry. Can I... COMMITTEE CHAIR RAMOS: You talked to us about the Governor's economic stimulus plan, and that there is inaction on the part of the State Legislature. Where is that today?
As he introduced the 21 Resolution 040171 - 3/15/04 stimulus plan about a year ago, there have been ongoing negotiations. We had hoped that it would be passed by now. As you know, both the budget... The budget and the economic stimulus plan were stalled. I would be loathe to suggest what the reasons for that are. But I know the Governor is very, very committed to passing economic stimulus because we need it right now. I mean, if we're going to invest in jobs, now is the time to do it. COMMITTEE CHAIR RAMOS: Any idea if it's going to be before the summer's out? I mean...
I can tell you two things. One, there was hope that it would be passed this month, but I have heard unofficially that the Republicans in the Senate and the House have walked away from the negotiating table. COMMITTEE CHAIR RAMOS: You talked about the Governor's economic stimulus plan. If all of his plan was to be 22 Resolution 040171 - 3/15/04 approved by the House, do you have any projection of how this would impact on the unemployment rate and how low it has a potential of going?
The multiplier effect is about 2.5 percent. I'd have to get you job estimates. I did not bring them with me. COMMITTEE CHAIR RAMOS: Can you get that for me?
Absolutely. But we would anticipate an increase in job creation, a significant increase in job creation. COMMITTEE CHAIR RAMOS: At 2.5 percent?
Mm-hmm. But I have to figure out what the baseline is. I have to get those numbers. I'm sorry I didn't bring them with me. COMMITTEE CHAIR RAMOS: Do you know in what sectors, in particular, these jobs will be available?
Some of the components of the economic stimulus are targeted to health care and biotechnology. Others are 23 Resolution 040171 - 3/15/04 targeted generally to manufacturing or any industries in which new business startups are possible. So, it could be a variety of sectors. COMMITTEE CHAIR RAMOS: And the Keystone Innovation Zones, they're included in the Governor's...
They've actually been passed. And we're hopeful that we will have both the funding and the guidelines out in April. COMMITTEE CHAIR RAMOS: What are your projections if these Innovation Zones are approved locally, and so forth? About how many jobs -- Do you have any projection on how many jobs it will create?
The Innovation Zones are actually designed to promote technology transfer, so we don't know exactly how many jobs it would create. But the goal is to make businesses more competitive by taking innovation done in the university setting and making that move more quickly into the private sector, 24 Resolution 040171 - 3/15/04 so that businesses become more competitive in terms of, you know, innovation, technology, research and development, new product design, et cetera. COMMITTEE CHAIR RAMOS: Can you talk to me a little bit about the Real Estate Construction Fund?
It's designed to provide assistance gap financing for people who -- You know, a lot of folks can come very close to having all of their financing secured. This would provide sort of incremental financing for the rehabilitation of commercial sites, particularly redevelopment of sites that need to be brought from brown fields to productive use. COMMITTEE CHAIR RAMOS: Do you have any projections on how many jobs that --
Again, I don't have any job projections. I apologize. I will absolutely bring you -- send you some job projections. 25 Resolution 040171 - 3/15/04 COMMITTEE CHAIR RAMOS: You stated early in your testimony that when the new Administration came to Harrisburg that there were 16,000 people that were unemployed, or had been -- correct me if I'm wrong -- that they were denied unemployment compensation, and that after they were denied, they were waiting for hearings. 16,000 people were waiting for hearings still when the new Administration came in. And you mentioned that 4,000 -- Correct me here. You reduced it at 4,000 or you have only 4,000 that still need hearings?
My understanding is that we have only 4,000 that still need hearings, and that the time waiting for hearings is down from a number of months to a couple of weeks. And we're working very hard. COMMITTEE CHAIR RAMOS: So you handled 12,000 hearings that were since the new Administration came in? Resolution 040171 - 3/15/04
Yeah. COMMITTEE CHAIR RAMOS: So, you brought it down to 4,000 in a year-and-a-half?
A little under a year-and-a-half, yes. COMMITTEE CHAIR RAMOS: A little under a year-and-a-half. What was the problem?
There were a number of problems. The way the work was managed was a problem. There also were not enough hearing officers. We've actually taken great strides to increase the number of hearings officers and provide incentives for people to move case loads more quickly through the system. COMMITTEE CHAIR RAMOS: Can you detail what the great strides are? How many hearing officers do you have in Philadelphia, and does that meet the demand for hearings?
I believe that we are still in the process of hiring more hearing 27 Resolution 040171 - 3/15/04 officers, but that we are working very diligently to have all the positions slotted. And I can't give you the specific numbers for Philadelphia or even statewide. COMMITTEE CHAIR RAMOS: Can you tell us how someone can apply for these hearing officer's jobs?
I can send you the information. I believe they're Civil Service jobs, and you would need to take a Civil Service test. You can directly link to the L & I web site, which is wwdli.state.pa.us, and the application and the information is on the web site. COMMITTEE CHAIR RAMOS: And how about here in Philadelphia? Can someone go somewhere?
You could go to the local -- COMMITTEE CHAIR RAMOS: Because we have people watching on T.V. I believe, Councilman DiCicco, and Councilman Goode, so there might be some folks that are 28 Resolution 040171 - 3/15/04 listening to every word you're telling us.
Yes. You can go to the local CareerLink Office. You could also go to the local Civil Service testing site. And unfortunately, I do not have the address to that. But I can find it for you. COMMITTEE CHAIR RAMOS: I have no 10 further questions at this time. Councilman Goode.
Thank you, Mr. Chair. Miss Vito, thank you for your testimony. I'm a little bit disappointed that you don't have the job creation numbers based upon the full enactment of the Governor's stimulus plan. But can you tell me, if you know, what the cost per job would be that the Governor's willing to spend to create jobs?
I don't know that information. I apologize. But I think in terms of costs per job... I mean, at this 29 Resolution 040171 - 3/15/04 point the stimulus plan is intended to stimulate economic investment by leveraging both public and private sector investment.
I understand that. But for the cost per job, if it's going to be $75,000, $80,000, $100,000 per job, it doesn't make it a good investment, despite the multiplier effect.
In the work force development system, we typically spend for a retraining, about $8,000 per --
No; I was speaking more so about the economic development side, in terms of the loan programs that will be set up under the stimulus plan.
I don't have that information. I know the Governor's Action Team typically spends about $10,000 per job.
Again, it's not my specific area. But my understanding is 30 Resolution 040171 - 3/15/04 that there would be an oversight board for the Venture Capital Fund which would make sure that the investment went into sound investments likely to promote job creation. Again, those details are being worked out by the State Legislature and the Governor.
Do you know if they intend to include any call-back provisions?
In other words, if those jobs are not created, will they either call the loans, increase the interest rate, take back part of the money? Are there call-back provisions?
Most of the programs currently administered in the economic development programs of the State do have call-back provisions. But as you know, unfortunately it's often difficult to exercise those call-back provisions if a business goes out of business. But they do typically have those in 31 Resolution 040171 - 3/15/04 the Venture Capital Fund. Again, the regulations have not been written, but I would assume that there would be similar call-back provisions.
Let me ask you a question that's more along the lines of your expertise. You spoke eloquently about work force development, and spoke also extensively about the Governor's economic stimulus plan. How directly linked are the work force development efforts to the economic development efforts?
Well, they're directly linked. Many people sort of falsely have an understanding of work force development as a catalyst for job creation. What the work force development system can do is create an educated and skilled work force that can help at times attract new businesses. But without economic development and stimulus, there are no new jobs. 32 Resolution 040171 - 3/15/04 So we work very closely with the Department of Community and Economic Development, so that if they're investing in particular sectors: Health care, biotechnology, et cetera, that we're gearing our work force development programs to those areas.
My question really is, how are they directly linked? In other words, if the economic stimulus plan is going to create loan funds, and those loan funds are targeted toward business lending, how then are your work force development efforts linked there? Or are they linked there? And are the work force development efforts, or what percentage of the work force development efforts are reserved or targeted toward what's going to happen in terms of those loan funds?
In other words, most work force development efforts identify industries that may be growing. 33 Resolution 040171 - 3/15/04
I'm not sure that the loan funds under the economic stimulus plan are targeted or to the extent to which they are targeted are then linked back to the work force development efforts. In other words, I guess I'm asking the question --
No; I think I understand the question. What we've done, the Department of Labor and Industry and the Department of Community Economic Development have jointly undertaken a cluster analysis, a targeted cluster analysis to identify, first, statewide where our competitive industry clusters are.
Which is where 34 Resolution 040171 - 3/15/04 I'm really going. In terms of your loan funds that you will establish if this economic stimulus plan is fully enacted, will those loan funds mandate a percentage of jobs for Pennsylvania residents? Will those loan funds mandate a percentage of jobs for your work force development clients?
Again, the regulations have not been written. I'm not sure that they would be mandated. But the systems work closely enough together that the work force development system provides the pipeline for the workers in those new jobs.
It can provide the pipeline, but is it mandated that there be a direct link?
It has not in the past always been that direct pipeline. We are working very hard to make those connections. I think I understand what you're saying. 35 Resolution 040171 - 3/15/04 You're right. In the past there has not always been the corrections that you're talking about. We're very much -- I use the health care industry because it's sort of the simplest one to understand. There's an actual labor force shortage. So, as we're making investments, we are actually trying to get people into the real jobs that exist there. The same thing as we build new jobs in targeted industry sectors. Presumably if biotechnology, pharmaceutical manufacturing, medical manufacturing is an area of economic development investment, we would specifically target through the career links, through job training services, that the first recruitment would come through the work force development system.
But if those companies don't seek public financing through your economic stimulus plan, then essentially for those companies that do seek public financing, there might be a 36 Resolution 040171 - 3/15/04 disconnect between what you're doing in work force development and what you're doing in terms of economic stimulus.
No. I think I'm saying that while there is currently and has been a disconnect, we're making every effort to avoid that disconnect. So, if they're getting public financing from the economic development side, they come to the work force development side. So, for instance, let me tell you about one improvement that we've made. The Governor's Action Team, as you know, actively works with businesses on retention strategies and attraction strategies. Whenever they make offer letters, they'd let us know that a company is coming in, what their job training ideas may be, so that we're at the table at those meetings. Similarly, when they're making loans, we'll understand what the sectors are that are invested in, and we'll pull 37 Resolution 040171 - 3/15/04 those employers together in industry partnerships to better understand their training needs. So, for instance, in the manufacturing... Let's say we're investing in NLF loans for certain types of equipment. The work force development side would then come in at a multi-employer strategy and provide specific job training and education on that type -- that piece of equipment that we might be investing in. So, there are direct linkages that we're creating. Is it perfect? I would say absolutely not. But are we making great strides? Absolutely.
Okay. But all that is still short of mandating that a percentage of jobs that the businesses will create from your economic stimulus plan will go towards your work force development clients.
Again, the regulations 38 Resolution 040171 - 3/15/04 haven't been written. And I guess I could take that back to the folks who are working on economic stimulus as an idea to sort of mandate that. I would say Pennsylvania residents -- I think the goal is to have Pennsylvania residents, so that absolutely that there be a specific linkage. That makes perfect sense.
I asked those questions not just in anticipation of what the Governor is going to do, but here we entertain the idea of a half a billion dollar economic development capital fund as well. Thank you.
Okay. I think that's a great idea. And I will look into, you know, how could we possibly mandate that, not just through voluntary agreements.
Thank you. COMMITTEE CHAIR RAMOS: Thank you, Councilman Goode. I want to acknowledge that 39 Resolution 040171 - 3/15/04 Councilwoman Donna Reed Miller has joined us. Thank you for coming.
Thank you. COUNCILMAN DiCICCO: Thank you, Mr. Chair. Good morning, Miss Vito. In your testimony you talk about some of the components of the Governor's economic stimulus package, and you also testified that it's about a year, year-and-a-half that it's been on the table, and that the Republican leadership, and that the House and the Senate have basically walked away from the table. I'm sure there are many components to this. I'm not asking you to go into detail. But could you speak with any specific knowledge on what may be the biggest sticking points that the Republicans are having to deal with and why they're not supporting this? Is there anything in general? Could you generalize that?
I have no -- 40 Resolution 040171 - 3/15/04 COUNCILMAN DiCICCO: Politics aside, that they may not want the Governor to look good. I understand all that stuff, I mean, again, myself. But I'm just curious if there's something...
I honestly have no idea. Again, that was unofficial. The official understanding, up until at least a week ago, was that there had been agreement on all the details. So... COUNCILMAN DiCICCO: On?
All the details of the stimulus plan. So, I really have no 15 earthly idea why they've walked away -- COUNCILMAN DiCICCO: Agreement on the details, but not necessarily in support of...
No. There was agreement. I think the difference of opinion had to do with timing. But my understanding was that there was an agreement that was worked out between the four caucuses as to what would be passed, and that the issue was timing, 41 Resolution 040171 - 3/15/04 and that it looked like March would be the time that they would pass it. COUNCILMAN DiCICCO: So, we have a good chance that sometime this month it may be passed, you're saying. And do you know if there's any --
I just got word on Friday, again, unofficially, that the Republicans had walked away from the table, and I don't know why. COUNCILMAN DiCICCO: Well, that's what I was trying to find out. Is the reason why --
I don't know. COUNCILMAN DiCICCO: -- it's too expensive? Are they not... You have no 18 knowledge of that?
I don't know. I don't know what their position is. I welcome you to ask them. COUNCILMAN DiCICCO: If they were here, I would. I'm just curious. I mean, again, without the political nature of these things that sometimes get in the way, 42 Resolution 040171 - 3/15/04 I was just curious if there is any specific issue or issues that the Republican leadership in Harrisburg was having a problem dealing with.
Again, I just got this on Friday, so I have very little information. COUNCILMAN DiCICCO: I understand. Thank you. Thank you Mr. Chair. COMMITTEE CHAIR RAMOS: I'm an optimist, but let's not hope at all that this package is turned down in the House, in the full House. What kind of negative impact would this have on the unemployment scene in Philadelphia in particular, if the Governor's economic stimulus plan, that has so much for employment, is not acted on?
Well, there's two sort of, you know, schools of thought on this. One is that we just should wait and the recession will end. The other is that we 43 Resolution 040171 - 3/15/04 need to actually take action to really sort of pump up the economy. I would be an adherent to the second, rather than the first, and I think the consequences for the people of all of Pennsylvania are pretty grave. We have had -- continue to have significant job losses. And, you know although, we're, again, months into a 11 so-called recovery, we have not seen the 12 type of job gains that you would expect to 13 see related to a recovery. 14 So, I would suggest that without 15 some action, such as the stimulus, we're 16 going to continue to see increasing 17 unemployment rates and increasing labor -- 18 decreasing labor force participation rates. 19 COMMITTEE CHAIR RAMOS: Thank you. 20 Councilwoman Donna Reed Miller, please.
Over the 44 Resolution 040171 - 3/15/04 weekend, I don't know whether I was on the internet or reading the newspaper, but the Bush Administration keeps predicting that jobs are going to start to come back. Do you have any idea what kind of jobs they're talking about? And how are they coming back? And this is not really -- This is not a political question.
When I read it, I said, I wonder where these jobs are going to come from. So, I thought, you know, since you work for Labor and Industry, that maybe you guys have some information we don't have.
Well, I guess, let me say a couple of things. One, the information Labor and Industry has, again, been very stark. Unemployment continues to --
-- increase. In Pennsylvania, where we believe we have a competitive advantage is in health care, where we actually have a labor force 45 Resolution 040171 - 3/15/04 shortage. We believe we can grow jobs in the biotechnology and biomedical areas, including pharmaceutical manufacturing and medical equipment manufacturing. But understand that that sector of the economy is very small, in terms of employment. Philadelphia has a specific competitive advantage in the finance sector. Also, you know, tourism continues to be an area where jobs grow, and one of the things that we're looking at, in terms of work force development, is how do we create actual tour pathways in the tourism sector. The construction sector in Philadelphia is still relatively healthy, although that sector has also experienced some job losses recently, too. So, the truth is, while I can tell you what the competitive sectors are for the region and for the State, most sectors are, with the exception of health care, and even that depends on the occupation within the sector, are experiencing job losses. 46 Resolution 040171 - 3/15/04
So, I guess the short answer is, if we have actual job gains, they are likely to be in those sectors that I just described.
Okay. Do you know what the -- And someone may have asked you this prior to my arrival.
Do you know what the unemployment stats are for Philadelphia?
7.7 percent, which is higher than both the state and the national averages. And among African Americans, it's as high as 9 percent. And again, as I mentioned before, that discounts folks who are discouraged from the labor market, so it could in fact have a real -- could be higher.
Since January of this year? COMMITTEE CHAIR RAMOS: What month is that for? 47 Resolution 040171 - 3/15/04
That's the current year statistics, 2003. That's January of this year. And then for 2002, I believe it was 7.6 annually. COMMITTEE CHAIR RAMOS: That's annual percentages.
Thank you. COMMITTEE CHAIR RAMOS: Any of my colleagues here on this Committee have any questions? I want to acknowledge Majority Leader Councilwoman Jannie Blackwell. Councilwoman, do you have any questions for the Madam Deputy Secretary of Labor and Industry?
Thank you. It's a pleasure to be here, and certainly I want to commend you and the members of this Committee for holding a hearing on such an important issue. I was with Councilwoman Miller just downstairs about another contract that 48 Resolution 040171 - 3/15/04 would bring another 500 jobs to our City. So, it is absolutely so important and so timely that we have these hearings. And we certainly support you 1,000 percent. And thank you, Secretary, for coming.
I'll follow up with a written testimony, and I'll also get you the job creation projections. I apologize for not having that with me. COMMITTEE CHAIR RAMOS: Thank you for coming here today, and we'll wait for your text.
Thank you. COMMITTEE CHAIR RAMOS: Will professor Bruce Radar... Mr. Radar is Professor of Finance at Temple University Fox School of Business and Management. Please state your name and your title again, please.
My name is Bruce Radar. I'm Assistant Professor of Finance at Temple University. I teach finance courses there. I'm also a chartered financial analyst. 49 Resolution 040171 - 3/15/04 COMMITTEE CHAIR RAMOS: Thanks for coming here. Do you have a prepared text?
No, I don't. I was just informed on Friday. And I want to apologize that I don't have any detailed prepared text. And I didn't know exactly what I was supposed to talk about, to be honest with you, which makes it sort of kind of interesting when I listen to people talk. But when I want to make sure that you understand that the remarks that I make today are mine alone. If you want to interpret them as being Temple's, I'm sure they are along the same lines as Temple University itself I hadn't had a chance to clear anything with anybody. As I said, I was notified on Friday that they asked me to testify today. I had very little time to come up with anything. I don't have any statistics for you like the previous lady. But I can tell you a little bit about my history and 50 Resolution 040171 - 3/15/04 some of the things, because I had a lot of experiences with unemployment and areas of unemployment. And I would also like to make some sort of recommendations that I think are important. I'm a free-market individual, to start off with, and that may be different than some of the people here. Because when people talk and say that government needs to get involved, I believe government's involvement should be to level the playing field, okay, to encourage innovation but to level the playing field. And I as I said, I don't know the statistics in the area itself, but it seems to me that this area, one of the problems with Philadelphia is the employment is moving outside the City limits but not out of the region. Okay. And what Philadelphia needs to do is, you have basically what we would call a structural problem in unemployment. 51 Resolution 040171 - 3/15/04 The City went through a period, I assume, of manufacturing and that was the center. And as that left, the City didn't really try to replace it. What they ended up doing was, in my opinion, raising taxes and stuff, and trying to keep the services the way they were at that time. Now, that is good for the people who are there. But what you did was sort of sacrifice, I think, a little bit of the future. And that being said, from here I think the City of Philadelphia needs to encourage people back into the City. I know Mayor Street has programs by which he's getting rid of some of the urban blight. And as I come into Temple, I see that factories have been leveled, and things like that. Those are the kind of things, I think, that make this City more attractive. It has a lot to offer. I think you as a council, and 52 Resolution 040171 - 3/15/04 Philadelphia as a City, needs to make sure that it's attractive for other people. We're in a period now which we're in one of the strangest times I think any economist has ever seen. We are in a recovery. People say there's a recession. The economic growth numbers are phenomenal that you see in the market that comes out nationally. The only problem is, we're not creating jobs. And I think that has to do a lot with globalization, and things like that. And another thing I think that people don't do is encourage entrepreneurship as much as they should. That's the way you bring jobs in the City. To be honest with you, large companies don't create as much jobs as small companies. That's a fact every economist knows. An entrepreneur who can develop a program -- And it was nice to hear that 53 Resolution 040171 - 3/15/04 people talk about venture capital and using venture capital in the City. I think that would create more jobs for the City of Philadelphia than anything else, encouraging entrepreneurship. And you do that by going through the universities themselves. Temple University, the School of Business has an entrepreneur group. I have students who come to me and ask questions all the time about starting a business and doing business, sometimes in real estate, sometimes in a wide variety of areas. And I try to encourage them.
What we need to do is try to encourage them to stay in Philadelphia, and help them to develop their business, and give them expertise, and things like that. Then the jobs will be created here. I think when government gets involved -- As I say, I'm a free market individual. As Adam Smith would say, when government gets too involved in business, what happens is, they usually create 54 Resolution 040171 - 3/15/04 problems more than they create jobs and create good economic growth. As I said, your job should be to try to level the playing field. Now, I know that you're competing with other people who are giving tax breaks, and things like that. You need to match those. That's obvious. Okay. But you always have to have that eye to the future, what's new. The lady before me was talking about different industries that we have a technical advantage in. We need to exploit those technical advantages for the City of Philadelphia. In other words, it's going to be hard because we're sort of in, as I said, a strange time, because even United States wide, President Bush claims that there's going to be a whole bunch of jobs created. He's done everything he can as far stimulus, and yet the jobs haven't appeared. And that really is a difficult task 55 Resolution 040171 - 3/15/04 for anyone in your position at this point, is to try to encourage that, the growth of entrepreneurship, because I think that's how you're going to get your jobs in this time and place. You need to develop a confidence in the City. People have expectations, and they look to the City Council to show them that the future for the City of Philadelphia is strong. And if you do, you'll attract people to come here. And you have to do that really -- You know, you may have tax incentives and other things. I read the paper and see this information coming out for the City of Philadelphia. It makes -- If they're done properly, I think you can attract a lot of positions and a lot of jobs to the City, and stem the tide that you have right now. You might be able to attract people in from moving their facilities from outside the City in places like Montgomery County back into Philadelphia County in the 56 Resolution 040171 - 3/15/04 City of Philadelphia. I'm not sure what the solution is. You know, you have economists and people working for you that help you develop those solutions. But it's something -- You need to show people that you're working on those solutions, to show them, so that they develop the expectation that this is the place to be, this is the place to develop jobs. COMMITTEE CHAIR RAMOS: Thank you for your remarks, Professor. I'm not an economist.
Mm-hmm. COMMITTEE CHAIR RAMOS: But I always, as I grew up and as I joined the work force at a very early age, I always equated the measure of recovery by job growth. Are you in a position to talk to me a little bit more about how I can better understand where the economy is having such a great recovery, and yet the unemployment 57 Resolution 040171 - 3/15/04 rate, as the Deputy Secretary of Labor and Industry just testified, continues to go up in Philadelphia?
There's a lot of different reasons why we have had a jobless recovery. One of them, if you look at Allan Greenspan, his testimony will tell you higher productivity. We've come through a technological -- basically, a technological change that's made us more productive. There is also the problem of outsourcing. Whether that's a problem or not depends on what you believe in. But that higher productivity makes it more difficult, okay, to employ the people we have, without developing some way... And I think one of the key elements is going to be eventually developing more of an export oriented country, more along the lines of Japan. And Philadelphia is in a good place to do that, in my opinion. That's really one of the key elements in why we have had a jobless 58 Resolution 040171 - 3/15/04 recovery, is that, basically, productivity gains have been so tremendous. And if you look at the productivity numbers over the last six months and last year, they've been phenomenal. COMMITTEE CHAIR RAMOS: If I was unemployed, I'd probably -- And I was unemployed last year for most of the year -- I would say, if there's so much productivity that's gone, you know, beyond the roof, how come you're not hiring me to help with that productivity that's expanded so much?
Well, how would I react to that? That maybe your job skills, your set of skills are no longer applicable, and you need to update your skills. One of the great things about the Philadelphia area, in my opinion, is that we have a tremendous amount of universities which can develop that expertise for people. And if you notice, a lot of people are going back to school and updating their 59 Resolution 040171 - 3/15/04 skills. The only problem is, we've come off a period of time where people didn't have to update their skills. Their salaries and everything increased almost yearly from the 1950s, all the way to the 1990s. Now, you know, when I tell my students... I'm sort of a unique individuals because I've had four or five careers. There's a lot of people who haven't. So I have a tremendous amount of different job skills. I tell my students to look ahead and always be prepared to change and to adapt to the new environment. COMMITTEE CHAIR RAMOS: I understand what you're saying, but could it be also that employers are maybe trying to get even with employees, that more is expected and more is demanded of the employee today than in recent times, because the new phenomena of the changing of the job market is unfolding before us. Do you think that could be a reason? You don't have to pay into health and 60 Resolution 040171 - 3/15/04 welfare benefits? I cannot -- I don't have to pay time-and-a-half. Do you think some of those factors are now things that employers use to keep their employee numbers down, and yet push for bigger productivity?
Mm-hmm. COMMITTEE CHAIR RAMOS: I'm not saying it as a negative factor. I'm just saying it as a matter of fact.
I would agree with you 100 percent, that employers are expecting a lot more out of their employees these days. For instance, just Temple graduates, when they leave the business school. If you had gone ten years ago, they would have gone -- most of them would have gone into some kind of training program. Now a lot of times they're expected to hit the ground running. They're expected to be able to do something right off the bat. And that -- You know, the pendulum swings both ways. And when there's -- Right now there's slack in the 61 Resolution 040171 - 3/15/04 employment market. There's more employees out there. Obviously, that's what you're talking about here. There is high unemployment, in a lot of ways. And that slack is going to -- The employers have an advantage. If the labor markets get tight, the employee has the advantage. And then you see job growth, and, you know, you see a lot of different things happen like that. So it sort of swings -- You know, you see more than having to add more people. And that's... You know, economics are kind of strange. There's good times and bad times because there is economic cycles. And what government has to do is learn to deal with those economic cycles and be sort of counter cyclical in them. That's why I said that as far as I'm concerned, you're trying to do a good job here. You're trying -- And I assume what you're trying to do with these hearings is to find ways that you can encourage more 62 Resolution 040171 - 3/15/04 employers into the City of Philadelphia so that we can use the resources that we have here, which are, you know, in a lot of ways are a very skilled work force. COMMITTEE CHAIR RAMOS: Thank you. I want to acknowledge that my colleague, Councilman Jack Kelly, who's a member of this Committee, has joined us. And for the record, we have a quorum. Do any of my colleagues here at the table have any questions? Councilman Goode.
Thank you for your testimony. I did enjoy it, although I found it mostly anecdotal in its content. Did you actually do any research with regard to job creation, job development, before coming here?
Let's deal with the first anecdotal reference, that small businesses create the most jobs, which I agree with. And the fact you say that most of your students at Temple should be encouraged in their entrepreneurial pursuits and should be trained in those pursuits. Do you believe, beyond the issue of technical capacity, that there may be other issues out there that should be addressed, like, for instance, financial capacity, that there might be particular access to capital issues for businesses, particularly small businesses in Philadelphia?
Well, that's what -- If you remember what I said, that the previous person who testified, she was talking about setting up a venture capital fund to help fund new businesses. I assume that was what it was for. That is something that I think is necessary and a good function of 64 Resolution 040171 - 3/15/04 government, okay, to encourage entrepreneurial...
Do you think that it might be a particular economic disadvantage in Philadelphia, with regard to redlining by banks, lower income and minority owned businesses?
In the context of the changing demographics of the City, that we may actually just have an access to capital problem, as opposed to a lack of entrepreneurship?
Well, that's where this... Remember, I said in one of my original testimony, or what I said was that the function of government in my opinion is to level the playing field? There are rules set up by the Federal Reserve, and there's things that 65 Resolution 040171 - 3/15/04 you can do as a City Council to encourage people to invest in this City and in the minority community.
Okay. Thank you. COMMITTEE CHAIR RAMOS: Any other questions from the panel? Councilwoman Donna Reed Miller, please.
I was wondering, when you do the entrepreneurship training programs, or workshops, or whatever it is you do, do you help students or people identify exactly what type of business they should open, like what's a hot new market? Because many people talk to me about opening businesses, but they really don't know what type of business they want to open. 66 Resolution 040171 - 3/15/04 And I know you can do like a skills inventory, an interest inventory, and all those kind of things. But what you might want to do may not be what you need to do for a successful business, if you understand what I'm saying.
I understand what you're saying. But I'm not actually involved with the entrepreneur group at Temple University.
And there are a lot of students who decide they want to open a business, and they ask my opinion. And what I try to do is encourage them, and to analyze where they can get the benefit or if it's beneficial for them to do it, and the risks involved. I'm more on that end of it, as far as, it's just students who come to me. I don't have any formal training, as far as 67 Resolution 040171 - 3/15/04 entrepreneurial, with the students. We have a section that does that. We have professors who are entrepreneurial professors. I just happen to be a finance professor, and I've had a lot of work experience. And so, I get students that try to depend -- you know, will depend on my opinion. Because... You don't know much about my history, but I was a civil engineer for ten years, and worked in Texas. Then I was an institutional broker and sold municipal bonds for a period of time. Then I went back and got my Ph.D. later in life. And then I've been teaching at Temple, and I taught at the University of Houston. I've been through periods of times that make sort of this... You know, Philadelphia has problems. I lived in Houston for over 20 years, and the bust of 68 Resolution 040171 - 3/15/04 the 1980s -- You're talking about the feelings of being discouraged? I had friends who were out of work for two and three years, highly skilled individuals, people with engineering degrees, people who were geologists by training, physicists by training. And to observe that and see how people can get discouraged, that's why I always thought the government should step in. In Texas, they don't step in as much as they do here. And I would regret that. I think Texas should act more like the governments up in northeast.
I know that this morning you made an interesting point when you said that Philadelphia, of course, was a City that had a lot of manufacturing plants. And when they started to close or move, it wasn't replaced. I think Philadelphia markets itself now as a service industry with tourism and hotels, et cetera. But those jobs certainly don't pay the same type of wages 69 Resolution 040171 - 3/15/04 that some of the blue collar jobs paid. For example, you know, right now there is a lawsuit in court regarding a contract to make rail cars for S.E.P.T.A. And with the Budd Plant closing, which is, you know, most of these workers there made very high wages. And the company that wants it actually is out of state, so those jobs would go out of state. But this is -- Councilwoman Blackwell spoke earlier. This is an opportunity for Philadelphia to create 400 -- for this company to create 400 jobs for Philadelphia, hopefully residents, and probably from the surrounding county. So, you know, I have my fingers crossed. And I'm hoping that the company that's going to be locally based here in Philadelphia gets that contract because that's 400 more people that we can put to work in very high paying jobs. And I think that we probably -- I know the PCDC does -- I get notices from 70 Resolution 040171 - 3/15/04 them when they're doing their entrepreneurship workshops and classes. But I think for young people, perhaps in high school -- and this is probably going to be a question for the School District -- but somewhere down the line. You know, when I was going to school, when I was in high school, the message from my parents and my teachers were, you know, get a good education so you can get a good job. But we have to switch that message and flip it. I mean, all statistics and data says that the small businesses are the industry that hires most of the workers here in the United States. So, we have to now say to our young people, think about what you'd like to do. And we just had a meeting with Labor and Industry. And one of the points that they brought up that I thought was really good was that we should probably use some of the colleges and universities, as you 71 Resolution 040171 - 3/15/04 stated, as the focal point for business start up. Because then perhaps you can, you know, capitalize on their student population and their staff, and also on the vendor, become a vendor with that particular university, to purchase a product from your base. And one of the things we really want to do is to promote the whole concept around entrepreneurship. So I just wanted to make those remarks.
I would agree with you 100 percent on that. I was raised in probably the same time you were where my father taught me, you go to school, you get a degree, you go work for a company, and you work for the company for the rest of your life.
Okay. And I found out very quickly, because I was a civil engineer when I started out, that that wasn't the way it worked. 72 Resolution 040171 - 3/15/04 Companies that I worked for would have -- I'll give you an example. I worked for a company one time that went from about 100 people up to 400 people in a period of two years. They went from 400 people to 100 in six months. And they had a tremendous amount of layoffs.
And it was very disheartening to be in a company having those things occur. So, I learned that I had to be very adaptive to the atmosphere around me, and develop skills. Some people who didn't probably regret it now.
Right. Okay. Thank you. COMMITTEE CHAIR RAMOS: Thank you. Any members of the Committee have any follow-up questions? (No response.) COMMITTEE CHAIR RAMOS: Thank you, Professor, for taking of your time and coming before us. 73 Resolution 040171 - 3/15/04
You're welcome. COMMITTEE CHAIR RAMOS: Mr. Ernie Jones, and Yvette Nunez West. Good morning, Mr. Jones.
Good morning. COMMITTEE CHAIR RAMOS: Good morning, Mr. Jones, and Yvette Nunez West. Please both of you state, at the time that you speak, your name and your title, please.
Thank you. We do have written copies of our testimony, if you'd like to give them out.
Good morning. I'm Yvette Nunez West. I'm here today as Chair of the Latino Work Force Development Task force.
My name is Ernest Jones. I am President of the Philadelphia Work Force Development Corporation. I believe we've decided amongst ourselves that I will go first, and then Yvette will follow through, if that's okay. COMMITTEE CHAIR RAMOS: Proceed.
Thank you. 74 Resolution 040171 - 3/15/04 Good morning, Chairman Ramos, and members of the Committee on Labor and Civil Service, and Councilwoman Blackwell. I would like to thank you for the invitation to appear before you and present testimony on the Resolution calling for public hearings to examine and investigate the high number of unemployed people in Philadelphia and its deleterious effects on the life of this City. I am President of the Philadelphia Work Force Development Corporation. As fiscal agent for the City, PWDC administers funding for employment and training activities. There are two major sources of funds for these activities: Work Force Investment Act funds, which come through the State Department of Labor and Industry, and TANIFF or welfare funds which come through the State Department of Public Welfare. In the fiscal year that just ended, that is FY03, PWDC received almost $58 75 Resolution 040171 - 3/15/04 million to provide services to non-welfare adults, dislocated workers, youth and welfare clients. Over 60 percent of these funds were targeted to welfare clients. So, that gives you some sense of the balance between the general funds and the TANIFF funds. With these funds and with the help of hundreds of training providers and community based organizations, we were able to enroll 17,568 individuals in various programs, and placed 11,530 in either jobs, or in the case of youth, in an appropriate youth program. The work force development system in Philadelphia is composed of four major organizations. They are the Work Force Investment Board, the Philadelphia Youth Network, the CareerLink Consortium, and the Philadelphia Work Force Development Corporation. The WIB, as we call the Work Force Investment Board is appointed by the Mayor, and has overall responsibility for the 76 Resolution 040171 - 3/15/04 strategic direction of the work force development system, and the investment of work force development funds. Philadelphia Youth Work -- and I see Laura Shubilla here -- I'm sure you'll hear from her later, administers WIA youth funds. The CareerLink Consortium operates the one-stop system required under the Work Force Investment Act. The one-stop system which is called CareerLink in Pennsylvania, is a series of physical locations throughout Philadelphia which serve as access points for employers and job seekers. There are currently nine comprehensive or mini centers strategically placed throughout the City and over 20 access points. Unfortunately, we do not have a center in West Philadelphia, but plans are under way to add an additional site there. PWDC is one of five members of the CareerLink Consortium. The other members 77 Resolution 040171 - 3/15/04 are the Pennsylvania Department of Labor and Industry, the Pennsylvania Department of Public Welfare, the State Office of Vocational Rehabilitation, and the Greater Philadelphia Chamber of Commerce. Both in our capacity as administrator of work force development funding, and as a member of the CareerLink Consortium, we see on a daily basis the causes and effects of unemployment in Philadelphia. A major cause of unemployment is something we refer to as the skills gap. If you look at Sunday's Inquirer, you are likely to see hundreds of jobs advertised. Most of these jobs require a certain skill level. Many of the people with whom we come in contact do not possess the necessary skills to get these jobs. This skill gap begins early in the lives of our citizens and grows larger with each passing year. By the time an individual graduates or drops out of high school, the deficit in 78 Resolution 040171 - 3/15/04 his/her education is so large that it is unlikely he or she will be in a position to compete for these jobs. It then becomes the task of the work force development system to try to train the individual and to undo years of miseducation.
Another major cause of unemployment in the City is the high incidence of criminal records on the part of residents, particularly males. We estimate that approximately 40 percent of African American males, and somewhat slightly less for Latino males between the ages of and 35 have some 17 sort of criminal record. 18 These criminal records prevent the individuals with them from getting many of the jobs that are available and for which they are otherwise suitable. Philadelphia is a city of immigrants, and many of our new citizens have not yet mastered the English language. This has served as a barrier for many who 79 Resolution 040171 - 3/15/04 otherwise are very qualified. Yvette Nunez West, Chair of the Latino Work Force Development Task Force will speak more to this issue. Finally, many businesses are leaving the City for a variety of reasons. Taxation, quality of life, incentives, and other factors all play into the equation. The net effect, however, is a loss of jobs for City residents and an increase in unemployment. Notwithstanding the above, we believe that City government can take steps to improve the employment climate in Philadelphia. First, the work force development system must be better coordinated. There should be a cabinet level position which oversees the entire system. The most obvious person to provide the oversight would be the Commerce Director, although the President of PIDC could also serve in this capacity. Currently, the WIB reports to the 80 Resolution 040171 - 3/15/04 Secretary of External Affairs, while the Mayor's Chief of Staff provides some oversight in certain instances. By tying work force development to economic development, we can take better advantage of situations when companies are locating within the City and creating jobs. Second, companies who received tax abatements or other publicly funded incentives should be required to hire a certain percentage of their work force from Philadelphia. They should also be mandated to advertise their openings with the CareerLink system so that they are widely distributed throughout the City. Third, there must be a major initiative put forth to solve the problem of individuals who have criminal records but who have paid their debts to society and now seek to become gainfully employed. This will require a joint effort on the part of the City and the private sector. But with the backing of the City 81 Resolution 040171 - 3/15/04 Council and the Mayor, I am confident we can overcome this problem and ensure that thousands who are currently kept out of employment will enjoy the fruits of their labor. Finally, we must improve our education system so that our graduates can compete with their counterparts from the surrounding counties. I am heartened by the progress that is being made at the School District, but we still have a long way to go. In closing, I would like to extend my congratulations to you, Mr. Chairman, and to the Committee for holding these hearings. The issues you are addressing today will decide the viability of this City tomorrow. And I am available for any questions you might have. Thank you. COMMITTEE CHAIR RAMOS: Thank you for your testimony, Mr. Jones. Can I ask Miss Yvette Nunez West to 82 Resolution 040171 - 3/15/04 proceed with her testimony please.
Thank you. Good morning. I want to thank Councilman Juan Ramos, and the Committee on Labor and Civil Service for the opportunity to present testimony on the Resolution 8 which calls for an examination of unemployment in Philadelphia. I am here to speak on unemployment in the Latino community as Chair of the Latino Work Force Development Task Force. You have with you today copies of a report on Latino Philadelphia, which provides demographic information on the Latino population here in the City, as well as additional information on the task force and inserts of an updated member list. org. I would like to quickly share with you some of the statistics in the report which identifies pressing concerns when discussing unemployment in Latino 83 Resolution 040171 - 3/15/04 Philadelphia. A report on Latino Philadelphia is the result of a comprehensive 400 household door-to-door survey in North Philadelphia's predominantly Latino community. The information gleaned from this research and from the most recent current population service at the time found that fewer than half of Latino adults in Philadelphia were working. The research also found that a significant portion of the Latino community is involved with public support programs, especially temporary assistance to needy families, and Supplemental Security Income. About one third of Latino households report public assistance income, and 40 percent of households in the survey reported receiving SSI. Education levels are one of several significant issues facing the Latino community in the area of work force development. Our research found that the median 84 Resolution 040171 - 3/15/04 education level in the Latino community was between a 10th and 11th grade level. Approximately half of Philadelphia Latinos have a high school diploma or GED. LWDT recommends that the City make a concerted effort to address the high dropout rate in the Latino community. Based on these and other data, LWDT established the following values and beliefs that serve as the overarching concerns regarding unemployment within the Latino community. To begin with, the current resources available to Philadelphia Latinos do not adequately address their training and employment needs. Collaborative policy and advocacy efforts will yield more efficient resources for Philadelphia's Latino population than will isolated efforts by individual agencies. Because Latinos are the fastest growing population in Philadelphia and are becoming a larger segment of the total City 85 Resolution 040171 - 3/15/04 population, it is critical to Philadelphia's vitality to ensure that the Latino community is socioeconomically healthy. Employment in jobs that provide family sustaining wages is key to socioeconomic vitality. And lastly, because Latinos are less likely to be employed and economically independent than most other racial and ethnic groups in Philadelphia, and because employment is so essential for positive socioeconomic outcomes, it is critical to dedicate more resources to addressing the employment needs of the Latino population. Because the Latino Work Force Development Task Force represents nearly 30 organizations, all volunteers, public and private who work directly or indirectly with the Latino community and/or work force development, I requested their input on what they believe are the prevalent barriers to employment, and the best strategies for alleviating the high 86 Resolution 040171 - 3/15/04 unemployment rate within the Latino community. Regarding English as a second language, adequate English's ESL services, as they pertain to employment, have been a repetitive concern. While learning English to function fluently takes time, many families need employment immediately. A suggestion is to identify employers who are willing to partner with the ESL community to provide in-house ESL training, as it pertains to the work being done, which will allow for a quicker road to self-sufficiency and mastering of the English language.
Furthermore, it was suggested that ESL services also be tailored to specifically address the needs of the mature worker population, and to ensure that classes be offered throughout the City. In general, the Latino Work Force Development Task Force would like to see 87 Resolution 040171 - 3/15/04 training opportunities that are directly linked to employment not only increase, but increase in its marketing to and recruitment from the unemployed Latino population. Training services need to be better marketed within the Latino community. Training services should be offered for individuals who have high degrees of experience in their native countries, but whose only barrier to successful employment here is language. Assistance with language and training for board testing in the United States should also be made available. Funding for training opportunities that are directly linked to employment should be increased and should be directly marketed to the Latino community, in addition to the general job seeking population. Furthermore, the City should fund a short-term public sector employment program for long-term welfare and unemployed 88 Resolution 040171 - 3/15/04 individuals or fund expansion of existing programs, such as the Transitional Work Corporation; invest targeted work force dollars to the Community College of Philadelphia to expand programs targeting welfare clients, such as Next Steps and New Choices, as well as those that target the long-term unemployed population. There is also a need for Latino inclusion in small business development in high to moderate economic growth areas. The Latino Work Force Development Task Force has also made an effort at addressing the needs of the ex-offender population. In November 2003, members of the LWDT steering committee met with the Pennsylvania Prison Society in an effort to begin a concerted effort at addressing the needs of the Latino ex-offender population. We found that many of the excellent resources offered by the Pennsylvania Prison Society were not being promoted to the Latino community, nor the agencies 89 Resolution 040171 - 3/15/04 serving that population. However, nor could the Pennsylvania Prison Society meet the additional demand without adequate staffing. 81 percent of its female inmates were Hispanic. In partnership with the Philadelphia County Assistance Office, an LWDT member, we were able to identify in recent statistics for drug felony conviction cases now eligible to return to TANIFF fully 34 percent were from North and Kent Districts, which are predominantly Hispanic. As a result of this meeting, LWDT is beginning the process of advocating for a full-time bilingual job developer of the Pennsylvania Prison Society that can work with agencies and CareerLink centers located within the Latino community, to ensure that our ex-offender population enters or reenters the work force. An LWDT member recently conducted a 90 Resolution 040171 - 3/15/04 survey in the Kensington section of North Philadelphia. The questionnaire was administered to the local community by a group of interviewers. 6 Overall, there were over 1,000 7 surveys conducted in English and Spanish. 8 Two-thirds, or 66 percent of the 9 respondents, were Latino, which reflects 10 the dominant ethnic community in the target 11 area. 12 The following information reflects the importance of a focused strategy for increasing employment within the Latino community. The survey found that the top three family needs reported in the survey were recreation, employment, and public safety in the community. Employment was reported at 16 percent. 51 percent of respondents believe that employment gives strength to the family unit. When asked about their highest hopes for the future, the highest percentage of 91 Resolution 040171 - 3/15/04 responses was the hope for better employment and for financial stability.
The respondents hope there will be more employment opportunities coming to the area that will lead to an improvement in financial stability. 39 percent of respondents hope to have a better job, while 33 percent hope to improve their financial stability. 52 percent of the respondents are employed, with the majority, 39 percent, working in the public services sector. Almost half of the respondents have graduated from high school, have gotten their GED, 46 percent high school, with 33 percent not yet completed high school. There is some other statistics included in the written testimony. In closing, the Latino Work Force Development Task Force welcomes the opportunity to present testimony and would like to work with the Committee on Labor and Civil Service in its efforts. The Latino Work Force Development 92 Resolution 040171 - 3/15/04 Task Force will continue its mission to improve opportunities and conditions for employment among Philadelphia Latinos. And in 2006 we expect to publish our second report, an update to the 2001 statistics, as well as expanded information about the growth of Philadelphia's diverse Latino population. Thank you for your time. COMMITTEE CHAIR RAMOS: Thank you for your testimony. And I just whispered to my colleague, Councilman Goode, a very good testimony, you and Mr. Jones.
Thank you. COMMITTEE CHAIR RAMOS: I'm going to defer the opening of questioning to Councilwoman Donna Reed Miller. And the Chairmanship will pass over to Mr. Goode, as I excuse myself just for a few minutes.
Thank you. Thank you for your testimony. This question is for Mr. Jones. 93 Resolution 040171 - 3/15/04 Regarding... I still call you PIC, but I know it's called Philadelphia Work Force Development Corporation, but better known as PIC. Is the main purpose of your agency to enroll people in employment and training programs?
The main function of our organization is to receive and administer funding that comes into Philadelphia for work force development activities. I would say 90 percent of the funds are then subcontracted out to a host of training providers, hundreds of training providers and community based organizations.
Okay. So, 90 percent of your funding actually goes to training providers, who then in turn train people and hopefully get them placed in employment.
Okay. So, basically, then, what is your connection to CareerLink? One of the problems that I'm having, and I'll just be, you know, open. I have a meeting that I have to go to downstairs at 11:30. I have a lot of young people between the ages of, let's just say, and 30. 11 Constantly I guess get calls, and when I'm 12 out they want help in finding employment. 13 And of course the ex-offenders, 14 which I know there will be groups that will 15 be coming in a little later to testify on 16 their issues. 17 And what I normally do is say, go to 18 CareerLink, you know. They're funded to help people find jobs. Many of them come back to me because I don't believe they understand how to use CareerLink. So, I was wondering, in the CareerLink system if there could be a special effort put together for that younger population that just doesn't really 95 Resolution 040171 - 3/15/04 know how to use CareerLink. One of the things that I do constantly -- And I think you're aware: I came from an employment and training background. So, one of the things that I try to do is encourage people, particularly the younger people, to go to an employment and training program so they can get some skill specific training and use that agency as a way to become employed. And that's one of my strategies. And it works for those that follow it up. But other than that, I send them to CareerLink, and they just come right back to me. So, I think there needs to be some kind of special service for that younger category there.
And I believe -- And I agree, a lot of people do go to CareerLink not knowing exactly how the system works. First of all, our connection to CareerLink is that we are one of five members of the CareerLink Consortium that 96 Resolution 040171 - 3/15/04 runs the entire system. But we play, I think, a key role in the running of that system. At the CareerLink sites -- And again, these are physical locations throughout the City of Philadelphia. The kinds of services that are offered are what we call core services. That is, an individual comes in. Each CareerLink is equipped with computers. There is an assessment counselor there. And individuals can go to simply try to find a job. If they need additional help after that, the next step of services is something called intensive services. That would include English as a second language, resume writing, some minor life skills type of assistance that will take place at the CareerLink site. If after that the individual cannot find a job, then that person should be referred either for something we call an individual training account which is a 97 Resolution 040171 - 3/15/04 training voucher, or to one of the existing training programs that we have. So, I do not know when the goal, whether they're going there expecting to be trained on site at the CareerLink, which does not happen. I believe all of the sites have orientation sessions and paraphernalia for people, but I will certainly follow up to make sure that all, including the young people, get the appropriate instructions on how to use the system.
Because I truly don't think that they actually do know how. And that's really a big disadvantage to them.
And I didn't know whether they were able to get, like, an intensive one-on-one at some point. So what I can do is just refer them back there, I guess.
Well, I would hope that you would call me, if that's ever an issue 98 Resolution 040171 - 3/15/04 in the future, where people are not getting the appropriate service at the CareerLink. If you'd let me know, call me. I will follow up to make sure that they are getting what they're entitled to.
And I don't know whether the service is not appropriate. I just don't know whether they know how to utilize it. You'd be surprised the number of people. And if you go -- I know that a lot of what CareerLink does is by computer. And there is -- Do they get assistance when they go there?
I've gone on the internet, and I've gone into Career Builder, I think it's called, and searched, you know, for jobs there just to test it out. And also, if I'm helping someone 99 Resolution 040171 - 3/15/04 look for a job, then I'll take that time to do that, to see what's in Career Builder. And you use -- CareerLink uses Career Builder, correct?
Okay. But I've seen the booklet that they put out. And I thought it was an excellent booklet. It's a very comprehensive booklet on finding employment. I don't know whether CareerLink puts it out or Department of Labor and Industry, but it's really a good resource. But again, people need, I believe, more one-on-one intensive assistance to really become employed in this type of a market where... (Councilwoman Miller's cell phone rings) -- in this type of market, where jobs are so few. And I guess another big thing is that people don't know how to really figure out how they can transfer skills from one industry into another that also makes them 100 Resolution 040171 - 3/15/04 more marketable, and just a how-to of finding a job. Because I've actually thought about running some workshops and bringing some of the constituents into them that constantly call me. And people are constantly, constantly looking for jobs. I'm sure other Council members have the same situation, and particularly ex-offenders. So, I'm glad to see that you did put something in your testimony regarding ex-offenders. You know, we can all do things with our money and file bankruptcy, and after seven years we're okay. But ex-offenders seem to have to live, you know, pretty much the rest of their life trying to get employed. And at some point I think that's an issue that we really have to address, the whole area about ex-offenders and employment. Thank you.
Thank you, Councilwoman. 101 Resolution 040171 - 3/15/04 Before we leave the issue of CareerLink, Councilwoman Blackwell wanted me to ask a question why there's not a comprehensive center within West Philadelphia.
The process for getting a CareerLink site approved is a slow process. And I can't say why West Philadelphia is the last one to be set up. The entire system is relatively new. The CareerLink Consortium has been in discussion with the West Philadelphia Partnership and a couple other groups out there to set one up. I mean, I would expect that process for chartering of the new center to take place very soon, by the end of this fiscal year.
Thank you. On my own behalf I wanted to say that I did think your testimony was excellent.
Particularly liked the fact that you've highlighted 102 Resolution 040171 - 3/15/04 immigrants and ex-offenders and the need for a link between work force development, economic development, which you know is a pet issue of mine. And I was particularly interested in your recommendation that the work force development system be put under a cabinet level position with leadership from either Commerce Director or the President of PIDC, that we need to be taking better advantage of companies located within the City in creating jobs, and particularly those who are receiving tax abatements and other public incentives. I wanted to ask you, for the record, do you know what percentage of jobs that are created by public financing of business, economic development, actually go toward work force development clients?
I don't have that exact percentage, but I can just over the last year anecdotally tell you, when TJ Maxx moved into the City and opened up its big warehouse -- that was about 1,000 jobs -- 103 Resolution 040171 - 3/15/04 we worked with them and provided a training subsidy for those 1,000 jobs. We are currently working with Ikea, which is going to be coming into the City. And I think that's about 400 or 500 jobs. What we try to do is, every Monday morning our Vice President who's in charge of the -- what we call employer services, or Work Force Services Division -- I'm sorry -- meets with PIDC to look at all of the economic development projects that are on the board. And we actually go with them sometimes to help sweeten the pot, so to speak, and to induce them to coming into the City. So we actually put in quite a bit of our funds into those kinds of projects. Again, I don't know what percentage. But, I mean, we could probably calculate it. I just don't have it today.
At what point are you brought into the process, in terms of business attraction? 104 Resolution 040171 - 3/15/04
It's not right in the beginning. I think in most cases, especially with PIDC, land acquisition, the site. Then the financing is generally worked out. And then after that's done, we are generally brought to the table. And I had this conversation with the President of the PIDC. He would like to be able to do it all at one time, you know, right in the beginning.
That's how you should be brought in probably at the point of financing because the point of public financing is generally subsidy. And you have resources that can be applied to that public financing.
Okay. Thank you. Thank you Mr. Chair. COMMITTEE CHAIR RAMOS: Okay. Members of the Committee care to question? Jack Kelly, please.
Thank you. Mr. Jones, you mentioned that you 105 Resolution 040171 - 3/15/04 received almost $58 million to provide your services to your clients. Could you tell me where the $58 million came from?
60 percent of it came from the Department of Public Welfare, which are TANIFF dollars, and the remaining came from the State Department of Labor and Industry. Those are work force investment dollars. Let me explain that the total amount that came in for the City is much greater than the $58 million. The state provides direct funding to a lot of agencies here in the City -- we call it pass-through dollars -- that we do not administer, in the sense that we don't issue an RFP and enter into contracts with individuals. But those dollars came from the two sources that I mentioned.
Okay. Now, you also mentioned that they were targeted, at least 60 percent were targeted to welfare clients. Could you tell me how many of these 106 Resolution 040171 - 3/15/04 people on welfare were removed from the rolls; in other words, who gained employment? Do you have any idea?
Yeah. I'd say annually we're able to place close to 4,000 people in jobs that are on welfare, which would then either substantially reduce or eliminate their need for TANIFF, continued TANIFF benefits.
In other words, they'd be removed from the welfare rolls?
Okay. Now, you also mention in your testimony that you're... It seems to me you're being a little critical of the education they received, because you've mentioned something about under years of miseducation. What is your opinion of the school system and what they're trying to do to help your clients?
My opinion differs from what they're trying to do, when compared to 107 Resolution 040171 - 3/15/04 what they've done in the past. I think the Philadelphia School System is a lousy school system. And I think we've made tremendous strides. And if we continue that way, I think we'll become a good school system. But I don't think it's done a good job of educating our kids, and to make them competitive when you compare them with the young people in Bucks County, Montgomery County, and the other counties.
What would you recommend as far as the school system to make improvements?
I have a lot of respect for Paul Vallas. I think he has the right plan, and I think he is making progress. But just as the system did not drop to the level overnight, it's going to take many, many years to get it back up where it is really educating our kids.
All right. That's all the questions I have. COUNCILMAN DiCICCO: Thank you. 108 Resolution 040171 - 3/15/04 Good morning, Mr. Jones.
Good morning. COUNCILMAN DiCICCO: You mentioned your involvement with TX Maxx, and your involvement with Ikea. Could you explain a little bit about exactly what it is you do when you bring your resources to them.
Yes. We are, under the Work Force Investment Act, allowed to invest in the training of new employees, if it leads to a job. So, we will sit down with the -- in the case of TX Maxx I believe the training subsidy was $1,000 per new employee. With that, it affords them the opportunity to train individuals. And we make the investment, people get hired, and, you know, they pay taxes, and they stay employed. COUNCILMAN DiCICCO: So, are you saying to me that TX Maxx, Ikea, the big box companies that you're involved with, were it not for your training investment, would they still be -- would they be in a 109 Resolution 040171 - 3/15/04 position to hire people or is it supplementing their ability to hire people? I think it supplements, I mean, if they're going to open a business, they need to hire people. But, again, it's one of the incentives that the City is able to offer them, and in many cases it has made a difference. COUNCILMAN DiCICCO: So, you're creating a job pool in a sense?
Well, actually, they can do the recruitment. We're just giving them money so that they can train their work force up front, and which will lead to employment of those individuals. COUNCILMAN DiCICCO: So, if you were not training them, then the company would be training them, which would cost them --
Yes. COUNCILMANN DiCICCO: I'm getting at the dollars and cents of this. Goes back 110 Resolution 040171 - 3/15/04 to my colleague, Councilman Goode, why I think -- We all agree you should be at the table initially.
Yes. COUNCIMLAN DiCICCO: I mean, as one who supports TIFS and tax abatements to encourage economic growth, is it part of the equation at the onset when companies are either looking to move here or we are wooing companies to come in? It seems not to be part of the equation until after PIDC has done their job.
Well, there has been, again, progress in that area. Peter Longstreth came onto our Board. He's on our board of directors now, the former Commerce Director was on our board. And I think probably over the last year there has been much more coordination between our organization and PIDC But I think he would say, if he were here today, that he would like to see work force development be at the table much earlier on than it has been in the past. 111 Resolution 040171 - 3/15/04 COUNCILMAN DiCICCO: And I agree. And I'm certainly not being critical of anyone here. I just think that if we are offering -- For me this becomes another financial incentive.
Yes, it is. COUNCILMAN DiCICCO: In addition to the TIF, the abatements, and everything else that's being offered -- And I think those are good things. People may disagree, but I think they're good things. But my concern is that are we guaranteeing or is this a better way in which we can guarantee that Philadelphians would be hired, since we're making the initial investment on training for the company or to the company.
The answer is yes. We can only spend our money on Philadelphia residents. So, when we make an investment they hire an Philadelphia individual. COUNCILMAN DiCICCO: Okay. Thank you.
I had one other 112 Resolution 040171 - 3/15/04 question. I just have another question, Mr. Jones. Are any of your training centers located in the northeast part of the City?
We do quite a bit of work with... And the name escapes me. First of all, there is a CareerLink site that was just opened up in the northeast.
And attached to my testimony is a listing of the various sites.