The poverty rate in America has increased during the Reagan Administration. Real welfare benefits have fallen sharply and people with jobs have been disqualified from government assistance. Using lessons from the public and private sectors, legislators are attempting to change the regulations of public assistance and welfare work programs to assure that work is always a viable and attractive alternative to people who receive public assistance and that job training and employment services are available to them. This document is the transcript of the first session of hearings held before the Senate Committee on Labor and Human Resources. Testimony is given by founders, administrators, and participants of work programs. Data are presented on unemployment, underemployment, welfare services, job training, and work incentives. The proposed legislation would give incentive bonuses to states which conduct job training programs which prove to be effective. (VM)