[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                 DEPARTMENTS OF LABOR, HEALTH AND HUMAN
               SERVICES, EDUCATION, AND RELATED AGENCIES
                        APPROPRIATIONS FOR 1999

========================================================================

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

  SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, 
                    EDUCATION, AND RELATED AGENCIES

                 JOHN EDWARD PORTER, Illinois, Chairman

C. W. BILL YOUNG, Florida        DAVID R. OBEY, Wisconsin
HENRY BONILLA, Texas             LOUIS STOKES, Ohio
ERNEST J. ISTOOK, Jr., Oklahoma  STENY H. HOYER, Maryland
DAN MILLER, Florida              NANCY PELOSI, California
JAY DICKEY, Arkansas             NITA M. LOWEY, New York
ROGER F. WICKER, Mississippi     ROSA L. DeLAURO, Connecticut
ANNE M. NORTHUP, Kentucky        

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

  S. Anthony McCann, Robert L. Knisely, Carol Murphy, Michael K. Myers,
                and Francine Salvador, Subcommittee Staff
                                ________

                                 PART 1

                           DEPARTMENT OF LABOR
                                                                   Page
 General Accounting Office--Department of Labor Oversight.........    1
 Secretary of Labor...............................................   59
 Employment and Training Administration...........................  403
 Occupational Safety and Health Administration....................  539
 Mine Safety and Health Administration............................  687
 Employment Standards Administration..............................  753
 Bureau of Labor Statistics.......................................  823
 Pension Benefit Guaranty Corporation, Pension and Welfare 
Benefits Administration...........................................  847
 Office of Inspector General......................................  939
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
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                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director













 DEPARTMENT OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 1999

                              ----------                              

                                        Thursday, February 5, 1998.

  GENERAL ACCOUNTING OFFICE, EDUCATION AND EMPLOYMENT ISSUES, HEALTH, 
                 EDUCATION AND HUMAN SERVICES DIVISION

                               WITNESSES

CARLOTTA C. JOYNER, DIRECTOR
LORI RECTANUS, SENIOR PROJECT MANAGER
SIGURD R. NILSEN, PH.D., ASSISTANT DIRECTOR, EMPLOYMENT AND EDUCATION 
    ISSUES
LISE L. LEVIE, HUMAN RESOURCES DIVISION
    Mr. Porter. The subcommittee will come to order. Today is 
the first of three departmental overviews that we have 
scheduled for this year, where we have asked the GAO to help us 
look into the three departments, Labor, Health and Human 
Services and Education with a view to results in the 
implementation of the GPRA law. And today we are pleased to 
welcome Carlotta C. Joyner, the Director of the Division of 
Health, Education and Human Services dealing with education and 
employment issues who will fill us in on the situation at the 
Department of Labor.
    Thank you, Ms. Joyner, for joining us.
    Ms. Joyner. Thank you, Mr. Chairman and members of the 
subcommittee. I am very pleased to be here today. I would like 
to start by introducing, if I may, some of my colleagues I have 
asked to join me here who will assist me later in answering any 
questions that you might have.
    To my right is Sigurd Nilsen who is an Assistant Director 
for Education and Employment Issues. And to my left Senior 
Evaluators Lise Levie and Lori Rectanus. They have been three 
of the people who have been very much a part of the studies we 
have done about labor over the last few years.
    So, we are very pleased to be able to talk about the 
difficult management challenges that the Department faces in 
carrying out its mission in an efficient and effective manner.
    As you know, Labor has a budget of about $34,600,000,000 
and about 16,700 staff for Fiscal Year 1998, with, as it 
states, its mission that of fostering and promoting the welfare 
of job seekers, wage earners, and retirees of the United States 
by improving their working conditions, advancing opportunities 
for profitable employment, and protecting their retirement 
investments.
    But, over the past few years, the U.S. work environment has 
changed in such a way that Labor's task is made more difficult 
now. The public is also demanding more assurance that their 
money is being spent in accordance with sound business 
practices.
    So, I would like to discuss the Department of Labor's 
progress in implementing the strategic planning that is 
envisioned under the Results Act and also the challenge that 
they face in ensuring the effective information management that 
is necessary for the Department to fully realize the benefits 
of that planning.
    In summary, Labor's strategic planning efforts are still 
very much a work in progress. The strategic plan submitted as 
required on September 30th, 1997, addressed many of the 
concerns we had raised in our review of a draft plan submitted 
to OMB and provided to us for review four months earlier. But 
we remained concerned when we reviewed that plan about the 
Department's strategic planning and in general that it appeared 
to be more organizationally driven than mission focused. Our 
past work also raised some questions about how well it is 
meeting these information management challenges.
     I would like to say a bit more about both of those two 
points. Labor's overall strategic plan reflected its 
decentralized management structure and showed the difficulty 
that that structure presents for adopting the better management 
practices envisioned by the Results Act. That is, to articulate 
a comprehensive department-wide mission statement that is 
linked to results-oriented goals, objectives and performance 
measures and then monitoring the attainment of these results.
    We have a chart here that illustrates for you the 24 
component offices of Labor that support its functional 
activities and it also has an additional 1,000 field offices. 
Labor chose to present individual strategic plans for 14 
offices along with a strategic plan overview.
    The strategic plan overview contained, as the chart will 
show, five department-wide goals that are generally results-
oriented and then a sixth department-wide management goal. Goal 
one is life-long learning and skill development in promoting 
welfare-to-work, goal two--enhancing pension and health 
benefits security; three--safe, healthy and equal opportunity 
work places; helping working Americans balance work and family; 
and then a broad goal of maintaining a departmental strategic 
management process.
    When we reviewed the strategic plan, however, we were 
concerned about the lack of a department-wide perspective 
because the 15 agency goals, for example, were listed under 
goal four. Goal four is safe, healthy, and equal opportunity 
work places and it had within it 15 sub-goals that were really 
organizationally focused rather than reflective of goals in 
general that would be needed to achieve that mission.
    For example, there was no single goal of reducing work 
place fatalities, injuries and illnesses. Instead there were 
four separate goals, each of them relating to a particular kind 
of injury or illness in a work place that happened to be the 
responsibility of, for example, OSHA or MSHA or another entity.
    And our observation was that a more mission focused 
approach would improve their ability to identify ways in which 
they could improve their operations to minimize duplications or 
promote efficiencies.
    We did review their Fiscal Year 1999 performance plan, 
which was submitted this week, and found that it reflects a 
significant change and in response as they have stated to that 
review of our strategic plan--we just got the plans so I do not 
have a new term for that--but the Department now describes 
three goals rather than these six that were described in their 
September strategic plan.
    They have now consolidated these goals to the first goal, 
which combines the previous goals one and two, which is to 
enhance opportunities for America's work force. A second goal 
combines former goals three and four, which is to promote the 
economic security of workers and families. And then the third 
goal foster quality work places that are safe, healthy and 
fair, picks up goal five and a part of goal four.
    The plan notes that this change was made in response to 
concerns raised by external reviewers, such as GAO, that the 
previous plan did not really reflect the integration and cross-
cutting nature of the component units. They now see this as a 
one-department plan that will provide them a more unified 
approach.
    We have not reviewed in detail their performance plan but 
we certainly see this as a step in the right direction to unify 
this a bit more.
    On the other point of measuring performance, which is the 
next step required under the Results Act, Labor needs 
information that is sufficiently complete, reliable and 
consistent to be useful in their decision making. But our work 
has raised questions about how well Labor is meeting this 
management challenge.
    We have found data to be missing, unreliable, or 
inconsistent in agencies throughout the Department. Examples 
include, first, the Employment Training Administration has a 
lack of information to monitor and improve its timeliness in 
meeting employers' needs for temporary and seasonal 
agricultural workers under the H-2A program.
    Second, there were questions of the reliability of some of 
OSHA's management information, data regarding the results of 
their inspections and also in ETA's database on the outcomes 
for Job Corps participants.
    Third, we have found inconsistent definitions of key 
program outcome data across multiple employment-focused 
programs. And our work has also identified a need for 
improvement in some of the information Labor provides for 
others to use, such as the prevailing wage rates under the 
Davis-Bacon Act, and the Consumer Price Index.
    In addition, Labor, as well as all other Federal agencies, 
must also address two information management issues that we 
have recently identified as high-risk because of vulnerability 
to fraud, waste, abuse and mismanagement and those are 
information security, which involves the agency's ability to 
protect information from unauthorized access, and the second 
requires Labor to rapidly change its computer systems to 
accommodate dates in the 21st Century.
    These two areas are just part of the management challenges 
organizations such as Labor face in the complex world of 
information management and technology. Others arise from the 
fact that Labor maintains multiple computer systems, operated 
by several computers with a variety of different architectural 
features such as the hardware of that operating systems and so 
forth throughout the department.
    This challenge to obtain reliable, complete, and consistent 
information is a very formidable one. And it is a complex 
problem but some solutions do exist. For example, as computer-
based information systems have become larger and more complex 
over the last 10 years, we have become more aware of the 
importance of what is called a systems architecture and the 
Congress has recognized the importance of this as well by 
requiring that the Department-level chief information officer 
develop, maintain, and facilitate the implementation of an 
integrated systems architecture.
    In conclusion, Labor's programs touch the lives of nearly 
every American because of the breadth of the Department's 
responsibilities. And like other agencies, Labor must focus 
more on the results of its activities and on obtaining the 
information it needs for more focused results oriented 
management decision making processes.
    The Results Act provides a framework for this and Labor has 
begun to make good use of it, but its decentralized structure 
makes it both more important and more of a challenge to achieve 
the results the act envisioned.
    The information systems of today also offer the Government 
and Labor unprecedented opportunities to provide high-quality 
services to the public and to enhance the quality and 
accessibility of information. It is extremely important for 
Labor to take advantage of these opportunities to improve its 
management information systems, we believe, if it is really to 
achieve what can be achieved through the Results Act.
    I will be glad to answer any questions. I have, of course, 
a longer statement I would like to submit for the record and if 
we can answer any questions, I would be happy to do that.
    Mr. Porter. Your statement, of course, will be received for 
the record.
    [The information follows:]


[Pages 5 - 21--The official Committee record contains additional material here.]



    Mr. Porter. Ms. Joyner, did you say that the Department had 
modified their strategic plan or they simply went ahead and 
adopted a performance plan that was built on it?
    Ms. Joyner. What they have done in their performance plan 
reflects some changes essentially to the goals, for example, as 
they stated them at the time of their strategic plan. I do not 
know whether they now intend to create a new plan called a 
strategic plan as a result of those changes or whether they 
would do that at this time or wait for the next cycle.
    Mr. Porter. Does GPRA require the strategic plan as well as 
the performance plan?
    Ms. Joyner. Yes, it does. They were required by September 
30th of 1997 to provide to the Congress a strategic plan. They 
met that date.
    Mr. Porter. Well, it sounds like--this is my 
characterization--but it sounds like the strategic plan was not 
given a lot of very deep thought. It sounds like they kind of 
threw it together from each of their offices or agencies within 
the department never synthesized it into a comprehensive, 
logical whole.
    Is it fair to say that they have done better on the 
performance plan?
    Ms. Joyner. In the sense of overall, department-wide view 
of the goals and the agency goals and the performancegoals 
related to that. They have definitely made progress. We reviewed a 
draft plan in the summer.
    There was progress from that plan to the final plan that 
was issued in September to overcome exactly what you have 
noted. The first one seemed to be very much just sort of an 
aggregation rather than an integration at all.
    And it has moved further now.
    Mr. Porter. Recognizing that this is something that has not 
been done by Government departments at least formally before 
and in an organized way, you are looking at all cabinet 
agencies and all departments?
    Ms. Joyner. Collectively GAO is looking at, I think, the 24 
largest ones.
    Mr. Porter. All right.
    Ms. Joyner. And we are issuing a report. I think it was 
issued this week but not yet released that will summarize the 
results of our reviews of all of those, the reviews of the 
September 30th plans. So, that will be out. That was done for 
the House leadership and that will be available soon.
    Mr. Porter. And your involved in many of those plans 
yourself?
    Ms. Joyner. My particular responsibility is for education 
and employment issues. And we reviewed the education and the 
labor plans and our observations about those two plans will be 
included in this overall report that has just been issued.
    We also, as a separate project, reviewed the plan for the 
National Labor Relations Board.
    Mr. Porter. I would really like to know your opinion as to 
where the Labor Department stacks up as compared to other 
Government cabinet level agencies with respect to implementing 
the Results Act. Are they doing what we should and have a right 
to expect them to do or are they falling short? Are they in the 
middle, the top, or the bottom?
    Ms. Joyner. Well, it is hard for me to generalize based on 
just the two. And one thing I would note is that the task 
facing Labor is, for example, quite different from that facing 
the Department of Education because of the diversity of its 
mission and its existing different component agencies, its 
history of having a separate OSHA, ETA, MSHA, et cetera.
    And, so, the option they chose was different from that of 
the Department of Education initially and it was one allowed by 
OMB which was to do separate unit plans and then prepare an 
overview and I think our sense is that it is both more 
important for them to do a good job of department-wide 
strategic planning but it is also more of a challenge than it 
would be for a less decentralized office or agency.
    Mr. Porter. They are responsible to and are being evaluated 
by OMB, with respect to GPRA and the plans and progress they 
are making on implementation, correct?
    Ms. Joyner. Right. They had to submit their plans first to 
OMB and they got comments from OMB to which they presumably 
responded before they then submitted the plan to the Congress.
    Mr. Porter. And by whose authority is GAO looking into each 
of these plans? Is that part of the law?
    Ms. Joyner. No. In each instance, we just had a specific 
request as part of the assistance we would give to any 
committee on the Hill to look at those. For example, when we 
looked at the National Labor Relations Board that was a request 
from the Subcommittee on Human Resources from Government Reform 
and Oversight.
    The others are from, in general, from the House leadership, 
Mr. Armey and several others.
    Mr. Porter. All right. So, they are responsible to OMB, and 
you are looking at them independently.
    Ms. Joyner. Yes.
    Mr. Porter. And we are trying to look at them from a 
congressional standpoint as well.
    Ms. Joyner. Right. And we are trying, we are just doing it 
to assist you, we are providing information we have been asked 
to provide to the Congress independently.
    Mr. Porter. Are you providing your information to them?
    Ms. Joyner. Yes.
    Mr. Porter. So that they can take some suggestions?
    Ms. Joyner. Absolutely. We are following our usual policies 
in the work that we do which is that we would prepare a draft 
report of our views and submit it to them for comment and then, 
for example, in the product that we issued with our comments on 
the June review of their plan we also included their comments 
about the plan. Ms. Rectanus was involved with that.
    And then we found in both instances in Labor when they 
issued their September plan, their final, if you will, 
strategic plan, they commented that some of those changes had 
been made as a result of our comments and those of the people 
with whom they consulted in the Congress. Similarly in the 
performance plan that has just been submitted along with the 
budget, they reflect that they have made some changes based on 
comments they have received from external reviewers.
    Mr. Porter. Can we now look at your concerns about the 
department's evaluation process? You evidently feel that the 
department is not doing an adequate job of evaluating its 
programs. Is that a fair statement of your concerns?
    Ms. Joyner. There are two ways to look at that. One is that 
as far as discrete evaluation studies and how they use that 
information in developing their goals and objectives, we felt 
that they have not, they certainly did not describe them 
adequately in their strategic plan.
    And they acknowledge that in the regulatory areas they have 
not done as much of an evaluation study, if you will, when they 
have implemented a change in practice to design a study to see 
whether that is effective or not that they acknowledge that 
they have not done, and we have said in the past that they have 
not done enough of that sort of evaluation, for example, of 
OSHA's innovations or changes in practice.
    Another way of looking at this is the ongoing information 
they have to manage their programs and we do have concerns 
about that as well, that they sometimes do not collect the 
information we think they should collect in order to monitor 
the programs. For example, in the H-2A program we found that a 
third of their certifications did not meet the statutory 
deadline for timeliness. They could not tell us that, they did 
not even know that, they were missing the deadline. We had to 
go in and do the analysis and we have recommended that they 
collect the data to monitor and, thus, to improve their 
timeliness. That is an example, there are numerous others.
    Mr. Porter. Thank you, Ms. Joyner. For the members of the 
subcommittee, we will operate under the five-minute rule. You 
notice that our staff now is armed with a timing device to 
remind us when our time is up. I will yield to members inthe 
order in which they generally arrived and Ms. DeLauro, that would make 
you first.
    Ms. DeLauro. I would be happy to let my senior colleague 
go.
    Mr. Porter. Let me remind members of the rule. If you are 
ranking on another subcommittee and have a responsibility there 
we would defer to such a member, otherwise, I would like to go 
in the order in which we arrived.
    Ms. DeLauro. Fine.
    Mr. Porter. So, if Lou has responsibilities that is fine.
    Mr. Stokes. Mr. Chairman, Ms. Delauro was ahead of me and 
right now I am not in hearing. So, I do not have to get away. I 
will defer.
    Mr. Porter. Good, Ms. DeLauro?
    Ms. DeLauro. Thank you very much. Thank you, Mr. Chairman.
    Thank you for being here. I appreciate it.
    Let me try to get a framework in my mind here. There was a 
strategic plan which you did not feel dealt with or the 
department did not feel dealt adequately with integrating the 
mission with the operation and then so that the department 
submitted another report, a strategic plan that was to have 
addressed the problems that you identified in their first 
strategic plan that came forward, is that correct?
    Ms. Joyner. Let me clarify about what we are doing.
    Ms. DeLauro. Exactly.
    Ms. Joyner. Okay. They were required by the end of 
September to issue a strategic plan and to deliver that to 
Congress. We were asked before they had prepared that we were 
asked to evaluate a draft plan earlier in the summer and we 
published some comments about that which they said they 
incorporated into revisions that they made in the September 
plan. So, there was one formal, final plan in September and we 
have since reviewed that and had some continuing concerns.
    Now, the most recent plan in which they have consolidated 
the goals is a different plan. It is called the annual 
performance plan and that is one that they were required this 
year for the first time to submit along with their budget 
proposal for Fiscal Year 1999.
    And in that plan they were supposed to go from the goals, 
strategic goals, to specific performance goals to take the 
general and make them specific and indicate some very precise 
measures and, you know, what percent do I hope to achieve on 
this?
    In the process of doing that they apparently concluded that 
they did not want to tie those performance goals to the goals 
they had originally stated. They felt a need to improve those 
goals.
    Ms. DeLauro. Okay.
    Ms. Joyner. And to reflect a more cross-cutting view and a 
more department-wide view. So, they took that opportunity to--
--
    Ms. DeLauro. So, that is to try to, in fact, make a 
difference in what they were doing by way of performance goals, 
of evaluation, of taking a look.
    Ms. Joyner. Right.
    Ms. DeLauro. Now, is that with the new Secretary, did the 
new Secretary move forward with these performance goals with 
this effort?
    Ms. Joyner. Exactly, that is right.
    Ms. DeLauro. Okay. And that is what we are now taking a 
look at.
    Ms. Joyner. Well, we, in preparing this statement, we did 
not have the new annual performance plan yet because those only 
came out this week. But I have been able to make some 
observations about that.
    We are going to be looking at that plan again much more 
specifically and will be in April issuing some products 
reviewing that in more detail.
    Ms. DeLauro. Is it your sense and please do not 
misunderstand what I am saying, you have had a very short time 
to look at this, but I wanted to make sure that the department 
has acknowledged that, in fact, there are some difficulties 
here, they came forward with a new plan only that has just been 
released in taking a cursory look at the new plan. Is it your 
sense that they have addressed the concerns that you have 
expressed in the past and that they are moving to try to 
correct any of the problems that you saw?
    Ms. Joyner. Yes, with respect to the integrating the goals 
and grouping the various activities of the organizations in 
some way that is more mission-focused than organizationally 
focused. This performance plan is moving in the right 
direction. It is an improvement in that sense over the previous 
one.
    Ms. DeLauro. So, in fact, come April when you take a 
lengthier review of this we will have a better idea if they are 
meeting the goals that you have laid out.
    Ms. Joyner. That is right.
    Ms. DeLauro. With that as the background, is there, in 
terms of evaluation, particularly in integration, what in your 
sense kind of a problem exists given the Department of Labor 
and it's, if you will, decentralized structure and giving a lot 
of leeway, flexibility to states, of being able to be an 
information gatherer and to try to take a look at evaluation? 
What is the nature of that structure, how does that affect what 
we do and what information we can get back in terms of 
evaluation?
    Ms. Joyner. That answer would be different depending on the 
different component agencies and I think the individual 
programs. So, that, for example, OSHA has a particular kind of 
relationship with the states, which is statutorily allowed. But 
that relationship on their programs would not be the same as, 
for example, the Employment Training Administration's 
relationship with the States under with JTPA.
    Ms. DeLauro. So, even given what you have said there, and 
help me with this, given that it is different for OSHA, it is 
different for ETA, it is different, does that make the task of 
getting to where we want to go, which is the desired outcome, 
more difficult in trying to get a handle on what is happening 
by way of evaluation? I am trying to figure out how, in fact, 
we get what we want from the agency given, unless you decide to 
restructure the way we deal with OSHA, the way we deal with 
JTPA and some other things.
    Ms. Joyner. Well, what I would say is that is one of the 
things that this strategic plan challenges them to identify. Is 
to say, how have they used evaluations and how might they use 
them in the future and certainly the differing Federal/State 
relationships are a part of what they need totackle, I think, 
to identify how they get the evaluation there.
    Ms. DeLauro. So, that it could be that the Department has a 
better opportunity for that evaluation process and data 
gathering over programs that they controlled. There will then 
be a better view as to what we do rather than, if you will, 
quite frankly, of depending on the States because they, in 
fact, cannot mandate the State to do an evaluation et cetera.
    So, that of itself makes it more difficult unless we decide 
and say, hey, look, you go ahead and mandate that the State of 
Connecticut gives you this kind of information.
    Ms. Joyner. Right.
    Ms. DeLauro. Does that----
    Ms. Joyner. I think that observation that where they have 
more control over the program and over what happens they would 
also have more control over the data they can collect. It seems 
like a fair general observation.
    Ms. DeLauro. So, we need to look at this and given the 
direction that they want to go in but also kind of take a look 
at what the structure is all about.
    Mr. Porter. Ms. DeLauro.
    Ms. DeLauro. Am I out of time?
    Mr. Porter. You are.
    Ms. DeLauro. Okay.
    Mr. Porter. However, we will go around again to the extent 
that people want to do that.
    Ms. DeLauro. Thank you, I just wanted to get a framework.
    Mr. Porter. Mrs. Northup.
    Mrs. Northup. Thank you, Mr. Chairman.
    In working with the Department of Labor, I notice that you 
talked about being outcome based. Do they meet this criteria, 
did they inputbased looking at results. And I wondered if there 
was sort of a culture there that was punitive instead of 
enabling. For example, going out and citing people and 
prosecuting, rather than enabling a safer work place. With 
other compliance issues, being proactive rather than reactive, 
you know, being a work place police instead of a work place 
consultant.
    Did that seem to exist, that sort of institutional 
environment?
    Ms. Joyner. From our work over the years, for example, in 
OSHA, we are certainly aware of that issue of whether to focus 
on the number of inspections and the number of penalties 
assessed or whether to focus on where it is possible to do so 
the actual improvement in the safety, fewer deaths. And that 
has been, I would say, a trend in OSHA over the last few years 
to try to shift that focus and the Congress has encouraged them 
in making that sort of shift, so, that they have identified.
    And this was in both the initial strategic plan that we 
reviewed before and in a quick glance at the new performance 
plan they have continued to do that to try to identify 
industries in which they are going to be engaging in some sort 
of intensive activity whether it is inspections or education 
and training or whatever it might be, that they would look in 
those particular industries for changes in fatality, injury and 
illness rates and certainly that would be a move in the 
direction of focusing as we would encourage them to on outcomes 
rather than to focus on how high the penalties were.
    Mrs. Northup. And, of course, first of all, identifying the 
industries that are maybe, already have the highest rates.
    Ms. Joyner. That is right.
    Mrs. Northup. I know you have mentioned OSHA, but do you 
feel that throughout the agency there is a change and a shift 
in that direction? But throughout the agency, do you feel like 
there is an attempt to change over to a different approach?
    Ms. Joyner. Would you like to speak to what they have been 
doing in job training, Sigurd? I thought that might provide a 
perspective on another department on whether you have seen that 
sort of difference?
    Mr. Nilsen. With the job training programs we have reported 
over the years that there are some 160-odd job training 
programs of which about 37 are in the Labor Department, most of 
them in the Employment and Training Administration.
    The Congress has been trying to consolidate these programs. 
Legislation I think was passed by the House this session again 
or last session. And it is waiting for Senate action. But 
before that has even been enacted the Labor Department has been 
trying to get States and localities to try to bring their 
programs together through their initiatives on one stop career 
centers.
    These are ways that people and employers, people looking 
for jobs and employers looking for workers, can come together 
in one central place and get the assistance they need.
    So, this has been one of the movements in the Employment 
Training Administration. So, I think there is movement to try 
to be, in a sense, more user-friendly. Certainly instead of 
having all the categorical programs where you have to find the 
one that applies to you, this is a way to sort of----
    Mrs. Northup. Well, being user-friendly is one issue, but 
the other issue is whether or not you are going to have a 
outcome-based focus or whether you are going to have a input-
based focus. How many dollars in, how many people in, how many 
people we get into the program? The other side of it is how 
many trained people that go to work and stay at work and have a 
career we get out of it.
    And those are two entirely different measurements and my 
question is, have you seen agency-wide the change in how they 
measure?
    Mr. Nilsen. Well, my perspective on this, sticking with job 
training programs, I think for the most part, particularly the 
Job Training Partners Act, JTPA, has been over time more 
outcome oriented and not so process oriented. They have good 
data on whether or not people got jobs and the wages and that 
they were retained. And the department funded a major 
evaluation, an impact evaluation to see what happened to people 
who went through JTPA and compared it to people who did not go 
through the program at all.
    That kind of evaluation is relatively rare throughout the 
Government and it is not done on every program within Labor. 
But these are very----
    Mrs. Northup. Do you have--I guess----
    Mr. Nilsen. It was privately conducted, funded by Labor but 
conducted----
    Mrs. Northup. So, you are getting good results, good.
    And my other question was, considering that we have job 
training in both the Departments of Education and Labor, and 
since youragency oversees or is auditing both of those 
departments, would you have us consider or will you eventually make any 
recommendations about whether they need to be reorganized, whether they 
are duplicative, whether or not the agencies ought to collaborate more?
    Mr. Nilsen. Certainly in the job training programs it is 
important as you said they go across Education and Labor. There 
are a total of 15 different agencies that fund some form of job 
training program and to get these streamlined in some way.
    Exactly how that is done is essentially a policy question 
that is up to Congress to decide, but certainly efforts, 
programs that have similar goals and objectives should be well 
integrated and working together.
    Mrs. Northup. My question is a little different than that. 
Are you going to identify programs that seem to be duplicative 
that perhaps should be combined in one department rather than 
still in two?
    Ms. Joyner. We have, in times past, as we have mentioned we 
have done a lot of work with different kinds of slants on that. 
And we have issued some reports in the past identifying some 
possible candidates for integration or consolidation and I 
could provide you with that information if you would like?
    Mrs. Northup. I would like that.
    Ms. Joyner. Okay.
    [The information is in the Committee files.]
    Mrs. Northup. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mrs. Northup.
    Mr. Stokes.
    Mr. Stokes. Thank you, Mr. Chairman.
    I have a question concerning the programs that you were 
just discussing. As I understand it, you have identified about 
160 programs, and I understand that the Department of Labor 
considers the number to be 25 to 30 programs with about 75 
percent of the funds going into 12 programs. Is that analysis 
correct?
    Ms. Joyner. Well, let me clarify. The 163 was based on a 
review we did of programs that existed in Fiscal Year 1995. So, 
we have not updated the number since that time and, you know, 
programs will come in and out of the count as time passes or 
some that exist might not be funded in a particular year.
    Again, I am not familiar with the way they did their 
analysis of the way they counted.
    Mr. Stokes. I am really trying to get at how you define 
programs if we have this type of difference between you and 
them.
    Ms. Joyner. This issue is common to another area of my work 
which is education and there the issue arises as well and what 
is an education program? What is an employment training 
program? And my caution would just be that when one is looking 
at two studies where the count comes out different would be to 
take a look at the definitions that were used. I am not 
familiar with the particular study that you cited. If we could 
obtain that we would be glad to take a look at it and comment 
on how the definition we used might have differed from the one 
that they used.
    Mr. Stokes. Okay. You can take a look at it, and if you 
want to amplify further in the record, that will be fine with 
me.
    Ms. Joyner. We would be glad to do that.
    Mr. Stokes. There is, of course, throughout the nation 
today a great deal of concern about the health of the nation's 
pension plans. This subcommittee has given some funding to the 
Department of Labor for the purpose of bringing the agency's 
system up-to-date. What were the results of your findings 
relative to the current condition of that system?
    Did you look at that at all?
    Ms. Joyner. I would need to, if you do not mind, provide 
you that information.
    [The information is in the Committee files.]
    Ms. Joyner. I do not have direct responsibility for that 
work and when we queried our group that does that about any 
major issues they would like us to pose in today's hearing they 
did not identify any but I would be glad to follow-up with them 
and get back with you, individually or for the record to 
respond to that question in fullness.
    Mr. Stokes. I would appreciate that.
    Did you review Davis-Bacon?
    Ms. Joyner. We have done work on Davis-Bacon, yes, sir.
    Mr. Stokes. I understand that you examined the wage survey 
data and found that it was somewhat hindered by a lack of up-
to-date computer hardware.
    Ms. Joyner. That is right.
    Mr. Stokes. Can you tell us about that area, and what has 
been done, if anything?
    Ms. Joyner. Yes. What we found was we looked at the system 
that they have for collecting wage data and using that as a 
basis for establishing the prevailing wage rates under Davis-
Bacon to see whether there were vulnerabilities to the use of 
inaccurate data in setting those wage rates. And we found that 
there were problems with that and that it was vulnerable to use 
of inaccurate data. And one reason, as you have noted, is the 
obsolete, out of date computer equipment that they had. They 
also were not doing the kind of verification of the data that 
came in that we thought would be useful.
    The department is engaged in a multi-year modernization 
effort or a look at reengineering that whole process. And they 
were given some funds for that, I believe, out of the Fiscal 
Year 1997 budget. And, in fact, we were mandated to take a look 
at that process and see how it is proceeding. And independently 
or as a separate issue, as you know, last year your committee 
required them to spend some of their funds to implement another 
part of our recommendation which was in the short term until 
you get the whole system revised at least in the short term you 
need to do some things like obtaining better evidence, 
requiring some documentation to be submitted and then going out 
to check some of those and trace them back and see if what was 
submitted was really accurate.
    We were also mandated to look at that. We plan to start 
work on a study that will combine both of these issues. We plan 
to start that within the next month or two. There, under the 
modernization or the reengineering effort, the operating plan 
that they submitted as required by your committee, indicated 
that they would have the first stage of that design completed 
by the end of December and that they had done so.
    So, now, that they have got a plan in place we think the 
time is right for us to go and take a look at it. So, the short 
answer is we do not know yet what they have done but weare 
planning to start a study for that specific reason.
    Mr. Stokes. Okay. Thank you very much, Ms. Joyner.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Stokes.
    Mr. Miller?
    Mr. Miller. Thank you, Mr. Chairman.
    Let me continue along with the issue of the Davis-Bacon. I 
was at a hearing over in the Interior Subcommittee not long ago 
and it got a little publicity because one of the things we were 
talking about was a $330,000 outhouse in Pennsylvania. But we 
were also examining housing for employees at the National 
Parks, Yosemite and Yellowstone.
    The houses varied in cost and were in the $350,000 to 
$500,000 range per house and they were relatively modest 
houses. You are not probably familiar with it, but we were 
talking about what was causing this.
    The Interior Department's report said that Davis-Bacon 
added $65,000 per house to the cost for each of those houses in 
Yellowstone and the Grand Canyon and Yosemite. That was not the 
intent of Davis-Bacon to increase by $65,000 the cost per 
house.
    So, there is obviously a problem somewhere. So, you are 
doing a study you say, an analysis on, this issue. Where does 
that stand? Are you looking also at the issue of the modal 
rate? Do they use a modal rate, is that your understanding?
    Ms. Joyner. They establish a prevailing wage rate that is 
based on, in most cases, survey data that they collect that are 
voluntarily submitted by employers or by third parties in a 
given area.
    And, so, in some instances the wage rate that would be used 
is actually the union rate in that area, but only if that is 
the, as you say, the most commonly paid rate. If it turns out 
to be the union rate then the union rate would become the 
prevailing wage rate.
    Mr. Miller. On average, is there a median?
    Ms. Joyner. No. It is a combination. Let me let Lise speak 
to that.
    Ms. Levie. If there is a wage that is paid for more than 50 
percent of them then that is the wage but in the absence of 
that then it becomes a mean rather than a modal. And, in fact, 
we did some analysis that looked at how many of them were means 
rather than modals and the majority of them were means.
    Mr. Miller. Okay.
    Ms. Levie. So, it is a first this, then, that, sort of 
scenario.
    Mr. Miller. Have you ever analyzed how much more it costs? 
I mean, you know, the Interior Department claims the $65,000 
per house in that one project. Have you looked or will you be 
looking at how much more it costs for the Government annually 
on projects because of Davis-Bacon?
    Ms. Joyner. Well, the way that we have approached that is 
to say that it would cost more than in the absence of Davis-
Bacon only if the prevailing wage rate is wrong.
    I mean if it is not, in fact, what we typically have been 
paying, absent the Davis-Bacon requirement, if it was set too 
high then, in fact, the wages paid would have been too high and 
the costs would have been inflated.
    So, alternatively, if the wage rate is set wrong, it might 
be set too low, and in that instance what might occur is that 
the workers would actually be paid less than they would be 
required to be if it had been set properly.
    So, that involves some, the heart of that is whether the 
wage rate does fairly and accurately represent the wages being 
paid in the area. So, what we focus on is looking at the 
possibility for that rate being set wrong because people 
accidentally or intentionally sent in information that was too 
high.
    Mr. Miller. Well, we have two cases right now, Yosemite and 
the Grand Canyon, where we are paying $65,000 more per house. 
Obviously, there is a mistake in that.
    We have over-paid. How do we go about looking at that 
problem? I asked the Interior Department that and, again, these 
are their numbers.
    Ms. Joyner. Well, I think the issue you might ask the 
Interior Department would be what was their basis for their 
estimation that it was $65,000 more because that would, for 
them to know that, would require them to have gone in to 
ascertain for each of the wage rates paid, that it was actually 
inaccurate. And, so, since there is a different wage rate for 
each laborer category they would have to know how many wage 
rates were wrong and how many people worked at that wage rate 
for what period of time in order to know how much the house 
was, the value of the house was inflated.
    So, I, of course, have not looked at the methodology, but I 
would ask when someone offers that, you might ask them to 
support that.
    Mr. Miller. Well, we did ask and they gave a rather lengthy 
document and I did not ask the details of how they come up with 
the numbers but that is the one that really bothers you when 
you can see----
    Ms. Joyner. Certainly, I can understand why.
    Mr. Miller. I mean there is no reason that should be this 
far apart. I mean, you know, it is bad enough to pay that much 
for the house, let alone the out-house.
    You were talking about the job training programs. You know, 
I have heard people state that job training programs are a 
waste overall. Well, we know they are not a total waste, but, 
you know, it is like say 50 percent is a waste, which 50 
percent we do not know. But the question is effectiveness.
    You mentioned in the report to Ms. Northup that, the Labor 
Department did their own effectiveness study. Do you feel 
confident that there is not a bias built into that report?
    You said, we do our own studies and we say they are 
effective.
    Mr. Nilsen. It was, the report was conducted by an outside 
organization and the site selection was done by the Manpower 
Demonstration Research Corporation which has done a number. 
They have been in the business for 25 years doing program 
evaluations, particularly in job training areas. And then they 
collected the data, did the site selection, did a lot of the 
data collection and then an independent entity, Abt Associates, 
actually did the analysis of the data and then they provided 
the report to the Labor Department.
    Mr. Miller. Do you feel comfortable that it is totally 
independent and accurate and there is not any motivation to 
show good results to keep the program going?
    Mr. Nilsen. Right.
    Mr. Miller. You are not doing it.
    Mr. Nilsen. There are ways, I think to improve the study 
but I think it was very objective. In fact, some of the results 
were not very flattering, particularly for youth programs. They 
found that basically the program had virtually no effect for 
youths who were in the program. There was positive and 
significant effects for both adult men and women, however, in 
the program.
    Mr. Miller. The study showed that for youth programs they 
were not every effective. What happened then? What did the 
Department of Labor do then?
    Mr. Nilsen. We have not looked at that but I know they have 
taken the results of the study very seriously to look at how 
can they improve the programs.
    Mr. Miller. How long ago was that report issued?
    Mr. Nilsen. I would say that it was issued about two years 
ago.
    Mr. Miller. Okay. Is there any reason that you all would do 
a follow-up to see, have they responded, if they are wasting 
the money and what are we doing about not wasting it?
    Mr. Nilsen. Well, right now in terms of looking, 
particularly at JTPA, given that there has been a lot of 
legislation to consolidate programs and part of that would 
basically put JTPA together with other programs, we have not 
looked specifically at that program for a couple of years. But 
we did look at successful job training programs a couple of 
years ago to find out what were the key elements of programs 
that contributed to their success?
    We looked specifically at six programs nationwide that had 
been nominated to us as highly successful and we had some very 
interesting results. Two of them were JTPA programs, another 
was totally privately funded in New York and another one was 
funded from vocational education funds.
    Mr. Miller. I will go back to that question but let me ask, 
are you familiar with LM-2 form?
    Ms. Joyner. No, sir. I am not by that name.
    Mr. Miller. Okay. It is the----
    Ms. Joyner. Is that the LMRDA reporting?
    Mr. Miller. Yes.
    It is a form that Labor files and, we have asked that it be 
automated.
    Ms. Joyner. Yes. Right.
    Mr. Miller. Are you familiar with how they are proceeding 
on that?
    Ms. Joyner. No, I am not. That is another study that is on 
my list to start just as soon as we can get some staff 
available. Except actually I sort of recall two. There was a 
deadline, I think, sometime in 1998 by which time they had to 
have their plan in place and then we would go in once they have 
done that to see how they are doing. And we anticipate doing 
that soon.
    Mr. Miller. We are interested in that.
    Back to the job training issue. Do you look at job training 
and look at the costs? A cost-benefit type analysis? Do you 
take the total cost and divide it by the number of people that 
have successfully gone through the program? Do you do that kind 
of analysis when looking at effectiveness? Are we getting our 
money's worth?
    Mr. Nilsen. True effectiveness studies are very difficult 
to do. And the study that I was talking about before (by Abt 
Associates) was done right; where there were blind referrals, 
random assignment to services, people in and out of the 
program.
    The kind of work that we do looks more at how the program 
is operating, and assesses whether the operation of programs 
can be improved but looking at the results of programs as well. 
Work that we have been doing over the last several years on the 
Job Corps, for example. It is a very expensive program and we 
are finding ways that the program can be improved and should be 
better targeted.
    Mr. Miller. Do you analyze the cost per person going 
through the program for each person who has successfully gone 
through the program? Does it cost $100,000 per person?
    Mr. Nilsen. It is difficult to look at. We do not have the 
resources or the time. We have not been able to follow-up 
people one year, five years out after they have completed the 
program services. We look at, placement rates and are they 
measuring placement rates in the right way? Are we looking at 
people who retain the jobs? Is this related to the kind of 
training? But doing benefit-cost analysis that you are talking 
about, we specifically have not done that kind of work.
    I would just add quickly that there is an example where 
Labor has a study underway now, for the first time in over a 
decade, to look very closely--in a systematic way--to evaluate 
with people in the program and not in the program to try to see 
what the result and the outcomes from Job Corps experience is.
    Mr. Miller. Because we are pouring so much more money into 
the program it is obviously important to be on top of it.
    Ms. Joyner. Right.
    Mr. Miller. Thank you.
    Mr. Porter. Thank you, Mr. Miller.
    Ms. Lowey?
    Ms. Lowey. Thank you, Mr. Chairman.
    Thank you, Ms. Joyner. I do apologize that because of 
activities on the floor I missed the presentation but I do not 
believe that anyone has addressed their questions to the issue 
of pension simplification. And this committee has been very 
involved with the pension system, it has been very successful 
in restoring the integrity of the pension system. And as you 
know there has been growing attention to the pension system 
through the years.
    The committee has provided funds requested by the 
Administration over the past two years to improve and 
streamline the form 5500 filing process, which is the annual 
report that all ERISA pension plans must file. This system is 
the cornerstone of Federal oversight and enforcement of the 
private pension system.
    Can you tell us what GAO's assessment is of the status of 
the Labor Department's efforts to improve the form 5500 process 
and will the implementation of the new system save money for 
both taxpayers and businesses?
    Ms. Joyner. My understanding is that we do have a study 
underway on that right now and the results of that are 
notavailable. I would be glad to provide for you some of the specifics 
of the time frames for completion if that would be helpful to you?
    Ms. Lowey. That would be very helpful. I appreciate it. We 
appreciate your work on that area.
    With regard to OSHA, a 1996 GAO report highlighted 
violations of safety and health regulations by Federal 
contractors and recommended several actions that would allow 
Federal agencies to take these records into account in awarding 
or terminating Federal contracts. I find this report very 
interesting and I would appreciate it if you could share with 
the committee some of the examples of companies that were major 
Federal contractors and, yet, had terrible health and safety 
records.
    What is needed to implement your recommendations, does it 
require action beyond OSHA, and frankly, why have not these 
recommendations been implemented?
    Ms. Joyner. Taking them in reverse order, I could speak to 
those. I am wondering if Ms. Rectanus, from her work on that 
study, remembers the specific details of companies. You might 
add to that, I think what I would like to focus on most of all 
is the recommendations that we made and the status on that 
which I can give you, unless you have a particular example, you 
would like to give.
    Ms. Rectanus. Well, I think one of the things we found from 
that review is that there are a number of issues concerning the 
IMIS data base. In our review, we did highlight several 
companies and since we have done that some things have come to 
light that have shown that there may be some difficulties in 
interpreting IMIS data.
    And that is what Ms. Joyner referred to in the testimony 
when we talked about OSHA needs to improve some of its data. 
So, at this point I do not know whether we can talk about 
individual companies but we could certainly provide you that 
information, if you would like?
    Ms. Lowey. That would be very helpful.
    [The information is in the Committee files.]
    Ms. Joyner. And, so, what I would like then to build on 
most of all is the recommendation that we made which was that 
OSHA work with an intergovernmental group that is involved in 
the contracting, policy making and work with them on ways that 
they could share information about OSHA violations so that that 
could be taken into consideration in awarding contracts.
    We were not making a specific recommendation that a company 
not get a contract if they had a particular violation but we 
certainly thought it raised enough of a question that there 
ought to be some discussions about sharing that information and 
finding some ways to share that information and to take it into 
consideration.
    And OSHA agreed to do that and our most recent follow-up 
was that it had not been fully implemented but discussions were 
under way. We will be following up again soon to see what the 
result of those discussions have been.
    As Ms. Rectanus mentioned, we are concerned as well that 
OSHA make sure that the data in its management information 
system are complete and accurate enough that it can be used for 
a purpose such as this.
    Ms. Lowey. I thank you.
    And lastly, I am not sure if anyone has discussed the 
Bureau of Labor Statistics report on the CPI? No? Okay.
    In looking at that report it recommended that more frequent 
updating of market basket expenditure weights is needed. What 
are the resource requirements to BLS if they would implement 
your recommendation and would you recommend that this committee 
provide these additional funds in the BLS' budget? This has 
been a subject of discussion here for quite a while and we 
would appreciate your response. If you do not have the answer 
today, you certainly can forward it to us.
    Ms. Joyner. That is what I would like to do is to submit 
that for the record that estimation.
    [The information follows:]

                       Bureau of Labor Statistics

    According to Labor's FY 1999 Performance for BLS, 
$11,159,000 and 71 FTE's are committed to continue the Consumer 
Price Index Revision. This is a reduction of $4,271,000 and 154 
FTE's from 1998.''

    Ms. Lowey. Thank you and thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. Lowey.
    Mr. Obey.
    Mr. Obey. Thank you, Mr. Chairman. I apologize for not 
being here. There are several other hearings this week. With 
everything that is going on on Iraq, and a few other things, I 
have been misusing my time elsewhere instead of misusing it 
here.
    But rather than ask any questions, I would simply make an 
observation. I think Congress should welcome the analysis of 
performance of any of our agencies, and certainly it is useful 
to see the views of the GAO on the Labor Department and the 
programs under its jurisdiction.
    I guess what I would say is when you have reviewed all of 
the specific suggestions about improving this area here, or 
that area there, to me, the bottom line, the big picture is 
simply that this is the first time in all of the years that I 
have been in Congress, that we have had a systematic 
Government-wide effort to improve the operation of Government, 
to the delivery of service, to improve the quality of service, 
so that we can increase the quantity of service that we are 
providing our constituents.
    I think that while we should certainly examine the 
shortfalls in the operations of any program or agency, Ithink 
we need to recognize that this is a work in progress. When you are 
trying to downsize Government at the very time that you are trying to 
increase the quality of services, that can sometimes be a very tough 
thing to do, especially if you are trying to manage agencies in a 
humane way, and I think that to be able to reduce the number of Federal 
employees in the workforce by 316,000, while we are doing this 
reinvention of Government across the board, while I think the title may 
be a bit pretentious, I think that the goal is, nonetheless, understood 
by people, and while you may not have pluperfect performance in every 
instance, we certainly have had a much more systematic effort on the 
part of virtually every agency to reinvent the way it does business 
than I have seen in the years I have been in Congress. I just think, 
for the record, that that needs to be noted.
    What is important, in the end, is that the information that 
is being produced by these plans is something that the Congress 
can understand, that we can use to measure our progress, or the 
lack thereof, and give our constituents some idea of whether or 
not Government really is trying to perform in ways that will 
help meet the public agenda, rather than the agenda of any of 
the major or minor players on the stage here in Washington.
    So I appreciate your appearing here and I appreciate the 
efforts of the Labor Department to modernize the way it does 
business as well.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Obey.
    Let me add something to that. I think that there has, in my 
judgment, been a sea change of attitude, both in the Congress 
and the executive branch, regarding how we look at what is 
being accomplished. I think the bottom line focus that has 
characterized the changes that have been made in the private 
sector--and they were painful changes, often leading to many 
people being laid off or losing their jobs in order to get 
private enterprise in America more competitive--were changes 
that led to some real economic recession but have paid off in 
terms of sustained, strong economic growth in recent years. 
These changes are now being experienced in Government, as they 
should be. How do we insure that the money we are spending gets 
results for people--real results?
    It used to be you would sit here, and say, ``well, we are 
spending so many more dollars,'' or ``we have got so many more 
people enrolled in the programs,'' and all kinds of other 
really irrelevant benchmarks. I think we are now replacing 
those terms. Are we getting people who are unemployed, and have 
no experience for the kinds of jobs available, into a program, 
through the program, successfully into a job, and keeping the 
job?
    In other words, what do we want to achieve with this money? 
It is not just running a program. It is not just opening 
another one-stop center. It is getting people to the end goal. 
I think we are doing a much better job of that, and I think the 
attitude of most of the people coming before this subcommittee 
is much different than it was previously.
    Do you feel that the Department of Labor is capturing the 
spirit of this in what they are doing, or is it kind of 
slipping by them? Is there too much evidence of the old ways of 
thinking, that GPRA, and other formal changes in Government are 
designed to overcome, and change?
    Ms. Joyner. I think there is at Labor, as you were making a 
general observation about Government-wide, that there is at 
Labor a realization that this is the way to go. That they are 
interested in the observations that we make about ways that 
they could improve, and that they have been listening to the 
observations they have been getting from the Hill, and the 
consultations here.
    I think that the attention the Congress has been giving to 
this has been absolutely crucial. That and the fact that while 
we were asked to look at the draft plans, make public what our 
observations were, that those that were used in hearings, that 
strategic plans--there has clearly been an interest in that on 
the part of your committee and other committees. There are 
hearings and we are asked these questions. I think that has 
made a big difference.
    I mean, that is my personal assessment, and I know that of 
many others in GAO; that it has sent a message that this has to 
be taken seriously, and I believe that it is being taken 
seriously.
    Mr. Porter. You have looked at two departments?
    Ms. Joyner. Yes.
    Mr. Porter. Is it taken more seriously at Education or more 
seriously at Labor? Of course, that is a leading question.
    Ms. Joyner. Well, you have responsibility for both 
departments. I could not speak to the attitudes and opinions, 
and views of the officials at the two and make a comparison 
like that. The first plan that we reviewed from the Education 
Department was more in compliance with the requirements of the 
strategic, of the Results Act, than the first plan we reviewed 
from the Labor Department, and so in that sense they were more 
quickly at the right place, where it was envisioned that they 
would be.
    So I think that, you know, the leadership in the 
Departments is crucial in this, and it is hard for me to judge 
what messages they are getting, internally. What we are able, 
primarily to look at, is the quality of the written product, 
and the responsiveness at the staff level. When we give views 
to people, what kind of response do they give, and then how do 
we see that reflected in the next version?
    Mr. Porter. Well, let me get to a bottom line. If I say to 
Secretary Herman, when she comes here, ``Madam Secretary, we 
know you are making some progress but we do not think you are 
doing as well as some of the other Departments of Government in 
terms of looking at results and being results-oriented as the 
law urges you to do, requires you to do, and GAO said so.'' 
Would that be an unfair statement?
    Ms. Joyner. I am not----
    Mr. Porter. And I realize that there are people from the 
Department here who are listening to this.
    Ms. Joyner. I do not think it would be accurate to say that 
I am saying Labor is not paying as much attention to this 
process as other Departments are. First of all, I would not 
have a basis to do that because of the limited number, and as I 
mentioned before, that the situation facing Education and Labor 
were both different.
    The other thing is that the earlier plan we reviewed was 
not conducted, if you will, on her watch. That the plan now, 
and what we are seeing of the evidence of strategic planning is 
definitely going in the right direction, and the earlier plans 
were not prepared under Secretary Herman's leadership.
    Mr. Porter. I am not looking for blame. I am just looking 
for progress here.
    Ms. Joyner. Yes. No, but I am saying I think that 
substantial progress has been made, and I guess my urging would 
be to say GAO says you are making progress, keep going in that 
direction, and we are not giving them a grade of any sort on 
their performance plans because we have not done that critique 
of those. We will be doing that later, and we will be providing 
that information to you as well as to others.
    Mr. Porter. All right. You mention in your statement the 
year 2000 computer system problem. Can you tell us today where 
the Department stands with respect to addressing the problem, 
and how does it stack up to other Departments who have the same 
problem?
    Ms. Levie. I can speak to that.
    Ms. Joyner. Yes. We have some work underway on that.
    Ms. Levie. I cannot say in comparison to other Departments, 
but they have somebody in the Secretary's Office, who is 
working weekly with the various groups to monitor it. They do 
not have a written plan for it in their strategic plan, but we 
are working on this problem, not our particular group, and in 
consultation with our folks in GAO who are working on this 
problem. They told us that in fact Labor was addressing it with 
management attention at the Secretary level.
    Mr. Porter. Did you not say in your opening, that they have 
a whole number of different systems?
    Ms. Joyner. They do.
    Mr. Porter. How many offices do they have?
    Ms. Joyner. Well, there are 24 major units.
    Mr. Porter. Yes, but how many----
    Ms. Joyner. And 1,000 field offices.
    Mr. Porter. That is what I thought you said.
    Ms. Joyner. Right.
    Mr. Porter. 1,000 field offices.
    Ms. Joyner. And 1,000 field offices.
    Mr. Porter. And what about the systems in the field 
offices? Are they all the same, or are they different?
    Ms. Joyner. Oh, they are different because the field 
offices are associated, in most instances, with a particular 
other component. It is an OSHA field office, or it is a Wage 
and Hour field office. So those would have--I know they are 
also, I am sure, different in how well they are integrated with 
the headquarters. This was something--for example, when we were 
doing our H-2A study, that they were not completely integrated 
between their field office and headquarters, even, in the data 
that they had available.
    So it is a very complex situation. That goes back to this 
issue, too, of the systems architecture, of trying to put in 
place--and I think it is fair to say that Labor does not have 
this in place now--an overview of, a blueprint for what are all 
the systems we have, what are the systems we need, and how do 
they need to fit together.
    That is part of the mission of this chief information 
officer, and they do have a plan that they have put together on 
how they are going to get to where they need to be in terms of 
technology.
    What I was going to add about the year 2000 is GAO is doing 
some individual audits of particular units within Office of 
Worker's Compensation Programs. I think it is one--there are 
several, and at this point it is necessary, again, because of 
the decentralization, to look at each unit, and say, What are 
your plans? How close are you?
    Because it is not something that is known, or being done, 
Department-wide. It is being done unit by unit.
    Mr. Porter. This is not a field of expertise for me. Do we 
have this same computer problem in every existing computer 
system, or are some of them designed to account for it?
    Ms. Joyner. The year 2000 problem?
    Mr. Porter. Yes. Does every one of them have the problem?
    Ms. Joyner. Right. It is a potential problem in all of 
them. A part of what is required is to go in and see, do an 
assessment of the extent to which----
    Mr. Porter. Have they done an assessment?
    Ms. Joyner. They have not assessed all of their programs 
yet.
    Mr. Porter. Systems?
    Ms. Joyner. Right. They have not finished assessing all of 
them, to my knowledge. I do not believe that they have. But the 
difficulty is first, finding out, and a schedule for finishing 
the assessments for each of them, to see what problems need to 
be fixed.
    Mr. Porter. Is this a hardware problem, or as I understand 
it, a software problem?
    Ms. Joyner. It is a software problem.
    Mr. Porter. It is a software problem.
    Ms. Joyner. It is the language.
    Mr. Porter. In every case?
    Ms. Joyner. Right. The coding that was written long ago.
    Mr. Porter. It is not a hardware problem?
    Ms. Joyner. No. And so it is a matter of uncovering all the 
software, the language that was written, and then finding 
people who are still alive, who know those languages, and 
getting them to come work on your fix.
    Mr. Porter. So you have actually got to check the overall 
program and each of the pieces of software program. You have to 
change each one?
    Ms. Joyner. That is right. We have to find all the 
locations where it is not correctly worded, as I understand it.
    Mr. Porter. All right.
    Ms. Joyner. Do you want to add something?
    Ms. Levie. Yes. This is a good example of the particular 
challenges that Labor faces with this decentralized system, 
because with Labor, the issue is even identifying who has what, 
where. Whereas in some other agencies that are less 
decentralized, the information is not as hard to get, even to 
say, okay, let us identify what databases we have. Number one, 
let us identify what databases.
    In a decentralized system such as Labor has, just that is a 
major undertaking.
    Mr. Porter. It is even a stretch to call it a system, if it 
is that decentralized.
    Ms. Levie. Right. Certainly, there are no system----
    Mr. Porter. You have got a number of systems.
    Ms. Levie. Right. You have many, many systems in the 
Department of Labor in terms of information management.
    Mr. Porter. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.
    I just would like to make a quick comment, that the new 
plan was issued February 2nd, 1998, which--what is today's 
date, the 5th? So three days ago. Then evaluating what theyare 
doing versus what was in existence, we may be a bit premature on where 
we are going on this.
    And in terms of some of the data that I know was put 
together, you know, in good faith and all of that business--do 
not misunderstand me--but in fact we have a new document here, 
which needs to be reviewed.
    I think that that is important to keep in mind.
    Secondly, given the nature of this current discussion, it 
strikes me that you do have to consider the agencies, and how 
they have been structured, unless you want to go back and 
restructure every single agency to meet a new determination.
    Also, if what you can make States do or not do, in 
collecting of data, and we have a very big emphasis here about 
turning over a lot of things to the States, in which case then 
you do not have the kinds of control that we seem to be asking 
for in terms of the data, and that is the problem that we 
create here. My question is: What would it cost--and this is 
both in dollar amount, and in burden on the data-gatherers--in 
your view, to get the information that we seem to be asking 
for?
    What will it cost? How much did that study cost, for the 
Department to contract out, if you will, to deal with the job 
training programs. I do not know what that cost, but it seems 
to have been a good study, that they paid for.
    What is your assessment, because you must have some idea of 
where we are asking people to do things, what it is going to 
cost to do that?
    Both as I said, there is a dollar amount, and then there is 
the burden on gathering the data, and what percentage of time, 
effort, et cetera, would it take to get what we think we need?
    Ms. Joyner. I think at this point what is still not really 
defined is what do we need. That is to say--and you have 
referred to the plan that was just issued this week. They are 
asserting there, they are establishing, essentially, what they 
believe they need to obtain in order to answer the question of 
how well they are doing toward their major three goals, and so 
essentially, they are asking you for confirmation of whether, 
if these are the measures for which they held themselves 
accountable, will the Congress be satisfied, then, next year, 
when they come in, or the year later, and say, ``This is how I 
did on it.''
    So the first part here is just establishing what are the 
measures on which they and you agree that they will be held 
accountable.
    Ms. DeLauro. Right.
    Ms. Joyner. Then I think that has to be done first, before 
then, you can decide how would we get the data, and that would 
apply--what they have in that plan is primarily individual 
measures, but they also have in there a discussion of how they 
are going to get it, how they are going to make sure it is 
reliable, and that it is valid, and what resources would be 
required.
    It may be that, as there always are, that there are some 
tradeoffs. That to really establish as well as they would like 
to, and as well as you would like them to do, that they have 
achieved certain goals, there just may be a tradeoff to say, 
``We are not willing to spend, you know, $2 billion, $2 
million, evaluating every one of these programs. We are going 
to be more constrained and only look at Job Corps once every 10 
years, instead of evaluating it more often.''
    There are those important tradeoffs that have to be made.
    Ms. DeLauro. Well, that is true, but you have a function to 
review where they are going, what they need, and to bring this 
effort up to a level of acceptance. We talked about computer 
systems differing wherever we go. We talk about Davis-Bacon in 
computer systems. We talk about hardware; we talk about 
software.
    On the other hand, we also say this is the budget, knock it 
back so many millions of dollars. Again, cost. Cost and data 
that you want, what you are willing to put in to get out what 
you want to get out.
    Should we update every computer system that the Department 
of Labor has? Or should we then say--and maybe there are some 
here who would like to dismantle the Department of Labor, come 
back with a way in which it is not decentralized.
    I am trying to get at, when we talked about cost, somebody 
here asked about cost benefit. What kind of dollars are we 
talking about here, from your perspective, in terms of dollars 
and percentage of time that it takes to gather the data, and 
are we creating a false balance?
    Do we have to create some balance here, so that we are 
programmatically carrying out the mandate of what we set out to 
do?
    And final question: Should we, as a committee, be putting a 
hell of a lot more money into these areas, instead of cutting 
back on hardware, software?
    You know, we can lay out a whole bunch of things that we 
are asking these people to do. What are we willing to put up to 
get it accomplished? What do we need to put up to get this 
accomplished, in dollars and in cost to the data-gatherers? 
Those would be very interesting answers.
    I would like to know, I would personally like to know what 
we believe it will cost, and then we have to face whether or 
not we want to take on the obligation to do it as a committee, 
as a subcommittee, as a total committee, as a Congress, to deal 
with this level of evaluation.
    You cannot answer my cost questions now?
    Ms. Joyner. No, I cannot. I really cannot. It is a very 
important question and I guess I would go back to saying that 
this is a part of what Labor has been expected to lay out in 
considering its performance plan, and then to the extent that 
they get it, identify what they are planning to do and how much 
they think it would cost, if that should happen in the plan. 
Then we could comment on it.
    But the cost, in dollars and resources, to gather 
information has to flow from what the agreement is on what 
information is needed.
    Mr. Porter. You see how the world----
    Ms. DeLauro. But it has got to be a component. In other 
words, if you have to have an agreement for where you want to 
go, you have to understand what the cost is in order to get 
where you want to go.
    Mr. Porter. You see how the world has changed? A Democrat 
talking about cost, worried about cost. I mean, this is 
wonderful. [Laughter.]
    I am kidding.
    Ms. DeLauro. I know you are, Mr. Chairman. But it is a good 
debate.
    Mr. Porter. It really is a focus for all of us. We really 
are all focused on these things.
    Ms. DeLauro. And when we ask, we have to understand what it 
costs. You just cannot ask, you know, just because it sounds 
good, it reads well, and so forth.
    What does it cost to get us to where we want to go? Thank 
you very much.
    Mr. Porter. A highly relevant question.
    Ms. Joyner, thank you. You and your team are doing fine 
work. We very much appreciate your advising us, and we have 
some questions for the record that we would ask that you 
answer. They are more technical in nature. We thank you very 
much for appearing here, and for the fine job you do for our 
country. Thank you so much.
    Ms. Joyner. Thank you.
    Mr. Porter. The subcommittee stands in recess until 
Thursday, February 12th, at 10:00 a.m.
    [The following questions were submitted to be answered for 
the record:]


[Pages 44 - 57--The official Committee record contains additional material here.]



                                       Thursday, February 12, 1998.

                           SECRETARY OF LABOR

                                WITNESS

ALEXIS M. HERMAN, SECRETARY OF LABOR

                        Introduction of Witness

    Mr. Porter. The subcommittee will come to order.
    Madam Secretary, I want to welcome you to your second 
appearance before this subcommittee as Secretary of Labor; you 
have been on the job for almost a year now. The committee looks 
forward to working with you and your colleagues at the 
Department on the fiscal year 1999 budget.
    I know that we can call on you for advice and assistance as 
we go through the appropriations process this year. It is going 
to be a short legislative year. We have a lot of work to do and 
not much time in which to do it.
    Today we begin our hearings with our Cabinet departments 
and other agencies under our jurisdiction. These hearings are 
scheduled to continue until April 29th with a couple of breaks 
for congressional recesses. We hope to mark up the bill as soon 
after the hearings as possible, assuming we have a budget 
resolution and get on with our business.
    I yield to Mr. Obey.
    Mr. Obey. Mr. Chairman, I don't see any need for a 
statement at this time. I just want to welcome the Secretary 
here and might as well hear what she has to say.
    Mr. Porter. Madam Secretary. Please proceed.

                           Opening Statement

    Secretary Herman. Thank you very, very much, Mr. Chairman.
    To you, Mr. Chairman, and to the distinguished members of 
the subcommittee, I am pleased to be here today to discuss the 
work of the Labor Department and our 1999 fiscal year budget 
request. I would ask that my full statement be included in the 
record.
    As members of this panel may recall and as you have just 
said, this is the first congressional committee that I 
testified before soon after I was sworn in as Secretary last 
year; and I am honored to be the first Cabinet Secretary to 
appear before you about our fiscal year 1999 budget.
    I might add, parenthetically, that you give new meaning to 
the words that the first shall be last and the last shall be 
first in my appearance here today.
    But this is certainly an exciting and historic period for 
all of us who care about improving the lives of America's 
working families. Working together with Congress, we have made 
enormous strides. We have the healthiest economy in a 
generation. The unemployment rate is the lowest since the 
1970s. Inflation is the lowest since the 1960s. And just last 
week the Labor Department reported that our economy has created 
over 14 million new jobs in the last 5 years.
    We are clearly entering the 21st century with opportunity 
on our side. But where there is opportunity, there is also 
challenge. The workplace and the workforce are changing before 
our very eyes.
    Back in the 1950s, indeed, when I was at the Department 
just 20 years ago, the workforce was comprised of 20 percent 
professional, 60 percent unskilled and 20 percent skilled.
    By 1996, that picture has completely reversed itself as we 
now find that 20 percent of the workforce is still in 
professional occupations, 60 percent are literally now in 
skilled jobs, and only 20 percent are now in unskilled jobs.
    The workforce of the future is also changing in other ways. 
It will be older, and it will be more diverse. Women, for 
example, will account for a growing share of the workforce, 
over 60 percent.
    Our workplace is also changing. We are utilizing more 
technology, and every day we are becoming more globally 
integrated. In the next 10 years, up to half of all of our 
manufacturing jobs will, in fact, be export related. Our 
challenge is to help every American manage change for the 
better, to help transform change from obstacle to an 
opportunity, from something to avoid to something to embrace.
    I see my job as making sure that the Department of Labor is 
an effective, efficient partner in helping Americans manage the 
change that is inherent in today's global economy. To do this, 
we must provide training and access to job information, 
retraining and job search assistance for those affected by 
changes in the marketplace, and a safety net for those who lose 
their jobs as a result of economic change. And, as we do that, 
I want to make sure that our initiatives are bottom-line and 
results-oriented.
    The Department of Labor has made a lot of progress since 
our team came into place nearly 9 months ago. We played a role 
in helping to bring labor and management together in settling 
the UPS strike. We attacked fraud and abuse in pension and 
health plans and recovered over $360 million for hard-working 
Americans.
    We were proud to report that the fatality rate from coal 
mining injuries for 1997 was the lowest ever recorded; and 
similarly, the injuries and illnesses rate in general industry 
for 1996, the last year in which we collected data, has been at 
a 23 year low.
    We know that a paycheck is the passport to dignity. 
Therefore, we have worked diligently to make sure that welfare 
recipients were well integrated into our workforce development 
systems. As a result, we now have $3 billion in grants to 
distribute to help long-term welfare recipients secure lasting, 
unsubsidized employment.
    We want to build on that record and continue to work with 
every member of this committee to help workers manage change 
for the better. That is why we are working to raise theminimum 
wage, to expand the Family and Medical Leave Act; and we want to work 
closely with Congress to pass legislation to enact the GI Bill for 
workers.
    I want to take this opportunity, again, to thank this 
committee and your leadership in getting the GI Bill passed 
through the House last year.
    As we go about our work, the Department has developed an 
effective strategy to meet our goals within the context of the 
Government Performance and Results Act, GPRA. This is reflected 
in the Department's fiscal year 1999 annual performance plan, 
which is tied directly to our budget request. This performance 
plan reflects a substantial revision and improvement on the 
Department's September Strategic Plan, which was largely 
developed prior to my arrival.
    In working to establish a unified Department of Labor, I 
have established three strategic goals which will bridge the 
Department's many agencies and programs that serve the common 
purpose of helping America's workers meet the challenges they 
face today and in the future.
    These three strategic goals are: A prepared workforce--to 
enhance opportunities for America's workforce; a secure 
workforce--to promote the economic security of workers and 
families; and quality workplaces--to foster quality workplaces 
that are healthy, that are safe and that are fair, meaning free 
of discrimination.
    Allow me to briefly touch on each of these three goals 
before taking questions from the committee.
    Clearly, a prepared workforce, a workforce that we must 
have to enhance opportunities as we enter the 21st century, is 
critical as we pursue our mission at the Department of Labor.
    I want to, first of all, thank this committee for your 
support of the Opportunity Areas for Out-of-School Youth 
Program.
    As we look at that area and look at issues related to 
minority youth and African American youth in particular, we 
have seen the unemployment rate at 30 percent or more for the 
last 20 years. I am hopeful that, with this initiative, we will 
be able to relegate that statistic once and for all from the 
statistics books to the history books. I believe very strongly 
that we cannot accept the economic status quo in this area.
    We also want to thank the committee for their support and 
what they have done to help ensure that our welfare-to-work 
initiative is successful.
    I want to pay special tribute to Congressman Stokes for the 
opportunity to visit much of what is going on in the Cleveland 
community as I traveled there to examine firsthand the success 
that we are having with preparing individuals for the workforce 
of the future in the Cleveland Works Project.
    Clearly a secure workforce that promotes the economic 
security for workers and families must also be a high priority 
for all of us.
    Our budget request includes an increase of $100 million in 
this area and this increase is estimated to help more than 
40,000 dislocated workers manage the change as they are in 
between jobs and experiencing the many shifts that are taking 
place in the economy today.
    I also want to point out that an important focus for the 
Department is what we must do to continue the encouragement of 
all American workers to invest in retirement savings and our 
efforts to not only make sure that pensions are safe and more 
portable but that we do much more to encourage American workers 
to invest in the future through placing a greater emphasis on 
retirement savings.
    The last area, quality workplaces, is an area that 
certainly speaks to much of what the Department has been 
engaged in on the enforcement front, particularly as we look at 
strengthening our work in the area of the cooperative 
compliance programs under OSHA; and our budget request is 
clearly tied to in this area, increasing not only our 
enforcement actions but also what we can do to encourage a more 
cooperative compliance.
    There is also a request in this budget for additional funds 
for expanding work on the child labor front. In this area, we 
have a request not only to strengthen and to build on the work 
of this committee and assisting us to work with the ILO and the 
IPEC international organizations, but to truly be a leader in 
the effort to eradicate child labor in the ILO countries. We 
also must make sure that we are doing our work here at home by 
paying greater attention to our enforcement efforts in the 
United States. Particularly by strengthening enforcement 
actions in those industries where we believe there are more 
incidences of child labor.
    Lastly, I would like to comment briefly on the GPRA 
process. Because I believe that the three strategic goals, 
which are embodied in our 1999 annual performance plan and are 
directly tied to our budget request, send the American public a 
clear message of the purpose and mission of our Department.
    The plan presents the programs, activities and achievements 
that the Department of Labor will strive to achieve in 1999, 
the means by which its performance will be evaluated and the 
standards to which it will be held accountable by America's 
public and certainly by this committee and by our distinguished 
Members of Congress.
    I thank you for the opportunity to make this opening 
statement, Mr. Chairman; and I will be happy now to respond to 
any questions that you may have.
    Mr. Porter. Madam Secretary, let me thank you for an 
excellent opening statement.
    [The information follows:]


[Pages 63 - 77--The official Committee record contains additional material here.]



                 government performance and results act

    Mr. Porter. If I could editorialize on one thing before we 
begin questions--I think that the best thing that we can do for 
America's workers regarding their security is to create now and 
have a national commitment to creating the kind of Social 
Security system we would have created in the middle of the 
Depression if we could have created it. This system would allow 
every worker to own their own account, invest it and watch it 
grow and have the ownership of that account and not simply a 
promise from government that they might get some benefits later 
on.
    I think it is time that the American people and our 
government address this and give hope to young people that they 
will not simply be putting money into a plan that really won't 
materialize for them when they reach retirement age.
    I would also say, if we had such a plan, if everybody had 
their own public investment account, Individual Social Security 
Retirement Account, I think we would eventually decide that we 
don't need corporate pension plans and we don't need labor 
pension plans. All we need to do is have the employer pay their 
portion in addition to the employee's FICA tax portion into 
those own accounts so that you don't have to worry about 
vesting. With this system you would have total portability, and 
the worker would be in charge of their own retirement destiny.
    I think if we can do that, we would make a great deal of 
progress; and Social Security would be a program that notonly 
is as good as the one we have today, it would be many, many times 
better.
    That is my editorial comment.
    Now, some questions. As you know, last week, we heard 
testimony from the GAO. We are going to have this in respect to 
each Department that comes before us with their budget. They 
talked primarily about your Department's implementation of the 
Government Performance and Results Act, known as GPRA.
    Now quoting briefly from GAO's testimony, they said the 
following in their conclusion: ``Labor strategic planning 
efforts are still very much a work in progress. Like other 
agencies, Labor must focus more on the results of its 
activities and on obtaining the information it needs for a more 
focused, results-oriented management and decision-making 
process. Labor has begun to improve its management practices in 
ways that are consistent with that legislation. The benefits of 
the Results Act can be particularly important for a 
decentralized department such as Labor. However, such an 
organizational structure provides challenges in meeting the 
legislation's objectives.''
    Basically, I think GAO told us that your Department was not 
doing a great job in implementing GPRA; but they also said that 
you were improving.
    Madam Secretary, how do you feel about the Department's 
GPRA implementation thus far? Do you feel that you are on the 
right track and proceeding in the best way possible?
    I think I will let you answer that part before I ask the 
next question.
    Secretary Herman. Thank you, Mr. Chairman.
    Well, I feel very positively about the work at the 
Department related to GPRA. I definitely believe we are on the 
right track.
    As I said in my opening statement, the strategic plan that 
was reviewed by GAO was largely completed before I arrived at 
the Department; and I think, in an effort clearly to meet the 
deadline that was imposed on all of the various departments and 
agencies, we did submit the plan that was due by September. 
But, since then, we have worked very, very hard, and I 
certainly have as Secretary, to become very clear on what the 
objectives are under GPRA, what it is we are trying to achieve 
overall in terms of outcomes and bottom-line results.
    And I purposely chose to use the performance plan for the 
1999 budget process as a way of getting us better aligned with 
what the expectations and intentions are under GPRA. I 
conducted two staff retreats with my senior management team, 
from both here in Washington and in the field, to make sure 
that, first of all, we had a clear understanding of what the 
expectations were and then to lay out a process that we could 
all understand and begin to identify the cultural changes, 
quite frankly, that we are going to need in the Department to 
ensure compliance with GPRA.
    To that end, I did lay out three overall arching strategic 
goals so that we can speak as one organization: a prepared 
workforce to meet the challenges of the 21st century; a secure 
workforce to make sure we are managing the change and desire of 
the American workers today; and, lastly, what do we mean when 
we say quality workplaces; and to have all of the agencies buy 
into those three strategic goals and to align their outcomes 
and results accordingly.
    It is a job--it is a big job to get away from what I call 
the stovepipe mentality, where we had good programs operating 
oftentimes as stand-alone functions and not looking at 
crosscutting activities and what we could do to speak as one 
unified department looking at overarching results with clear 
priorities that we are all focused on. I believe our 
performance plan reflects the work that we have engaged in 
recently to look at priorities, look at results, look at 
outcomes and to speak as one department against these strategic 
objectives.
    Mr. Porter. I am glad to hear that that is the direction 
that you are taking your Department.
    I know it is historically a Department that has been, as 
the GAO said, very decentralized; and your reference to culture 
I think is a very important one. Often, you can have leadership 
at the top going one direction and people underneath who don't 
get it; and you need to have everybody in the Department get 
it. That is what we are looking for here, programs that work 
for people, money that is well spent in getting people a better 
chance in life and better prepared for a place in the 
workforce.
    GAO had concerns about the Department's evaluation of 
programs and how it relates to the Results Act. They believe 
that you are not doing adequate evaluation of programs and that 
you have not been specific in identifying the evaluations that 
you plan to do and when you plan to do them in carrying out the 
Results Act.
    What is your reaction to that criticism?
    Secretary Herman. Well, I agree, actually, in part with 
what GAO has said in this area. I do believe, particularly in 
the employment and training administration, that we have made 
good and strategic use of evaluations to give us a better 
handle on outcomes and to be able to learn more from 
experiences and to evaluate those experiences to see how we can 
improve our own operations.
    We need to do that more broadly, in my view, in other areas 
of the Department; and I am looking to foster that kind of work 
in other areas of the Department as well, taking some of the 
lessons clearly that we have learned I think from the ETA 
experience here.
    We have to always, I think, be mindful of cost when we talk 
about engaging in evaluations. We want to make sure that it 
leads to the outcomes that we want to achieve in this area. 
But, also, as one who operated her own business for many years, 
doing this kind of work in the private sector, I am very 
mindful of the fact that, oftentimes, you can come back with 
evaluations that point to corrections and things that you 
really need to get a handle on and sometimes those documents 
can also be used against you.
    So when I talk about a cultural change I think a part of 
what we have to do is to understand that evaluations are to 
help us to get the data, positive and negative, and to be able 
to use both sets of data to improve program efficiencies.
    Mr. Porter. That is my next question. GAO expressed concern 
about the Department's lack of reliable and consistent 
information needed to monitor performance of individual 
programs. Are you confident that the performance data that you 
have for your programs will tell us what we need to know to 
assess whether they are meeting their objectives or not?
    Secretary Herman. What I feel better about, Mr.Chairman, 
quite frankly, is that we are asking the right questions going into the 
future to get the desired outcomes. That is what I do think that we are 
doing differently at this point in time.
    I would not say clearly that all of our performance 
measurements are yielding the results and telling us the story 
that we want to get a handle on; but I do feel a lot more 
confident, based on the process that we have engaged in, that 
we are asking the right questions that will lead us in that 
direction.
    Mr. Porter. Thank you, Madam Secretary.
    Mr. Obey.

                       child labor budget request

    Mr. Obey. Thank you, Mr. Chairman.
    Madam Secretary, just two questions.
    This country spent the last almost 60 years trying to build 
a set of rules domestically that reflect a certain sense of 
decency in their relationship between employers and workers. On 
issues such as child labor, on rights of workers to organize 
and bargain collectively. It encourages workers to organize and 
bargain collectively and to create safe workplaces.
    In my view, we cannot allow our compulsion for 
globalization and free trade to push us into walking away from 
those values and tear down the social contract that has made 
this country a civilized place to live for all of my life.
    I am told that, worldwide, there are about 250 million kids 
who are in the workplace. Half of them work full time. And I am 
concerned that the fact that many of them work in near slave 
labor conditions which not only treats them as subhuman but 
also, in the process, undercuts our own wages and erodes our 
own sense of decency. I don't think America wants to build a 
yuppie life-style on the backs of the kids who are treated like 
dogs.
    You have got a $27 million increase in your budget, as I 
understand it, to deal with child labor abuses nationally and 
domestically. That is such a tiny amount, given the huge size 
of our economy, but I welcome the initiative nonetheless.
    I wonder, can you tell us exactly what you are going to do 
with that money and can you explain to us how that is going to 
be able to make a real difference in our ability to stand by 
the values that we profess in this country for about 45 minutes 
when we go to church on Sunday and then all too often ignore 
for all of the other hours of the week?
    Secretary Herman. Thank you very much, Congressman Obey. I 
am certainly not in the habit of correcting you, but I want the 
record to state that the request is $37 million----
    Mr. Obey. 37 good.
    Secretary Herman [continuing]. Not $27 million. And the 
initiative is divided into two areas, $27 million on the 
international front and $10 million on the domestic front. I 
will just speak briefly to both of those areas.
    You are absolutely right when you speak of the large 
numbers of working children that we have worldwide--250 
million. I have often said that I don't think that American 
consumers want to wear or use products made by children who 
have been robbed of their own childhood. So this initiative 
seeks to continue the work of what this committee has supported 
historically and what we have done as a nation and that is to 
be an international leader on this whole question of 
eradicating child labor abuses.
    Specifically, with these funds, we wish to enroll 10 other 
countries in the work that we have been doing in our other 
technical assistance programs that we have engaged in in the 
Department. To date, we worked in countries like Thailand, 
where we have worked there to deal with the eradication of 
child labor abuses in the garment industry, more than 10,000 
cases there. We have worked successfully in countries like 
Pakistan and Nepal.
    What we want to do now is to expand those technical 
assistance operations through the ILO, working with our child 
labor there to expand those efforts so that we can continue to 
be a world leader on this front but, more importantly, as we 
look at the globalization of our economy today, to make sure 
that we really are going to practice what we preach when we lay 
out principles that say we don't support any forms of child 
labor anywhere in the world. These funds will help to ensure 
that.
    On the domestic side, it is also equally important to make 
sure that our domestic house is in order. So what we have asked 
for are two sets of dollars. One set will go to our Wage and 
Hour Division to be able to more effectively target our 
enforcement areas where we have knowledge that child labor 
violations may be on the increase, to make sure that we are 
doing in our own backyard what we want to do internationally; 
and the remaining $5 million will be attached to our migrant 
and seasonal farm worker program so that we will be able to 
actually follow many of our youth who are on the migrant 
streams and to expose them to alternative careers and other job 
opportunities.
    Mr. Obey. Let me just make a suggestion. Because I am 
limited in time, I ask you not to respond now but for the 
record.
    We have often required report cards on the voting records 
of our countries in the United Nations to see how many times 
they have voted with us, how many times they voted against us. 
If we can get involved in that, why should not the Secretary of 
Labor have the ability to develop a report card on every 
doggone country in the world on issues of the reality of their 
labor markets, the rights of workers to bargain and the child 
labor practices for other countries and simply rank every 
country A through F?
    I personally don't see why any country that ranks F should 
be able to sell one dime of product in this country. I know 
that doesn't, again, comply with the compulsion for free trade, 
but it is conventional wisdom in this country. But I don't want 
free trade if it is perverted trade, and I would simply urge 
you to explore on your own how you can develop a report card to 
assess the performance of other countries in the world.
    Another question and then a request.
    Democrats at our retreat last week heard from an amazing 
black woman who worked for a defense contractor in this 
country. That workforce voted to unionize. That company is 
consistently dragging its feet. They have appealed and appealed 
and appealed; and, during the process, she, who was a very 
active force in pushing to unionization, was fired by the 
company. They wound up handcuffing her and getting her tossed 
off the premises. Just an absolute wretched performance by a 
company that masquerades as a practitioner of free enterprise.
    I would hope that--while you are a patriot, I would hope 
this administration will not be intimidated by forces in 
thisCongress and in this society who want to prevent you from 
establishing good, tough rules; say if a corporation engages in that 
kind of conduct they can go straight to hell in a hand basket if they 
expect to get any Federal contracts.
    I mean, no company in America who treats workers like that 
ought to get one dime of taxpayers' money; and I hope that the 
administration will not be intimidated by the apologists for 
that conduct in the business community or in this Congress.
    Having said that, I have got one other request.
    I have got about six companies in my district that were 
closed in the past year and just walked away and paid virtually 
no attention to their obligation to the workers they left 
behind. I have one company in Ashland, Wisconsin, now. It is a 
very large company in this country. They decided to close the 
paper mill. Over 200 workers were thrown out of work.
    That company was asked by the mayor of the town to at least 
have a discussion on the possibility of leaving some paper 
machines behind so that they could look at the possibility of 
other potential buyers for that plant. The mayor was told, in 
plain English, this is nonnegotiable. That discussion will not 
be held.
    I would like you to give me the name of someone in your 
Department who I can work with so that, between your Department 
and Treasury, we can draft an expansion of the Plant Closing 
Act which simply says that if any company closes down shop in 
this country and if they refuse to at least entertain requests 
from the community to leave equipment in the community so that 
they can try to find other employment opportunities for their 
people, that those companies will lose all ability to claim all 
depreciation rights anywhere for the next 10 years.
    I don't know who can be the most help on that. But I feel 
very strongly about it, and I would very much appreciate the 
help of your Department.
    Secretary Herman. Well, I would be happy to follow up with 
you on this, Mr. Obey.
    The whole question of what we are doing today to help 
workers really manage much of the change and dislocation is 
something that I am very committed to as Secretary, and I would 
be happy to follow up with you for ways that we can help create 
incentives as well as disincentives in this area.
    Mr. Obey. Well, I recognize that there are good social and 
economic reasons for providing depreciation in this country. 
But companies who are receiving also have an obligation to give 
something back in return.
    So I am not seeking administration endorsement for what I 
am trying to do. I endorse it. I am for it. That is all I care 
about right now. I am looking for a person to give me some 
technical help to draft it the way I would like to draft it. I 
would hope the administration would support it.
    Secretary Herman. I will follow up with you on that.
    Mr. Porter. Thank you, Mr. Obey.
    Mr. Bonilla.
    Mr. Bonilla. Thank you, Mr. Chairman.
    Madam Secretary, I would like to start by thanking you for 
establishing a wonderful open line of communication with my 
office and other offices of other members on the subcommittee 
since the very first day I think you were designated to be the 
Secretary of Labor. I think that is very productive as we try 
to move through some problems that we all express to each other 
going both directions.

                        work flex demonstrations

    I am also delighted about the signal that the Department is 
sending with the designation of work-flex demonstration sites, 
and we were delighted just a few days ago to learn that the 
State of Texas is going to be a designated site. That is in 
concurrence with my philosophy and the philosophy of many in 
this country that the more we can take the handcuffs off of 
small businesses and unload some of the burden of paperwork 
that is breaking their backs that the better off we are.
    I concur strongly with our Governor of Texas and what the 
spirit of Texas is, that Texans know what's best for Texans. I 
think that the designation of this work site is a great move in 
that direction of allowing us to have more local control over 
our business situation.
    My question about this particular program is, since it will 
greatly benefit the six States that have been designated as 
demonstration sites, when will it be extended to all 50 States?
    Secretary Herman. Well, as you know, Congress gave us the 
authority to essentially authorize the six States that were 
part of the work-flex program. But we have also, as the result 
of much of the work that has gone on in Congress and with the 
Department, provided for general waivers to States in specific 
areas so that they could come into the Department and make 
requests in specific areas.
    I am pleased the States are taking advantage of this. As a 
matter of fact, we have had requests from over 41 States for 
general waivers in other areas; and 30 States are now 
participating in that waiver process. So it is working in terms 
of more flexibility, more creativity and States taking 
advantage of the overall principle.
    Mr. Bonilla. Are there some States that have not even 
requested to be designated?
    Secretary Herman. There are some States that have not 
requested, yes. But we have tried to respond to all of the 
States that have come in for a general waiver request in key 
areas.

                       use of general duty clause

    Mr. Bonilla. In the Department's spirit of trying to lift 
some of these local regulations on local businesses, I am 
concerned this philosophy is not existent at OSHA. 
Specifically, I have said on this subcommittee many times that 
we are all concerned about worker's safety. I am concerned, 
however, just as much about new rules and regulations that are 
promulgated by OSHA that are not based on sound science or 
research.
    Specifically, I have a concern since we included language 
last year in a bipartisan agreement to stop any enforcement or 
promulgation of an ergonomics regulation. We inserted a 
provision in the bill which prohibits OSHA from issuing a 
proposed or final standard on ergonomics during this fiscal 
year. It also prevents OSHA from enforcing voluntary ergonomics 
guidelines through the general duty clause during fiscal year 
1998.
    Again, this is a bipartisan agreement. But I am concerned 
that OSHA has chosen to completely disregard this provision in 
the bipartisan agreement and is citing companies through the 
general duty clause for ergonomic violations using vague 
justifications.
    I have an article I am sure you saw that is 2 months old 
about OSHA proposing a $840,000 fine against Hudson Foods. 
Ihave a copy if you have like to see that, Madam Secretary. I am not a 
lawyer, but it looks to me this is a clear violation of this bipartisan 
agreement and Federal law.
    My question is: Would you or would you not interpret OSHA's 
action in this case to be in violation of this--of the law? And 
do you think these actions should be reported to the Department 
of Justice? Because I do.
    Secretary Herman. My goodness. No, I don't think the 
actions should be reported to the Department of Justice.
    Let me just say, in terms of my own interpretation, I would 
be happy, Congressman Bonilla, to make sure we provide you with 
a full briefing from our own staff and our own legal counsel on 
this situation. Because I have been briefed; and my 
understanding, in terms of what happened specifically with the 
Hudson case that you are referencing, is that the rider, as we 
interpret it, the intent of the language from Congress, 
referred to the voluntary guidelines that could be promulgated 
regarding the ergonomics standard. But it did not refer to a 
prohibition in terms of OSHA exercising its legal authority 
under the general duty clause.
    So there is a clear legal distinction between saying, yes, 
the language says you cannot take guidelines that are out there 
and use those guidelines for any kind of enforcement or 
citation action. But what OSHA did in this instance was to use 
its authority under the general duty clause to cite the Hudson 
company.
    And, specifically, the general duty clause says that four 
criteria have to be met; and it was the opinion of OSHA and our 
own team that these four areas were examined very closely in 
the case of Hudson. Specifically, those four areas include: 
that workers have been exposed to hazards; that the hazard was 
recognized by the employer or by the industry itself; that it 
was likely to cause serious injury or in some cases death; and 
that there was a feasible means, a feasible way to correct that 
hazard. And the Hudson situation was evaluated against those 
four criteria.
    I should also point out that, in April of 1997, we had a 
similar issue with another company that I won't bother to get 
into here, since you are not raising that issue, that 
challenged OSHA in a similar manner. Those actions were upheld, 
and it was decided that OSHA had the authority to act the way 
it did in the Hudson case.
    But I think it would be very useful if we could send a team 
up to your office to have a thorough review of exactly what 
happened in this situation.
    Mr. Bonilla. In this particular case--and I am aware of, of 
course, the four points of the justification that needs--they 
need to comply with before they move forward in this area, 
before OSHA moves forward in this area. But clearly the bill--
and I know you have read it--references the general duty 
clause. The language here says, no funds made available in this 
act may be used by OSHA to enforce voluntary ergonomics 
guidelines through section 5, the general duty clause. And, in 
fact, the courts are throwing out OSHA's cases under the 
general duty clause because there is not enough evidence to 
support OSHA's involvement in this area.
    Again, I am not an attorney. But after reviewing the 
guidelines, the four points of justification and language in 
the bill, I saw it as a clear violation of the law.
    I am just concerned that OSHA--why would they push the edge 
of the envelope, going almost to the very--if not to the edge 
of the line, over the line in this area? That is--it is just a 
power-mongering attitude that exists at the agency.

                   scientific research on ergonomics

    In another area related to this, I am concerned about--
continue to be concerned about the medical research and the 
scientific research behind the need for such a standard. My 
question in that area is, what are you doing to ensure that a 
comprehensive, thorough review of all available scientific and 
medical evidence is completed before OSHA moves forward on this 
rule?
    Secretary Herman. Well, Congressman Bonilla, as I told you 
last year when I came before this committee, I am going to make 
sure that we are doing the appropriate outreach and consult 
widely and broadly before we come forward with any rule in this 
area. We continue to do that with regional conferences and with 
consultation that is still going on in this area. Again, we 
would be happy to brief you on exactly what that has included.
    Mr. Bonilla. Do I have time--has my time expired, Mr. 
Chairman?
    Mr. Porter. Your time has expired.
    Mr. Bonilla. Thank you, Madam Secretary.
    Mr. Porter. Thank you, Mr. Bonilla.
    Mr. Stokes.

                         minority unemployment

    Mr. Stokes. Thank you, Mr. Chairman.
    Madam Secretary, welcome before our subcommittee.
    I would like to take a moment to thank you for your recent 
appearance in Cleveland, at our annual Urban League luncheon, 
and for the time that you took, while you were there, to visit 
our welfare-to-work projects. You referred to each of these 
events in your formal statement this morning.
    Let me begin by discussing with you an area of concern.
    While all of us are proud of the overall economic growth 
that is occurring in the country and the record low 
unemployment, an interesting phenomena that no one is talking 
about or discussing is the high unemployment amongst African 
American adults, males in particular, and also among African 
American teenagers. Can you give us some statistical data 
relative to that situation so that we can put it in perspective 
as we talk about the low 4.7 percent unemployment?
    Secretary Herman. Well, you are absolutely right in terms 
of the fact that we are not talking enough about the whole 
question today of what I call selective prosperity. Because, 
while it is true that we have the lowest unemployment rates 
that we have had in 2 decades in this country, we clearly have 
key populations, target populations, that still have 
excessively high rates of unemployment. And at the top of that 
list has been the historic and persistent unemployment rates of 
African American youth, in particular African American males.
    When you look at that core population, ages 16 to 24 years 
of age, in terms of the overall young adult population, or in 
particular when you look at the 16- to 19-year-old teen 
population, we know that this is a group that has had 
unemployment rates that have been at 30 percent or higher for 
the last 20 years. It is almost considered to be an economic 
status quo that we can do nothing about.
    Of course, I reject that argument; and I believe that, with 
concentrated effort and concentrated work, much of whatthis 
committee is being asked for in the out-of-school youth initiative can 
help us to once and for all eradicate these statistics.
    We know we have very definite models that are operating in 
the country, that when we make the real investment in our young 
people, when we give them the access to training, to education, 
when we put in the appropriate support systems, that we can get 
them into the economic mainstream. I began my own career 
working with this particular population in Mobile, Alabama, so 
I know it is possible.
    But you have to have both the national will and the 
resources to eradicate this problem.
    I am very pleased with what I have seen, quite frankly, in 
my own travels around the country for what we are doing in 
isolated pockets. But we clearly need to do more and be much 
more aggressive on this front.
    I might add that linked to that is the tremendous need for 
education and training when we look especially at the large 
numbers of high school dropouts and the disproportionate higher 
rates of unemployment that show up especially for high school 
dropouts, particularly for African American and Latino youth in 
this area.
    Mr. Stokes. I am pleased to have that response from you. 
This, of course, is an area I have had discussions with Labor 
Secretaries now for more than 25 years, right here in this 
Subcommittee. Of course, as you said, this problem has 
persisted for 30 years, at about the same rate.
    Let's talk about employment training.
    Secretary Herman. Let me just add one other thing for the 
record.
    I never like to make much out of one set of data, because 
you certainly need a longer trend line to determine whether or 
not there is any significant movement. But I was pleased in 
last month's unemployment report to see that we did get a 4 
percentage drop for the first time in a long time in this 
population. I am hopeful that that is a trend that we will 
continue, continue to see to be a downward trend. But I 
certainly recognize it is too early to suggest that we have a 
trend line there, but it bears watching.

          level of service in employment and training programs

    Mr. Stokes. Let's talk about a related area. What percent 
of the eligible population is being served by the employment 
training program?
    Secretary Herman. Well, when we look at, again, the high 
needs of unemployment, particularly in key urban and key rural 
areas, there is no way that all of the programs of the 
employment and training administration can service those who 
both need training to access the new jobs that are coming on-
line or oftentimes retraining assistance for those who are 
being dislocated in their present jobs.
    So what I would like to focus on are those key areas where 
we can make a significant difference in key populations if we 
target them. For instance, the out-of-school youth is one 
target population where, if we had the resources, we could do 
more to get that population in.
    What we are doing on the welfare-to-work front is another 
area where we can substantially increase that participation.
    And in the dislocated worker program, we are also looking 
to make sure that, through those new funds, we are able to get 
at least 40,000 to 50,000 more people served.
    Overall, we have had generally an estimate, nationally, 
that we serve about 5 percent of those who are really eligible, 
which is why I believe if we can go in a more targeted approach 
to work with specific populations that we will be able to get 
that number up.
    Mr. Stokes. Now, between your 1998 fiscal year request and 
the fiscal year 1999 budget request, am I correct that there is 
a reduction in the amount being requested?
    Secretary Herman. In the disadvantaged adult and youth 
area?
    Mr. Stokes. Yes, under your employment training.
    Secretary Herman. In the employment and training area, we 
actually are asking for an increase over the FY 1998 
appropriated amount. We are asking for an increase in our adult 
training program of $45 million; and we are also asking for 
$250 million in our out-of-school youth program.
    We did not ask for any additional increases in either our 
youth training or our summer youth program. So we didn't have 
any decreases there.
    What you may be referring to, Congressman Stokes, is the 
decrease, $75 million in the school-to-work initiative. There 
we do have a planned reduction, and that planned reduction is 
38 percent. But that was actually a part of the statute that 
accompanied the school-to-work grants in terms of a mandatory 
phaseout. So in that area, yes, we do have a reduction in 
funds, as well as in our one-stop centers. But, again, that is 
a part of what was designed to be seed money on the part of the 
committee in Congress.
    Mr. Stokes. Can I have additional time, Mr. Chairman?
    Mr. Porter. You have about another minute, yes.

                            welfare-to-work

    Mr. Stokes. This is my last question to you during this 
round. In your professional judgment, Madam Secretary, how well 
is welfare-to-work working?
    Secretary Herman. In my professional judgment, I think that 
it is working. I think that we have a lot more that we have to 
do to meet the challenges that are in this legislation. But I 
am concluding, actually this week, a national fact-finding tour 
at the request of the President to go out firsthand and to 
examine, as you know, what is happening with this initiative.
    I would say that there are three big areas where we are 
making progress and where we have more to do.
    The first is the recognition that the individuals who are 
making this transition really do want to work and employers are 
stepping up, both large and small, to make those jobs 
available. But there is much more that needs to be done to 
provide the kind of infrastructure support to help them really 
become skill ready and job ready.
    Secondly, we have placed a lot of emphasis on getting the 
job. In my view, we are not placing enough emphasis on keeping 
those jobs. Therefore, the transportation strategies and child 
care strategies are going to be critical to ensuring the 
overall success for this effort for the long term.
    Just lastly, I would say that it is not going to work 
unless we have partnerships clearly beyond just the government, 
State and local municipalities of government. It is going to 
take the business community. It is going to take faith-based 
communities and other nonprofit organizations to really be in 
there to help to be the bridges that these individuals will 
need to make the change to sustain them for the long term. 
Otherwise, I believe that we will be in another cyclical 
pattern and not having a long-term institutional change.
    Mr. Stokes. Thank you.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Stokes.
    I would remind the committee members that we are operating 
today under the 8-minute rule, that we begin with going back 
and forth for those members who were here at the beginning of 
the hearing, and then we will recognize members as they arrive 
if they arrive after the beginning of the session.
    Mrs. Northup.

                         black lung regulations

    Mrs. Northup. Thank you.
    Madam Secretary, I had a couple of questions to follow up 
questions from last year.
    Last year, I spoke repeatedly in this committee and with my 
colleagues about the black lung provisions and regulations that 
have been rewritten by the Department. Specifically, I asked 
you about how the Small Business Administration felt about the 
regulations and how these regulations would affect the small 
business community; and, at that time, the Department of Labor 
believed that there would be no effect. I am pleased to see 
that the Small Business Administration did not agree and that 
they have raised their concerns to you.
    I am also aware that several Members of Congress have 
requested that you withdraw these proposed regulations. I 
wonder with the controversy about these effects of these 
regulations unresolved, why we haven't withdrawn the flawed 
regulations; what is the status of the discussions with the 
Small Business Administration; and whether or not you have met 
with the House Small Business Committee regarding these issues.
    Secretary Herman. I have not met with the House Small 
Business Committee. I have spoken with the Small Business 
Administrator, and I will tell you that the current status 
regarding the regulations is that we are in active discussion 
with the SBA team. We are looking at what the SBRFA 
requirements are, and we want to make sure that we are doing 
all we can do to be sensitive in this area.
    I believe that when I did meet with you last year you did 
raise this issue with me. I did make two commitments to you at 
that time, that I would go back and personally take a look at 
the regulations to see, first of all, what we could do to 
extend the comment period to make sure that we were consulting 
as broadly as possible and that we would pay particular 
concerns to the small business community. We have done both of 
those things, and we continue to be in consultation presently 
with SBA on this regulation.
    Mrs. Northup. I think we also talked at the time about what 
would be the reason to change the regulation considering that 
there seems to be no additional medical evidence that would 
invite these changes, and I am interested in whether or not you 
have looked at this. I guess the question that is raised here 
is exactly what is it that would cause us to change a 15-year-
old regulation, considering that the incident of black lung has 
actually decreased rather than increased.
    Secretary Herman. I think the impetus for the regulation 
initially, Congresswoman Northup, was the fact that it was 15 
years ago and there have been several court decisions that 
actually impact on the regulations themselves. Clearly, the 
impetus, in terms of looking at this issue, was to see were the 
regs still in compliance, were there things that needed to be 
updated and strengthened in terms of ensuring greater 
protection and safety concerns.
    They have given me a note, and I don't know what it says, 
but that is my understanding. Let me see what the staff is 
saying. That is what they are telling me.
    Mrs. Northup. Were those court cases in which workers did 
not receive benefits?
    Secretary Herman. In terms of the court cases, no, it is 
not my understanding.
    I will admit I am not versed in all of the case history on 
this, but it is my understanding that it was both an issue to 
take into consideration what some of those actions were, but 
also there was an emphasis on process in terms of what could be 
done in this area to make it more efficient.
    Mrs. Northup. Well, I would just like to point out that 
there will be a lot lost other than efficiency if, in fact, you 
rewrite regulations that allow us to reopen 80,000 cases, 
including cases where people have died in the meantime. It will 
be those issues that will undo any sort of efficiency.
    Secretary Herman. Let me just give you my assurances, 
again, Congresswoman Northup, that we continue to consult on 
this; and we continue to work slowly with the SBA and with the 
small business community. I am committed to ensuring that we 
still follow that path before we take any action in this area, 
and we will certainly be in touch with your office before we 
do.

                 peer review of black lung regulations

    Mrs. Northup. I think the concern by both officials and 
businesses in Kentucky where coal mining exists--where it is 
very much a part of our economy, is that the Department of 
Labor decided they wanted to do this and now is trying very 
hard to overcome any reasonable obstacle for not doing it. 
That, in fact, will have a tremendous cost.
    I would like to just follow up with the question about peer 
review of research. I am aware that NIH, for example, requires 
peer review of all research. And it is not just that peer 
review catches mistakes, it is that when there is a standard 
that every bit of research is held to, then people don't 
overstate what the results of their data might show. They don't 
allow their personal interpretations to come through, because 
they know that their peers will likely reverse those.
    It occurs to me that peer review would be something that 
would be important for all of the studies you conduct, and I 
wondered if you could give me a breakdown of the extent of peer 
review that goes on; where you don't use peer review; where you 
do; and what the criteria is for when you do. Particularly, I 
would like to know what type of research you are using for 
these black lung benefit changes would be and whether peer 
review exists for these regulatory changes.
    Secretary Herman. I will be happy to supply you with that 
information for the record.
    But let me just say, philosophically, that I support the 
concept of peer reviews. I think it is very important as a part 
of what we are doing in applying any of our standards.
    But we also go beyond just peer reviews. I mean, there is a 
broad outreach and consultation process that really does go on 
when we look at proposing any standards, if you will, that 
includes peer review to the academic community. But to the 
specifics of the way that you would like to see it broken down, 
I will be happy to provide you that for the record.
    [The information follows:]

             Peer Review of Proposed Black Lung Regulations

    There are two primary bases for the proposed changes in the 
regulatory definition of pneumoconiosis. The first is the 
result of judicial construction while the second is the result 
of studies and recommendations developed by the National 
Institute for Occupational Safety and Health (NIOSH).
    The statutory definition of pneumoconiosis at 30 U.S.C. 
902(b), ``a chronic dust disease of the lung and its sequelae, 
including respiratory and pulmonary impairments, arising out of 
coal mine employment'', has been judicially construed to 
include both restrictive and obstructive lung conditions and to 
be progressive in nature.
    NIOSH is a part of the Centers for Disease Control and 
Prevention of the Public Health Service of the U.S. Department 
of Health and Human Services. Its statutory mandate includes 
the study of occupational lung diseases and the preparation of 
recommendations to reduce their incidence. The current criteria 
for the medical tests to determine total disability due to 
black lung disease were established in consultation with NIOSH 
as mandated by 30 U.S.C. 902(f)(1)(D). These criteria were not 
changed in the proposed regulations. However, the regulatory 
proposal draws upon medical research summarized in NIOSH's 
September 1995 publication on ``Occupational Exposure to 
Respirable Coal Mine Dust,'' in support of the revised 
definition of pneumoconiosis.
    In addition to the peer review processes to which the 
individual studies cited in the 1995 NIOSH study were 
subjected, the 1995 study itself was also subjected to review 
by a six member External Review Panel and the submission of 
written comments from another twenty-two reviewing individuals 
and organizations. Included among the reviewing organizations 
were: the National Mining Congress, the Bituminous Coal 
Operators Association, the National Coal Association and the 
medical directors of two major coal mining companies, the Kerr-
McGee Corporation and the U.S. Steel Corporation. The Director 
of the Education and Information Division of NIOSH has also 
submitted formal written comments and additional medical 
studies in support of the proposed regulatory changes.

    Mrs. Northup. I would also be interested in the process. I 
think it is important that the process be objective and that 
the people that do the peer review aren't the same----
    Secretary Herman. I understand.
    Mrs. Northup [continuing]. And you know there isn't sort of 
a closer relationship to that.
    Secretary Herman. We will be happy to provide you with 
that.
    Mrs. Northup. Mr. Chairman, is my time up?
    Mr. Porter. No.

                     davis-bacon helper regulations

    Mrs. Northup. Okay. I also asked you last year about the 
question of helpers under Davis-Bacon. Particularly, I noticed 
you stressed the importance of giving better opportunities to 
people who are just joining the workforce; and the helpers was 
part of the regulations. I think you all put a hold on that or 
said that there was additional information which came to light 
showing the regulations were not appropriate.
    I wonder if you could make available to this committee what 
that additional information was and whether it is any sort of 
different statistics or survey data that the Department cited 
in support of the regulation in 1989 and 1993. It seems like it 
is very important to help people who are just trying to get 
into the workforce have access to, really, some of the best-
paying jobs that we have in our workforce.
    Secretary Herman. Again, we would be happy to provide you 
with that information.
    But let me just say, because this was something that I did 
go back and take a look at personally when you raised it with 
me last year, there are two things that stand out in my mind 
that came in as additional data, but we can give you more 
information in this area. One was that the basic use of 
semiskilled helpers was not as widespread perhaps as it once 
was particularly 20 years ago when I was in the field working 
with helpers in the south; and, secondly, that the definition 
of a semiskilled helper seems to encompass a lot of 
definitions. So the question of how you would actually enforce 
it and how the appropriate determinations around it would be 
made were all questions that came into play here.
    But we can provide you with that information in terms of 
the additional data that did come into the Department.
    Mrs. Northup. I would appreciate that.
    [The information follows:]

             Experience With Davis-Bacon Helper Regulations

    The Department of Labor's proposed rule published in August 
1987, projected that helpers would be determined to be 
prevailing in at least two-thirds of all craft classifications 
(52 FR 31369). This projection was amended in the final rule 
which indicated that the frequency of the use of helpers might 
be reduced somewhat to the extent that collectively bargained 
rates were recognized as prevailing and did not provide for use 
of a helper classification (54 FR 4242).
    The Department's actual experience with the helper 
regulation presented a starkly different picture. In contrast 
to the estimate published in 1987 that helpers would prevail in 
at least two-thirds of all craft classifications, the 
Department found that use of helpers prevailed with respect to 
only 69--less that 4 percent--of the 1,763 classifications 
included in the 78 prevailing wage surveys completed during the 
period the rule was in effect.\1\ These numbers are even lower 
in just the nonunion sector--where it had been assumed that use 
of helpers would almost always be found to prevail. Of the 69 
helper classifications found to prevail, 21 were based on the 
practice of union contractors.\2\ A total of only 48 open shop 
helper classifications were found to prevail.
---------------------------------------------------------------------------
    \1\ Not included are instances where the number of helpers actually 
used or the number of contractors using helpers was insufficient to 
determine a prevailing rate.
    \2\ Fifteen of the 21 union helper classifications were elevator 
constructor helpers--a classification historically recognized 
nationwide in the union sector of the elevator constructor trade.
---------------------------------------------------------------------------
    Furthermore, the Department found that use of helpers was 
not the prevailing practice in any classifications in 43 of the 
78 surveys conducted, covering 229 of 328 counties surveyed.\3\ 
These included only two surveys in which the schedule reflected 
entirely collectively bargained rates, 10 surveys in which the 
schedule reflected entirely open shop rates, and 66 mixed 
schedules--51 of which reflected 50 percent or more open shop 
rates. In 13 of the 35 surveys where a helper classification 
was issued, the only helper classification found to prevail was 
a union helper. Open shop helper classifications were found to 
prevail in only 22 of 78 surveys conducted, covering only 52 of 
328 counties surveyed.
---------------------------------------------------------------------------
    \3\ Note that the survey results have been re-examined and these 
numbers revised slightly since publication of the proposed rule 
(compare 61 FR 40367). Both the ABC and AGC questioned the results 
obtained in the 78 surveys, citing a 1996 GAO report on the Davis-Bacon 
wage determination process (GAO/HEHS-96-130, May 1996). It is 
inappropriate to draw conclusions concerning the accuracy of survey 
results based on the GAO report. The report did not examine or verify 
the accuracy of wage determination data, survey response rates, or 
calculation or prevailing wages. It focused on the policies and 
procedures utilized to prevent the use of inaccurate data, and proposed 
changes to strengthen those policies and procedures.
---------------------------------------------------------------------------
    The extraordinary divergence between the actual data and 
the projection used as a basis for adopting the helper 
regulation clearly support the Department's conclusion that 
``the basis and effect of the semi-skilled helper regulations 
should be reexamined.''
    Data not previously available when the helper regulation 
was originally proposed and promulgated also show a lower use 
of helpers than was originally believed. For example, Bureau of 
Labor Statistics (``BLS'') tabulations from the 1995 Current 
Population Survey (``CPS'') show that helpers comprise only 1.3 
percent of the total construction employment. Employment data 
from the Occupational Employment Statistics (``OES'') program, 
which formed the basis for earlier analyses of helper 
employment, show that helpers comprise 9.4 percent of the total 
construction workforce--higher than the CPS data but a much 
lower incidence than the Department's economic impact analyses 
in 1987 and 1989 would suggest.

    Mr. Porter. Thank you, Ms. Northup.
    Ms. Lowey.
    Mrs. Lowey. Thank you, Mr. Chairman.
    I want to join my Chairman and my colleagues in welcoming 
you before this committee as the first departmental hearing, 
our first witness. We do appreciate your being here today and 
responding to the many questions we have, and I just want to 
express to you that I personally appreciate the importance of 
your position in protecting American families. The Department 
of Labor has such a critical role in protecting our pensions, 
helping more people move from welfare to work, and to ensuring 
job security. We do appreciate your leadership of this agency.

                 assessment of skill training programs

    I would like to follow up first, Madam Secretary, on the 
question of--I believe it was Mr. Stokes who asked you about 
your national welfare-to-work tour; and I know you have visited 
many of the sites and are going to report fully. But perhaps 
you can share with us some of your impressions of the skill 
training programs helping people get ready for work. I know we 
have often talked in this committee about the myriad of job 
training programs, and I know you have seen some that are 
particularly successful. Perhaps you can comment to this 
committee.
    Secretary Herman. I have seen several programs in the field 
that I have actually been very impressed with.
    I am impressed in part with what I see going on in many of 
our one-stop centers where the consolidation is working in 
terms of streamlining not only the types of programs that we 
are operating but the quality of the training and the quality 
of the services. It is very good to see how individualized much 
of the services have become because of the streamlining 
effects. I think the staffs in the field are able to be much 
more hands-on and much more tailored in meeting individual 
needs; and that is very, very important, particularly as we 
talk about this particular population of new workers who are 
trying to make that transition from welfare to work.
    The second thing that I am impressed to see is that we are 
doing a much better job, I believe, of linking training needs 
to where the jobs are going to be; and that is very, very 
important.
    I saw, for instance, a program in New York City, in Harlem, 
the Strive program.
    I saw in Tampa, Florida, just 2 weeks ago, employees 
actually coming into the centers and helping the training 
programs, in the computer area in particular, and making sure 
that the basic fundamentals are being incorporated into our own 
programs so that we can get these individuals more job ready.
    There has been a big emphasis on just life-style issues, 
life-style training, attitudinal training in terms of what it 
takes to get a job, to be successful on a job, and going much 
more into those kinds of situations with individuals who are 
trying to make it today into the workplace. To see this kind of 
tailored assistance, to see employers actually coming into the 
center, working hand in hand with our training initiatives is 
very encouraging.
    I was in the State of Delaware where I had the opportunity 
to actually meet with business leaders throughout the State who 
have come together to identify on a Statewide basis where the 
jobs are going to be and to make commitments not only to the 
number of jobs that they will make available to welfare 
recipients but to clearly identify the training needs and to 
help to participate in the design and the delivery of those 
training needs through an employer council that was very 
encouraging.
    I think that businesses today, given the unemployment 
rates, are really looking for new pools of workers.
    Mrs. Lowey. I thank you. And I just want to emphasize 
again, as someone who has been working with the job training 
programs since the 1970s, as I know you have, we both know that 
there are too many of these programs that lead to nowhere, 
nonexistent jobs; and yet there are some outstanding examples 
that are really doing the job. The challenge to all of us is to 
replicate the outstanding ones.
    In my own district we have programs run by Westchester 
Community College where they are educating welfare recipients, 
preparing them for jobs, and they are 88 percent successful.
    So education is an important component, as is combining 
education with hands-on experience. In fact, what they are 
doing there is actually placing these people in jobs, 88 
percent in jobs, earning over $25,000 a year; and, if they do 
not succeed, they can always come back and get additional 
placement.
    Mercy College, Pace College, I think there are tremendous 
resources in the community college network; and I would like to 
work with you on introducing legislation that focuses on the 
education component so we can be sure as we are reforming 
welfare we don't deny people, men or women, the opportunity to 
get the education they need to truly move from welfare to work.
    So I want to thank you, and I think it is absolutely 
critical that we figure out how we can replicate the successful 
programs and we just don't have spot successes here and there. 
Because this is the challenge to all of us, and I would like to 
continue that dialogue with you.

                    davis-bacon wage survey program

    In another area, last year's House report directed the 
Department, and I want to quote, to ensure that an appropriate 
portion of the funds appropriated for the Davis-Bacon wage 
survey program is expended to randomly sample all data 
submissions, to verify their accuracy. In addition, a sample of 
all data submissions should be selected for on-site data 
verification against actual payroll records.
    Could you explain what you have done to implement this 
directive and what results has been achieved? And does this 
take care of the criticism that was leveled last year against 
third party submission?
    Secretary Herman. Well, what we have done in this area is 
to follow many of the recommendations that were made by the GAO 
and OIG in particular that spoke to verification of data from 
third party submissions. We have placed a clear emphasis on 
making sure that our systems are able to more adequately 
monitor and to audit that data for accuracy when it is 
submitted by third parties.
    In addition to that, we are working very closely with other 
organizations such as the Bureau of Labor Statistics now to 
examine what we are using as basic sources of data as we try to 
enlarge the picture so that we have a more accurate picture.
    Mrs. Lowey. And you are satisfied with that.
    Secretary Herman. I am satisfied in terms of both what we 
have done with the funds and I think the results that we are 
getting.
    I am aware that the OIG itself is actually going tosubmit a 
report to this committee shortly on the expenditure of those funds and 
what we have done in the specific areas of ADP to make sure that our 
overall data systems are upgraded, and what we are doing specifically 
on the reengineering front as it relates to data verification and 
working with other data sources that will be detailed in a full report 
to the committee shortly.
    Mrs. Lowey. Thank you.

                       small business initiatives

    Lastly, another area that we address repeatedly is OSHA; 
and I do believe that most small businesses want to improve 
their working conditions. We are usually dealing with the 
minority of businesses that need an extra prodding. There are 
many businesses that want to improve their working conditions 
but need the technical expertise to do so.
    I know that OSHA has made a commitment to work with small 
businesses. Could you tell us specifically what OSHA has 
accomplished this year to improve its relationship with small 
business, what initiatives are under way to improve the health 
and safety of small business?
    Secretary Herman. Well, we have actually done several 
things to work with small business and OSHA.
    First of all, in terms of how we have tried to be much more 
expansive in our outreach, we have consulted with more than 
20,000 small businesses as part of our overall OSHA efforts in 
1997.
    I actually brought in an individual from the small business 
community, someone who is on the staff now at OSHA, that serves 
as a liaison, as an ombudsperson, to work closely with the 
small business community to address their concerns. We are 
strengthening both our voluntary compliance assistance program 
and our cooperative compliance program to make sure that we are 
bringing more small businesses in for consultation and a better 
understanding of how those programs work.
    Specifically, when we set up the cooperative compliance 
program, we communicated with more than 90 trade associations 
so that they would be informed and very much aware of our 
efforts to work more closely with the small business community 
while, at the same time, being very mindful of the overall 
mandate and mission of OSHA, which is to protect the safety and 
health of America's workers.
    Mrs. Lowey. I understand that. In fact----
    Mr. Porter. Ms. Lowey, I am sorry.
    Mrs. Lowey. I was just concluding in saying that I 
understand that the ombudsman for the SBA has actually 
commended OSHA for this work.
    I thank you, and I thank the Chairman.
    Secretary Herman. Yes, he did; and we were grateful for 
that commendation.
    Mr. Porter. Mr. Istook.
    Mr. Istook. Thank you, Mr. Chairman.
    Ms. Herman.
    Secretary Herman. Congressman.

             improvement in davis-bacon wage survey process

    Mr. Istook. I would like to follow up on some things Ms. 
Lowey was saying regarding wage and hour and the Davis-Bacon in 
particular. If I understand it correctly, so far in the sense 
of dollars expended most of the funds for Davis-Bacon 
improvement have been spent on upgrading the computer systems 
with new file servers, desktop and laptop equipment to be 
shared by wage and hour and some other parts of the Department 
of Labor to enable them to try to do a better job of verifying 
the accuracy of the wage and hour submissions--I am sorry the 
Davis-Bacon submissions, the W-10 forms, the WD-10s. Is that 
generally true? Is that the major component of the expense?
    Secretary Herman. I wouldn't say the major component. You 
are speaking of the $3.75 million overall?
    Mr. Istook. Yes, ma'am.
    Secretary Herman. More or less. In my own head, I break it 
up in sort of three areas.
    Mr. Istook. I am talking about in the sense of dollars 
where most of it has gone.
    Secretary Herman. I said I generally break it up in three 
areas, not into one area. First, I break it up into the ADP 
systems in terms of what we have to do for upgrading, if you 
will, hardware and computer capabilities.
    The second area, though, where we have had about $500,000, 
is to the overall reengineering efforts in terms of putting in 
more efficient systems, working on verification, trying to 
determine exactly the sources of the data and their accuracy.
    I believe it is around $300,000 or more that has gone to 
work with the Bureau of Labor Statistics just as a part of 
their own survey work. But it is my understanding, Congressman 
Istook, that the OIG is preparing, as I said to Congresswoman 
Lowey, a report to this committee that is actually going to 
detail those expenditures for you.
    Mr. Istook. Sure. But in the sense of dollars I believe the 
contract with the Bureau of Labor Statistics is in the 
neighborhood of $300,000. The contract with an auditing firm to 
try to sample and verify the accuracy of wage submissions is in 
the range of half a million to $600,000, and then most of the 
rest is on the computer systems.
    Secretary Herman. Yes. They have just given me the 
breakdowns, which I will be happy to give you for the record.
    Mr. Istook. Sure.
    [The information follows:]

      FY 1997 Obligations for Davis-Bacon Wage Survey Improvements

    During FY 1997, Wage and Hour obligated $512,000 for an 
auditing contractor (under contract with the Office of the 
Inspector General) to review on-site contractors' payroll 
records to verify the data contained on forms WD-10, and to 
obtain information that will assist the Wage and Hour Division 
in improving the Davis-Bacon wage survey process.
    Wage and Hour obligated $621,000 for a Davis-Bacon 
reengineering requirements analysis and work on a preliminary 
systems design.
    Based on the requirements analysis and preliminary design 
work, $2,186,000 was obligated for information technology 
(computer hardware and software) in support of WD-10 form 
redesign and electronic imaging, World Wide Web capabilities 
for WD-10 on-line transmission, and expert systems to assist in 
the effective management of collected data.
    Wage and Hour obligated $118,000 for system and LAN 
managers for its fair share of the costs of managing the 
additional workloads resulting from the Davis-Bacon ADP 
hardware and software purchases.
    Wage and Hour provided $314,000 to BLS as start-up costs 
for surveys of fringe benefit incidence and employer cost data 
for construction occupations.

                    davis-bacon wage survey process

    Mr. Istook. Here is what I am getting to on that.
    First, on the scope of work with the contract with the 
Bureau of Labor Statistics--and I would appreciate getting the 
correspondence and whatever is the document that states the 
scope of work--as I understand it, BLS, the Bureau of Labor 
Statistics, is being tasked really to look at the gathering of 
fringe benefit information and also the union status 
information to try to see if, in a highly unionized area, the 
union wage rate would represent more than half of the workers 
in that area, which factors into your competition. Is that a 
fair description of the basic work the Bureau of Labor 
Statistics is doing or is it beyond that?
    Secretary Herman. No, I don't think so, Congressman Istook. 
I think the basic work of the Bureau of Labor Statistics is to 
look primarily at the cost and impact of fringe benefits.
    Mr. Istook. That is what I mentioned first.
    Secretary Herman. Right. But I am saying that is the 
primary focus here, because that is data we have not had 
historically. That is how I would characterize it.
    Mr. Istook. But the Bureau of Labor Statistics is not being 
asked to look at the adequacy or accuracy of the overall system 
which is relying upon third party submissions to determine the 
prevailing wage rates. That is not part of their task. And the 
outside contractors that are doing some sampling of the 
accuracy of those, again, is not designing a system other than 
one that remains dependent upon the third party submissions. So 
that remains the common denominator, is that----
    Secretary Herman. Yes.
    Mr. Istook. And yet the Office of the Inspector General, in 
part of their conclusions--and I will just quote directly from 
it--when they reported previously said, and I quote, ``we do 
not agree with wage and hour's objection to excluding third 
parties from wage surveys.''
    I digress here. They wanted third parties excluded.
    Continuing to quote from them: ``Our audit indicated that 
third parties complicate the process of obtaining accurate data 
and contribute to significantly higher error rates. 
Additionally, third parties do not pay wages. Employers do. 
Data is usually more accurate when obtained from the original 
source rather than from a third party. Therefore, a statistical 
selection of employers would go far in solving both the 
coverage and the accuracy problems faced by wage and hour.'' 
And I end my quoting.
    So, as I understand it, there is no effort under way to go 
to the heart of the matter, which is that the system is still 
depending upon third party submissions, not upon submissions 
from people that are actually paying the wages.
    Am I mistaken or have you spent any of these resources in 
that area?
    Secretary Herman. Yes. We have spent resources in that 
area. And I would say that----
    Mr. Istook. Since we have already described what is 
consuming almost all of them, what is left to be looking at 
this?
    Secretary Herman. Well, in terms of focus--and we will be 
happy to provide you with the details of the actual dollar 
amounts. But, as I was saying earlier, in terms of the three 
areas, conceptually, you have the ADP systems in term of the 
hardware-software----
    Mr. Istook. But is that a system that is meant to evaluate 
third party submissions?
    Secretary Herman. Well, it goes to the issue of 
verification, you see.
    I guess I differ with the statement you read this way: I 
don't think the issue is third party submissions. My review of 
it is that the issue has to go to verification of the data. 
That is where the problem has been. It is not so much where the 
data comes from.
    Because, quite frankly, oftentimes when you have more data 
in the sample, that can actually contribute to a healthier 
picture and a healthier indicator to get the information that 
you need to determine the prevailing wage. There is a real 
flaw----
    Mr. Istook. Ms. Herman.
    Secretary Herman [continuing]. On the system of 
verification, Congressman Istook.

                      third party data submissions

    Mr. Istook. Yes, but you are contradicting yourself.
    A moment ago when I said, is it correct that you are still 
depending upon the third party, that you are not expending the 
resources to try to design a system that is not dependent upon 
a third party? You said I was wrong. Then you proceeded to 
explain how your whole system was again relying on these third 
party systems.
    No matter what the computer system may be, if all you are 
doing is looking at the third party submissions that come in, 
rather than devising a system that actually goes to the 
employer records, not anecdotal submission signed by sometimes 
anonymous people, unless you are doing that, the computer 
systems are still not going to help you. As you may know the 
term, one of the original terms in the early days of data 
processing was GIGO--garbage in, garbage out.
    Secretary Herman. You are right about that.
    Mr. Istook. And if your system is still dependent--
everything you are doing remains dependent upon what the 
Inspector General said was the source of the problem, the third 
party submissions, all you are doing is building a larger 
structure based upon the same shaky foundation.
    Secretary Herman. That is not what I am trying to 
communicate, Congressman.
    Mr. Istook. But tell me what you are doing----
    Secretary Herman. Let me say----
    Mr. Istook [continuing]. To question whether you will 
continue to use third party submissions.
    Secretary Herman. Let me speak to that issue, because for 
me it is not a question of either/or.
    First of all, third party data submissions are part of the 
process. And I didn't mean to suggest that we were relying 
exclusively on third parties. I am simply saying it is still 
part of the system.
    The issue for third party submissions, in my view, has been 
our inability to verify the accuracy of the data; and what we 
determined to do with these funds as a part of the overall 
reengineering effort is to make sure that we are putting in 
systems and approaches and personnel to help us with the 
verification of the data in terms of where it is coming from 
third party sources.
    Mr. Istook. But were you using employers as sources to 
begin with, you would not require the same level of 
verification.
    Secretary Herman. Well, I think the issue is beyond just 
specifics related to the employer. There are opportunities,as I 
said, to get the input from other areas. What we have to do is to 
stress the verification issue.
    Mr. Istook. The report of the Inspector General stresses 
that there was a significantly higher error rate in submissions 
from third parties that are not paying the wages than in 
submissions from those who are paying the wages.
    It certainly sounds to me like you are spending the money 
trying to create a structure based upon the same shaky 
foundation. Rather than going to the heart of the problem, that 
you are focusing upon data that has a much lower reliability 
factor; and instead of changing to start using more reliable 
data in the gathering process, you are trying to preserve the 
imperfect, inherently flawed process of the third party 
submissions.
    Secretary Herman. I would have to respectfully say that 
that is clearly where we would have some disagreement--just in 
terms of clarifying our conversation. Because you correctly 
point out that the OIG has said this data is flawed, which is 
why the emphasis is on verification as opposed to throwing out 
the entire system.
    I keep getting these notes.
    But I still want to stay with my point, because the 
fundamental difference here really is on the belief that I want 
us to be able to test the system to see if we can get 
verification of third party data. When you look at the entire 
effort, when you said are we dependent only on third party 
data, no, we are not. It is only 30 percent of the system. It 
is an important 30 percent of the system, I believe, but we 
have to make sure that the data is accurate, and that is what 
our efforts are driving towards.
    Mr. Istook. I guess it is kind of like the NFL team that 
has to decide do you want to draft a quarterback that you know 
can throw the ball accurately or do you want to go ahead and 
draft a quarterback that has a history of being inaccurate and 
hope that maybe you can hire enough coaches to fix him.
    Secretary Herman. That is one analogy. I wish I had one to 
come back on.
    Mr. Istook. You will think of it, but it will be later.
    Secretary Herman. Give me time.
    Mr. Porter. Madam Secretary, let me say we share Mr. 
Istook's concern in this area. It really is a policy question 
and one that we think can be greatly improved upon. If you want 
to submit any other data for the record as to the issue itself, 
we would be happy to see it.
    Secretary Herman. Thank you, Mr. Chairman.

                    electronic filing of lm-2 forms

    Mr. Porter. Our colleague, Dan Miller of Florida, could not 
be here today because of a death in his family.
    He has been very interested, as you know, in the 
development of an electronic system for the filing of reports 
under the Labor Management Reporting and Disclosure Act and for 
developing a computer database of these reports. We included 
$500,000 at his request in last year's bill to initiate this 
process, and I wonder if you can tell us how much progress has 
been made to date on this area.
    Secretary Herman. This is on LM-2.
    Mr. Porter. Yes, this is on LM-2.
    Secretary Herman. We have made significant progress in 
terms of funds that have been expended in this area, and I 
believe by the end of this year you will have a full report on 
that.
    Mr. Porter. You have asked for $500,000 more for the next 
fiscal year, and we can't tell from the budget documents any 
specifics about the Department's plan. What do you plan to 
accomplish with this additional $500,000?
    Secretary Herman. Well, with the additional $500,000 that 
is in the budget, we are now looking to expand much of the 
operations to our field systems to make sure that we can have a 
more unified, integrated system.
    What we can do is provide you with full information on that 
if Congressman Miller would like that.
    Mr. Porter. We would like that. Thank you.
    Secretary Herman. Thank you.
    [The information follows:]

                         LM-2 $500,000 Breakout

    In FY 1998, the Congress appropriated $500,000 to the 
Department for development of an alternative system for the 
electronic filing of LMRDA labor organization reports (Forms 
LM-2/3/4 and for an indexed computer database of the 
information from each report that is searchable through the 
Internet. There are three principal components of this project: 
electronic filing of union reports; design and implementation 
of the electronic public disclosure database; and electronic 
and Internet public disclosure. The plan will be implemented in 
stages over a multi-year period with full implementation 
culminating in Internet access to the indexed union report 
database.
    In FY 1998, the Department will initiate contracts to 
develop the following: electronic data entry versions of Forms 
LM-2, LM-3 and LM-4; an electronic reports submission system; 
electronic filing procedures; and design and programming of a 
computer database for the storage and retrieval of information 
on filed union reports. Estimated costs for project development 
in FY 1998 total $500,000.
    In FY 1999, contract work will continue on electronic data 
entry versions of the reporting forms and on the union reports 
database. Pilot testing of the electronic filing system is 
planned. Estimated costs for project development in FY 1999 
total $500,000.
    As requested by the Congress, the Department will submit a 
multi-year plan for implementing the electronic filing and 
Internet public disclosure system.

                          year 2000 conversion

    Mr. Porter. The GAO had some specific criticisms that I am 
sure you are aware of in regard to both what I call the 00 
problem in your computers, which when it reaches the year 
2000----
    Secretary Herman. The year 2000.
    Mr. Porter. That is the 00 problem.
    Secretary Herman. I thought you were saying uh-oh.
    Mr. Porter. I was. It is a play on words.
    Also, the GAO was very concerned that you have so many 
different computer systems and programs throughout the 
Department that you end up having a balkanized department with 
a lot of decentralization and not any real core information 
system. Can you comment on that and tell us what you are 
thinking about and what you may be doing?
    Secretary Herman. Well, we are very concerned about making 
sure we are in compliance, first of all, with all we have to do 
for the year 2000, so much so that effort has been actually 
upgraded to the Office of Secretary. Through our Deputy 
Secretary and our Assistant Secretary for Management 
Administration, all of those functions are being managed so 
that we can keep a critical eye on exactly what we are doing to 
monitor our own progress on a monthly basis.
    We have actually revised our own targets internally to make 
sure that--and I want to state for the record--that we will be 
in compliance by March of 1999 on all of the critical systems 
that the Department is charged with. We have 61 systems that we 
are pulling in. They fall across five or six broad areas from 
our enforcement programs through our administrative programs, 
and we are looking in a very detailed fashion to make sure that 
all of those systems are in compliance by March of 1999. That 
is our goal, and that is my commitment.
    Mr. Porter. What about long range planning in terms of 
hardware and software?
    Secretary Herman. We have looked at those units that have 
particularly unique problems, such as our UI system that has to 
dispense over 8 million claims in that area, and the 
combination of our black lung program and our other programs to 
make sure that their systems are ready. We have given special 
attention there to the hardware-software problems. Even in this 
budget we have asked for additional funds to make sure that our 
worker's comp program gets the additional resources that it 
needs to be able to work with its hardware and software 
problems as well.
    So we have a very detailed review, if you will, that we 
have taken on each of these systems. We are very much aware of 
what the needs are for each of them and what we have to do to 
get them in compliance. And I am actually pleased with the fact 
that of these 61 systems, about 21 of them are meeting our 
internal checklists for compliance, and we will continue that 
down that path.
    Mr. Porter. I am going to reserve the balance of my time. 
Mr. Dickey.

                       international child labor

    Mr. Dickey. Thank you, Mr. Chairman. Madam Secretary, I 
regret that I didn't--I couldn't take the opportunity of having 
lunch with you when you called, and I am worried that because 
now we are having this testimony, that you are not going to 
invite me again. Is there some chance that we can get that 
invitation back on the table?
    Secretary Herman. We will get it back on the table, 
Congressman Dickey.
    Mr. Dickey. Even though we are finishing testimony?
    Secretary Herman. That is right.
    Mr. Dickey. All right. Many in Congress and around the 
country are concerned about the ever-increasing scope of the 
Federal Government. Your department continues to expand its own 
definition of its mission with the help of the Administration. 
One area in which it seems the Department of Labor is doing 
this is through its assistance of the international program for 
the elimination of child labor. You are proposing increasing 
your donation from $3 million this year to $30 million next 
year. The next highest contributor is Germany at $7 million. 
Can you justify taking an additional $27 million from the 
taxpayers for such things as surveys of the labor force in a 
foreign country?
    Secretary Herman. Congressman Dickey, I believe that the 
United States as a world leader has a special and unique role 
to play in doing what we can do to eliminate child labor abuses 
throughout the world. There are more than 250 million children 
who labor in these kinds of conditions. This committee 
historically has supported a cutting edge program in countries 
like Nepal, Pakistan, Thailand, where we have been able, 
working through the ILO organization for the elimination for 
child labor, to successfully bring down these incidences.
    I also believe that through my own work and just through 
what we know generally of consumers here in this country, that 
Americans are concerned about products, goods that they are 
purchasing that are made by children who have been robbed of 
their own childhood. I think that to the extent that we can 
continue to work with other countries on this issue, as we talk 
today about living and working in a global marketplace, what 
are the responsibilities that we have more broadly as a world 
community, that this is an area where the United States can be 
a leader.
    The funds that we have asked for would expand the work that 
we have been involved with into 10 other countries 
specifically. And in those 10 countries we would hope to do the 
same kind of work that we have been doing in the other 
countries where we have clear evidence of having made a 
difference.
    Mr. Dickey. You know, I had that same process when I had to 
decide how to vote on MFN for China----
    Secretary Herman. Yes.
    Mr. Dickey [continuing]. Because of the same problem. Now, 
this question, as written, is aiming at another country. But 
what I am saying is, the administration was for MFN, it seems 
to me we could just by some other method, by just money, like 
withholding MFN from countries that in fact do have abuse.
    Secretary Herman. Child labor abuse.
    Mr. Dickey. What is your idea about that? Could you take 
such a stand in your conversations in the administration?
    Secretary Herman. Well, I think as we look more broadly at 
what we are doing on the trade front and the attention that we 
are trying to give to labor standards, particularly child labor 
violation itself, that we can and ought to do more in this 
area. And I believe that as an administration we are doing 
that, whether it is the debate that is presently taking place 
on the IMF funding, or quite frankly my own work in terms of 
what I have been involved in, to make sure that in all of our 
international forums that we are doing more to raise this issue 
of child labor and child labor violations.
    Mr. Dickey. Secretary Herman, I have only one other thing, 
and that is spending the money that is the problem and whether 
or not we are getting the proper return. There is something 
like $133,000 to support the President's civil rights agenda.
    Secretary Herman. Yes.
    Mr. Dickey. And I think we are all for that. And 
particularly those of us who voted against MFN, that was a 
tough vote for us. I am from Arkansas, and we have a lot of 
people who do business in China. We just can't continue going 
from, what, $3 million to $30 million is a drastic increase in 
a time of budget constraints. And I just would ask you to just 
please find other avenues if you can, though not to give up the 
idea of trying to help the rest of the world understand child 
labor, that we shouldn't use it. Thank you.
    Secretary Herman. Thank you, Congressman.
    Mr. Dickey. Thank you. It is good to see you.
    Secretary Herman. Good to see you.
    Mr. Porter. Thank you, Mr. Dickey.

                    New assistant Secretary for osha

    Madam Secretary, you have a new head of OSHA who replaced 
Joe Dear. We are going to talk to that individual later, but 
does that individual share Mr. Dear's philosophy regarding the 
Department and its role, or do we expect change?
    Secretary Herman. No. Our new Assistant Secretary, Charles 
Jeffress, very much shares Mr. Dear's philosophy. As you 
probably know, Mr. Jeffress comes from the State of North 
Carolina where he was the State director for OSHA, and, was 
involved in a number of reinvention efforts. He is very much in 
the tradition of what we call the new OSHA. And I expect that 
Mr. Jeffress will continue on the path that has distinguished 
his career and on the groundwork that Joe Dear laid.

                  Appointment of Assistant Secretaries

    Mr. Porter. What agency heads of the department have you 
appointed since you took office besides Mr. Jeffress?
    Secretary Herman. Besides Mr. Jeffress, we have essentially 
completed all of our appointments in terms of recommendations 
to the White House and to the Senate for the Department of 
Labor. There is one person that I am actually focusing on this 
week. We had made a selection and that individual was not able 
to accept the job for the Chief Financial Officer. That is the 
only other position that I am having to go back on, and I am in 
the process of doing that.
    Mr. Porter. How many are acting right now?
    Secretary Herman. Well let's walk through it. We have the 
Assistant Secretary for OSHA, Mr. Jeffress. We have acting 
Assistant Secretary for the Employment and Training 
Administration, Ray Uhalde, that we have named a permanent head 
there, Mr. Bramucci. We have an Assistant Secretary for 
Employment Standards who is permanent and not changing. We have 
the Assistant Secretary for Administration and Management who 
has been confirmed and is permanent. We have the Assistant 
Secretary for Public Affairs who is permanent. We have the 
Assistant Secretary for Pension and Welfare Benefits who is 
permanent. We have the Deputy Secretary who is permanent. We 
have the Solicitor who is acting, but we have a new Solicitor 
that has been named, is awaiting ratification by the Senate, 
Mr. Salono. We have--I believe I have done them all.
    Mr. Porter. So you have got four or five that are awaiting 
final----
    Secretary Herman. I am waiting on the Solicitor. I am 
waiting on ETA. I am waiting on Wage and Hour. I am waiting on 
the Assistant Secretary for Policy. Those are the big four on 
which we are waiting on Senate action.

                           Job Corps Funding

    Mr. Porter. In last year's bill, we provided $4 million, 
for Job Corps expansion. This was basically site acquisition 
and design money. What are the department's current plans for 
spending these funds, and how are you planning to proceed?
    Secretary Herman. The requested increase for the Job Corps 
includes virtually half of those funds going for the completion 
of the 5 new centers that were authorized by the committee, and 
the other half basically going to program services to support 
the infrastructure.
    Mr. Porter. And you are talking about the $33 million that 
you are asking for?
    Secretary Herman. $61 million I believe is the total 
requested increase from the committee for Job Corps. $62 
million.
    Mr. Porter. $33 million is for construction.
    Secretary Herman. For construction, yes.

                          Job Training Reform

    Mr. Porter. Okay. As you know, Madam Secretary, the House 
has passed its version of the job training reform and 
consolidation bill, and it is pending in the Senate. Is the 
administration supporting this bill in its current form, or do 
you have some significant problems with it?
    Secretary Herman. We don't have significant problems. We 
obviously are pleased that the House has taken action and has 
passed the legislation. We are hopeful that the Senate will act 
expeditiously as well.
    Mr. Porter. And if the Senate passed a bill substantially 
the same as the House version, would you urge the President to 
sign it?
    Secretary Herman. We are urging the President to sign the 
GI bill of Worker's Rights, and he called for it in the State 
of the Union. Obviously we recognize that there are some 
differences, but overall, we are hopeful that we can get a 
bill.
    Mr. Porter. GAO has said that there are as many as 160 job 
training or related programs, depending on how you count them, 
throughout the government. Many of them, however, are not in 
your Department. What attempts is the administration making to 
address this problem outside of legislation? Do you discuss 
these matters with Secretary Riley and Secretary Shalala and 
others in the Cabinet to see what can be done to address the 
problem internally?
    Secretary Herman. First of all I will take the latter part 
of the question. I have discussed what we can do to work 
together more closely, more efficiently, both with Secretary 
Shalala and with Secretary Riley, primarily as we have worked 
jointly on some of our education and training efforts in 
particular.
    With regard to what we are trying to do to foster greater 
consolidation and streamlining of our efforts, the waiver 
process that Congress granted both through the work-flex 
programs, as well as the general waiver authority that the 
department is now exercising, are also contributing greatly to 
streamlining and consolidation of efforts in the field.
    Mr. Porter. I ask my colleagues if they have additional 
questions. Mrs. Lowey?
    Mrs. Lowey. Yes. Thank you, Mr. Chairman.

                            Third Party Data

    A couple of points, Madam Secretary. I just wanted to say 
that I hope to follow up with some questions for the record 
regarding third party data. I understand that the GAO did not 
recommend abandonment of third-party data, and I also 
understand that the OIG did not find that wages were affected 
by some of the errors. But I will follow up with some questions 
for the record.

                     Departmental Computer systems

    The other point I wanted to make regards the computer 
system, and I have been asking questions related to thatsince I 
got to Congress in 1988, and I know you--this mess was dumped in your 
lap. I find it extraordinary that there are 66 different computer 
systems at the Department of Labor. I also have found it, through the 
years, extraordinary that the computers in one department don't talk to 
the computers in another department.
    And I would just say, related to that, this is why I have 
real questions about the legislation on the floor today, in 
that the computers can't verify anything. But I probably 
shouldn't have brought that up. Let's not confuse the issue.
    I would just say that I look forward to hearing from you as 
to your efforts, because I think it is an outstanding 
investment, in making sure that the computer systems for the 66 
programs not only will adjust to the year 2000 but they will 
adjust to each other. And I would think, and I know that many 
of my colleagues on both sides of the aisle think, investment 
in coordinating the computers in all the departments seems to 
me so basic that I can never believe we can't seem to 
accomplish it in spite of the millions of dollars put in that 
effort. So I commend you for your efforts and I look forward to 
following the progress.

                            Pension security

    Another area that is been very important to me since I 
joined this committee is your department's commitment to 
pension security, and I am particularly interested in your work 
regarding women and pension issues. There are special pension 
issues regarding women, and I know you have been moving to 
address them. Could you just briefly discuss that with us for 
the record?
    Secretary Herman. Well, we have been doing several things 
on the pension front as it relates especially to women. One, it 
has been a basic education and outreach campaign to inform 
women of the differentials between men and women in pension. As 
you know, women live on average about 4 to 5 years longer than 
men, so the fact that they will need a pension is greater. And 
the reality is also that, if you are lucky enough as a woman 
today to get any kind of retirement pension income, it is more 
likely that it is less than 50 percent of what a male receives 
today in retirement income. So getting the facts out to women 
in particular that they have to take a hold of their own 
futures and begin to plan and to invest now is very important.
    Secondly, we have--I have, in particular, tried to be very 
aggressive in working with the small business community to 
examine ways that we can expand pension coverage, to inform 
them of the actions of this Congress in particular as it 
related to the S.I.M.P.L.E. bill that was passed to make it 
easier for small businesses to cover workers so that they can 
get pension coverage.
    We know, in particular, that the job creation that is 
taking place in the labor market today is taking place in the 
small business sector in large numbers, and large numbers of 
those new employees are women. So you have got a compounded 
issue when you look at who is not getting covered, where the 
jobs are and what we have to do to expand pension coverage. I 
am holding round table discussions in the field with small 
businesses to hear their concerns firsthand, to examine what it 
is we can do to better meet their needs, to make pension 
coverage more affordable and more available.
    Mrs. Lowey. Because the hour is late, I just want to 
briefly mention two other points that I know you are 
addressing, and I look forward to continuing the dialogue. As a 
strong advocate of one-stop shopping, I feel the Job Bank is a 
very important part of that effort, and I know you have been 
focusing on this as well. And I would be interested in 
following your progress with the Job Bank because there is such 
a tremendous demand for this information, especially with the 
good news that the unemployment rate is so low. So I just 
wanted to mention that. I know there has been positive movement 
and I look forward to working with you on that.
    And then another area where I have been very much involved 
is genetic discrimination, and I was pleased that Vice-
President Gore recently released recommendations of an 
interagency task force calling for legislation to protect 
workers from discrimination in the workplace based on genetic 
information, and I know that your agency has a lead role in 
this effort. Because of the lateness of the morning, I won't 
ask you to go into it, but I am also interested in following 
this because I think it has a great deal of potential in 
causing real problems in the workplace. And I thank you for 
your leadership on this, and I look forward to working with 
you.
    Secretary Herman. Thank you, Congresswoman Lowey.
    Mr. Porter. Thank you, Mrs. Lowey.
    Mrs. Northup.

            Implementation of Davis-Bacon Helper Regulations

    Mrs. Northup. Ms. Herman, there were a couple of questions. 
I did want to follow up, though, just briefly and say that I 
meant to bring to your attention that there was report language 
in the bill that we passed last year urging the Department of 
Labor to implement the helper regulation by December 31st. So 
you know that certainly I hope the subcommittee will take into 
account the fact that you did not meet that deadline.
    I would also--last year when you testified, I had noticed 
that there was quite a bit of rhetoric regarding the Davis-
Bacon, that it is so helpful for women and minorities to get 
into construction jobs, and I asked if you would help provide 
the information to substantiate that. That hasn't been my 
experience, and I would just like to know what sort of 
information could be found that would substantiate those claims 
that are very regularly made. And you all haven't replied to my 
office regarding that.
    Secretary Herman. I am sorry, Congresswoman Northup. You 
are saying that I made claims that that was helpful to women 
and minorities. I don't recall.
    It is regularly made in many of the debates, made regarding 
Davis-Bacon.
    You are saying general debates, not that I made.
    Mrs. Northup. Yes. In fact, it is one of the 3 or 4 regular 
arguments that are made. And there is probably no other agency 
that could substantiate those claims. And I just think it is 
important we have the correct information.

                     Oversight of Federal Agencies

    I also, last year I asked Mr. Watchman of OSHA, when he 
testified before this committee, if OSHA covers the U.S. Postal 
Service, and do they have to comply with OSHA regulations which 
are required in the private sector, and he assured me that they 
did. However, the Director of OSHA later told the subcommittee 
that they had no enforcement powers in the Federal sector and 
could not propose a penalty against an agency like the Postal 
Service. And I just wondered, in fact he told us that lack of 
enforcement in the Federal sector was a big problem, so I 
wondered what your understanding of this matter is and if OSHA 
officials currently are monitoring the post office for safety 
violations.
    Secretary Herman. Mr. Watchman is here. We don't have, as 
you know, oversight in the Federal workplace, but there is 
latitude to go in and to inspect. But there is no formal 
oversight of Federal agencies, including the post office.
    Mrs. Northup. But of course if there is no way to assess a 
penalty or enforce it, there is no cost that the Postal 
Service, for example, might incur if they are in violation of 
OSHA. And I think this is of particular concern in my district 
because the post office has gone into direct competition with 
UPS, and UPS has enormous OSHA enforcement efforts. And so I am 
sort of wondering, now that they are in the same business, 
whether this is a concern of yours. And I think we also had 
report language in the appropriations bill last year asking 
that inspections be increased, and I wondered what your office 
has done to comply with that.
    Secretary Herman. Well, I see what you are saying from a 
competition standpoint of view with UPS and the Postal Service.
    Mrs. Northup. And I would assume that UPS is so 
aggressively monitored because you consider it a high risk area 
and that--and your concern is for the safety of workers, not 
punitive. I am not suggesting that it is punitive, but rather 
out of your real concern for the safety in the workplace. And I 
am just sort of wondering if that same concern exists for 
Federal workers, and what sort of aggressive compliance you all 
plan for an exactly the same workplace.
    Secretary Herman. I can honestly say to you, Congresswoman 
Northup, we really don't have plans for that kind of action in 
Federal workplaces. It is not a part of the statute or mandate 
of OSHA.
    Mrs. Northup. Are you as concerned about those workers you 
talked about as the workers you were talking about in the 
private sector?
    Secretary Herman. I am clearly concerned about them, but in 
terms of what our statutory obligations and responsibilities 
are, they do not cover Federal workplaces.
    Mrs. Northup. Well, do you think it would be possible for 
you to make a recommendation on what, you know, since you--you 
are the lead agency to assure safety and worker safety. I would 
assume that you would be as concerned about Federal workers, 
and would maybe be able to recommend an initiative that would 
protect their well-being as well as you do in the private 
sector.
    Secretary Herman. Well, I am concerned. And there have been 
situations that have arisen since I have been Secretary of 
Labor, where I have had the occasion to engage my counterparts, 
in areas under their jurisdiction to my own concern. I do not 
have the official authority to act. But I hear what you are 
saying in terms of examining that further.
    Mrs. Northup. I am looking for a recommendation.
    Secretary Herman. Right.
    Mr. Porter. If I can say to the gentlelady from Kentucky, 
she raises a very, very important point, I think, and one that 
this committee and the authorizing committee definitely ought 
to look into. If there is no agency except the Postal Service 
for examining the conditions in the workplace and the safety 
and health of its workers, and especially since they are in 
direct competition with the private sector, I think there is a 
serious problem. I think you put your finger on something we 
have to do something about.
    Madam Secretary, you have done an excellent job in 
testifying. We thank you for your forthright answers to our 
questions. We know that you are going to tell your agency heads 
that when they come in to testify before us very soon, that 
they should be more focused on results.
    The way I see this, we have seen a revolution in the 
private sector in terms of looking at the bottom line and have 
gone through some wrenching changes there that were difficult 
for everyone. But they were successful. And the economy is 
largely growing at the rate it is now because of those changes 
that were made over a 4, 5, or 6 year period leading up to this 
economic expansion.
    Now government is in the same process of changing itself to 
look at the bottom line. How are we doing in helping people, 
and are we spending the money wisely and getting real results? 
Your department is on the forefront of that effort. The others 
that we have under our jurisdiction are as well. And what we 
really want to know is, are we getting our money's worth? Are 
we helping people with the money we are spending? And so I know 
you will tell them all to come here and be prepared to answer 
those questions. We thank you for the fine job you are doing.
    This subcommittee stands in recess until 2 p.m. on February 
24th.
    Secretary Herman. Thank you, Chairman Porter. Thank you.
    [The following questions were submitted to be answered for 
the record:]


[Pages 110 - 402--The official Committee record contains additional material here.]



                                        Tuesday, February 24, 1998.

                 EMPLOYMENT AND TRAINING ADMINISTRATION

                               WITNESSES

RAYMOND J. UHALDE, ACTING ASSISTANT SECRETARY FOR EMPLOYMENT AND 
    TRAINING
ESPIRIDION BORREGO, ASSISTANT SECRETARY FOR VETERANS' EMPLOYMENT AND 
    TRAINING SERVICES
MARY SILVA, DIRECTOR, JOB CORPS, EMPLOYMENT AND TRAINING ADMINISTRATION
EDWARD L. JACKSON, ACTING DIRECTOR, OFFICE OF BUDGET, OFFICE OF THE 
    ASSISTANT SECRETARY FOR ADMINISTRATION AND MANAGEMENT
    Mr. Porter. The subcommittee will come to order. We're 
pleased to welcome Raymond J. Uhalde, Assistant Secretary for 
Employment and Training, from the Department of Labor, and--I'm 
going to try to pronounce this correctly--Espiridion ``Al'' 
Borrego, Assistant Secretary for Veterans' Employment and 
Training Services.
    And we thank you both for coming this afternoon to testify. 
We'd be pleased to hear your statements in that order, and then 
reserve the remainder of the time for questions. Thank you.

                         ETA Opening Statement

    Mr. Uhalde. Thank you, Mr. Chairman, and I appreciate the 
opportunity to appear here today. I'll summarize my written 
testimony. With me today is Mary Silva who's the Director of 
the Job Corps.
    The request before the committee totals $10 billion, of 
which $9.3 billion is for discretionary programs and $717 
million is for our mandatory programs. Our request is tied to 
Secretary Herman's three strategic goals; those being to have a 
prepared workforce, a secure workforce, and a quality 
workforce.

                     effectiveness of eta programs

    Mr. Chairman, at last year's hearing, I addressed, at your 
request, the effectiveness of our employment and training 
programs, and I informed you about our progress we've made in 
implementing the Government Performance and Results Act. Today, 
nearly a year later, I'd like to provide you with an update.
    The Employment and Training Administration places a high 
priority on measuring and improving the efficiency and 
effectiveness of its programs. We do this by collecting 
detailed data on our program participants by monitoring program 
results through a performance measurement and management 
system, and by evaluating our programs through rigorous studies 
of our costs and net impacts. We routinely provide feedback to 
our State and local partners on their performance.
    For some time, ETA has been making investments in 
management information which provide taxpayers and the 
Congress, and the workforce development community with 
information on client characteristics and the services they 
receive, and the results in the form of employment, earnings, 
and educational attainments. This information is important for 
assessing our progress in meeting our performance goals under 
GPRA. It also enables State and local programs to compare 
performance results and set performance benchmarks when serving 
diverse populations and utilizing different service strategies.
    JTPA was one of the first Federal block grant programs 
designed to be results-driven, guided by a highly structured 
performance management system. Local programs must meet 
federally-defined, State-adjusted, minimum levels of 
performance. These standards help States identify high-
performing programs that qualify for incentive awards, and low-
performing programs that need technical assistance or 
reorganization.
    The Department takes evaluation seriously. We attempt to 
use the most rigorous evaluation techniques possible, and 
currently, as you know, we're conducting at the committee's 
encouragement and support a major national evaluation of the 
Job Corps. Short-term impact results will be available late 
next year. We are also implementing a national random 
assignment study of JTPA's dislocated worker program.
    In general, our evaluations and data from program 
operatives show that our employability development programs can 
be effective in improving employment and earnings of 
participants. Our study of JTPA of 20,000 economically 
disadvantaged participants found that the increased earnings 
among the adult participants surpassed the costs of the program 
and paid the program back in two-and-a-half years.
    A favorable economy has contributed to unprecedented gains 
in our job placement rates for low-income participants, 
particularly our welfare recipients that were enrolled in JTPA. 
Our programs for dislocated workers and for youth have 
performed well over the last year, as described in my 
testimony.
    We are using our wealth of information and experience in 
performance measurement and management to meet the GPRA 
requirements. In drafting the five-year strategic plan and the 
first annual performance plan, which we submitted to Congress, 
we have solicited and received input from our partners and 
stakeholders in the workforce development systems, as well as 
other job training and employment stakeholders.
    ETA's Fiscal Year 1999 Annual Performance Plan consolidates 
activities into Secretary Herman's three cross-cutting 
departmental strategic goals that I mentioned earlier. The plan 
also establishes performance goals for each of the ETA programs 
that will lead to accomplishment of our strategic goals.

                          job training reform

    Mr. Chairman, President Clinton in December 1994, proposed 
to dramatically restructure the complex array of Federal job 
training programs into an integrated workforce development 
system with skill grants, or vouchers, coupled with consumer 
information available to adults who need training, and improved 
accountability focusing on results, rather than process. With 
last year's House passage of a bipartisan training reform bill 
and the anticipated Senate floor action in the next couple of 
weeks on a similar measure, we believe that Congress can 
complete action on job training reform before the summer. While 
we do not agree with every provision in the House and Senate 
bills, we believe the bills largely reflect the President's 
principles, and we're committed to working with Congress to 
obtain enactment of this legislation this year.
    Even without the new legislation, the Department has 
pressed ahead with reforms to job training, including 
implementing the authority you provided us, under the 1997 
Appropriations Act, to waive Federal, legal, and regulatory 
requirements under JTPA and the Wagner-Peyser Act that impede 
State and local reforms. To date, 34 States have won approval 
of these waivers, and we currently designated six states to 
participate in a five-year work-flex demonstration that lets 
States waive selected requirements pursuant to requests from 
their local areas.

                           eta budget request

    The Department's Fiscal 1999 budget affirms the President's 
commitment to employment and training and builds on previous 
legislation. It is closely linked to the Secretary's strategic 
goals and ETA's annual performance plan under GPRA. Let me 
highlight a few items in our request.
    The request includes $1 billion for JTPA training and 
employment assistance for disadvantaged, low-income adults, 
including welfare recipients. This is a $45 million increase 
from Fiscal Year 1998.
    Last year, Congress provided a $250 million advance 
appropriation for Fiscal Year 1999 for the President's proposed 
Opportunity Areas for Out-of-School Youth, contingent upon 
enactment of the authorizing legislation by July 1 of this 
year. An advance appropriation is requested again this year to 
fund the initiative in Fiscal Year 2000. This initiative 
concentrates time-limited Federal seed grants directly into 
high-poverty urban and rural neighborhoods, including 
designated and prospective Empowerment Zones and Enterprise 
Communities. It differs from other job training programs in 
that it concentrates a large amount of resources in these 
targeted communities so as to bring about a fundamental change 
in the neighborhoods that are served.
    The request also includes $1.3 billion for Job Corps, an 
increase of $61.4 million, that will continue much needed 
repairs and modernization of the centers, upgrade vocational 
courses, fund operating costs for 118 centers, and completion 
of five new centers to be initiated in 1998.
    The Fiscal Year 1999 budget request for the Employment 
Service is $816.6 million, including $20 million to administer 
the Work Opportunity Tax Credit and $31 million for State 
administration of Alien Labor Certification programs. The 
Administration is proposing to extend the Tax Credits through 
April of 2000. The Administration will also be proposing 
legislation which would establish user fees for the Alien Labor 
Certification program beginning in the year 2000.
    Relating to the Secretary's goal for a secure workforce, we 
are requesting $1.45 billion, a $100 million increase, for 
retraining laid-off workers and help them return to work. This 
increase is part of the build-up which, by the year 2003, would 
more than triple the size of the dislocated worker program 
since the President took office.
    We are requesting $2.4 billion for State Unemployment 
Insurance program administration, $100 million below the Fiscal 
Year 1998 level. The reduction is due to the one-time increase 
of $200 million appropriated in 1998 for assisting the States 
to convert their computer systems to the year 2000 compliant. 
We are grateful to the Congress for providing us with these 
funds and are now confident we can achieve uninterrupted 
operation of State UI systems.
    The request includes an increase of $91 million for 
additional integrity activities in the States, as authorized in 
the Balanced Budget Act of 1997, to reduce errors in benefit 
overpayments and losses in collection of employer taxes. This 
increase in integrity activities will more than pay for itself 
in increased savings to the Unemployment Trust Fund.
    Our request also includes a major proposal to begin a 
process of UI program and financing reform; we call this the 
Unemployment Insurance Safety Net proposal. The legislative 
proposal will allow short-term improvements to the UI program 
to be made while we begin to discuss additional reform issues 
with all of our stakeholders.
    The request includes $360.7 million in mandatory funding 
for trade adjustment assistance and NAFTA-TAA programs. The 
authorization for these programs expires September 30 of this 
year and the Administration will be proposing legislation 
extending them for five years. We also propose to extend the 
eligibility for TAA to those who lose their jobs due to shifts 
in production abroad and make other changes in the program.
    We have two initiatives for registered apprenticeship 
training for skilled child care development specialists, and 
another initiative to offer migrant youth alternatives to field 
work.
    Congress has already appropriated $1.5 billion for formula 
and competitive grants for the Welfare-to-Work programs in each 
of Fiscal Years 1998 and 1999. These programs are provided for 
the workforce development system to move the most difficult to 
employ welfare recipients into unsubsidized jobs. We've been 
working for five months to implement this authorizing 
legislation. We have made significant progress, including 
getting regulations published, setting into motion the process 
needed to award the grants, and hiring the staff that this 
committee approved.
    Mr. Chairman, in conclusion, I'd emphasize the importance 
of the investments we're discussing. These investments are 
essential if we are to have, in the President's words, ``a 
world-class system of education and training in place for 
Americans of all ages.'' In recent years, education and wages 
have become even more interconnected and the economy has 
divided along skill lines. To ensure that every American will 
have the opportunity to obtain the skills needed to compete and 
succeed in the new economy and that some are not left behind 
requires adequate levels of funding for training targeted to 
low-income youth and adults and dislocated workers.
    Mr. Chairman, this concludes my prepared statement. I would 
be happy to answer questions.
    [The information follows:]



[Pages 408 - 423--The official Committee record contains additional material here.]



    Mr. Porter. Thank you, Mr. Uhalde.
    Mr. Borrego.

                        ASVET Opening Statement

    Mr. Borrego. Thank you, Mr. Chairman, Mr. Obey, and members 
of the committee. I appreciate the opportunity to present our 
Fiscal Year 1999 budget request for Veterans' Employment and 
Training. It is a personal honor for me to be the first 
Assistant Secretary for Veterans' Employment and Training to 
present our request in the context of a balanced budget 
submission.
    The Government Performance and Results Act has enabled our 
strategic and annual performance plan to be tied directly to 
our budget request. We now set performance goals, we benchmark 
efforts, we measure accomplishments; all of which are bringing 
better services to our Nation's Veterans. Our budget reflects 
the three strategic goals of Secretary Herman; a prepared 
workforce, a secure workforce, and a quality workforce.
    A prepared workforce means that veterans have the 
opportunity to acquire and use skills, to make them productive 
members of society; that veterans will have access to 
development, counseling, and placement services to move them 
into the labor market. We are no longer satisfied with just 
finding jobs; we are helping veterans build flexible, 
financially-sound careers. A prepared workforce means not 
having to sleep on the streets at night and our homeless 
programs are helping proud men and women regain their dignity, 
their livelihoods, and again become productive members of 
society.
    A secure workforce means that reservists and national guard 
members like those being called to the Persian Gulf don't have 
to worry if their jobs are waiting when they get home. VETS 
ensures that the employment and reemployment rights of all 
service personnel are protected when they are called to serve 
our Country or to help keep peace in the world and that they do 
not suffer any form of employment discrimination because of 
military service.
    A quality workforce means veterans will not encounter 
discrimination because of service-connected disability and that 
they will have their pension and health benefits continued if 
they are called to duty; that they will receive preference for 
Federal government jobs and, if eligible, be afforded 
opportunity by Federal contractors and subcontractors.
    A quality workplace means that veteran service providers 
receive the best training available to meet the changing needs 
and career goals of today's veterans. The National Veterans 
Training Institute provides state-of-the-art courses for VETS 
staff, our State partners, and others working with America's 
veterans.
    I have given you a thumbnail sketch of how VETS serves 
America's veterans. But, a unique window of opportunity 
presents itself this year which could dramatically improve the 
lives of veterans well into the 21st Century. The President 
intends to propose legislation for a bold, new veterans 
employment initiative which would allow VETS to greatly expand 
its services to more veterans in each State: older veterans, 
homeless veterans, veterans on public assistance.
    The legislation would shift $100 million each year for five 
years from the VA into the JTPA 4(c) account. We project 
serving 40,000 veterans with at least 25,000 placed into 
quality jobs each year. We could provide services to older 
veterans and dislocated veteran workers forced by technology or 
global competition to change valued careers or to completely 
retrofit a lifetime of skills. Older veterans who can no longer 
do the physically-demanding construction jobs that served them 
so well when they were younger can now be trained for better 
jobs before suffering the pain of redundancy or the stigma of 
unemployment. We can provide expanded services to veterans who 
are without homes and who, nightly, wander our Nation's cities, 
suburbs, and rural areas.
    This is an historic opportunity, much like the Congress 
that enacted the GI bill, to improve the lives of countless 
veterans for decades to come.
    Before I conclude, I would like to acknowledge that I am 
here today as part of a team; the agencies of the U.S. 
Department of Labor. Secretary Herman understands that veterans 
have special needs in the marketplace and she respects the 
unique contributions that veterans make to our growing economy. 
Secretary Herman knows that the rest of the Department of Labor 
affects veterans and that, as veterans, we care about more than 
just veterans' issues, that veterans working with the rest of 
the Department can improve the working lives of America's 
working men and women. In that light, VETS is now working 
better and closer with other agencies in the Department of 
Labor and other Cabinet-level agencies, such as the VA, HUD, or 
DOD.
    It has been a privilege to appear before you today and I'll 
be glad to answer any questions.
    [The information follows:]


[Pages 426 - 432--The official Committee record contains additional material here.]



    Mr. Porter. Thank you, Mr. Borrego.
    Mr. Uhalde, how long have you been with the Department?
    Mr. Uhalde. Since 1977.
    Mr. Porter. And Mr. Borrego?
    Mr. Borrego. About three-and-a-half years, sir.
    Mr. Porter. And prior to that time?
    Mr. Borrego. I was at the University of Alaska in Juneau.

                 impact of good economy on eta programs

    Mr. Porter. We now have an economy that is performing 
miracles. We thought that it would take another four years to 
balance the budget and it looks entirely possible, despite the 
fact that we won't enact the President's revenues, that we will 
bring the budget into balance this year or perhaps early in the 
next Fiscal Year.
    Mr. Uhalde, what differences do you see in terms of the 
Department's workload and efforts in this good economy where 
unemployment is maybe at a 25 year low compared to earlier 
times when unemployment was much higher? What differences do 
you see in the operation?
    Mr. Uhalde. I can remember in years past, in the early 
1990's and again in portions of the early 1980's, when the 
question for employment training programs was, where are the 
jobs, training for what, why are we training people, why are we 
educating people? There were no job openings, no opportunities.
    That's not the central question now. The central question 
now is where are the people with the skills for the jobs, 
vacancies that we have? And, it puts a very high premium on 
Federal and State and local investments in education and 
training, and also puts a high premium on doing it right the 
first time, on being efficient because both the participants as 
well as the taxpayers want us to have very effective programs 
that are able to match up with the needs of the workers and the 
needs of the employers and the economy. So, we're in a much 
better situation, obviously, in terms of not having to answer 
the question where are the jobs, but it also puts a very high 
premium on us doing a good job.
    Mr. Porter. Is the Department able to respond to that 
change in environment effectively and quickly?
    Mr. Uhalde. We believe we are. One of the reasons that the 
employment and training system is really locally based is to 
make it responsive to the local needs and local economies. 
That's why it's a partnership between business and local 
elected officials and local communities, so that they can be 
responsive to the needs of employers because it's very 
difficult in Washington to anticipate all of the changes in 
labor markets. So, having a locally-based system helps us do 
that.
    It is important where local shortages tend to grow in 
industries for us to be sensitive to those, like in the 
information technology or in other areas, where there may be 
localized or even regional shortages to try and get more 
information out and make sure our systems are sensitive to 
those shortages.

                impact of good economy on asvet programs

    Mr. Porter. Mr. Borrego, do you see the same things or is 
it different for veterans than for others in the economy?
    Mr. Borrego. We're facing the same set of dynamics. In 
terms of addressing the needs of employers who are looking for 
skilled employees, we're moving ahead on two fronts. There's 
about 250,000 members of the Armed Forces that separate each 
year. We train about 150,000 in our transition programs. We're 
moving ahead in the area of facilitating the certification of 
military skills for civilian employment on two fronts in those 
areas where the Federal Government provides licenses to 
certification; aircraft mechanics, air traffic controllers. And 
also, for telecommunications companies, we have a small grant 
where the communication workers would certify the 
telecommunication skills, and place separating veterans with 
these skills into telecommunications companies where they 
really need skilled employees.
    So, we're proceeding on those two fronts to take advantage 
of the skilled workforce that's coming out of the military. The 
other is I think that because our unemployment is low, we 
really have an opportunity to examine the way that we work, the 
way that we deliver service. What role does automation play? 
How do we automate? How do we deliver services better? When we 
talked about this shift from activities to outcome, how do we 
move from just putting veterans into jobs and move into getting 
them into careers? So, we have a little bit of opportunity that 
we should take care of to make sure that we better the system 
and when we have good people that we move them quickly and 
easily into industry.
    Mr. Porter. There are more veterans coming out of 
departmental programs in times of a good economy, I assume, 
than there would be in times of a weak economy?
    Mr. Borrego. After the large downsizing, it's been holding 
steady at about 250,000. It seems to kind----
    Mr. Porter. Regardless of the economy----
    Mr. Borrego. Yes, sir.
    Mr. Porter. Okay. How many programs do you administer, Mr. 
Uhalde?
    Mr. Uhalde. Gee, I've never counted.
    Mr. Porter. Well, is it thirty----
    Mr. Uhalde. I'd----
    Mr. Porter [continuing]. Or forty----
    Mr. Uhalde. Thirty or so.

                          RANKING OF PROGRAMS

    Mr. Porter. Thirty or forty? What are your top three in 
terms of getting results for people? Which are the three best 
programs in terms of the investment that is made and your 
getting from where you are to where you want to go?
    Mr. Uhalde. Well, the programs do a variety of different 
things so, it's difficult to compare. For example, we believe 
the Unemployment Insurance program that we administer with our 
State partners is a very effective program with timely results 
in terms of our payments, maintaining trust funds, and so 
forth. So----
    Mr. Porter. That would be one.
    Mr. Uhalde. We believe that's a very important program. 
That's different than, say, the Job Corps which is another very 
highly effective program for at-risk youth. As this committee 
well knows, it serves the most disadvantaged young people and 
has been shown to be very effective.
    Our programs for dislocated workers, title III of the Job 
Training Partnership Act, has been very effective. 73 percent 
to 75 percent of dislocated worker participants have employment 
at 95 percent of their prior wage after they leave the program. 
So, I'd say those are three examples but they serve different 
populations.
    Mr. Porter. Yes, I understand.
    What about the bottom three? Which three are we getting the 
least payback for?
    Mr. Uhalde. Well, I think we don't have a bottom three. 
[Laughter.]
    We have----
    Mr. Porter. That sounds like a political answer to me. 
[Laughter.]
    Mr. Uhalde. We have good programs, sir, and if we have----
    Mr. Porter. You mean, none of them are operating----
    Mr. Uhalde [continuing]. Four operating programs----
    Mr. Porter [continuing]. They're all evaluated at the same 
high level?
    Mr. Uhalde. We haven't evaluated every program.
    Mr. Porter. Which programs have problems that you're 
concerned about?
    Mr. Uhalde. I would say that we've had the most difficulty 
in getting consistent sustained returns over time with our 
disadvantaged youth programs----
    Mr. Porter. Okay.
    Mr. Uhalde [continuing]. But, even there, we have 
identified a lot of very effective youth programs.
    Mr. Porter. Yes, relatively speaking, they may all be 
effective, but which ones are less effective than others?
    Mr. Uhalde. Well, I mean, I give you one that we have had 
some difficulty in having consistent performance but----
    Mr. Porter. No others?
    Mr. Uhalde. I would say that we have a range of programs 
that we have more or less effectiveness.
    Mr. Porter. All right. Mr. Borrego, how many programs do 
you administer?
    Mr. Borrego. We have--I'd put them in three categories. We 
have a large program where we fund staff in State employment 
offices to work with veterans. Then, we have our Federal 
administration where we protect the reemployment rights of 
reservist and national guard. And, then, we have a small JTPA 
Title IV-C program.
    Mr. Porter. I'm going to get to more specific questions. I 
just wanted to get a feel for the answers you might give.

                             problem areas

    Are there any areas under your jurisdiction where you are 
having particular problems or where evaluations have shown weak 
results?
    Mr. Borrego. No, sir.
    Mr. Porter. They're all doing well?
    Mr. Borrego. When we take a look at, for example, the 
people that we put in the 50 States, some States do better than 
others and the States that aren't doing as well, we have 
Federal employees who are directors in every State to work with 
them and that's what we try to improve within the program, the 
range of effectiveness but in terms--we serve very different 
areas with our programs. So we don't have the range that Ray 
does with his agency.
    Mr. Porter. No, I understand that, but you still have 
different groups that you are working----
    Mr. Borrego. Yes, sir.
    Mr. Porter [continuing]. With in different ways.
    Mr. Borrego. Yes, sir.
    Mr. Porter. And you're getting uniformly good results?
    Mr. Borrego. Again, within each program, we may have a 
range of results in a program; one State may be doing better 
than another. We set performance targets, and if they're not 
meeting them, we have our State directors work directly with 
them. In terms of comparing one State program to the other, I 
don't know how to compare a program that gets jobs for 
veterans, with a program administered by Federal employees who 
protect the reemployment rights of National Guard and 
reservists and veterans. I don't know how to match or compare 
them in a way that compares apples and apples. So, they are 
very different programs within each program. We do assess the 
bits and pieces of each program----
    Mr. Porter. Now, our job, of course, is to evaluate whether 
the money is getting results for people.
    Mr. Borrego. Yes, sir.
    Mr. Porter. And, obviously, we need your help in order to 
do that.
    Mr. Borrego. Yes, sir.
    Mr. Porter. And where we are spending money and not getting 
results, obviously, we don't want to continue to spend the 
money----
    Mr. Borrego. Yes, sir.
    Mr. Porter [continuing]. We want to do something 
different----
    Mr. Borrego. Yes, sir.
    Mr. Porter [continuing]. So we're getting results----
    Mr. Borrego. Yes sir.
    Mr. Porter [continuing]. And that's the reason I'm raising 
these questions.
    Ms. Delauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman. Thank you 
for your testimony.

                  INCREASED DISLOCATED WORKER FUNDING

    I'm interested in the increased funds for dislocated 
veterans. Obviously, that's the area in which my community has 
faced a lot of structural changes in the economy. I understand 
that the model for this program is the retraining for 
communities that are downsizing. I am wondering how the 
initiative will work.
    Mr. Uhalde. The increase for dislocated workers, which is 
$100 million, will enable us to be able to make targeted 
investments for communities that are impacted by NAFTA, 
particularly, border communities, and workers who have been 
impacted by what we call secondary layoffs, where the trade 
impacts have been with primary firms, and their supplier firms 
are not eligible, typically, for trade adjustment assistance, 
and the secondary workers are impacted. It would be with 
national applications, as we do with the National Reserve now.

                        job corps and head start

    Ms. DeLauro. Let me ask one question with a couple of parts 
that have to do with the joint effort between the Job Corps and 
Head Start. That's an area of interest to myself and 
Congressman Hoyer, as we're dealing with trying to coordinate 
these efforts with students who have young children and as 
we're looking at the new welfare reform requirements. The first 
priority for child care is given to former welfare recipients; 
the second priority for Job Corps is the working poor. The Job 
Corps is 60 percent young men and 40 percent young women. Is it 
your sense, or have you picked up anything like this, that the 
lack of child care services is a barrier to enrolling more 
young women in Job Corps? What is Job Corps doing to help these 
young women find quality, affordable day care, so that they can 
participate? Finally, if you can, give us an update on the 
progress of the collaborative partnership between Head Start 
and Job Corps that was urged by the language in the Fiscal Year 
1998 report. Where does this collaboration stand? When can we 
expect to see construction beginning for Head Start centers on 
Job Corps campuses?
    Mr. Uhalde. I'll let Mary answer it in more detail, but, 
clearly, the issues with regard to child care are an issue with 
participation of young women, particularly single mothers in 
Job Corps to a full extent. We have been aggressive in trying 
to respond to the language the committee provided. The 
Department has talked with Head Start. We've had preliminary 
meetings with them. Head Start can't fund facility acquisition, 
but they can provide operations funding. Job Corps is not 
funded to operate child care centers. It's a good marriage, and 
we and HHS/Head Start officials agree that it's a good 
partnership arrangement, and they have an interest in 
partnering with us to set up some Head Start programs in Job 
Corps facilities.
    Mary, do you want to talk about how many and where?
    Ms. Silva. Okay. We certainly have found the lack of child 
care is a real barrier to young women being able to avail 
themselves of opportunities. We have had more success in 
finding child care for those who are participating as 
nonresidential students. Job Corps is 90 percent residential. 
And so for those students whom we enroll as nonresidential, we 
are able to have in some cases child development centers on our 
Job Corps centers or have them be able to take their little 
ones there before going as day students to Job Corps.
    We currently have seven Job Corps centers where we have 
single-parent dorms and we have child development centers on 
those facilities. That opens the opportunity for young women to 
participate on a residential basis. So this is something that 
we feel very strongly about, and we're very concerned about 
providing more opportunity for young women. We have met with 
Head Start officials, and we are trying to develop ways to use 
our shared resources to be able to actually provide more child 
care centers, particularly in urban areas where we have a 
nonresidential capacity initially, because that means that you 
do not put up a single-parent dormitory, which is a significant 
additional expense.
    So right now we are meeting with the Head Start officials. 
We hope to be able to identify specific centers where we will 
be able to get the local partners in those local areas to be 
able to work out details, so that we can get funding for the 
young women through Head Start and get facilities opened.
    Ms. DeLauro. Is it your sense or evaluation--the word 
``processing'' is so insensitive. What's your capacity? Your 
capacity now is not meeting the demand, is that correct, in 
terms of being able to assist with the child care aspect of 
trying to get people to work, to get women to work? Is it 
overwhelming? Is it underwhelming? Are you moving in a 
direction quickly enough to help us, if you will, to get some 
sense of an evaluation of Welfare-to-Work? How well is it 
working? Are people getting jobs? Are they able to do what they 
need to be able to do? What we want with Welfare-to-Work is to 
get people to work; that's the goal.
    Ms. Silva. Exactly.
    Ms. DeLauro. I want to get some sense of where we need to 
go in this area in order to make Welfare-to-Work work.
    Ms. Silva. I think we can't overestimate what a barrier 
child care is. But to young women who have one or two little 
ones, getting to a job training program is very difficult. 
There are lots of barriers for transportation. There are lots 
of barriers for health care for these little ones, for getting 
them up and ready. It's very difficult, and I think we need to 
be very sensitive to the size of that barrier. It is an 
enormous barrier.
    We find when we have child care available for 
nonresidential participants, that they avail themselves of 
that. We work very hard with them and have to provide 
additional support for them because they have more to do to get 
to that nonresidential program every day than someone without 
children, regardless of gender.
    Ms. DeLauro. So that the Job Corps/Head Start partnership 
is something that we need to nurture? It works?
    Ms. Silva. I think it's very important, because the Job 
Corps program works in providing the opportunity for these 
young women to be in a program that has this level of service 
and level of intervention. I think it's very, very important to 
make sure that these young women get that chance to be self-
sufficient.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. DeLauro.
    Mr. Wicker.
    Mr. Wicker. To follow up, what portion of Job Corps 
participants are nonparticipatory?
    Ms. Silva. About 12 percent.
    Mr. Wicker. Is that figure moving?
    Ms. Silva. No.
    Mr. Wicker. It's staying at 12 percent?
    Ms. Silva. Yes.

                         job corps construction

    Mr. Wicker. Mr. Uhalde, let me ask you about Job Corps 
facilities. In 1998, the committee instructed the Department to 
examine ways to expedite construction of these facilities. What 
progress have you made in this area?
    Mr. Uhalde. Mary, do you want to take that? On the 
rehabilitation.
    Mr. Wicker. Yes, construction and rehabilitation.
    Ms. Silva. Right. One of the things that we have done very 
specifically is we have embarked using design/build as a way of 
getting a project up and going under one contract, so that the 
effort is with one contract to have the same entity do both the 
design and the construction. We have that underway in five 
different centers where we're using that technique to do 
renovation of facilities.
    We are very interested in seeing how that works because we 
have heard that there are some significant advantages in terms 
of timeliness. Our effort is to try to examine our 
construction/rehab process to be able to streamline it. We have 
a working group that's had one meeting. They'll be meeting 
again next month to look at ways where we can streamline the 
process, so that when we get funds from Congress, we're able to 
get them to the centers in a timely way with a process, so that 
the construction and renovation can be done more quickly.
    Mr. Wicker. Well, I understand that it's been several years 
since any money was spent on construction. Is that correct?
    Ms. Silva. No.
    Mr. Wicker. Well, tell me, then, how much construction of 
Job Corps facilities we're doing now. And, as a matter of fact, 
I'm going to ask you to provide a list of proposed construction 
rehabilitation projects by center and location.
    [The information follows:]

    Job Corps Construction, Rehabilitation, and Acquisition Porjects

    As a result of recent Congressional appropriations that 
have been provided for new center facilities, center 
relocations and reducing the backlog of facility construction 
and rehabilitation needs that had built up at existing Job 
Corps centers, the volume of Job Corps construction activity 
has been increasing substantially. The following table displays 
the dollar amount of contractual obligations that have been 
incurred in recent years for Job Corps facility construction, 
rehabilitation and acquisition.

                                             CONTRACTUAL OBLIGATIONS                                            
                                            [In thousands of dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                             Relocation  of    Rehab existing         Total     
              Program year                   New centers         centers        center sites       obligations  
----------------------------------------------------------------------------------------------------------------
1991....................................            13,600             7,900            31,600            53,100
1992....................................            17,451            26,482            40,078            84,011
1993....................................             7,296             3,641            40,517            51,454
1994....................................            16,615            22,393            50,404            89,412
1995....................................            34,653            17,092            56,780           108,525
1996....................................            85,533             6,783           106,179           198,495
----------------------------------------------------------------------------------------------------------------

    Regarding the requested list of proposed projects by center 
and location, our process for allocating appropriated FY 1999 
construction funds to specific projects at individual Job Corps 
centers will not be completed until early 1999. We will be 
pleased to share this list of projects with you as soon as it 
is available.

    Ms. Silva. Okay. We have received funds from Congress, over 
the last several years to be able to help beat back a backlog 
of facility needs, and this includes some construction of new 
buildings on a center, not new centers necessarily, but 
construction of a new vocational building or an academic 
building or a new dormitory on an existing center, and we have 
other needs where we rehab existing facilities. But I will be 
able to provide you a list of the types of activities where we 
use our construction money.
    Mr. Uhalde. Last year the appropriation was $114 million 
for the construction part, not including any expansions.
    Mr. Wicker. Okay. You mention these five projects using 
this innovative design-and-build program. I take it that's a 
very small percentage of the construction and rehabilitation 
that's going on.
    Ms. Silva. Yes, it is.
    Mr. Wicker. Do you know offhand if any construction is 
planned for the State of Mississippi?
    Ms. Silva. I don't know offhand, but I will be able to get 
you that.
    [The information follows:]

          Mississippi Construction and Rehabilitation Projects

    The facility construction and rehabilitation projects that 
are currently underway at the three Job Corps centers in 
Mississippi are listed below. These do not include any new 
projects that might be initiated under the 1999 appropriation.

Batesville JCC: description                               Estimated cost
    Replace Dormitory Windows.................................   $25,600
    A/C System in Gymnasium...................................   202,100
    Site Drainage Improvements................................   171,000
    Voc Shop Addition, HVAC in Rec Bldg.......................   472,200
Gulfport JCC:
    New Dormitory............................................. 2,212,000
    Admin Bldg-New HVAC Asbestos Abatement....................   890,000
    VOC/Training Bldg Roof Replacement........................   314,700
Mississippi JCC (Crystal Springs):
    New Gym Bleachers.........................................    35,000
    Roofing and HVAC System is 8 Bldgs........................   463,500
    New Male Dormitory........................................ 3,069,000
    New Education Building.................................... 2,356,000
    New Cafeteria/Culinary Arts Bldg.......................... 2,490,000

                       distribution of resources

    Mr. Wicker. Okay. Let me just ask one more question of Mr. 
Uhalde. The administration is asking for $8.2 billion for 
employment training in Fiscal Year 1999 from $8.14 billion. Of 
this money for training, how much of that is spent on a preset 
formula? How much of that is distributed, dispersed, based on a 
formula?
    Mr. Uhalde. Of our programs, most, for example, are the 
dislocated worker money, which we're asking $1.45 billion. 
Eighty percent of that goes out to States on a formula basis; 
20 percent is the National Reserve account for emergencies and 
floods and disasters and major plant closings. For summer jobs, 
100 percent of it goes out to States, and down from States to 
localities by formula. It varies by program how much is 
retained as discretionary but, in the main, most of it, 80 
percent or more of the money goes out by formula for these 
programs. The exceptions would be Job Corps, which is a 
nationally-administered program.
    Mr. Wicker. So there's a very small part of it that's 
discretionary?
    Mr. Uhalde. Yes.
    Mr. Wicker. Could you give me an idea of some of the groups 
and organizations who receive the discretionary funds, and 
specifically have you awarded any grants to SBDC, Small 
Business Development Centers?
    Mr. Uhalde. With regard to the SBDCs, I'm not sure whether 
we have or not. I know they are very interested in the 
competition under the Welfare-to-Work grant, which is now in 
play. Twenty-five percent of those monies are competitive, to 
be awarded, and I know SBDCs have been one of the sets of 
groups that have inquired about competing for the Welfare-to-
Work grants.
    Types of organizations range from nonprofits to for-profit 
entities, community-based organizations. Discretionary monies 
for dislocated workers goes down to cities and communities that 
have major plant closings or mass layoffs, and might go to a 
consortium of business and communities for a major plant 
closing. So we run the gamut in terms of discretionary awards 
from for-profits, nonprofits, and public entities.
    Mr. Wicker. Nonprofits, for-profits, and public entities? 
How about labor unions?
    Mr. Uhalde. Labor unions as well, that's correct. Labor 
unions and----
    Mr. Wicker. What percentage of discretionary funds go to 
labor unions?
    Mr. Uhalde. I wouldn't know the percentage, but I would be 
glad to provide you information on precisely that, yes.
    Mr. Wicker. I'd very much appreciate that.
    [The information follows:]

      Percentage of ETA Discretionary Funds Given to Labor Unions

    In program year 1996, 2.5 percent of discretionary funds in 
ETA programs was awarded to labor unions. This inlcudes the Job 
Corps program.

    Mr. Wicker. Thank you, Mr. Chairman.
    Mr. Uhalde. Thank you.
    Mr. Porter. Thank you, Mr. Wicker.
    I would tell members that we are operating under the eight-
minute rule, and we will have a second round.
    Mr. Stokes?
    Mr. Stokes. Thank you, Mr. Chairman.

              groups with lingering unemployment problems

    Earlier this afternoon, when the chairman was questioning 
you, he made reference to the wonderful economy we're now 
enjoying, along with a national low unemployment rate. Does 
this operate as it relates to all working groups in the country 
today?
    Mr. Uhalde. Clearly, it does not. We have a 4.7 percent 
unemployment rate nationally. We have, for example, for black 
teenagers, a 35 percent unemployment rate. Unemployment rate 
for high school dropouts in inner cities is over 50 percent. In 
high-proverty, rural areas, unemployment can be substantial. So 
while we have a generally robust and energized economy, there 
are areas of geographical and population groups that are having 
substantial problems, and where industry has long since moved 
out of certain areas.
    Mr. Stokes. I think it's precisely the recognition of that 
factor that this subcommittee put in $250 million in the 
appropriations in the Fiscal Year 1998 bill for the Youth 
Opportunities Areas Initiative; that, of course, is subject to 
authorization. But, what are we doing in terms of that 
particular area?
    Mr. Uhalde. Well, that's, of course, an area that we're 
very appreciative of the committees for having advanced that 
appropriation. It's a high priority for this administration, 
for Secretary Herman particularly. Just to review it a moment, 
because we can target resources into high-poverty 
neighborhoods. The goal of this is to raise the employment rate 
of 16- to 24-year-olds in those neighborhoods so that they are 
equivalent to the employment rates in non high-poverty areas, 
so we can have a fully-functioning economy, where work is the 
norm for young people in that area. What our problem has been 
in the past is we deal with individual youth in a scattered 
area, and the peer pressure sometimes in these high-poverty 
areas just overwhelms the work ethic in the communities. So 
we're trying to concentrate on small neighborhoods.
    We've been doing some pilots with the discretionary pilot 
and demonstration money that the committee has provided over 
the last several years, trying to figure out these concentrated 
efforts. They seem to suggest encouragement to us.
    In the earliest of seven projects that we did, the dropout 
rates declined for young people in those communities and the 
teen pregnancy rate fell in those communities that we were 
dealing with. Now we can't attribute all of that to the 
intervention we had, but we believe that there is great promise 
in this concentrated approach in small areas, bringing together 
all the providers and bringing together all the resources from 
existing programs as well as these grants.
    Mr. Stokes. I noted this morning that you--this afternoon, 
rather--that you made the statement that the question is: Where 
are the people, the skills for the jobs? I quite agree with 
you. I'm just wondering if Congress and the Nation really know 
and understand the crisis that we're confronted with when we 
think about the fact that we're two years away from the year 
2000. We're told that one-third of the new entrants in the 
workforce in the year 2000 and beyond will be minorities. 
They'll be coming into a workforce that will be the most 
highly-technical workforce known to mankind. It would seem to 
me that there is a very real urgency attached to the targeted 
approach that you've referenced here this afternoon.
    Mr. Uhalde. Well, we would agree completely that there's a 
sense of urgency; there's a great opportunity. The pressures on 
employers now are such that they are, in fact, looking to 
sources of labor that they otherwise would not be looking for, 
and I think that's very exciting, and we need to take advantage 
of leveraging this opportunity and leveragingthe people that 
we've been traditionally charged with, helping and assisting by taking 
advantage of that. So we believe that the investments this committee 
makes now can leverage greater successes now than they ever have in the 
past, but this is precisely the time now to ratchet-up those 
investments in these populations.

                             school-to-work

    Mr. Stokes. Let me ask you about the school-to-work. It's 
been said that the school-to-work program trains students for 
specific jobs to fill workforce needs rather than training them 
in how to make career choices. Is this the case, and how do you 
explain this lack of choice perception?
    Mr. Uhalde. It's difficult to explain the perception 
because we've been fighting this argument for quite some time. 
It's clearly not the case that school-to-work is focused on 
tracking young people into specific occupations, specific 
careers over time. In fact, school-to-work is about broadening 
the horizons and the opportunities for young people throughout 
the schools. We know that it works particularly well on young 
people who are prone to drop out, young people who are prone to 
not be interested or be facile in a more academic approach, but 
we know it's very effective for those precise children in 
getting into high academic standards by using a more 
experiential approach to learning, a hands-on approach to 
learning.
    But if anyone takes a serious look at the range of school-
to-work programs that are going on around the country, they 
will see that it is about broad career opportunities, mixing 
work and learning, so that young people know the reason and the 
rationale for why they are learning something, and they see the 
application out in the real world.
    Mr. Stokes. I note in the Congressional Justifications here 
that funding for the school-to-work program would be reduced by 
$75 million. This reduction is also reflected in the Department 
of Education's component program, which is part of the State 
and local school-to-work systems. Are they ready to undertake 
the responsibility for this program?
    Mr. Uhalde. What we launched collectively in a bipartisan 
effort for school-to-work three-and-a-half, four years ago was 
an ambitious undertaking. We may have underestimated the task a 
bit, but we have made enormous progress. We have 37 States that 
have implementation grants around the country. We have 3,000 
schools engaged, 1,000 local partnerships, and over 200,000 
businesses that are actively engaged in helping young people 
work and learn.
    The agreement was, in this innovative approach, to provide 
seed funding and taper off States over a five-year period. We 
think the first set of States will be going off in 1999, and 
they face some challenges. We're going to redouble our efforts 
over this next year and work with them to expand and make sure 
that they have sustainable programs, and we're encouraged by 
it.
    Mr. Stokes. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Stokes.
    Mr. Miller?

            effect of low unemployment on program operation

    Mr. Miller. Good afternoon. I would pursue, first, some of 
the same kind of questioning that Mr. Stokes and Mr. Porter 
were asking about. With low unemployment nationally, how does 
your work change and how do your programs change? Mr. Stokes 
talked about the type of areas where we have high unemployment. 
You mentioned rural areas, for example. Are we focusing more on 
those areas? Do you think you're being successful when we're 
still having these problems? We still have the tremendously 
high unemployment in the innercities. The program may not be 
working all that well, and yet we have full employment.
    Mr. Uhalde. I think that's a fair question, until one 
understands what the orders of magnitude are here. We do have a 
4.7 percent unemployment rate. We have, for example, 5.3 
million young people, ages 16 to 21, who are below the poverty 
line who are eligible for our Disadvantaged Job Training 
Program, JTPA. We can provide at best, with the summer jobs 
program, half a million summer jobs, plus 116,000 year-round 
training opportunities. We're talking about 10 percent 
penetration rate on summer jobs and 2 percent on our year-round 
training program for young people.
    For disadvantaged adults, there are eligible for our title 
II-A of the JTPA, 35 million Americans, and we will serve with 
our budget request about 400,000. So we're talking about 1 
percent.
    So the economy is terrific. We want to make sure that, for 
those 400,000 low-income adults we serve, we get every one of 
them a job that lasts; we want to make it right the first time. 
But to believe that with this order of magnitude we're going to 
completely change is a false----
    Mr. Miller. Are there programs that, because of the good 
economy, you think should be de-emphasized now? With the good 
economy that we're having and low unemployment, are there any 
programs that you're downsizing and shifting those resources to 
the areas that need it? Or does everything just keep going full 
speed ahead and get automatic increases? I know school-to-work 
had a small decrease.
    Mr. Uhalde. Well, school-to-work and the one-stop 
implementation grants both have a phase-down starting this 
year. I believe what you do in an economy like this, for 
example, is our unemployment insurance proposal--you start 
looking to the future. At 4.7 percent unemployment, nobody 
wants to think about reforming the unemployment insurance 
system, but, in fact, this is the time to do it. You start 
looking to the future and anticipating what might happen in a 
decline.
    So we have spent a fair amount of time in this budget 
anticipating that we get that vital safety net in shape for the 
next downturn that may occur. So I believe those are the kinds 
of things, with the change in the economy, we're doing. Because 
what will happen the next time we have 7 percent unemployment 
is we'll be running around collectively, administrations and 
Congress, figuring out how to extend unemployment compensation 
in a very rushed manner, and we won't be thinking about 
building the strong fabric of that system.
    Mr. Miller. The dislocated workers' program has a large 
increase.
    Mr. Uhalde. Yes, sir.
    Mr. Miller. What kind of an evaluation do you have? I note 
in JTPA you're doing----
    Mr. Uhalde. We are doing----
    Mr. Miller. I want to make sure we're going to spend the 
money wisely on this.
    Mr. Uhalde. Well, we are doing, with the money appropriated 
by this committee, a very rigorous evaluation of the dislocated 
worker program, as we are withJob Corps. Job Corps is farther 
along, was started sooner. We are doing that.
    But even with dislocated workers, in a thriving economy 
about 2.2 million workers lose their jobs permanently each 
year. During the height of the recession, permanent job losses 
were up to maybe 3 million. So there's still churning--births 
and deaths of firms, even in a lively labor market, and our job 
is to make a better match of workers and jobs.

                  national council of senior citizens

    Mr. Miller. Change to another subject for a minute: the 
National Council of Senior Citizens
    Mr. Uhalde. Yes, sir?
    Mr. Miller. Are you aware, as reported in numerous articles 
in the Washington Post and New York Times, about their 
involvement in laundering funding?
    Mr. Uhalde. I'm aware of what I've seen in the papers, yes.
    Mr. Miller. It's been widely reported that this 
organization may have been involved in laundering money to 
teamsters and may get indicted. What do you do with something 
like that, an organization like that?
    Mr. Uhalde. Well, we have audits of organizations, 
obviously, going on. We would hope that if anything like that 
had happened, we would have detected it. If we didn't detect 
anything, we don't believe it would have been with our money. 
If, obviously, anything happens like that, we would take steps 
to suspend a program. But at this time, all I know of on that 
score is what I've read in the papers, as you have.
    The Inspector General has been doing a routine audit of the 
National Council of Senior Citizens.
    Mr. Miller. These are fairly serious charges about money 
laundering, as reported by the Post and New York Times----
    Mr. Uhalde. I'm not aware of any abuse of the Federal 
monies that we provide to the organization.
    Mr. Miller. It wasn't Federal money, but it was--an 
organization that did this. Even though it wasn't your Federal 
tax dollars, what do you do with an organization like this?
    Mr. Uhalde. Well, we have a responsibility to review when 
we provide grants to any organization, and if the organization 
has any such serious problems like that, that certainly would 
influence whether or not we'd give a grant, absolutely.

                    job training reform legislation

    Mr. Miller. Let me switch to one more subject. The 
consolidation bill that's passed the House, the Job Training 
Program is going to be consolidated. Where does that stand? Do 
you expect we're going to see that this year, realistically?
    Mr. Uhalde. I certainly hope it's going to pass this year. 
I've spent five years working on that. So I'd like to do 
something else over the next year.
    I believe it's going to pass. There is bipartisan support 
for it. There was a meeting yesterday at the White House with 
the governors and the President, and this topic arose, and I 
think there was consensus; they want to move forward on it.
    I don't want to oversell this. It doesn't consolidate every 
job training program, by GAO's account, but it makes a major 
effort forward, and the one-stop centers that this committee 
has been proposing is the way for communities to integrate 
these programs at the street level.
    Mr. Miller. What is the difference between the Senate and 
the House, money flows to the States--or wasn't there a 
difference?
    Mr. Uhalde. I think a major difference between the Senate 
and the House has been the relative authorities in the past 
years between the State versus the local. I think that, with 
their coalition agreement between States and locals, they've 
worked that out. States are now, in the Senate, arguing for yet 
more consolidation, and that means education programs with 
training programs, and that raises issues with regard to 
whether or not non-school entities are going to have some 
control over schools. It raises a lot of issues, and I know the 
education community wants to have less of that merger across 
these different domains.
    Mr. Miller. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Miller. Ms. Northup?

                        job corps and child care

    Ms. Northup. Yes, I'd like to go back to the Job Corps and 
the question of child care, day care, Head Start funds, and the 
availability of those. Can you explain to me if sort of the 
money stream that's involved there? In the Welfare-to-Work bill 
or in the welfare reform bill there was quite a lot of money 
appropriated for day care. Is that available to people that are 
in Job Corps programs?
    Mr. Uhalde. I believe, yes, it is; those monies are 
available to them, as long as they meet the eligibility 
criteria under----
    Ms. Northup. But, of course, I mean the fact that you're 
not sure sort of leads me to believe that maybe that's just for 
people that participate but don't live in the residential 
programs. I mean, if you're in the residential programs--what I 
understand from the State programs is that the day care money 
is fairly available. My question is, how much leeway is there 
for your participants in the job training, in the Job Corps, to 
access that money? I mean, maybe the 12 percent that are in 
nonresidential programs have access to it, but if they're in 
the residential programs probably not.
    Ms. Silva. I'm aware that our centers that have single-
parent dorms and child development centers are facing 
challenges in getting access for these funds for students.
    Ms. Northup. Are those Federal challenges or just 
challenges for the local community? I mean, in Kentucky we 
receive funds block-granted to our local community. There's a 
board that then brings together providers with people that are 
entitled to those monies. Is that because you're just not at 
the table or because there are Federal prohibitions against 
that money being transferred intact to the Job Corps?
    Ms. Silva. My understanding is that it's handled at a local 
level, and we may or may not be at a table. There are 
challenges here, and we are trying to deal with them at the 
local level, where our local centers are located, so that they 
go to meetings, so that they attend the sessions and engage in 
these discussions to make sure that we can work with 
communities so that these funds are provided and available for 
the young women.
    Ms. Northup. I think also what would be of interest to this 
committee is whether there are any prohibitions in our language 
that make it more difficult for you to access those funds since 
some communities are finding they have enough to stretch and be 
available.
    [Ms. Silva nods affirmatively.]
    Ms. Northup. I also had additional questions about the 
welfare reform bill. Is it correct that the bill prioritized 
welfare recipients over previous welfare recipients, over Job 
Corps participants, or low-income adults? We prioritized former 
welfare recipients for the day care money or for the funds.
    Mr. Uhalde. I'm not familiar--you're talking about the 
Personal Responsibility Act?
    Ms. Northup. I just wondered if within the labor camp 
whether there was any consensus that maybe that initial 
prioritization ought to be lifted, so that the money can be 
used for other individuals. For example, a Job Corps could 
consist of people that were welfare recipients and adults that 
were just unemployed or wanted additional skills. Yet, the 
total cost of providing day care for residential participants 
would serve everybody well. Let's say you have 40 percent 
former welfare recipients and 60 percent that aren't. If you 
can only provide a money stream to support day care for the 40 
percent, because they're given priority, if that isn't an 
effective regulation at this point, particularly because Job 
Corps seems to have been so successful.
    Mr. Uhalde. I will--I'm not familiar with that priority and 
how much it impinges on it, but we'll be glad to check, 
absolutely.
    [The information follows:]

                    TANF/CCDBG Funding and Job Corps

    The Personal Responsibility and Work Opportunity 
Reconciliation Act (PRWORA, or welfare reform bill) provides 
funding for the Temporary Assistance for Needy Families (TANF) 
block grant and the Child Care and Development Block Grant 
(CCDBG) programs. TANF replaces previous welfare entitlement 
programs and gives States the flexibility to establish 
eligibility criteria and the type and level of benefits for 
individuals to be served.
    Under the Child Care and Development Block Grant, States 
must use at least 70% of funds to provide child care assistance 
to TANF recipients, to those who are in work programs and 
attempting to leave welfare, and to those at risk of going on 
welfare. In addition, States must ensure that a substantial 
portion of funds are used to provide assistance to low-income 
working families.
    Neither TANF nor Child Care block grant funds can be 
transferred to the Job Corps program to provide child care for 
children of Job Corps students. Each State determines who is 
eligible to receive assistance under TANF, and who is eligible 
to receive child care assistance under CCDBG. Job Corps 
students are not automatically eligible for benefits under 
either program.
    Some States consider Job Corps an approved education and/or 
training activity which counts toward work requirements for 
TANF recipients and therefore students enrolled in centers in 
those States can receive TANF benefits and be eligible for 
CCDBG child care support. Other States do not consider Job 
Corps an approved education/training activity and they reduce 
or eliminate student's TANF and/or CCDBG benefits when they 
enroll in Job Corps. Each Job Corps center has to deal with 
these situations at the State or local level as appropriate to 
try to ensure that young parents are not penalized by enrolling 
in Job Corps.
    Because of the issues of individual State-determined 
eligibility criteria for welfare assistance and child care 
benefits, we believe it is also important to pursue care for 
children of Job Corps students through Head Start. These 
children automatically qualify for Head Start because all Job 
Corps students are economically disadvantaged according to 
Federal poverty guidelines. Head Start offers quality programs 
which can be beneficial in meeting the developmental needs of 
the children of Job Corps students, who themselves have social, 
academic, and skills deficiencies which are major barriers to 
employment.

    Ms. Northup. Well, I think it's very important that all the 
money that's out there is able to be used in the most effective 
manner, in the most effective programs.
    Mr. Uhalde. Right. We try very hard in Job Corps to 
leverage other resources. When we bring in foster children, for 
example, we try to leverage foster care money, and try and 
access child care and other resources. Sometimes it may be 
because of the residential nature of the program and some of 
the students are not from that area; they come from another 
area sometimes.
    Ms. Northup. Regarding Job Corps, did you say it was filled 
to capacity currently?
    Mr. Uhalde. Ninety-some percent.
    Ms. Silva. I believe we're at 98 or 99 percent.
    Mr. Uhalde. Our objective is to hold down unit costs for 
youngsters, to keep it at full force.
    Ms. Northup. I asked that question because you talked about 
the unemployment rate being so low, and yet there are pockets 
of unemployment that are very high. I wondered if any of your 
Job Corps centers were finding that, because they were in a 
very high employment area, low unemployment area, that the 
demand for those services has been reduced. Maybe the need is 
higher in some areas, and if there's any sort of changeover of 
resources or transfer of resources----
    Mr. Uhalde. We try to give priority to them within the Job 
Corps centers that are nearest where they reside, but Job Corps 
students can be assigned to more remote areas, and part of that 
is done to balance the need, because it is very important with 
the cost of the program to keep all the slots filled, so that 
costs----
    Ms. Northup. Sure.
    Mr. Uhalde [continuing]. So in some areas it's more 
difficult to recruit and we'll have to move students from other 
areas.

                       wages for welfare clients

    Ms. Northup. Finally, I thought it was very interesting 
that it showed here that the minimum wage--I mean the average 
wage--for welfare clients is $7.27, and that 75 percent of 
these clients are in full-time jobs and have access to 
benefits. When you talk about minimum wage that's something 
that is always used as an example. Everybody's moving to a 
minimum wage job, and, clearly, they're moving way above that, 
if that's the average.
    Mr. Uhalde. Yes.
    Ms. Northup. That means for the majority of them, any 
change to the existing minimum wage wouldn't affect their jobs.
    Mr. Uhalde. That's correct, and our objective is to try to 
get as many of the welfare recipients well above the minimum 
wage, if we can, and we've, on average, been successful.
    Ms. Northup. Thank you.
    Mr. Porter. Thank you, Ms. Northup. Ms. Lowey?
    Ms. Lowey. Thank you, Mr. Chairman. I thank you, Mr. 
Uhalde, for being before us.

                           america's job bank

    There's been a good deal of talk about the success of the 
America's Job Bank, and I didn't get a chance, actually, to 
talk to the Secretary about it, to get an update. If you could 
share with us the progress Job Bank is making, what new 
initiatives are you undertaking, how are you measuring the 
success of the program, what changes you expect to make, how 
widespread is it----
    Mr. Uhalde. Thank you. America's Job Bank, first of all, is 
a partnership amongst the Federal Government and the State 
employment security agencies. Job Bank wouldn't exist if we 
couldn't get the jobs from the local employment offices, the 
job listings. But what we have been able to do most 
successfully over the last few years with the funding provided 
by this committee is grow that into the most actively-searched 
job bank on the internet. It lists any day 750,000 jobs on 
America's Job Bank. In the record month of January, we had 32 
million hits, as they call it on the internet. It is an 
enormous amount of visits and traffic.
    And come the end of March, we are going to be launching the 
newest version of America's Job Bank with America's Talent 
Bank, and it will go nationwide. America's Talent Bank will 
offer the opportunity for millions of resumes by individuals to 
be listed, and these will be interactive, so that resumes can 
search jobs; employers can search resume banks, just as 
individuals are now searching job banks. It's a very exciting 
opportunity, and it is something that we're trying very much to 
make a complement to the local operations and the local 
employment service offices.
    So, again, with this committee's one-stop investments, the 
local unemployment office or employment services, now the one-
stop centers, have this electronic capacity in what they call 
resource rooms, and individuals are going in there and being 
able to get access to this information.
    Lastly, I would say, States are tailoring this to their 
needs. The State of Connecticut has branched out into 101 
public libraries around the State, in putting in America's Job 
Bank in this electronic exchange. Maryland, in their nine one-
stop offices, has had a 37 percent increase in productivity, 
and because of this capability, they've been able to serve over 
16,000 more participants than they would have without this 
technology. So the marriage of the technology, the new offices, 
the better customer service is providing, I think, much more 
information and better access to more Americans.
    Ms. Lowey. It's certainly very exciting, and I would hope 
that this also shows the connection between our training 
programs and the jobs that are available. Having lived through 
CETA and now JTPA, it's totally frustrating to me, and I share 
my colleague Mr. Stokes' frustration as well, in how important 
it is for us to somehow begin to replicate the successes of 
these training programs.

                        welfare client followup

    To follow up on that, we just recently met with some people 
from our State delegation. What I'm hearing is, once someone is 
going off welfare, there really isn't much tracking, certainly 
on the Federal level and the State level. For those off 
welfare, what's happening to those people? Is there any 
tracking at the Federal level as to what's happening with them?
    And then the follow-up question is: I believe in your 
testimony you noted that, once placed in a job, holding onto 
that job is a necessary step toward self-sufficiency. No. 1, 
I'm interested to know what's happening and to what extent 
you're keeping track of those going off welfare, and the kind 
of jobs they're moving into, if any. And, secondly, once 
someone is placed on a job, what kind of tracking is being 
done, and how long they're holding the job, and how long you 
actually track them?
    Mr. Uhalde. Well, of course, on the larger welfare reform 
effort and the implementation of that, HHS has had the primary 
responsibility, and sort of the caseload declines that are 
being experienced now, and where are those people going, they 
are responsible for that data collection.
    We are launching the Welfare-to-Work, the $3 billion, but 
we also in JTPA have served welfare recipients. We follow----
    Ms. Lowey. May I interrupt at that point?
    Mr. Uhalde. Yes.
    Ms. Lowey. You're saying, once they get off welfare, it's 
HHS's responsibility?
    Mr. Uhalde. Yes.
    Ms. Lowey. You have a coordinative responsibility between 
Welfare-to-Work and JTPA; is that right?
    Mr. Uhalde. Yes. On Welfare-to-Work, we have $3 billion, a 
billion and a half each year for two years. HHS is providing 
$16 billion a year out to the States, and has the data-tracking 
responsibility for that.
    For our $3 billion, plus the JTPA monies, we track welfare 
recipients and all our participants three months after they 
leave our program. Under the legislation on the Hill, the job 
training reform legislation, we will track for six months 
everybody who leaves the program. Currently, what we do is we 
recontact them by telephone, to determine whether they're still 
employed, what their wages are, and many of the localities use 
that to get customer feedback on their program.
    I can tell you for welfare recipients that we have been 
serving that we place 63 percent of them at termination. They 
were employed last year at an average of $285 a week. So we go 
from three months, hoping to go to six months to be able to 
track them.
    And with the Welfare-to-Work, we are hopeful that, with the 
wage record system that has been put in, we'll be able to 
follow administratively for up to a year or more.

                       job training consolidation

    Ms. Lowey. Thank you. There has been discussion about the 
fact that the reauthorization passed the House and not the 
Senate. Can you give us some information, in lieu of the 
legislation, what has been done in the Department to 
consolidate the workforce development programs, and in 
coordinating the Welfare-to-Work and the JTPA programs, could 
you give us some really good examples of a State or a locality 
which has done a particularly good job of integrating these 
services? As I mentioned, having worked for years in these 
programs, it is frustrating to me that there are some really 
outstanding programs. We've done some excellent one-stop 
shopping centers, and yet we still have 50 percent unemployment 
in the innercities. So that although we can always find 
outstanding examples, we don't seem to move forward, and it is 
very frustrating to all of us.
    I hear the bell, but perhaps, with the chairman's 
graciousness, you can respond.
    Mr. Uhalde. Well, I believe there are excellent examples of 
where Welfare-to-Work and the job training and the TANF 
programs have been merged really into a much more seamless 
system. Work in Indiana and Michigan has been very successful 
in that regard. I just came back from California, and there in 
the Los Angeles area they were going to work very closely 
between the county welfare and the job training to merge 
welfare and Welfare-to-Work, TANF, and the job training 
efforts.
    Just one example, out in Los Angeles, of an excellent 
effort to join this with the criminal justice system, is 
Parents' Fair Share that has included the district attorney's 
office, the welfare office, and the JTPA system. Unemployed men 
who are not paying child support payments go before the courts, 
and are referred to this program, where they both get training 
and employment assistance, have peer counseling, have mediation 
services which are oftentimes needed, and for the first time 
providing support to their children, and dealing in a mature 
manner with their children as parents, and helping to raise 
their children, which they couldn't do without a job. And 
there's where they forge that link, and they're dealing with 
400 a month in that program.
    Ms. Lowey. I think I've used my time. Thank you, Mr. 
Chairman.
    Mr. Porter. Mr. Bonilla.
    Mr. Bonilla. Thank you, Mr. Chairman.

                    migrant and seasonal farmworkers

    Mr. Secretary, I'd like to start the day with the migrant 
seasonal farm worker program, specifically, the migrant child 
labor initiative that you referenced in your testimony on page 
26, and the idea of offering migrant youth alternatives to 
field work using $5 million additional. It's my understanding--
can you tell me what specifically these alternatives might be? 
Because, as you know from my history on this subcommittee, I'm 
very concerned that our dollars spent to help migrant seasonal 
farm workers are spent wisely. This is a culture that's very 
committed to work from sun-up to sun-down, and if necessary, 
traveling great distances, and it's a group that I want to make 
sure is targeted correctly. So if you'll elaborate on those 
alternatives, I'd appreciate it.
    Mr. Uhalde. Certainly. The project that you referenced is 
very important. It's a small expenditure, $5 million, but the 
issue is so many children of migrant and seasonal farm workers, 
as you know, move with the migrant stream; oftentimes, because 
of pressures of the family and income needs, are pressed into 
service and work in agricultural labor. They work for long 
periods of time quite often, and their schooling is often 
interrupted in that process, and because the schooling is 
interrupted and they're working in the fields quite often, they 
don't get the exposure to alternatives and alternative 
opportunities, and it almost becomes assumed that this is their 
approach.
    What we're trying to do with this initiative--and, 
admittedly, this is going to be very difficult because of the 
transient nature of the labor--is essentially to try to build 
alternative work experiences like school-to-work and learning. 
So that if we can identify through different providers work 
experiences that complement their education outside of 
agriculture, and expose these young people to alternative 
career opportunities, possibilities, much like one would do 
with our summer jobs program now, where young people get some 
remediation, some education, and they mix it with work and 
learning during the summer, and let them kind of explore other 
careers. Oftentimes, migrant children miss out on those 
opportunities. It's difficult to figure out how to do that 
logistically, but we're going to try.
    Mr. Bonilla. One reason I ask the question is that the 
administration is choosing once again to level-fund migrant and 
seasonal farm worker programs. Wouldn't the money be better 
spent, this $5 million, for the basic program, and 
acknowledging that the alternatives might be a good idea to 
reach into areas that haven't been reached before, but wouldn't 
it be better, possibly, to put this into the basic program 
that's being level-funded already?
    Mr. Uhalde. It's a choice we had to make. This is an 
investment. Hopefully, if this pays off, it's an opportunity to 
expand this for migrant children into the future, and sometimes 
we have to make an investment and forego some additional 
operating money in that regard.

                          job corps expansion

    Mr. Bonilla. I want to move now to the Job Corps program. 
As you know, I've been very proud of the Job Corps centers that 
we have in my congressional district, and also, I happen to 
believe that one of the reasons that they succeed is not just 
because of good instructors and the people committed to the 
program locally, but because of the great role played by the 
private sector in this program. In the private sector, 
performance equals success. There's no gray area; there's no 
two ways about it; if you're going to stay in business, you 
have to produce results.
    I appreciate the Department's investigation into low-cost 
options of expanding Job Corps to serve more at-risk youth, as 
requested by the subcommittee last year. As you stated on page 
19 of your testimony, the Department plans to issue a request 
for proposal sometime in March. My question is, is there a 
specific date yet that you have in mind?
    Mr. Uhalde. Do we have one?
    Ms. Silva. Early in March.
    Mr. Bonilla. Like next week? [Laughter.]
    Ms. Silva. It could be that early. I would certainly 
anticipate within the first two weeks in March, yes.
    Mr. Bonilla. What criteria will be incorporated into the 
Department's request for proposal?
    Mr. Uhalde. Well, we're certainly going to do it consistent 
with the congressional guidance that we received, and we are 
going to be looking at both stand alone and new satellite 
facilities. There will be an emphasis on having almost a 
turnkey operation because we have $37 million for the 
construction of five centers, and that's considerably less than 
we would have traditionally. So we need turnkey operations in 
these full centers.
    Do we have any other criteria we can speak of?
    Ms. Silva. We'll include linkages with the local and the 
State areas, so that we can try to leverage resources. That 
would be an additional criteria. Also, need: the percentage of 
poverty youth in the State versus the capacity of Job Corps 
already existing in the State. In terms of following up on 
congressional guidance, we would be giving priority to States 
without Job Corps facilities, as well as low-cost facilities, 
including those that would be available through the closing of 
military bases.
    Mr. Bonilla. Does the Department have a final goal as to 
when the new centers will be up and running?
    Mr. Uhalde. We plan to make the selections by the end of 
the year, by December. It will depend on the sites themselves 
and the physical condition of the sites.
    Usually these plans are thrown out of whack when you 
actually see the facility and you find out what you have to do 
for the facility.
    Ms. Silva. This is the first time where we have really 
sought facilities that were turnkey to this degree, and to the 
extent that we're successful in this process, I would say a 
year, 18 months. It will depend, however, on the facilities.
    Mr. Bonilla. You've answered part of the next question I'm 
going to ask you here, but I'm asking specifically, as you see, 
because of the military base closing situation, and now we've 
explored the idea of having a center at Kelly Air Force Base, 
about how much weight will the Department give to those 
applications that use existing structures. You mentioned that 
there had to be a network already in place, an opportunity to 
have turnkey operations, specifically, existing structures, 
made available through military base closings. We have one at 
Kelly Air Force Base, as you know, which could potentially 
decrease the cost of developing the new Job Corps centers. 
Something like that, would that be of great significance, to 
have facilities in place already?
    Mr. Uhalde. Yes, existing facilities are very important. We 
did go through a lot of military base closings, though, so 
there are a lot of existing facilities.
    It's also the quality of the facility. We go into 
facilities and we find out there's asbestos or there are other 
deteriorations, and it costs more. So it's the quality of the 
facility as well as the existence of it.
    Mr. Bonilla. Well, you finished right when the time ran 
out. [Laughter.]
    I suppose my time is up. I thank you for your time here 
today.
    Mr. Porter. We will have a second round. I'd like to ask 
which members will stay for the second round. Two? Three? 
Including myself. So we have 26, 27 minutes. So we'll have 
eight or nine minutes each.

                        program performance data

    Mr. Uhalde and Mr. Borrego, the GAO expressed concern in 
recent testimony about the Department's lack of reliable and 
consistent information needed to monitor performance of 
individual programs. Are each of you confident that the 
performance data that you have for your programs will tell us 
what we need to know to assess whether they are meeting their 
objectives? Because for us--and I want to repeat this--we need 
to know what gets results for people in their individual lives, 
and we depend upon you and the information you develop to tell 
us what works and what doesn't work. So are you confident in 
the information that you have?
    Mr. Uhalde. For our job training programs, for JTPA, for 
example, we get a participant record report on each participant 
that is served. We get it on an annual basis. It gives all the 
demographics, plus appended to it, when they leave the program, 
are the earnings for the individual. So if we serve 700,000 in 
the dislocated worker program and 400,000 in the disadvantaged 
program, we have an individual record on 1.1 million 
individuals annually. That's what we produce in a detailed 
report back to every State, telling them performance, and 
that's what the States themselves use. So I think we have a 
very good record there.
    For unemployment insurance, we have a quality control 
system that is in place. It's a very detailed record. For some 
of the other, more direct grant programs, like the Indian and 
migrants, we have reports from the individual grantees. I would 
say we're very focused on performance and outcomes for each of 
these programs, and can produce more detailed reports on each 
of the programs.
    We do have State audits of the quality of the data, and 
that, we believe, is important. We also have routine edit 
checks of the data to make sure the data are good.
    Mr. Porter. Mr. Borrego?
    Mr. Borrego. We have two kinds of data. One had been the 
old activities data. Our legislation still requires us to 
collect it. It's good data, reliable data. We will continue to 
collect that data.
    As we're moving into outcomes, we're doing a couple of 
things. One of them is, we made sure that the outcomes we're 
doing are the ones that we wanted; we work with our 
stakeholders. We've got good measures.
    The others--we're taking a look at doing a study on what's 
the most cost-effective way to measure data; do we need to do 
full, in-depth measurements or will indicators get us there? So 
depending upon which program that we're looking at, I think as 
we move forward, you'll find we need good, reliable data to 
manage the programs, to make sure that they're running well and 
they're effective. We will have the data. We're still working 
out the how and which is the best way, but I'm confident that 
we'll get there.
    Mr. Porter. I would ask both of you if you will look at the 
testimony of the GAO before this subcommittee and then respond 
to the criticisms they have made, both as to the availability 
of information and to the evaluations of programs as that 
relates to the Results Act. Because I'd like to get you to 
answer specifically the criticisms that they've made of the 
Department and the programs under your jurisdiction, 
particularly as to information and evaluations.
    Mr. Uhalde. I did look at the GAO's testimony with regard 
to the evaluations, and I guess I must say I'm mystified. I 
think, outside of medical research, job training programs have 
had more rigorous evaluation of their net impacts than most 
social programs I'm aware of, and I can give you a list of 20 
that we have funded. I'd be glad to do that for the record.
    Mr. Porter. Yes, provide whatever comments you wish to make 
for the record, in response to what they have testified in 
respect to the Results Act and the criticisms that they have 
made.
    [The information follows:]


[Pages 456 - 458--The official Committee record contains additional material here.]



    Mr. Porter. I will also ask you, for the record, to 
describe what kind of incentives are available for your 
managers and senior executives and to describe how they are 
tied directly to the achievement of performance measures under 
GPRA, but you can do that for the record.
    Mr. Uhalde. All right.
    [The information follows:]

  GPRA Incentives for Managers and Senior Executives Tied Directly to 
                  Achievements of Performance Measures

    ETA's mission is to be a high-performance, customer-focused 
organization that continues to use performance management to 
improve results and raise accountability in the provision of 
high quality job training, employment, and income maintenance 
services through State and local workforce development systems.
    Beginning with the FY 1998 performance year, all 
performance management plans for the Executive Staff and 
managers and supervisors will reflect ETA's program goals and 
performance outcomes. ETA has developed a number of management 
strategies to achieve its performance goals such as increasing 
managerial accountability by more closely linking the personnel 
performance management system with the agency's annual plan 
through training and consulting.
    Monetary incentives for SES high performance includes level 
increases and bonuses. Under a unique performance focused 
performance award system, supervisors and manager's summary 
ratings are ``delinked'' from their awards. Their award is 
determined instead by performance on specific results and 
outcomes related to the ETA GRRA-based Annual Performance Plan. 
In FY 1998, performance awards tied to GPRA are expected to 
reach $203,000.
    ETA has an extensive non-monetary award system which 
utilizes local award teams who are encouraged to have ``just-
in-time'' recognition for interim results.
    Finally, ETA has been very successful in achieving 
recognition for significant program accomplishments for an 
average of 50 managers and supervisors each year in the 
Secretary's Annual Honor Awards Program.

ASVET GPRA Incentives for Managers and Senior Executives Tied Directly 
                 to Achievement of Performance Measures

    The ASVET already gives weight to activities that lead to 
the organizational outcomes and impacts needed and noted in our 
Strategic Plan. This year we have asked our field managers to 
identify the activities necessary to achieve our Strategic Plan 
goals and make plans to carry them out. Their performance 
ratings, and thus awards and future compensation will give 
great weight to the achievements of such activities and on the 
outcomes attained by States and Regions. During the previous 
performance appraisal cycle the first standard of performance 
was ``Organizational and Programmatic Mission'' and for 
Regional Administrators they included elements such as:
    Develops and promotes the long-term view, and initiates 
organizational and programmatic changes for the future.
    Anticipates and meets the needs of clients/customers. Set 
standards for customers' needs and satisfaction and meets them.
    Uses performance agreements and other management systems to 
link individual performance to outcome.
    Demonstrates, through specific action, advancement of 
either organizational or programmatic mission.
    These standards and others supported accomplishment of 
outcomes related to our strategic goals. Future standards of 
performance will tie elements closely to annual performance 
plan goals and to support of long-term strategic goals and 
strategies necessary for their accomplishment.

    Mr. Porter. Mr. Uhalde, we've given you in recent years, 
through the appropriations process, a great deal of flexibility 
to transfer funds between certain JTPA programs. The 
administration has supported this. In your opinion, how useful 
have these transfer authorities been, and how much have they 
been utilized?
    Mr. Uhalde. The authorities have been very useful; I think 
particularly so between the two youth programs, between the 
summer program and the year-round program, much more so than 
between the dislocated workers and disadvantaged adults. My 
recollection is between the dislocated and disadvantaged adult 
program the transfer has been $15 million or so, but for the 
other one, they have been substantial. Over $100 million I 
think has been transferred between one youth program and the 
other, mostly from summer to the year-round program--very 
helpful.

                          services to veterans

    Mr. Porter. Mr. Borrego, Congress appropriated $3 million 
in Fiscal Year 1998 for the homeless veterans' program. This 
year you're asking for $2.5 million. What have you done so far 
with the $3 million?
    Mr. Borrego. Sir, we're in the process right now of putting 
together a competition for grants awards that will be out on 
the street probably first part of March. We're soliciting grant 
proposals, and as soon as we get the grant proposals ranked, 
we'll evaluate them and fund them, and get that money out on 
the street.
    Mr. Porter. Do you coordinate this program with the 
homeless programs administered by HUD?
    Mr. Borrego. We work with HUD very closely and with the VA, 
because they also have programs for homeless veterans. In fact, 
in our grant--in our solicitation for grant awards, we place in 
there that there should be linkages, that where possible, to 
have HUD provide housing, the VA to provide the services, 
support services, that the veterans who are homeless may need. 
That's how we leverage that small amount of homeless money into 
a really successful program.
    Mr. Porter. Isn't JTPA supposed to serve homeless veterans, 
and why do we need a separate small categorical program for 
this group?
    Mr. Borrego. JTPA IV-C in its authorization language 
targets special disabled veterans, Vietnam veterans, and 
transitioning veterans, but there are a large number of 
homeless veterans who do not fit those categories. And even 
when we've used JTPA money for homeless providers, it's 
excluded those veterans that don't fit the criteria in the 4(c) 
authorization.
    Mr. Porter. Wouldn't it be better to amend that act and 
include them rather than to have a separate category?
    Mr. Borrego. That's something that we can look at, and I'll 
talk to the authorization committees.
    Mr. Porter. You indicated in your budget documents, Mr. 
Borrego, that you expect to receive $100 million by transfer 
from the Department of Veterans' Affairs during the next Fiscal 
Year. How would this come about, and how would you spend the 
money if you received it?
    Mr. Borrego. This is dependent upon legislation that the 
President will propose shortly, I think. The first thing that I 
did was to go over to the VA and meet with them and start 
putting together a working group to structure how we would fund 
this or how we would administer the funds, but I think there 
are some principles that, if we apply, will lead to a 
successful program.
    First, there should be some money in each State. All States 
have veterans with needs. The States should have some 
flexibility to meet the unique needs of each State. The States 
are doing very different things and are in different places. 
That there be performance measures, so that we have 
accountability built into the program; that we put some 
emphasis on placement, because a training program without the 
placement linkage means that people will get trained and won't 
go into jobs. We have a good history with that with the VA and 
the VOC rehab. And that we engage the employer community in a 
dialog about where those trained veterans will end up. So we 
need to train them for jobs that employees are looking for. So 
if we do that, I think we'll have a successful program.
    Mr. Porter. Thank you, Mr. Borrego.
    Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                        job corps and child care

    I have a couple of comments. Following up on Ms. Northup's 
questions about Job Corps and Head Start, as I understand--and 
I just want to be clear about this--in the welfare bill that 
passed there was not enough money for child care for welfare 
recipients, for the working poor, and for those who are 
categorized as students. And then when States receive their 
block grants, if they do not treat welfare recipients as their 
first priority, in fact, they are in danger of losing their 
funding.
    So to get back to what we were talking about, as I 
understand it, with regard to Job Corps, that in fact it's not 
revenue that comes through Job Corps for child care. But, in 
fact, your folks are students, and therefore, the students are 
making applications for child care funding. And if you take a 
look at that money that was part of the welfare bill that was 
passed, that in fact is almost nonexistent, if you're going to 
treat welfare first, working poor second, and students third. 
So, therefore, we talk with you about trying to make the link 
between child care for your students as a category and the job 
training. Is that accurate? I just want to get clear about it.
    Mr. Uhalde. Yes, I believe that's accurate. The one 
qualification I'd give is that, depending on which State the 
students are resident in, they may or may not be also a welfare 
recipient. You used to be able to be eligible in AFDC and be 
resident in Job Corps. Now there's much more flexibility, so we 
don't know what the rules of the individual State would be.
    Ms. DeLauro. So, it's not in fact that you're not taking 
advantage of a source of money out of the welfare bill or 
looking for some way to do something else, but there's a source 
of child care money, a pile of money, for you to avail 
yourselves of. That money is being taken up by the States, and 
in terms of the welfare reform bill mandate that they have on 
how they hold onto their long-range funds?
    Mr. Uhalde. That's correct.

                          demand for services

    Ms. DeLauro. We talked about, based on what Mr. Stokes has 
said and several of my other colleagues--you said there are 2.2 
million dislocated workers every year, roughly.
    Mr. Uhalde. Yes.
    Ms. DeLauro. We're trying to address that problem. We don't 
meet the demand, if you will, in terms of summer jobs.
    I want to get to Mr. Borrego and the veterans, and whether 
or not we're meeting the demand for jobs for veterans. Job 
Corps, as successful as it is, we're not able to take in 
everybody who could be eligible. What I'm trying to do is to 
get a sense of the dimension of our problems and the level at 
which we are addressing those problems in terms of resources. 
I'm not here to say that you just throw money at problems, but 
we do seem to have some disconnect between the level of the 
problem and how we're meeting it in terms of the very 
fundamental issue, which is someone being able to work when 
there's so much emphasis today on people working and exercising 
their responsibility to work.
    It's a question of how do we--because we don't have all the 
money in the world--how do we catch up to some extent here? 
What is it that we can help to provide? What should we be doing 
in order to get a handle on what I view as one of the most 
fundamental issues that we have to address in this country--how 
we get people to work, so that they can be gainfully employed, 
take care of their families, be contributors to the economy, 
and not a drain on our economy? How do we manage this and where 
should we be putting our resources?
    Mr. Uhalde. Well, I would say this committee has been very 
helpful in investing in some of the programs we know are 
effective, like Job Corps. We have been growing Job Corps in 
terms of center expansions. As we know, we'll go to another 
five. So there it's wise to put money where we know we have a 
substantial payback.
    We have dislocated workers. We have sort of a bipartisan 
consensus in investing money there. Our adult training 
program----
    Ms. DeLauro. Whether it's the insurance industry in the 
State of Connecticut that is consolidating or whether it's the 
defense industry, just on the downsizing, these are people who 
had great jobs.
    Mr. Uhalde. Yes.
    Ms. DeLauro. These are not folks who we--you can comment 
all you want about they had great jobs, some in two-worker 
families, own homes, own their automobiles, paying substantial 
amount of taxes in property and in income. Today they're in 
serious trouble. How are we meeting, and are we meeting, that 
2.2 million every year who are going by the boards? What 
percentage of these people are we getting back to work again, 
so that they can help with everybody else?
    Mr. Uhalde. Well, of the 2.2 million, we will serve about 
700,000 with our budget request. And of the people that we 
serve with dislocated worker monies, 75 percent of them get 
jobs back and they get jobs at about 95 percent of their prior 
wage on average. So I think from those data, we know we're 
successful, but we're dealing with about 45 percent.
    Ms. DeLauro. We're dealing at the margins.
    Mr. Uhalde. And in our mind's eye, they are mostly 
successful people. They are clearly experienced workers. They 
have mortgages. They've raised families, and the rug's been pulled out 
from under them, and this program has been enormously powerful for 
them.
    But, also, at the other end of the spectrum are dislocated 
workers who are in the garment industries in the South, 
textile, that have closed the doors, and they've been working 
all their lives, they're experienced workers, but at or near 
the minimum wage. So this program has been a godsend to them, 
too, but the losses monetarily that they have experienced 
probably have been as substantial, if not as much, in terms of 
their wage. So I think that's a program we have been investing 
more in and should continue.
    As we're moving in this tight economy, the important thing 
is to be able to match up people to jobs, and our employment 
service is really the backbone of the funding for one-stop. As 
one-stop declines, what's going to stay to operate it in terms 
of the labor exchange is the employment services monies, and we 
have $780 million, roughly, we invest there. Employment 
services get about 2.5 or 3 million job openings a year and are 
able to fill about 48 to 50 percent of those job openings. 
That's an important resource and something that, as I said 
earlier, is the backbone of the electronic America's Job Bank. 
So we need to invest in our employment services to better match 
the technology and the people there.
    Ms. DeLauro. You want to talk about adult training?
    Mr. Uhalde. Adult training is important because, as we move 
on Welfare-to-Work and all the attention has been on Welfare-
to-Work, and that's clearly important, and we've invested $3 
billion in two years in this population, the low-wage worker, 
the textile worker, and those types of workers that are in and 
out of jobs, that's a labor market that's going to be under a 
lot of pressure with welfare workers going in to work. JTPA's 
disadvantaged program is really the only program that deals 
with people who are not welfare who are low income, and it, 
too, places two-thirds of the people in jobs at $300 a week on 
average around the country, and has been shown to return 8 to 
10 percent of its investment annually. So it's a cost-effective 
program.
    Ms. DeLauro. Thank you.
    Mr. Porter. Thank you, Ms. DeLauro. Mr. Stokes?
    Mr. Stokes. Thank you, Mr. Chairman.

               provision of skills to those most in need

    Mr. Uhalde, let me start my next question with a reference 
to a statement that appears in your budget justification. It 
says, ``Out-of-school youth in many of our country's innercity 
neighborhoods currently have employment rates of less than 50 
percent, contributing significantly to crime, youth gangs, 
welfare dependency, and drug abuse in these communities.'' The 
young people that we are talking about consider themselves to 
be in the basement of our society. They see themselves as being 
hopelessly unable to escape the economically distressed world 
in which they find themselves. Are we finding employment for 
them? Are we just putting them in jobs? Or, are we really 
trying to get them the kind of skills they need to work 
themselves permanently into the workplace?
    Mr. Uhalde. Well, clearly, our objective is the latter. 
First of all, in the discussion of the scarce resources, we 
can't afford to do it two or three times with participants. We 
can't have them get a job, stay a few weeks, then come back to 
a program. We need to be able to do it successfully. That means 
both getting them work, being able to help them build skills, 
and staying with them on a long-term entering capacity, like 
STRIVE in New York and others that stay with young people for 
one and two years, and they have an 80 percent retention rate 
with their young people. That's what we're striving to do.
    That also means we have to learn how to help people mix 
work and learning, and start that with young people, so that 
for out-of-school young people, we get them a job, involve some 
on-the-job training, and that may mean we'll also have to make 
available to them opportunities for schooling at night and 
weekends, and if they're willing to put in the time, we're 
willing to invest the money. That's the kind of bargain I think 
we want to make, if we want these jobs to last.
    Mr. Stokes. That kind of leads me to my next question. I 
noted that the Department's overall budget justification speaks 
to its commitment to ensure a fair workforce, a secure 
workforce, and a quality workplace. There have been a number of 
articles and recent reports concerning the shortage of skilled, 
ready employees in the high-tech job market. What is the extent 
of this problem? What does your budget do to address the 
problem in the short- and the long-term, and what is the 
business community doing to address this growing problem?
    Mr. Uhalde. Well, there's some debate on the magnitude of 
the problem. The industry itself has produced some estimates of 
over 300,000 job vacancies. Job vacancies are not the same as a 
shortage, because in a growing industry, vacancies are going to 
occur because of turnover and because of new jobs. So what we 
are seeing is there are tight labor markets for this industry 
putting great pressure on employers to seek alternative sources 
of labor, and we're trying to make sure that's focused 
principally on domestic labor.
    There is some interest in the industry on immediately 
turning to foreign labor and raising the caps on the H1-B 
temporary skilled labor program. We are more interested in 
first having industry turn inward and invest in the education, 
training, and recruitment of domestic labor from sources they 
traditionally don't go after, so that we can get at these 
pockets that we haven't gotten to when we have 5 to 6, 7 
percent unemployment. If we take the pressure off by allowing 
large numbers of foreign labor to come in, all those pressures 
will be at the detriment of those American workers who don't 
have a shot at these jobs.
    Mr. Stokes. Let me move now to a couple of other areas. The 
question of Job Corps, can you tell us the status of the 
Cleveland Job Corps relocation construction effort that is 
going on?
    Mr. Uhalde. As you know, we've had some difficulty finding 
a suitable location for Cleveland. We have identified one, and 
I believe we are in the process of doing a site.
    Ms. Silva. Site utilization.
    Mr. Uhalde. A utilization study to determine the cost of 
making that site available.
    Mr. Stokes. Is any progress being made there?
    Ms. Silva. Yes. Yes, indeed. There have been a lot of 
efforts by lots of different people to come up with sites that 
we could look at, and we've looked at a number of them. We have 
found one which is a wooded lot. It does not have any buildings 
on it right now. So we do have people out looking at it, doing an 
appraisal, and we anticipate in April being able to have the 
information.

                    unemployment rate among veterans

    Mr. Stokes. Good. Let me move to the veterans' area now. 
Tell us, how is the rate of unemployment among our Nation's 
veterans compared to the national average?
    Mr. Borrego. Overall, for veterans, the unemployment rate 
is about 1 percentage lower than for nonveterans, which is why 
we're there to make that difference. Using nonveterans as a 
baseline, we find that we are placing 150 percent of our 
veterans in terms of rate. But I think if you take a look at 
that overall picture, that we've got some high pockets of 
unemployment. Unemployment tends to be very high for young 
veterans, those that are just leaving the Armed Forces, and 
that's an effect that stays until veterans are about 35. Yes, 
young veterans, minority veterans, women veterans are suffering 
much higher than the overall rates of unemployment.
    Mr. Stokes. You said 20 to 24, right.
    Mr. Borrego. Yes, sir.
    Mr. Stokes. That is what I wanted to ask. I wanted to ask 
also about minority veterans and female veterans. What are the 
figures for them?
    Mr. Borrego. What I have just in terms of the average for 
1997 from the BLS--let's see if I can--black veterans--and this 
is overall--5.5; female veterans, 5 percent; hispanic veterans, 
4.9. But when you take a look at the young veterans across the 
board, 20 to 24, it's over 10 percent, and then that drops down 
when they get about 25, 34, on up to 35, 44. Let me provide you 
what we've got in terms of BLS statistics, but, clearly, young 
veterans, women veterans, minority veterans are suffering much 
higher unemployment rates than their nonveteran colleagues who 
did not go into the military.
    Mr. Stokes. Please feel free to expand on that in the 
record for me.
    Mr. Borrego. We'll do that, yes, sir.
    [The information follows:]

               Minority and Female Veterans Unemployment

    Mr. Borrego. The most current Bureau of Labor Statistics 
data, calendar year 1997 current population survey annual 
averages, indicates the unemployment rate for the civilian 
labor force was 4.3%. For veterans, it was 3.4%, for Black 
veterans it was 5.5%, for Hispanic veterans it was 4.9% and for 
female veterans it was 5.0%. Veterans aged 20-24 years of age 
suffer a 10.05% unemployment rate.

    Mr. Stokes. Now, as you know, many of our Nation's veterans 
have fallen on hard times. What percentage of the Nation's 
homeless are veterans?
    Mr. Borrego. We know that there's about 250,000 homeless 
veterans on any particular night. I do not know how that 
compares to the total homeless.
    Mr. Stokes. My time has expired. Thank you, Mr. Borrego, 
and thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Stokes. I have a number of 
questions for the record that I would ask both of you to 
answer.

                           hathaway decision

    I have a final question at the other end of the spectrum. I 
understand that the Department has yet to publish a final 
regulation clarifying that the so-called Hathaway decision on 
prevailing wages does not affect university researchers. As you 
know, this subcommittee has jurisdiction over NIH funding, and 
I'm concerned that biomedical research may be delayed because 
universities are having difficulty using the H1-B visa to hire 
highly skilled, international researchers. As I understand it, 
the public comment period on your Notice of Proposed Rulemaking 
on this matter closed on May 22, 1996, nearly two years ago. 
When can we expect to see a final regulation implemented?
    Mr. Uhalde. We just recently got approval from OMB, and we 
should be issuing within two weeks.
    Mr. Porter. Thank you very much. Let me thank both of you 
gentlemen for your good testimony this afternoon. Thank you 
very much.
    Mr. Borrego. Thank you, Mr. Chairman.
    Mr. Porter. The subcommittee stands in recess until 10:00 
a.m. tomorrow.
    [The following questions were submitted to be answered for 
the record:]


[Pages 467 - 538--The official Committee record contains additional material here.]



                                       Thursday, February 26, 1998.

             OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION

                               WITNESSES

CHARLES N. JEFFRESS, ASSISTANT SECRETARY OF LABOR FOR OCCUPATIONAL 
    SAFETY AND HEALTH
EDWARD L. JACKSON, ACTING DIRECTOR, OFFICE OF BUDGET
    Mr. Porter. We continue our hearings on the budget request 
for the Department of Labor for fiscal year 1999. We're pleased 
to welcome this morning Charles N. Jeffress, the Assistant 
Secretary of Labor for Occupational Safety and Health, 
accompanied by Edward L. Jackson, the Acting Director of the 
Office of Budget.

                           Opening Statement

    Mr. Jeffress, thank you for appearing this morning. We 
welcome you, and please proceed with your statement.
    Mr. Jeffress. Thank you for the invitation, Mr. Chairman. 
Before I proceed, if you would grant me a point of personal 
privilege, I have relatives in the room with me today, and I 
would like to introduce them to you. My mother came to make 
sure I was on my best behavior, Dot Jeffress, and her sister, 
my aunt and uncle, Ann and Frank Litchenton, are next to her.
    Mr. Porter. Thank you for being with us also.
    Mr. Jeffress. Mr. Chairman, I'm pleased to come before the 
committee today to talk about occupational safety and health 
and our budget proposal and request for 1999. It's my first 
opportunity to appear before you and I look forward to working 
with you in years to come on occupational safety and health 
matters.
    I come to you having had the experience of leading a State 
OSHA program in North Carolina, a State that learned some very 
difficult lessons following a terrible tragedy in 1991, where 
we, after 25 people died, realized that we as a State had to do 
more to protect worker safety and health in North Carolina.
    We realized the importance of having an effective 
enforcement program protecting workers. We also realized that 
inspections alone weren't enough to save lives, that we would 
save more lives through training and education and teaching 
someone to work safely than we would by enforcement alone.
    So in the last five years we made a major effort in North 
Carolina to have a balanced enforcement and education program. 
I'm proud to bring that same kind of outlook to the United 
States Department of Labor to follow up on the reinvention work 
of Joe Dear, and to continue the development of the new OSHA 
that President Clinton and Joe Dear started in the 1990s here.
    I'm also happy to come to you at a time when OSHA has 
developed a new strategic plan, and a new outlook on how we 
work, and the Department of Labor has developed a new outlook 
on how we will work. The Congress passed in 1993 the Government 
Performance and Results Act, mandating that every agency adopt 
a strategic plan. The Department of Labor worked hard last 
year, and OSHA worked hard last year, to develop a plan that 
makes sense, that measures performance.
    And what you will hear and what you see in our fiscal year 
1999 budget proposal builds on Secretary Herman's mission to 
foster quality work places in this country that are fair, 
healthy and safe. And of course, OSHA will be focusing on the 
safety and health portion of that mission.
    I also mentioned that OSHA has had a positive impact in 
this country on safety and health. In the 22 years prior to 
OSHA's establishment, employers and employees in this country 
worked together to reduce the injury and illness rate on the 
job by nearly 38 percent. In the 22 years following OSHA's 
establishment, that reduction in illness and injury rate 
increased to over 60 percent.
    So we believe OSHA has had a positive impact on the injury 
and illness reduction in this country. And I'm happy to tell 
you, the last four years have seen a steady decline in the 
injury and illness rate to the point where in 1996, we had the 
lowest rate ever on record. You have before you a chart that 
shows the decline in the injury and illness rate for the last 
four years. In 1996, the last year we have numbers for, 7.4 out 
of every 100 workers suffered an injury on the job, which is 
the lowest rate ever in the history of this series.
    However, a note of caution. While we're doing very well, 
and that's the lowest rate ever, that still translates into 6 
million workers being hurt on the job every year in this 
country. So there is still work to be done.

                             strategic plan

    Our strategic plan, which shows where we're heading in 
OSHA, will focus on injury and illness reduction as the 
performance measure for Congress and the public to use, and 
ourselves to use, in measuring our success. We have set as a 
goal over the next five years to reach 100,000 work places in 
this country to assist employers and employees to bring the 
injury and illness rate down by 20 percent. We have a very 
measurable, specific goal. We will identify specific work 
places to work with. And we will work to achieve a 20 percent 
reduction in each of those work places.
    We have particularly targeted, in addition to 100,000 work 
places, the hazards of silicosis, lead poisoning and 
amputations, and some particular industries where rates are 
particularly high. We need to work with industries such as 
nursing homes, food processing, shipyards, logging and 
construction, particularly on the causes of fatalities.
    And let me encourage you to also consider that while 
Federal OSHA will focus on these areas in the 29 States where 
we have private sector jurisdiction, there are 21 States in 
this country (excluding Puerto Rico, Virgin Islands, Guam, 
Samoa and the District of Columbia), where State governments 
operate the OSHA program and have private sector jurisdiction. 
Our mission this next year is to work with those 21 States to 
develop strategic plans that also address injury and illness 
reduction as a performance measure and address specific things 
that need to be done.

                          cooperative programs

    I mentioned the balanced approach that we have in North 
Carolina. We will be continuing that approach here with Federal 
OSHA. We have had a lot of success with that program the last 
few years, with the new OSHA that Joe Dear started. In 
particular, in nine States across the country, we experimented 
with an approach to working with employers in partnership, 
where we identified employers with high rates of injury and 
illnesses and said to them, work with us in a partnership. 
Let's try to bring your injury and illness rate down. Moving 
away from just enforcement, just traditional inspections, to a 
partnership to work together to bring rates down. The results 
have been very encouraging. In those nine States, in anecdote 
after anecdote, employers tell us, yes, they've brought their 
rates down, yes, they've brought their workers compensation 
costs down. It's a win-win program. Everybody wins.
    We are working to implement the Cooperative Compliance 
Program nationally. I'm very proud of what we've done. A court 
has stayed this to hear suit on it to make sure that it is in 
fact in keeping with the law and the constitution. We expect to 
succeed on that suit. We're proud of what we've done, and 
believe that we will have great success.
    I could mention to you EZ Paintr Company in Milwaukee, 
which cut its injuries and illnesses by 60 percent, cut its 
workers compensation costs by 80 percent. I could mention to 
you Clayton Homes, a housing manufacturer in my home State that 
had similar success.
    I could mention to you the shipyards in southern Alabama 
and the area around Fort Worth, Texas. We had a Cowtown 
project. Example after example of places across this country 
where we've worked in partnership with employers and achieved 
demonstrated success in bringing injury and illness rates down.
    Another way we have worked in partnership with employers is 
the Voluntary Protection Program, where we recognize employers 
with exemplary safety and health records. Over 400 employers 
have now earned this designation from OSHA. It's growing at a 
rate of 25 percent per year, and recognizes people who have 
done an outstanding job.
    Not only do we recognize them, but these employers turn 
around and mentor others and extend our outreach, if you will, 
in selling safety and health and convincing people that it 
makes sense for the bottom line.
    We have also gone online, through the internet, with expert 
advisors which are interactive computer programs to help 
employers. People can also dial up and request some material 
and have it faxed to them on demand. We have a number of 
different ways to assist employers throughout this country to 
reduce their injury and illness rates, which again is our 
bottom line.
    We have made a great effort over the past three years to 
work with our stakeholders. We hold meetings whenever new 
standards are under consideration with trade associations, 
unions, public interest groups, members of Congress and others 
who are interested in our policies and procedures. We talk 
about what it is we're doing, how we can do better, and listen 
to suggestions people have and accept their input.
    And you will find in the standards that we have developed 
over the last three years, you will find specific places, in 
methylene chloride, in respirators, where we've taken 
information from the people we've met with and in fact changed 
our proposal based on that.
    I would also like to point out to you something we have 
just received this morning, and passed out to you, a new 
brochure that is developed specifically for small businesses, 
to give them information and advice on how OSHA works and what 
they can do to make their work places safer. Part of this is to 
help inform small employers of the Small Business Regulatory 
Enforcement Fairness Act, and what we are doing to comply with 
that Act, and to give small businesses access to what we're 
doing and input into what we're doing.
    On the inside flap of this brochure are the requirements of 
SBREFA and how we're going to work with them and how they can 
work with us.
    One more word on the Cooperative Compliance Program. 
Through that program, for the first time we identified specific 
work sites in this country that had high injury and illness 
rates. Prior to the development of this program, we were 
conducting a lottery, drew a name out of a hat. And if you won 
the lottery today, your prize was an inspector showing up on 
your doorstep.
    Through the Cooperative Compliance Program, we had data 
from employers themselves on their injury and illness rates at 
80,000 work places, and we identified the 12,000 work places 
where people were most at risk. And those were work places that 
through the Cooperative Compliance Program we expect to target, 
expect to work with, expect to extend partnership to.
    And I'm happy to tell you, we've sent letters to all 12,000 
of those folks, and more than 9,000 of them signed up to join 
with us in this effort. So I believe it holds great hope for 
the future.

                         common sense standards

    The last general area I want to speak on, Mr. Chairman, is 
standards. One thing I want to submit to you is that OSHA will 
continue to develop common sense standards. We will continue to 
develop standards that are written in plain English that people 
can understand.
    One standard that has attracted a lot of attention and 
concern in recent years is ergonomics. It really addresses 
issues of musculoskeletal disorders. And I'm going to use the 
term MSDs when I'm talking about ergonomics and the disorders 
related to that.
    More than one-quarter of all the work place injuries in 
this country are musculoskeletal disorders. More than one-third 
of the workers compensation dollars that are spent by private 
businesses are spent on these injuries and illnesses. It's 
important that business, employers, and government move 
together to address this area.
    You have directed us not to issue citations based on 
voluntary guidelines in this area this year. We are not doing 
that. We are proceeding, however, to develop information and to 
talk with stakeholders to ask how we should address this area. 
And we are focusing in this area on the particular processes 
that we know cause problems and where we know there are 
successful solutions.
    We will continue to work on the focus areas where we know 
we can make a difference. Perhaps as the years go along and we 
learn more, we can expand the approach to other areas. But 
right now, we will focus our attention and research on specific 
areas where we know we can make a difference, where private 
businesses have demonstrated solutions that have made a 
difference.
    We also will be working this year on a standard for safety 
and health programs. This is an area where, if we look at a 
work place and say, what is the most important factor in making 
a work place safe and healthy, it is probably not addressing a 
single hazard. It is not addressing just electrical safety or 
just ergonomics.
    Probably the most important thing an employer can do is to 
develop a safety and health program to demonstrate some 
leadership in what makes his work place safe, to involve 
employees, have employees looking out for one another. In 
short, to have a program that underscores all of the hazard 
abatement that they may do.
    So we will be proceeding to develop a standard, to develop 
a requirement that employers across this country have a safety 
and health program in their work place.
    In conclusion, Mr. Chairman, let me thank you for the 
opportunity to be here. And I pledge to you my cooperation in 
working with you towards our common goal of having healthy, 
safe and good quality work places in this country.
    Thank you.
    [The information follows:]


[Pages 544 - 547--The official Committee record contains additional material here.]



    Mr. Porter. Mr. Jeffress, the subcommittee is going to have 
lots of tough questions for you, as you know, but let me say 
that I have not heard a better statement before this 
subcommittee in a long, long time. I think you laid out the 
mission of your agency extremely well. You reflected the kind 
of thinking that I think exists on both sides of the aisle 
here, that we can change the old ways of doing business and 
improve the work of the agency. I think your predecessor, if 
this is reflective of the kind of approach that both he and you 
followed and will follow, obviously it gets results.
    So I'm very encouraged both with our earlier meeting and 
with hearing your testimony this morning. I would say that if 
everybody in the agency will think the way the boss thinks, 
you're probably going to make these numbers go down even 
further.
    Mr. Jeffress. Thank you, Mr. Chairman. We'll work on that.

                           changes in agency

    Mr. Porter. You haven't really mentioned what kind of 
changes you would like to make in the agency. Have you given 
that, you've only been on the job a short time, obviously, but 
have you given thought to what you see that really needs 
changing?
    Mr. Jeffress. Well, I've been here three months, Mr. 
Chairman, and I spent about a month of that time visiting with 
the OSHA offices around the country, talking and listening to 
the staff, and hearing their outlook on things. At the same 
time, I took the opportunity to visit with employers that we 
had invited to join us in the Cooperative Compliance Program 
and to talk with them and listen to them about what direction 
they thought OSHA should take.
    Clearly, the first priority for me is to continue the kind 
of reinvention that Joe Dear started. The culture change in an 
organization takes a while to take effect. Four years ago, OSHA 
was primarily an inspection agency. We went into a work place, 
and the usual expectation of the compliance officer and the 
employer was that the compliance officer would come in with a 
book of rules and look to see if there were any violations to 
those rules, and write people up if there were violations to 
the rules.
    What we are moving to, and what Joe started and I'm 
determined to continue, is an attitude change where, when the 
compliance officer comes into a work place, the compliance 
officer's goal is to assess what is it that is hurting people 
or could hurt people here, and what can I do to work with this 
employer and these employees to keep that from happening, to 
reduce the chances of someone getting hurt.
    We want to move from seeing ourselves as inspectors to 
seeing ourselves as safety and health professionals, and giving 
advice and assistance. I believe that's happening. I've seen it 
happen. The best example recently was when a Dallas, Texas 
newspaper did an interview with employers in the Fort Worth 
area and with our area director there. And he said, in his own 
words, that four years ago he thought of himself as an 
inspector. And today he thinks of himself as a professional who 
is coming in to help people determine what they can do to 
reduce injuries and illnesses. That culture change is the most 
important thing that I want to continue in the agency, Mr. 
Chairman.
    Frankly, in another area that is separate from this, OSHA 
is still developing standards the way we have for years. 
Speaking before the Senate Labor and Human Resources Committee 
on Tuesday, Senator Collins remarked how frustrating it was for 
her as a Senator to see rules take four, eight, twelve years. 
Senator Reid pointed out that the confined space rule took 17 
years for OSHA to get out.
    I believe we've got to find a better way to develop 
standards. We began doing this the past couple of years with 
negotiated rulemaking, getting all the stakeholders in a room 
together and trying to develop a standard together, with input 
from the people affected.
    The steel erection standard is the first big one to come 
out that way. The shipyard standard was developed in a 
cooperativeway, in a negotiated way. And that worked last year.
    I think we can reinvent our standards process so we can 
develop these things quicker and in consultation with the 
people affected.

                        proposed changes to law

    Mr. Porter. The law governing OSHA was adopted, I believe, 
in 1970 and really hasn't been changed very much since that 
time. Are there any changes in the law that you see necessary 
at this time?
    Mr. Jeffress. One of the beauties of the OSHA Act, Mr. 
Chairman, is that it is written in a flexible manner. And I 
believe, as you have seen, the agency's made a significant 
change in the way we do business without any changes in the 
Act.
    So I believe that the Act itself is flexible enough as it 
stands to allow us to enforce it and educate people in 
appropriate ways. The Administration testified earlier, on a 
bill introduced by one of our Congressmen from North Carolina, 
Mr. Ballenger. We reaffirmed at the time that we shall not use 
quotas.
    The Administration in the past has also suggested that the 
way we do consultation would be an appropriate area to endorse. 
And while the bill is moving through, there are still a couple 
of minor points that we want to work on. I believe you'll find 
support for that position as well.
    Mr. Porter. Several of our members have requested that we 
proceed as quickly as possible and we're going to operate under 
the five minute rule this morning and save time for a second 
round.
    Mr. Stokes.
    Mr. Stokes. Thank you, Mr. Chairman.
    Good morning, Mr. Jeffress.
    Mr. Jeffress. Good morning.
    Mr. Stokes. Let me thank you for the courtesy visit you 
paid to my office a few days ago.
    Mr. Jeffress. Yes, sir.
    Mr. Stokes. It was a pleasure to have you visit with us.
    Mr. Jeffress. Thank you. Glad to be there.

                 decline in construction industry rates

    Mr. Stokes. In your opening statement, you make reference 
to the fact that injuries and illnesses in the construction 
industry, which account for about half of OSHA's inspections, 
have dropped below those in manufacturing for two consecutive 
years. To what do you attribute this factor?
    Mr. Jeffress. As with other declines, I attribute the 
factor always to the attention paid by employers and employees 
in that industry to safety and health. After all, it's those 
people at the work site every day that look out for one another 
and make a difference whether someone gets hurt or not.
    So I think we should pay tribute to the industry as having 
made a major effort the last few years to address their 
injuries and illnesses. I also believe that the attention that 
OSHA has paid contributed to this. The fact that we make 10,000 
to 20,000 inspections every year in the construction industry 
helps keep a focus, if you will, on safety and health in that 
industry.
    But we have some partnerships. We have a partnership in the 
Illinois-Ohio area with roofing contractors, where we've worked 
hard on fall protection for roofers. That seems to be going 
very well. We've had partnerships in a number of places with 
home builders, and the overall construction rate has come down 
below manufacturing for the first time over the past few years. 
But the homebuilding rate has fallen even further.
    I believe what I've seen out there, Congressman, is much 
more attention to safety and health by the employers and 
employees in this industry.

                           workplace violence

    Mr. Stokes. Mr. Jeffress, let me ask you this. Violence in 
the work place is now becoming a very serious problem. I 
understand an average of 1,000 workers are murdered, and nearly 
a million are assaulted in the work place each year.
    According to the Bureau of Labor Statistics 1996 Census of 
Fatal Occupational Injuries report, homicide continues to be 
the second leading cause of death for all American workers. 
And, it is the leading cause of death for women.
    What specifically is OSHA doing to address this problem in 
the work place?
    Mr. Jeffress. As you say, it is one of the leading causes 
of death in the work place, and one that troubles all of us 
greatly, particularly since the violence is so frequently 
introduced from outside the work place and not generated from 
what's going on in the work place itself.
    OSHA began addressing this area a couple of years ago by 
collecting information and talking to employers and employees 
about the issue. And we issued guidelines for the health care 
industry. One of the leading problems in the health care 
industry is not death, but in fact, work place violence, 
particularly patient violence on health care workers. It may 
happen when people who are being lifted, someone slips or they 
get angry and they lash out and they hit someone. That kind of 
violence is a concern in that industry. And we did issue some 
guidelines on how people in that industry could protect 
themselves and protect their employees better from that kind of 
violence.
    We have under development, and we'll be discussing with a 
group of stakeholders tomorrow, recommendations to prevent work 
place violence in late night retail operations, where these are 
not attacks from patients, but tend to be the homicides that 
occur during robberies.
    We have a whole list of recommendations. We have met with a 
number of staff folks from Capitol Hill. We issued a proposal 
for guidelines a little over a year ago, and have had a lot of 
input and advice from police chiefs, from law enforcement 
folks, trade associations, unions. We have developed some 
recommendations which we will discuss tomorrow and hopefully 
release as soon after as possible, based on our best advice to 
people on how to prevent this.
    So we're working through guidelines, through 
recommendations. It's an area where it's a tragedy for everyone 
concerned, and frequently very difficult to anticipate, because 
the problem gets introduced from outside the work place.

                       small business initiatives

    Mr. Stokes. I note that OSHA is striving to work closer 
with small businesses. I understand that you're about to issue 
a pamphlet devoted to that, is this correct?
    Mr. Jeffress. Yes, sir.
    Mr. Stokes. Do you want to tell us a little bit about it?
    Mr. Jeffress. Yes, sir. One of the things that Congress has 
directed that we and other agencies do is to make sure that 
small business considerations are taken into account in our 
work. I mentioned the pamphlet that was just off the press this 
morning that we will be distributing through Small Business 
Administration offices, and through the small business 
development centers at community colleges across the country. 
These are ways that will reach small businesses and folks who 
don't want to call OSHA. We'll try to get this information out 
to them so they can understand what their responsibilities are.
    Also, we have worked with small businesses and the Small 
Business Administration on field hearings, when it comes to 
development of OSHA standards, when it comes to development of 
OSHA policies. We've made an effort to reach out to small 
businesses with the assistance of SBA and to listen to their 
concerns.
    I'm happy to report to you that the ombudsman's office for 
the Small Business Administration reported to Congress three 
weeks ago that OSHA has made major strides in its outreach to 
small businesses, and that in their hearings across the 
country, they heard praise for OSHA. That's a big change from 
10 years ago, Mr. Congressman. I'm proud of what we've done.
    Mr. Stokes. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Stokes.
    Mr. Bonilla.
    Mr. Bonilla. Thank you, Chairman.
    Good morning.
    Mr. Jeffress. Good morning.

                        Consistency of Policies

    Mr. Bonilla. I'd like to start out by saying that I 
appreciate you stopping by my office yesterday. I like what I'm 
hearing, about the attitude of OSHA having more of a compliance 
agenda versus an enforcement agenda. I just hope that again, as 
the Chairman mentioned earlier, that this agenda is one that 
troops at OSHA carry out as well.
    As you know, a lot of agencies in this town do not reflect 
necessarily what the boss is saying. So I know that you've been 
around a while, working in government back in your home State. 
But you've got to watch for those folks that still think that 
it might be a good idea to have quotas and that it might be a 
good idea to come in with a gestapo-like attitude.
    You know, my concern is for all those small businesses out 
there, where people are working day and night to try to make 
their business more productive and create more jobs. We've had 
this talk before. I just want to make sure that while we're 
talking about worker safety, we're not making it harder for 
these people to realize the American dream out there.
    Again, I like what you have to say, and I hope that your 
agenda trickles down to everyone at OSHA. But it's not going to 
be easy.
    Mr. Jeffress. Yes, sir, and I appreciate your concern. With 
approximately 1,200 federal inspectors across the country, 
getting consistency is always an issue. But I will say that I 
also think that the local initiatives are one of our strengths 
as well--specifically, the reinvention in area offices, where 
they don't just think in terms of responding to events, but 
think strategically about what would make a difference in their 
local area.
    And giving the local area offices some responsibility and 
authority to design a program that makes sense in their 
particular area is one of our strengths. But as you say, it 
also makes consistency an issue, and something we will need to 
continue to work on.

                         Ergonomics Enforcement

    Mr. Bonilla. I'd like to ask a couple of questions in the 
area of ergonomics. You know that's an issue I've been involved 
in for many years now. I know you mentioned the language that 
we put in the bill, effective this fiscal year, which prohibits 
the issuance of a final standard on ergonomics.
    But you didn't mention in your testimony that it also 
prohibits the enforcement of voluntary ergonomics guidelines 
through the general duty clause. This is something that 
concerns me greatly. We have discussed before in hearings in 
this subcommittee the situation with Hudson Foods. I just want 
to make sure that we're all on the same page here.
    My concern, as I expressed to Secretary Herman earlier, is 
that there could be a violation of Federal law, because this 
was law that we wrote last year in the bill and it looks like 
OSHA was trying to circumvent that law. The question I have is, 
how many other citations, without getting into the Hudson Foods 
case again at a hearing here, how many other citations has OSHA 
issued for alleged ergonomic violations or ergonomic hazards 
under the general duty clause, besides the Hudson Foods 
situation?
    Mr. Jeffress. Over the past 10 years, we have been issuing 
citations under the general duty clause for ergonomic 
violations. This is not something new that's just cropped up in 
the last few years. Historically, we have been issuing 
citations under the general duty clause for this. And each 
year, some cases lead to letters of warning to employers, and 
some lead to citations.
    For those cases that actually lead to citations, I'll just 
go back the last couple of years to give you a feel for it. In 
fiscal year 1995, there were seven cases, in fiscal year 1996 
there were three cases; in fiscal year 1997 there were five 
cases. And the one you mentioned, Hudson Foods, actually is a 
fiscal year 1997 case, because that's when the inspection was 
initiated. The citation was actually issued in December of 
1997, which is the current fiscal year.
    There have been no cases initiated this fiscal year for 
which citations have been issued.
    But most importantly for us in this area, we will comply 
with the intent of Congress and with the wording of the 
restriction that we not issue citations based on voluntary 
guidelines. We have not issued voluntary guidelines and will 
not be issuing voluntary guidelines on ergonomics at this 
point. We're working on developing a standard.
    There were guidelines issued some years ago on red meat, 
but we're not proceeding with voluntary guidelines or 
ergonomics, at the direction of Congress. But we come upon 
situations where we find employees whose hands are crippled, 
who have suffered surgeries, and I've had employees come and 
sit in my office who can't hold a glass of water, a woman who 
has her daughter on her lap and can't brush her hair because 
she can't hold a hairbrush. These folks have been crippled by 
what's going on in their work place.
    When we find situations where that has occurred and the 
employer has knowledge of it, and where the employer has not 
only knowledge of it, but has had internal advice or advice 
from consultants that he has hired on what can be done to fix 
it, and where other employers in the same industry have taken 
actions to fix these problems and kept people from getting 
crippled, when we find those situations where employers turned 
their back on crippled employees, in those situations we will 
cite for a violation of their general duty, their basic 
obligation to provide a safe and healthy work place.
    But I assure you, we will not develop voluntary guidelines 
and issue citations because someone didn't follow our 
recommendations. We work very closely with our solicitors in 
this area, I believe that was the intent of Congress, and we 
certainly will not violate that intent in terms of issuing 
citations based on guidelines.
    Mr. Bonilla. I believe I'm out of time, Chairman, if you 
would just permit me a closing, very brief comment. I'm going 
to submit some questions for the record, as I said, because 
I've got some very serious questions. In your testimony, the 
reference to musculoskeletal disorders accounting for one-
fourth of all work place injuries and illnesses, and that's in 
contradiction to what the Bureau of Labor statistics cites, 
which says that they amount to about 4 percent.
    So I'm going to submit for the record some questions in 
that area, and I would appreciate it if you'd respond to them.
    Mr. Jeffress. Okay, one clarification. That is of all 
illnesses, not all injuries and illnesses.
    [The information follows:]

                Estimates for Ergonomic Related Injuries

    OSHA uses BLS data to develop estimates of the number of 
ergonomics-related injuries and illnesses. The agency estimates 
that there were 640,000 work-related lost workday 
musculoskeletal disorders (MSDs) in 1995. MSDs represented 
nearly 25 percent of work-related lost workday injuries and 
illnesses in 1995. The OSHA estimate includes all overexertion 
and repetition-related lost work time injuries and illnesses 
that resulted in musculoskeletal disorders or carpal tunnel 
syndrome. The OSHA data are estimates because the BLS category 
of ``disorders associated with repeated traumas'' is not an 
estimate of all MSDs. For example, this category includes 
illnesses and disorders that are not MSDs, such as hearing 
loss, and does not include all injuries that are clearly MSDs, 
such as strains caused by overexertion. OSHA is currently 
working with BLS to develop published estimates of the number 
of workplace MSDs (both injuries and illnesses) from 1993 to 
1996.

    Mr. Porter. Thank you, Mr. Bonilla.
    I would remind members, I've had several members request 
special exemption so we can move quickly, and we will have a 
second round.
    Ms. Northup.
    Ms. Northup. Thank you, Mr. Chairman.

                      definition of lost work day

    I'd like to turn for a minute to the Cooperative Compliance 
Program, and also the question of finalizing standards. It's my 
understanding that the final standards for what's included in 
restricted or lost work days is not finalized. Is that correct?
    Mr. Jeffress. We've had a rule out for 20 years that 
defines what constitutes a lost work day. And it does include a 
restricted work day. We're working on a clarification to that 
rule, and the clarification has been under consideration for a 
year, too, and is not out. But there is a rule that's been in 
place for 20 years on that.
    Ms. Northup. Well, I'm very concerned about the fact that 
you would now identify out of 80,000 work places the 12 that 
are the most dangerous and have the highest lost work days, 
when you haven't finalized the definition of lost work days. In 
particular, this has affected an automobile manufacturer in my 
district who is working very hard to overcome ergonomics 
problems by rotating its employees.
    What happens is, if an employee has five different jobs 
that use different joints and parts of the body, in order to 
avoid ergonomic injuries, they rotate the jobs. Let's say they 
start to have a shoulder that acts up, so they get transferred 
into the four of the five jobs sothey can let that shoulder 
rest. Currently, as you interpret it, it is included currently as a 
restricted work day or a lost work day.
    Mr. Jeffress. What the rule currently says, and has said 
for some time, is that if employees lose time from their 
regular work, cannot perform their regular work because of some 
illness or injury sustained, that counts as lost time.
    Ms. Northup. Well, that's basically saying what I just 
said.
    Mr. Jeffress. Job rotation is one way to address ergonomic 
problems. And if there is a standard rotation and the person 
rotates according to that standard rotation and does not lose 
time from anything in that standard rotation, then there's not 
a lost work day.
    But if they're supposed to be doing this job today, and it 
hurts so bad they can't do this job today, and they have to do 
a different job, at that point it is restricted work.
    Ms. Northup. So in other words, all you do by using the 
best antidote to ergonomics, protecting from ergonomic injuries 
by rotating employees and having them do and stress different 
parts of the body, that's the best remedy or protection from 
ergonomic injuries. However, if a company does that, then 
they're vulnerable to any part of the body that hurts.
    If they were painting their house yesterday and had their 
arm up, then they might be rotated among four of the five jobs, 
they work a full time, get paid full rate for the day. But 
they're now counted by that company as being on a restricted 
day.
    Mr. Jeffress. Well, actually, Ms. Northup, while job 
rotation is one of the ways to address job ergonomics, it's not 
the best. The best way is to redo the job or change the 
environment so you don't have to move off of it. If that person 
has to reach up high on the chicken line, if they could stand 
on a box and reach right here, then they wouldn't have to 
rotate the job.
    Ms. Northup. The point that I'm trying to make is, you make 
yourself much more vulnerable by rotation, even though that may 
be the preferred for other reasons, maybe ergonomics, that what 
you do is you make yourself much more vulnerable for getting 
counted as a lost work day, when in fact it's not a lost work 
day, and it's very different from a lost work day.
    Mr. Jeffress. I hear you very clearly, and that is a point 
of debate within the safety and health community, when someone 
does work but can't do their regular job, how should we 
consider that. It currently is lost time from the regular job, 
so that's counted as lost work.

                         Participating in CCPS

    Ms. Northup. Well, what you do is you really encourage 
companies not to have this rotation. Because of falling into 
the category. The voluntary compliance, I think what a number 
of businesses in my district complained about is that it went 
from voluntary to pretty compulsory. Because in fact, you sent 
a letter to these 12,000, but you didn't ask, if they would 
like to become a part of this program. What you said is, if you 
don't sign up for this program by January 31st, then you are 
going to be subject to a whole other inspection and aggressive 
effort by the OSHA.
    Mr. Jeffress. It's really important to me to get that 
straight on that particular program. Because I think it is a 
very important and a very good program that OSHA has begun. We 
identified 12,000 work places as having the highest rates of 
injuries and illnesses, and these aren't our rates, this is 
information the employer gave us, so it's based on the 
employer's own data.
    Ms. Northup. But it's based on a standard that you haven't 
finalized that may use restrictive days instead of lost days.
    Mr. Jeffress. That standard has been in place for 20 years. 
And we identified 12,000 of the most dangerous work places, 
there are others that are dangerous as well, but 12,000 of the 
most dangerous work places in America.
    And we said to them, we've made a list, we've checked it 
twice, and we know where the highest rates of injuries and 
illnesses are. So this becomes our primary inspection list. And 
we will inspect based upon this primary inspection list.
    For those employers, though, who go beyond that and want to 
invest in a more active safety and health effort, who will look 
for hazards and fix hazards in their areas, who will invest in 
safety and health programs, involve their management and their 
employees in safety and health programs, for these employers 
who make an exceptional effort on their own part, there will be 
a reduced chance of inspection.
    But there is a primary inspection list. There is no penalty 
if you choose not to join. There is no penalty for failure to 
have a safety and health program. There is a primary inspection 
list. And you will be on the primary inspection list.
    If you choose to do more, then there is a reduced chance of 
inspection. But it's not a penalty for punishing people who 
don't do it.
    Ms. Northup. That's not how it was interpreted. And I think 
you actually have a State where somebody has gone to court and 
found, asked you and said you can't proceed. But I'd just like 
to close and say, one of the parts of that is, businesses have 
to form a safety committee, which I believe violates the NLRB's 
regulations, that unless you have a union and it's formed under 
that, you're not allowed to form one of those committees.
    Mr. Jeffress. Well, actually what it says is you need to 
involve your employees. And we do not specify committees or any 
other particular type of involvement. There are a lot of 
different ways that employers have of involving employees in 
their activities. Total quality management some years ago 
talked about a lot of different ways of involving employees in 
a lot of issues in the work place, safety and health being one 
of them.
    And I very much believe that having employees involved in 
identifying some of the problems is an important way to do 
business, whether it's safety and health or other aspects of 
production.
    Ms. Northup. Thank you, Mr. Chairman. I have more questions 
that I will follow up with.
    Mr. Porter. Thank you, Ms. Northup.
    Mr. Obey.
    Mr. Obey. Mr. Chairman, before I proceed under my time, I'd 
like to raise a question of process. I'd like to inquire who is 
the camera represented by?
    Mr. Black. J.R. Black, International Media.
    Mr. Obey. And what is that?
    Mr. Black. A video company that records hearings.
    Mr. Obey. And my question is, are you a public news 
organization or have you been hired by a private source?
    Mr. Black. I'm here, someone called me, I'm not sure who 
hired me. I'm just a recorder.
    Mr. Obey. Mr. Chairman, let me explain why I raised it at 
this point. There is a long history of private economic 
interests trying to bring cameras in this room to film hearings 
that relate to OSHA.
    A number of years ago, we had a controversy when Mr. Thorne 
Auchter was running OSHA. And at that time, frankly, I had 
gotten a lot of papers over the transom from people within OSHA 
who were upset about the fact that the new nationally 
determined plan that in the Denver regional office they would 
have been required to inspect a number of Coors plants.
    There was great controversy about whether Washington 
intervened with the Denver office to prevent inspection of 
several of those plants. Mr. Auchter knew that I was going to 
be questioning him at great length about that. And when he 
appeared in this room, there was a camera that accompanied him. 
And we were told afterwards that a copy of that film had been 
sent on its way to the Coors people that evening after the 
hearing.
    Now, I have no idea, and I'm not in any way accusing anyone 
of anything, but I think that when a camera is in this room, we 
have a right to know whether it is a straight news 
organization, or whether in fact some private party has used 
its resources to try to film the events of this hearing, events 
which can then be taped and spliced and cut to make any point 
they want to use, either for fund raising purposes or for legal 
purposes down the line.
    So I for one would like to have more assurance that if 
cameras are in this room, they are not cameras with an axe to 
grind, but here simply to report to the public what the actions 
are of their representatives.
    Mr. Porter. Well, I think it's a point well taken, we ought 
to know the reason and who the camera represents. The rules of 
the House provide, of course, that all hearings of all 
committees will be open to the public and open to the press. 
And if the gentlemen represents the press, then he certainly is 
welcome here.
    But we would ask that you discover who has sent you.
    Mr. Black. I assure you there's no axe to grind.
    Mr. Obey. Well, let me simply say, as I said, I'm not 
accusing anyone of doing anything. But I think this committee 
needs to know ahead of time when cameras are in the room who 
they represent. And I may be overly sensitive on this area, but 
having been burned once before and knowing of the great desire 
of very large monied interests in this issue, I just want to 
make sure that in fact there is no private purpose behind any 
filming.
    And as I said earlier, I'm not at all accusing you. I just 
am reciting past history of this committee. We have a right to 
see to it that the rules are followed. We have an obligation to 
see that the rules are followed in a way which is consistent 
with the intent of those rules, which is to provide for 
expanded public knowledge, not expanded private interests.
    Mr. Porter. I would ask the gentleman to inform us, and I 
would ask the gentleman, because we have so many members that 
have other assignments to proceed now and discover what the 
reason is.

                       use of general duty clause

    Mr. Obey. I just have, I think, three questions and one 
point to make. It was asserted by Mr. Bonilla and moment ago 
that because you had proceeded under the general duty clause to 
inspect some plants, because of your concern about 
musculoskeletal injuries, that in fact you were in violation, 
or you might be in violation of the law.
    For how many years have you used the general duty clause to 
enforce egregious, against egregious ergonomics problems?
    Mr. Jeffress. Of course we've used the general duty clause 
since the beginning of OSHA in 1971. We've been citing for 
ergonomics problems using the general duty clause since 1985.
    Mr. Obey. Isn't it true that you have cited, that you have 
engaged in over 250 such actions using the general duty clause?
    Mr. Jeffress. Yes, sir, that's exactly right.
    Mr. Obey. I would respectfully suggest then, that it's very 
clear to me that the agreement reached last year in no way was 
trying to prevent you from doing what you had been doing in the 
past, since I was a party to that agreement. I think common 
sense would dictate an understanding that that agreement was to 
try to make certain you do not engage in any new end runs to 
enforce new standards while there was a controversy about the 
direction that those new standards should take.
    Mr. Jeffress. That was our understanding, Congressman, that 
we would not develop voluntary guidelines. The final language 
actually said that we would not issue citations based upon 
voluntary guidelines. So it was really predicated upon new 
activity by OSHA, not continuing what we were doing.
    Mr. Obey. Let me also simply make one statement. I noted 
this morning that a document called Inside OSHA dated February 
23rd refers to the continuing difference of opinion that Mr. 
Bonilla and I have had on this issue. It indicates that a 
source close to Congressman Bonilla said that Obey is 
supposedly breaking the ergonomics agreement, since I am 
apparently attempting to kill an NAS study which he requested 
subsequent to our agreement.
    I just want to say something for the record. I've been in 
this Congress 29 years. I think I've developed a very clear 
reputation. And I think that virtually anyone would grant that 
that reputation is that I am up front and blunt, sometimes 
brutally so. But that I don't play sly games. And I defy anyone 
to cite any agreement that I have made in that 29 years that I 
have ever broken.
    I think I may have a reputation for being, some people may 
think I'm wacky on an issue, but by God, I don't think anybody 
thinks that I go around peoples' backs. It's too much fun to go 
at them front ways. [Laughter.]
    So I would simply say that Mr. Bonilla and I can have a 
legitimate difference of opinion about what you ought to do. 
But I want to make clear, when we reached that agreement last 
year, it simply said that no funds would be made available for 
you to enforce voluntary ergonomic guidelines, and that we 
indicated there would be no further efforts to legislatively 
dictate what your agency could do on that subject.
    At that time, Mr. Bonilla indicated he was going to write a 
letter to try to get other agencies of Government to stick 
their nose into the argument. I told him he was free, as a 
member of that committee, to do any blessed thing he wanted.
    But I certainly never indicated that I was going to buy 
into any letter that he would send to anybody. And I reserve 
the right, just as he does, to take individual actions outside 
of the committee. I think that it's pretty clear that there has 
been no effort on my part to break any deal.
    And I want to say one other thing. While I certainly agree 
with Mrs. Pelosi's comments that NIH was naive to get sucked 
into this debate, I specifically have told NIH that they ought 
to make up their own mind on this issue, that I am not--and I 
was asked by them, because they knew I didn't like what had 
happened. I was asked what my advice would be to them.
    And I said, I have no advice. I want you to follow your 
best professional judgment, just as you have and you're 
supposed to do in every other case. In this committee, Mr. 
Porter and I for years have resisted political invasion of 
scientific judgments. That's the main reason I wanted on this 
committee in the first place.
    So I just want to make quite clear that if somebody is 
trying to bust an agreement and slide around it, it sure as 
hell isn't me.
    Mr. Porter. Thank you, Mr. Obey.
    I suggest, because I think it is much better that we sit 
down and discuss these matters face to face, as you indicated 
you are always willing to do, that instead of airing them in a 
hearing from either side, that my intention would be to invite 
both you and Mr. Bonilla to sit down, if you want, in my office 
and discuss this matter face to face.
    Mr. Obey. I have no problem with that, but since the 
comment was made in public print, I felt I ought to respond to 
it in a public way, because I don't sneak around.
    Let me also say that I find it quaint, while I'm supposedly 
telling NIH what they ought or ought not to do, the only letter 
that I can find telling NIH what they should do was sent by 
Senator Specter. And it was Senator Specter who indicated, if I 
read that letter correctly, that NIH in their action is doing 
something which was not contemplated by any party to the 
agreement last year.
    Mr. Porter. Mr. Wicker.
    Mr. Wicker. Mr. Chairman, before I proceed on my time, let 
me just interject that although Mr. Bonilla was here earlier 
and did make points, he is not now present in the room to 
respond to anything that Mr. Obey says.
    Mr. Porter. That's why I'm suggesting a meeting.
    Mr. Wicker. It may very well be that he would like to 
insert a response in the record at this point.
    Mr. Porter. I would invite the gentleman, he's going to 
return, I believe, for the second round.
    Mr. Obey. I would say on that point, I would object to any 
member trying to insert something in the record on this issue.
    Mr. Wicker. Well, the gentlemen----
    Mr. Obey. If he has something to say to me----
    Mr. Porter. He'll be back.
    Mr. Obey [continuing]. He ought to say it in the open 
session and if I have something to say to him, I ought to say 
it in the open.
    Mr. Wicker. My concern, Mr. Chairman----
    Mr. Porter. He'll be back.
    Mr. Wicker [continuing]. Is that the transcript is going to 
reflect that Mr. Bonilla was here, that he made statements, 
that Mr. Obey made statements in response to that, and Mr. 
Bonilla was gone.
    Mr. Porter. The Chairman will say for the record that Mr. 
Bonilla was not here, and he will return, according to what he 
just told me as he left, and have a chance in the second round 
to make whatever statement he wishes.
    Would the gentleman proceed?
    Mr. Wicker. Thank you, Mr. Chairman.

                        peer review on standards

    Mr. Jeffress, Chairman Porter asked you earlier what needs 
changing in the agency, and you mentioned sort of a change 
already in mind, you said. And then you mentioned that the law 
itself is quite flexible enough to make whatever changes might 
be needed.
    Mr. Obey mentioned not injecting non-scientific judgment 
into scientific issues. So let me bounce a suggestion off of 
you, for perhaps a change in the law. As compared to OSHA, the 
Environmental Protection Agency has both a peer review process, 
which was created by Carol Browner, and a legislatively 
mandated advisory committee. EPA uses these peer review panels 
to review major scientific and technically based work products 
that may contribute to the basis for policy or regulatory 
decisions.
    What do you think about that? And I guess my follow-up 
question is, has there been any discussion in the three months 
you've been in office about this type of approach?
    Mr. Jeffress. There's been a lot of discussion about how we 
develop standards. The review by peers or other outsiders has 
been a part of that. And let me just mention for the record, 
OSHA also has a legislatively mandated advisory committee under 
the OSHA Act that meets five or six times a year. We do 
regularly consult them on matters such as standard development.
    In terms of peer review, our standard setting process 
currently involves a significant amount of peer review. Any 
time that we are developing a proposal in an area, even before 
it becomes a proposed rule and goes out to the public, we 
solicit information from experts, from scientists that do 
research on a subject, whatever it may be, such as lockout, 
tagout, on what are the best ways to lock out power machinery 
or electrical machinery so that people who are working on it 
don't get hurt. We will solicit from experts in that area what 
is the best research, what are the best practices.
    So before we ever go out with a proposal, we solicit from 
experts in the area, from scientists in the area, what's the 
best way to address the issue. We then propose a rule, and send 
that proposed rule out across a broad spectrum of peers, if you 
will, for advice and comment, and have an extensive period for 
public comment by experts in this area, by laymen in this area, 
by employers, by employees.
    We then invite those who wish to give testimony to come to 
a public hearing and comment upon it. So during the course of 
our standards development process, we have extensive comment by 
peers, by experts, by scientists, by laymen on the subject 
before we ever get to the point of issuing a final rule.
    So we believe we have developed an extensive period of 
solicitation of comment on any standards which we develop.
    Mr. Wicker. Mr. Secretary, I know that a lot of people look 
at these proposals. And a lot of experts and people affected by 
them get to make comments.
    But let me give you the example, last year, you briefly 
mentioned methylene chloride. We had a great deal of discussion 
last year on the regulation about methylene chloride. One of 
your own employees, the Director of the Office of Risk 
Reduction Technology, came to me, and sent a letter to this 
subcommittee, objecting to the feasibility of the new rule.
    We mentioned earlier the Small Business Administration 
ombudsman. Well, in this case the Office of Advocacy in SBA 
publicly objected to the way in which the rule was done. And 
while there was a lot of testimony and a lot of information 
gathering, no doubt; there was no panel, no peer review panel, 
that I could cite, or that objective people in this Congress 
could cite as saying whether this very experienced director in 
your own department knew what he was talking about.
    It just seems to me that this is quite controversial. This 
agency, by its very nature, is quite controversial. It seems to 
me that we could minimize some of the controversy by putting in 
place a more structured peer review panel. I hope that you and 
the Administration will seriously consider this proposal. I 
want to get with you about it. I want you to come to my office 
and let's sit down and talk about it.
    It seems to me that it is a way to be more objective and to 
make sure that we make the decisions based on science rather 
than emotion or apocryphal stories or politics.
    Mr. Jeffress. Mr. Wicker, I'll be happy to come meet with 
you and talk with you about that. The whole standard setting 
process I think is a process that cries out for reinvention. 
There are so many different processes that we go through. A way 
to consolidate those, not add an additional hoop, but to 
consolidate those and get the people involved that need to be 
involved in that process, would make a lot of sense to me. I'd 
be happy to work with you on that.
    Mr. Porter. Thank you, Mr. Wicker.
    Ms. DeLauro.

                          targeted workplaces

    Ms. DeLauro. I want to ask some questions about the 
Cooperative Compliance Program.
    Mr. Jeffress. Yes, ma'am.
    Ms. DeLauro. For years, employers have argued that OSHA did 
not adequately target the bad actors. Now the Chamber of 
Commerce and other business interests have filed a lawsuit 
preventing OSHA from doing just that. Just quickly, and I don't 
want the names of companies, who are the ``bad actors''? Tell 
us who these folks are, and what classifies them as a bad 
actor?
    Mr. Jeffress. Well, first, I have to say I don't use the 
word bad actor, but I do say that when we surveyed 80,000 
businesses, we identified those who had rates of injuries twice 
the national average as places that were the most dangerous to 
work. So we identified 12,000 work places in States where 
Federal OSHA has jurisdiction as the most dangerous places we 
most needed to work with to bring the rates down. And we used 
this average as the basis for identifying the people we needed 
to work with.
    Ms. DeLauro. The most dangerous places for people to work 
were those that were identified?
    Mr. Jeffress. Yes, ma'am.
    Ms. DeLauro. That's what we're talking about?
    Mr. Jeffress. That's exactly what we're talking about.
    Ms. DeLauro. In the absence of any kind of targeting, 
because all of us who run for public office deal with 
targeting----
    [Laughter.]
    Ms. DeLauro [continuing]. You identify those who are 
against you, and you go after those you believe might be 
persuaded.
    Mr. Jeffress. Yes, ma'am.
    Ms. DeLauro. And help me. If you're trying to do that, what 
does that save you in time and effort, and what does it mean to 
those who are living and playing by the rules and so forth? How 
does this identification, if you will, of those places that are 
the most dangerous places in which to work, affect the rest of 
the universe of companies who are out there?
    Mr. Jeffress. It's an enormous advance over the way that 
we've worked over the past 20 years. When we would pick a name 
out of a hat to see who to go visit, we would sometimes spend 
our time with folks who were doing a good job, and there really 
was no reason either for us to interrupt that work place or for 
us to spend our time that way.
    So we use employers' own data, not something we ginned up, 
but their own data to identify the most hazardous work places 
and say, this is where we're going to target, because America 
expects us to measure ourselves by reducing injuries and 
illnesses, so let's go where most of the injuries and illnesses 
are occurring. It makes sense to everyone.
    And we believe, the fact that over 9,000 of the businesses 
said, okay, we'll join with you, we do need to do something 
about the injuries and illnesses in our work place, that says 
to me we're on the right track, that this is the right thing to 
do. It saves the taxpayers money, it enables you to get the 
best bang for the dollar you invest in the OSHA program, if we 
can target our resources to where the most injuries are 
occurring.
    Ms. DeLauro. Well, it makes you a more efficient operation, 
and also lessens the risk to every other business out there, as 
I say, where people who are playing by the rules.
    Mr. Jeffress. For the people who are doing a good job, it 
gets us out of their business. For the folks who are not doing 
a good job, we're going to work with them.
    Ms. DeLauro. And 9,000 of the 12,000 indicated that they 
want to work with you, and they've done this on a voluntary 
basis?
    Mr. Jeffress. They have written us letters, and I can quote 
you from the letters that say, this is the best thing that OSHA 
has done. We need to work with you. We're delighted to join 
with you. Nine thousand employers have said, yes, we will work 
with you.
    Ms. DeLauro. And from a recent historical perspective, as I 
understand it, that CCP's predecessor was Maine 200.
    Mr. Jeffress. Yes.
    Ms. DeLauro. And Maine 200, in fact did save businesses 
money and win innovative awards from Ford Foundation or others.
    Mr. Jeffress. The Maine 200 program was recognized as one 
of the most innovative programs in Government the year that it 
started. The Ford Foundation, and the John F. Kennedy School at 
Harvard University, recognized it as one of the brightest 
innovations in Government that year.
    And we built upon that. We went from Maine to eight other 
States where we ran pilot programs on the same kind of basis, 
identifying through workers compensation records where the most 
injuries and illnesses are occurring, and working with those 
places to bring rates down.

                          lawsuit against ccps

    Ms. DeLauro. If we shut you down, if you will, from dealing 
in this way of identifying the most dangerous places, then do 
we open up the system again to going back to, you know, random 
inspections?
    Mr. Jeffress. One of the things about this lawsuit that 
makes the least sense to me, is if we block the Cooperative 
Compliance Program, we're back to the random inspections and 
the traditional OSHA enforcement that people didn't want to 
see. You here in Congress said to do a better job, focus what 
you're doing, invest your time better. That's exactly what 
we're doing.
    The lawsuit seems to send us back in time five years.
    Ms. DeLauro. So this lawsuit will shut you down from what 
you're doing, and in fact penalizes all the businesses that are 
out there doing the job of keeping workers and the work place 
safe. So it's resulting in penalizing those folks, and we're 
back to the random selection of businesses.
    Mr. Jeffress. We're going to try real hard to win this 
lawsuit. Again, so far the judges have only stated, don't put 
it into effect until we can rule on the merits. There hasn't 
been any ruling on the merits.
    We believe this is a good program. We believe we're going 
to succeed with this lawsuit. We will find a way to work with 
these 12,000 employers, because they are amongst the most 
dangerous places to work in America. We believe that's what you 
want us to do, and we will do that.
    Ms. DeLauro. Thank you.
    Mr. Porter. Thank you, Ms. DeLauro.
    Ms. Lowey.
    Ms. Lowey. Thank you, Mr. Chairman. And welcome, Mr. 
Assistant Secretary.
    Mr. Jeffress. Thank you.
    Ms. Lowey. I'm particularly pleased to welcome you to the 
subcommittee. I can remember the day when I was on the 
authorizing committee, Education and Labor, and some women 
testified who had survived the fire at Hamlet, North Carolina.
    Mr. Jeffress. Yes, ma'am.
    Ms. Lowey. And frankly, I will never forget that testimony. 
This is what we're really trying to do, to focus on a very 
small percentage of employers. Most employers are trying to do 
the right thing.
    But to think that those doors at the Hamlet plant were 
locked, because they were afraid that someone was going to 
steal a chicken, and then when this fire occurred, they 
couldn't get out and 29 people, if I recall, died. And I know 
that as a result of your leadership, you really transformed the 
North Carolina OSHA program. I just want to say how refreshing 
it is to have you here.
    I feel very confident that with your leadership, we'll be 
able to continue to answer many of the questions that have come 
to OSHA. I know that you're dealing with, some of the 
responses, frankly, that have been justified, some of the 
questions are justified. So I thank you very much for your 
leadership.
    Mr. Jeffress. Thank you, Ms. Lowey.

                           targeting process

    Ms. Lowey. And just to follow up on one of the comments 
made by my colleague, Ms. DeLauro, isn't it true, I recall that 
until this targeted process, an employer had a chance to be 
visited about once every 90 years? Was it something like that?
    Mr. Jeffress. Ninety in some States and even higher in 
others, I'm afraid.
    Ms. Lowey. Exactly. So that your targeted methodology seems 
to me to make most sense. And this approach of the CCP, which 
is to target specific businesses and work in partnership with 
business, makes sense. I just can't understand why anybody in 
good conscience could object to it.
    So I personally want to thank you.
    Mr. Jeffress. We appreciate your support.

                             back injuries

    Ms. Lowey. On another area, I was impressed with what 
you're doing in targeting specific illnesses in the work place. 
And I would appreciate your expanding upon it for this 
committee. First of all, we all know that back injuries are a 
major problem for so much of our population. Our Chairman has 
been very involved with this issue, and it happens to, it does 
have an impact on reduced work time.
    What are you doing to deal with that? Are you working with 
employers in this effort? Could you explain to the committee?
    Mr. Jeffress. Yes, ma'am. Back injuries have long been a 
problem in the work place. And it affects a number of different 
industries. You find it in grocery stores where people stock 
shelves, you find it in poultry plants where people slip on the 
floor. So it's found in a broad range of industries such as 
nursing homes, from nurses lifting patients.
    So back injuries are a significant problem. Matter of fact, 
in the poultry survey we recently did, when we looked at the 
ergonomic problems, back injuries were more of a problem than 
the repetitive motion injuries. They're both problems, but back 
injuries were even more of a problem.
    The National Institute of Occupational Safety and Health, 
NIOSH, which is under HHS, did a study some years ago and came 
out with some guidelines on preventing back injuries, on how to 
lift and ways to reduce the impact of lifting. We've encouraged 
people to follow those. We have published brochures, 
guidelines, guide books on lifting, on how to avoid back 
injuries.
    When it comes to nursing homes, you always have to look at 
the specific type of lift going on that causes the back 
injuries, it appears it's one nurse lifting a patient who is at 
most risk. And we've encouraged nursing homes to consider and 
implement assisted lifting. Sometimes that might mean amachine 
to help lift, sometimes it might mean two people to lift a patient. But 
in every case, to use assisted lifting. And we believe that will reduce 
the back injuries. And there are some success stories in that.
    When it comes to the poultry industry, so many of the back 
injuries are a result of slips on slippery floors. There's a 
lot of water in this industry used to wash down, so the floors 
are always wet. But there's also a lot of fat and grease on the 
floor. You can't wash that off, you've really got to scrub that 
off.
    So the floor is very slippery. We need to work with this 
industry to get some non-skid substance on the floor or to get 
some footwear that will increase traction and reduce the 
chances for slips, trips and falls. Back injuries, as you say, 
are a significant problem, have been a significant problem. And 
we're trying to go industry by industry to say what's causing 
the back injuries in this industry, and what can we do.
    In the beverage industry, we have route salesmen who are 
lifting these heavy boxes down off of trucks. Is there some way 
that they don't have to reach so high to lift that heavy weight 
down? So we're trying to work industry by industry and look at 
what we can do in each place to reduce those injuries.
    Ms. Lowey. I appreciate that, and I think it would be very 
helpful to this committee if you could provide some kind of 
documentation as to success of these preventive measures, which 
are really very cost effective, and could lead to some major 
improvements.
    Mr. Jeffress. Yes, ma'am. We've had great success. And 
particular employers will be happy to provide you with some 
information on those successes.

                              tuberculosis

    Ms. Lowey. Another area which I've been interested in, I've 
been amazed to see the increase in tuberculosis. And I know 
you've done some work in tuberculosis in the work place.
    Mr. Jeffress. Yes, ma'am. There was a significant increase 
in tuberculosis a few years ago. While the total number of 
cases has dropped off a little now, what is worrisome is that 
there are many more cases of drug resistant strains of 
tuberculosis. It's getting more and more difficult to treat.
    The Centers for Disease Control came out with some 
guidelines on best practices in the health care industry to 
protect people from tuberculosis. In talking with folks and 
taking testimony and hearing from people, it was our belief, 
based on that information, that half the hospitals in the 
country were not following those guidelines.
    So we proceeded to develop a proposed rule on tuberculosis 
to attempt to protect health care workers from contracting 
tuberculosis from this increase a few years ago, in the drug 
resistant strains. That is now a proposed rule, we've put it on 
the street. We've had over 1,000 comments in response to that. 
We will take those comments into consideration and will be 
issuing a final rule on protecting people from tuberculosis in 
the next year.
    Mr. Porter. Thank you, Ms. Lowey.
    Mr. Istook.

                         participation in CCPs

    Mr. Istook. Thank you, Mr. Chairman.
    I want to echo, of course, what many people have said, we 
appreciate the progress on reducing the number of paperwork 
violations that have been issued, and therefore trying to shift 
focus to things that will have a greater benefit to worker 
safety.
    I did want to ask you some further things regarding the 
Cooperative Compliance Program. Looking at a copy of the 
directive that you've issued, and a copy of the litigation 
that's been filed, I find it ironic that in a program that is 
meant to boost cooperation, you did not go through a process, a 
formal notice and comment period, before issuing what the 
employers say is an OSHA standard or an OSHA regulation, and 
that there wasn't this element of cooperation in developing 
this in the first place.
    The essence of the problem seems to be the question of 
whether you are using leverage, to say, ``you won't have to be 
inspected like everyone else, if you can do things which we 
cannot require you by law to do.'' An example was in your 
exchange with Mr. Bonilla earlier, when it was indicated that 
compliance with ergonomic standards was made a condition of 
avoiding regular inspections, even though you don't have 
authority or have not issued such standards.
    I'm very concerned that while you're talking about 
cooperation, there doesn't seem to have been an effort to 
cooperate with businesses by going through a normal process so 
that everybody will have input before you issued this new 
program. That might have avoided the lawsuit which may end up 
delaying new things far more than going through a comment 
period would have.
    So let me, having laid that predicate, I'd like to know 
from you how many businesses before or after the lawsuit was 
filed, actually indicated that they wished to participate in 
this program, and can you give us the comparative data on that 
out of a pool of how many people potentially could participate. 
If you would couple that with your projection on how many 
businesses you believe would participate, if the program is 
cleared and goes forward.
    Mr. Jeffress. I'll be happy to do that, Mr. Istook.
    First, let's go back to the question of involvement and 
participation in consultation prior to the implementation of 
this program. As was mentioned earlier, the Maine 200 program, 
the award-winning, nationally recognized program upon which 
this program is based, was conducted in 1993, five years ago. 
Following that pilot program, that initial program, we expanded 
the pilot on an experimental basis to eight other States, a 
total of nine, where we tried out different forms of this 
program to perfect it.
    In every case, in each State that we worked in, we worked 
with the employer community, with associations, with trade 
unions, to talk about how this program would work and whether 
it would work, what improvements we could make on the previous 
one.
    There were two additional States where we wanted to do a 
pilot where employer associations objected. We didn't do pilots 
in those States. We sat and met with those folks about how to 
redesign it.
    Mr. Istook. But you're not addressing the issue of why not 
have a formal notice and comment period before you issue not a 
State by State pilot, but a national program.
    Mr. Jeffress. I'm coming to that.
    Mr. Istook. Well, that's what I asked about, if you could 
get to that.
    Mr. Jeffress. The involvement of people in the process is 
very important. And we involved folks for five years in this 
process.
    The formal notice and comment process is required for 
rulemaking, when we adopt rules. What this is, is an 
enforcement procedure and a targeting process. Two Federal 
circuit court decisions have upheld that decisions on how OSHA 
does its enforcement are not rules, are not subject to notice 
and comment. So there's not a requirement, there's not a legal 
requirement that there be a formal rulemaking.
    Instead what we did was work, again, over a period of five 
years, with employers, with unions, with trade associations, on 
identifying the best way to proceed with this data.
    Mr. Istook. How long would that notice and comment period 
have taken?
    Mr. Jeffress. It depends. I mentioned earlier that it took 
OSHA 17 years to do a confined space standard. Rules take 
different amounts of time. Our average rulemaking is about four 
years.
    It takes a while to do a rule. But this is not a rule, so 
this is not something that's subject to those procedures. It's 
a different way of involving people, and we have made a major 
effort over the past years to involve folks in the design of 
this program.
    Mr. Istook. And the participation rates about which I 
asked?
    Mr. Jeffress. The participation rates currently are at 85 
percent of the employers that we invited to join us in 
partnership. They have sent us letters saying, yes, they wish 
to join us in partnership. You asked how many had joined at the 
time of the lawsuit. I'll have to go back and look at that 
date. But my recollection is in the high 60s or 70 percent. 
Even after the filing of the lawsuit, more came in.
    Mr. Istook. And that 85 percent is applied toward a base 
number of what?
    Mr. Jeffress. Almost 12,000. I believe it's 11,700 or some 
odd number.

                       number of ccp inspections

    Mr. Istook. So those which do not participate, being only 
15 percent of the entities, which might, does this mean, for 
example, that something like 80 percent of the inspections will 
be at 15 percent of the businesses?
    Mr. Jeffress. No, sir. OSHA does about 34,000 inspections 
per year. Of those 34,000 inspections, our anticipation was 
this fiscal year that about 5,000 inspections would be done 
pursuant to the Cooperative Compliance Program. So 29,000 of 
our inspections would be in construction, which is outside of 
that, or complaints, accidents, fatalities, referrals or 
outside of the Cooperative Compliance Program.
    So about 15 percent of our inspections we had projected to 
be Cooperative Compliance Program inspections. Some of these 
would be people who remain on the primary list, some would be 
quality assurance inspections, if you will, and some percentage 
would be inspections of those people that chose to join in 
partnership with us. But with the stay, it's unclear how many, 
if any, inspections we'll be able to do pursuant to the CCP.
    Mr. Istook. We'll follow up with a written request on 
developing further numbers.
    Mr. Porter. Thank you, Mr. Istook.
    Mr. Bonilla has asked a point of personal privilege.
    Mr. Bonilla. Thank you, Chairman, just for 30 seconds.
    For the record, I'm going to submit some questions, since 
we're in a time crunch. But we worked out an agreement on this 
subcommittee last year involving the ergonomics issue. I 
understand earlier in this hearing, while I was out of the 
room, that a question was raised about my commitment to my 
keeping my part of the deal.
    And I want to clarify that I have every intention of 
keeping my word on the part of the deal that I made. I would 
just appreciate if other members on the subcommittee, if they 
have a question about my commitment to an issue, that they 
would raise it to me personally first, and rather than raising 
an issue that was a result of rumormongering and an inside 
newsletter or some article that may have been in the newspaper. 
As any member on this subcommittee knows, you can't always 
believe what you read in the paper.
    I'm absolutely committed to keeping my end of the deal that 
we made on ergonomics last year. I wanted to state that for the 
record.
    Mr. Obey. Chairman, I never questioned whether Mr. Bonilla 
was willing to keep his part of the deal or not. What I did was 
to make the point that in an article this morning, a source 
supposedly close to Congressman Bonilla had said that I had not 
kept my part of the deal. I never questioned whether Mr. 
Bonilla had.
    And I simply said that I stand on my reputation. I don't 
think any member of this Congress can ever cite an agreement 
which I have made that I have broken. And that's the point I 
was trying to get at. I never questioned whether Mr. Bonilla 
was keeping his part of the deal or not, but I'm willing to 
stand on my record against that of any member in this House in 
sticking to what I shake hands on.
    Mr. Porter. The Chair is----
    Mr. Bonilla. I want to stand on my commitment as well.
    Mr. Porter. The Chair is delighted to hear that both sides 
are going to stand on their commitment. [Laughter.]
    The subcommittee will stand in recess until the completion 
of this vote.
    [Recess.]
    Mr. Porter. The subcommittee will come to order.

                              stay of ccps

    As we understand it, the U.S. Court of Appeals for the 
District of Columbia last week ordered a stay of your proposed 
expansion of your Cooperative Compliance Program. Do you know 
why the court took this action, and when it is likely to rule 
on the merits of the case?
    Mr. Jeffress. Mr. Chairman, we expect to be asking for an 
expedited hearing on this matter. I expect that motion for 
expedited hearing to be filed in the next few days.
    The court did not rule on the merits, did not suggest that 
either party was likely to prevail on the merits. They simply 
referred to a case, suggesting that they didn't think a great 
deal of harm would come from OSHA's delaying the implementation 
of this program until the hearing could be held.
    They asked for briefs to be filed in April and May. Given 
the court's procedures, there are no hearings held during June, 
July and August. So if they stick to what was said in their 
order last week, the hearing would probably not be until the 
fall, with a ruling some time after that, clearly after the end 
of this fiscal year, which is why we're asking for an expedited 
hearing. We will try to get a hearing in before their June, 
July, August recess.
    Mr. Porter. Do you have any greater insights as to why the 
plaintiffs brought this suit? I can't imagine, myself.
    Mr. Jeffress. Well, I have read their brief, and it does 
not appear to me to be based upon anything they're likely to 
prevail on. We see this as an inspection assignment system not 
subject to rulemaking. And they believe it is a rulemaking, 
because we're asking employers to invest in a safety and health 
program, and there's not a rule requiring that. That's why they 
see it as a rulemaking. But in fact, to us, it is an inspection 
assignment program.
    I am most concerned about the fact that we used employers' 
own data to identify the places we thought most needed 
attention, and we're trying to reach out in a cooperative way. 
The stay effectively stays us from any actions pursuant to that 
directive. And read literally, we would not be able to offer 
the partnership to employers that we sought to offer.
    So I'm very disturbed that this would keep us from 
proceeding down the path which we were trying to follow.
    Mr. Porter. The Chair would say that I do not believe that 
we can ever reach the point of having no enforcement money or 
no enforcement action of your agency. There are people who 
attempt to get around the rules. And enforcement actions are 
needed. What I understand this program to be, though, is one 
that works on the cooperative side and simply targets those 
that are at the highest risk or has the worst safety or health 
records. And that seems to me to be exactly what we've been 
talking about this morning, and the way both the majority and 
minority party and the Administration would like your agency to 
proceed.
    So perhaps I'm missing something, that's entirely possible, 
but I find it rather strange that when you are doing exactly 
what everybody says they want you to do, you're being 
challenged in court by one of the people who I think would 
benefit from it.
    Mr. Jeffress. Thank you, Mr. Chairman. I hope the judges 
will listen to your statement.
    Mr. Porter. I think they're going to have to listen to your 
statement.
    Mr. Jeffress. Yes, sir.
    Mr. Porter. Mr. Dickey?
    Mr. Dickey. I've got a question, but it's being taken away 
from me.
    Well, I can come close to it.
    Mr. Jeffress, you have succeeded Joe Dear?
    Mr. Jeffress. Yes, sir, I have.
    Mr. Dickey. Well, maybe I have gone through this with you 
before, but I was worried when Joe quit that he was being too 
cooperative with us. There's not any truth to that? [Laughter.]
    Mr. Jeffress. I think he enjoyed working with Congress, Mr. 
Dickey.
    Mr. Dickey. Well, he did a great job. He came into my 
district and took some complaints. I'll never forget, he was 
standing up and answering some questions. One guy was a 
mechanic, and he told about spending three nights not sleeping, 
that his daughter was in college, and his son was coming up to 
be in college. When he finished the question, Joe stopped and 
he said, now, Jay, I understand what you're talking about, 
about the concern that people have. And I hope you'll follow 
through with that.

                           poultry initiative

    Let me ask you a question, particularly about an industry 
in Arkansas. It has to do with the poultry processing 
initiative. I've been warned that you will answer by referring 
to a court case. That's off limits.
    Mr. Jeffress. All right.
    Mr. Dickey. I think it's clear we get a clear common sense 
answer, not a legal one.
    Why are chicken catchers now not classified as farm 
laborers? It seems to me chickens are on farms and chicken 
catchers work on those farms to catch the chickens. Can you 
give me a down to earth--Mr. Chairman, are you commenting on my 
question? [Laughter.]
    Mr. Porter. I wouldn't do that, Jay.
    Mr. Dickey. You were laughing at something else, all right. 
Help me out.
    Mr. Jeffress. Mr. Dickey, this is an issue that has both 
OSHA and Wage and Hour implications, as you know. Whether they 
are chicken catchers or whether they are industrial workers, 
OSHA would still have jurisdiction over the working conditions.
    But these chicken catchers are generally, my understanding 
is, dispatched by the processor to go collect the raw 
materials, if you will, that come back to the plant. So to the 
extent they are dispatched by the processor for that purpose, 
it would appear they are related to the processor more than 
they are to the farmer who has raised the chickens.
    Mr. Dickey. What about the location, though? Is that not a 
factor, where they do this?
    Mr. Jeffress. It is a factor in terms of what they do. But 
in terms of the OSHA application and the OSHA coverage, we hold 
the employer responsible for the conditions that the employees 
are exposed to. Some folks are trying to say these are 
independent contractors, and they're not employees of the 
processor. But these people are hired by the processor to go 
out and collect their chickens and bring them back for 
processing. We feel very strongly they are working at the 
direction of the processor, and believe the processor should 
take precautions to protect them from the hazards of the job.
    Mr. Dickey. How many, in numbers, how many new regulations 
or rules do you foresee coming as a result of this poultry 
initiative?
    Mr. Jeffress. There has not been a suggestion of any new 
rules or regulations coming as a result of the poultry 
initiative, Mr. Dickey. Through that survey, what we did was to 
identify hazards in poultry plants that may not have been 
identified in previous comprehensive inspections, to examine 
what was happening with different people, with different 
exposures in that industry.
    We have met with industrial representatives from the 
poultry industry to talk about what we found. In the course of 
acting on that information, when we normally do inspections 
within the poultry industry, pursuant to the cooperative 
compliance program or any other reason we might have for being 
in a poultry plant, we will be better prepared to know what to 
look for and we will have a better idea of what different 
plants have been able to do to respond to some of the problems.
    So it really will be for the benefit of the industry for 
our inspectors to be better educated about what can be done. 
But we don't project at this point it will lead to a new rule 
or regulation.
    Mr. Dickey. So you don't think there's going to be any 
additional costs that are going to be imposed on the poultry 
industry?
    Mr. Jeffress. There will be no costs imposed by additional 
rules. Now, there are some places where we've found conditions 
which we believe a particular plant should address. But they 
should have addressed it, anyway. It's not additional cost 
because of this survey.
    Mr. Dickey. Do you know of any time that you're going to go 
out that we could actually meet with these folks, or could we 
meet up here if it's necessary?
    Mr. Jeffress. I'd be happy to do that. We currently plan to 
have meetings in three different cities, in Little Rock, in 
Atlanta and Baltimore.
    Mr. Dickey. You'll be in Little Rock?
    Mr. Jeffress. The agency will. I don't know my schedule 
yet. But if you're going to be there, I will be there, Mr. 
Dickey.
    Mr. Dickey. It's the other way around. [Laughter.]
    I don't want you coming to Little Rock without my watching 
what you're doing. Let's see if we can help these people to get 
together.
    Mr. Jeffress. I'll be happy to work with you to do that.
    Mr. Dickey. Thank you, sir.
    Mr. Porter. Mr. Obey.

                     number of ergonomics injuries

    Mr. Obey. Just three things. First of all, would you give 
us a succinct statement for the record on how many, and I know 
you've been asked this before in different forms, but how many 
workers experience injury because of the ergonomics problem, in 
your view? What's your best information on that?
    How many, do we know how many cases of surgery we've had to 
correct problems caused by ergonomics problems? Do you have any 
idea how much lost time from the work place has been 
accumulated because of those injuries? And how much lost time 
just recovering from those surgeries?
    How much workmen's comp costs have been incurred because of 
those problems? If you could just give it to me that way for, a 
response for the record, I'd appreciate it.
    [The information follows:]
                       Ergonomic Related Injuries
    Using BLS data, OSHA estimates that there were 640,000 work-related 
musculoskeletal disorders in 1994 that resulted in workers losing at 
least one day of work, MSDs represented nearly 25 percent of work-
related lost workday injuries in 1995. OSHA estimates include all 
overexertion and repetition-related lost work time injuries that 
resulted in musculoskeletal disorders or carpal tunnel syndrome. OSHA 
is currently working with BLS to develop published estimates of the 
number of workplace MSDs from 1993 to 1996. BLS data does not permit 
estimates of the number of non-lost time musculoskeletal disorders.
                      Ergonomic Related Surgeries
    BLS does not collect data on ergonomic-related surgeries. One of 
the most widely recognized ergonomic-related injuries is carpal tunnel 
syndrome (CTS). There were 31,000 CTS cases in 1995 that caused one or 
more lost workdays. CTS cases averaged 30 days away from work, the 
highest average of all types of reported cases. Another ergonomic-
related injury caused by overexertion is hernia. In 1995, BLS reported 
30,000 lost workday cases due to hernias. Hernia injuries required an 
average of 22 days away from work--higher than amputations (average 21 
days) and fractures (average 18 days).
                 Lost Work Time for Ergonomic Injuries
    Based on the median numbers of lost workdays for repetition and 
overexertion injuries, there were 4.5 million lost workdays associated 
with MSDs in 1995. This estimate does not include lost workdays that 
resulted from permanent disabilities caused by MSDs.
                       Worker Compensation Costs
    The Labor Department does not maintain records on the percentage of 
worker compensation costs that are attributable to private industry 
MSDs. However, Webster and Snook, using the records of Liberty Mutual 
Insurance, the largest workers' compensation insurer in the U.S., have 
estimated that in 1989, upper extremity cumulative trauma disorders and 
low back pain claims accounted for over one third of all worker 
compensation claims costs. OSHA estimates that these injuries and 
illnesses cost employers approximately $20 million in workers' 
compensation costs annually.

                 enforcement and compliance assistance

    Mr. Obey. Secondly, just one question, and then a 
statement. Your budget calls for, you've got a 4.6 percent 
increase for enforcement programs and a 7.8 percent increase 
for compliance programs. The committee has traditionally had 
concerns about the balance between those two. Would you tell 
us, what's your justification for reaching the balance that you 
reached between those two increases?
    Mr. Jeffress. Yes, sir, and let me take the budget question 
first, if I may. Our effort has been and will continue to be to 
maintain a balance between enforcement and compliance 
assistance. We need both. My experience in North Carolina was, 
after that fire, North Carolina greatly increased its 
enforcement effort, and all of a sudden we had people demanding 
and asking for compliance assistance, and asking for 
consultation.
    But before the fire, when we had a very low and small 
enforcement effort, our consultants were going around making 
cold calls, begging people to ask them for advice.
    So I believe it's very important that we maintain a strong 
enforcement effort and keep a balance between the two. Over the 
last three years, there has been an increasing percentage, if 
you will, applied to the compliance assistance and State 
consultation efforts. There has been this increase in demand, 
and it's been helpful to satisfy that demand.
    And I affirm that it's useful to respond to that demand. 
But we cannot take away from enforcement, and as you pointed 
out, we're actually asking for increased enforcement, because 
we need to maintain that strong enforcement level.
    The effort in the cooperative compliance program this year 
is directed at both having the enforcement but offering 
partnership where people ask. So this year, we're asking for an 
increase in compliance assistance and an increase in State 
consultation, because we expect the demand on that side to 
increase this year because of the effort we're making with 
partnership.
    So you will find larger increases projected and requested 
by the President for compliance assistance and State 
consultation because of that expected demand from the 
partnerships.

                          ergonomics injuries

    On the ergonomics part of it, as I said earlier, we had 
about 6 million people hurt on the job in the United States 
last year. And about a quarter of all of those were from 
ergonomics related problems. So that will give us about a 
million and a half people suffering some kind of injury on the 
job or illness on the job as a result of ergonomics.
    Cost to employers varies depending upon the type of injury 
and the extent to which the employer has addressed it. For the 
surgeries that you mentioned, in North Carolina, we looked at 
the cost to employers. Theaverage carpal tunnel case costs over 
$11,000 to an employer for a single case. And we have employers with 
2,000 employees in their plant, and they were having dozens of these 
cases per year. It added up to substantial money, cost to the employer.
    The cost to the economy, if we multiplied this $11,000 
times more than a million injuries, it's a huge cost to the 
economy. I'd like to get with my staff and get back to you on 
the specific numbers, and I'll be happy to do that.
    Mr. Obey. I just find it interesting that members of 
Congress sit here arguing year after year about how much we can 
slow down the efforts of agencies like yours to provide worker 
health and safety protection, yet members of Congress, near as 
I know, the biggest occupational health and safety danger we 
have is stumbling over each other to get to a microphone or 
television camera.
    So I find that kind of ironic. But I just want to----
    Mr. Jeffress. Well, we would issue a standard, but we don't 
have jurisdiction over the legislative branch. [Laughter.]
    Mr. Obey. And nothing would help.
    But let me just make one point about your agency. I was in 
Congress when the OSHA Act was originally passed. It was 
sponsored by that well-known notorious leftist, Bill Steiger, a 
Republican from Wisconsin. He pushed those terrible socialist 
ideas, such as increased capital gains tax breaks and things 
like that. So he was obviously an out of control anti-business 
leftist.
    Since that time, to be frank, your agency from time to time 
has given me fits. Because it has a long history in the early 
years of not being sensitive to legitimate concerns that the 
business community expressed.
    Mr. Conte and I, when he was with us, we went through a 
long effort to see to it that OSHA inspectors were retrained so 
that they would take a more practical approach. We worked to 
carve out some small business special consideration. And we 
worked very hard to start, we had to push OSHA pretty hard to 
get them to move into a compliance, volunteer compliance 
program.
    And having said all of that, I just want to echo the 
comments of the Chairman. I am mystified by the court suit with 
respect to the Maine 200 or whatever they call it. Because it 
would seem to me, unless it's a case where you have letters 
that raise peoples' hackles because the letters aren't 
carefully drawn and they appear to be questioning peoples' 
integrity or appear to be threatening, it would appear to me 
that this is what the business community would want you to do. 
You're trying to get most people out of the line of fire who 
are not serious offenders, so you can concentrate on the whales 
rather than the minnows.
    And I just note the comments from the CEO from Wisconsin 
Box who indicated that he was extremely pleased with his 
company's participation in the Wisconsin 200 program.
    Mr. Jeffress. Yes, sir.

                        non-adversarial approach

    Mr. Obey. On CNN recently, he said this approach was 
indicative of a new and less adversarial OSHA, and was willing 
to help you find out what was wrong and help you correct the 
problem. To me, that's what you're supposed to be trying to do.
    So I guess the only note of caution I would have is, I 
recall receiving a letter from the State motor vehicle 
department in my State, suggesting that I hadn't, that I was 
understating what I had paid for a Jeep Cherokee and telling me 
that they were going to demand that I pay X number of dollars 
in increased sales taxes by return mail unless I could prove to 
the contrary.
    Well, the idiots had classified it as a new Cherokee rather 
than a used Cherokee, it was four years old. So they were 
wrong, but they got me mad. And I can understand a businessman 
getting mad, if the kind of letters they get are not 
considerate, thoughtful letters.
    So I guess I would simply urge you to make certain that the 
way in which this is being implemented is a way which does 
treat people with dignity, does not imply that they are 
lawbreakers to start out with, and does not in any way give 
people reason to think that they are being threatened. Because 
I think the thrust of what you're trying to do in this program 
is correct.
    Mr. Jeffress. Thank you, Mr. Obey, and I appreciate your 
caution. This is a case where we used the data the employers 
provided us, rather than our assumptions or projections about 
their experience. We used their own data in responding to them.
    The fact that 85 percent of them, over 9,000, have said to 
us, we want to join with you, we want to do something about it, 
suggests to me that by far the large majority of businesses out 
there also believe it makes sense for OSHA to proceed in this 
way.
    But I assure you, there are a few employers that, even 
while we acted on their own data to identify them as belonging 
in this program, are now finding that, golly, they think they 
may have provided us the wrong information and want us to look 
again, maybe, at their data, and they're giving us alternative 
data to look at. In every case, where it is suggested the data 
is inaccurate or insufficient, we're going out to visit, to 
look at the data and help them ascertain what the records 
actually say and whether they belong in the program or not.
    Mr. Porter. Thank you, Mr. Obey.
    Mr. Wicker.
    Mr. Wicker. Mr. Chairman.

                      data base on osha citations

    Mr. Jeffress, let me ask you what you know about an overall 
Labor Department initiative, and that is, the executive 
memoranda or proposal about deciding which contractors the 
Federal Government will do business with. Presumably, your 
agency would be involved in scoring or benchmarking potential 
Federal contractors, applying for Federal contracts.
    Do you have any information on the substance of these 
proposals? Back during the confirmation hearings of Secretary 
Herman, this issue became quite controversial. And can you tell 
me how OSHA will be involved in this process?
    Mr. Jeffress. When we make inspections of employers, of 
course, we keep a data base that shows what violations we have 
cited for employers. For those employers who are Federal 
contractors, it has been suggested that one piece of 
information that the Government should consider in letting 
contracts is that employer's safety and health history and 
their experience with OSHA.
    The General Accounting Office, a year or two ago, issued 
reports suggesting that there were a lot of Federal contractors 
that had extensive history with OSHA, and a history of serious 
violations. That in turn led some people to question our data 
base, and we have in fact reviewed our data base, and have just 
recently updated it. There were some cases where the initial 
citation remained in the data base, even though a later court 
decision or a later decision by the review commission altered 
or changed it, and that we had not updated the data base.
    So we have now updated that data base and have it available 
once again for anyone who chooses to use it for the Federal 
Government as a basis for deciding whether or not to award 
contracts. We'll have information to base their decision upon.
    Our role in this, Mr. Wicker, from our perspective, is to 
provide the information to those who award contracts and may 
wish to consider safety and health violations as a basis for 
making awards.
    Mr. Wicker. And you can assure the subcommittee that the 
data base will not include complaints that have not been acted 
on and citations issued?
    Mr. Jeffress. Yes, sir. We are making very sure that our 
data base includes only citations issued, not allegations made 
or complaints or anything else. But the data base shows 
inspections made and citations issued. We are now making a 
major effort to make sure we keep up with any settlements or 
court decisions or commission decisions to keep that data base 
current.
    Mr. Wicker. Okay, and if those citations have later been 
overturned, they are later removed?
    Mr. Jeffress. That we have just recently done. I'll have to 
tell you that when the data base first was made available to 
the public, it was not as clean as it needed to be. We have 
made an effort to clean that up now.
    Mr. Wicker. All right. Well, I certainly would ask you to 
supplement your answer, if you find out there's any other role 
of OSHA in this department-wide initiative.
    Mr. Jeffress. Happy to do so.

                      methylene chloride standard

    Mr. Wicker. Let me ask you about methylene chloride. I 
believe in your initial statement you mentioned that based upon 
some information you had received, you had made changes in the 
methylene chloride regulation, is that correct?
    Mr. Jeffress. Yes, sir.
    Mr. Wicker. Would you update us on that?
    Mr. Jeffress. Yes, sir. Following the issuance of the 
methylene chloride standard, there were a number of concerns 
expressed about its impact on small businesses, particularly 
small businesses, and particularly a couple of industries where 
this Congress directed us not to issue citations if it was 
economically and technologically unfeasible for a business to 
comply.
    So we've done a number of things. First, of course, we 
implemented what this Congress directed, and directed all of 
our State consultation offices to give priority assistance to 
small businesses that had methylene chloride in the work place, 
and asked for assistance in assuring that they were using the 
best possible and most feasible technological controls to 
reduce employee exposure.
    We had several businesses in the association file a lawsuit 
and suggest that the methylene chloride standard was improperly 
adopted, because we had not considered its application in 
different ways to their members or to them as individuals. We 
have been working with those employers and associations.
    I'll have to say at this point we have a handshake on a 
deal, but it's not signed yet, to settle that case, whereby we 
are extending the deadlines that people have to comply with the 
provisions of the standard. With the handshake, I believe we 
have settled the issues that were of concern to the employers 
and the associations on this rulemaking.
    Mr. Wicker. When do you anticipate that a judgment will be 
issued, that a settlement will be filed and a judgment signed?
    Mr. Jeffress. I certainly expect and would hope that the 
papers would be filed by the parties in the next month. I 
always hesitate to project when a court might actually sign the 
order, but I think it will be very soon.
    Mr. Wicker. Mr. Chairman, I assume we're operating under 
the same five minute rule that Mr. Obey was just allowed? 
[Laughter.]
    Mr. Porter. If you have additional questions, please 
proceed.

                       stay on ccp implementation

    Mr. Wicker. With regard to the Cooperative Compliance 
Program, I don't quite understand. I thought a court had stayed 
the implementation of this program. And yet your testimony 
seems to be that you're proceeding ahead with at least a 
portion of it. Is that correct?
    Mr. Jeffress. No, sir. We have been stayed and are not 
proceeding with the Cooperative Compliance Program. It is my 
belief that we will prevail on the merits and it's certainly 
our hope that we will proceed with this program as soon as the 
court hears the case and issues a decision.
    But in the meantime, we are stayed and are unable to 
implement any of the portions of that directive. What I may 
have said is, we know that these 12,000 employers are amongst 
the most dangerous work places in the country. If we can't 
proceed with the Cooperative Compliance Program, then we need 
to go back and redesign an alternative way to work with these 
employers. Because this is where we need to work if we're going 
to bring injury rates down in this country.

                      changed enforcement process

    Mr. Wicker. Okay, and you talked about an official 
beginning to think of himself as compliance rather than 
enforcement, different mind set. What's the difference? Both of 
them go in and issue citations. What's the real substantial 
difference between enforcement and compliance?
    Mr. Jeffress. I think there are two principal aspects to 
this. We work hard on it in North Carolina. This is not just 
projection for me. This is from a lot of difficult 
conversations with my compliance officers in that State and a 
lot of thinking about how we could proceed differently.
    First, under the old OSHA, when we drew a name out of a hat 
and went into a work place, we didn't have any idea what the 
problems were in that work place. So we went in there cold on 
that day with our book of rules, and had to make judgment calls 
when we got there and saw what was there.
    Now that we have the data, the injury and illness data, we 
generally have a little better idea before we go in of what's 
hurting people, of what's causing the injuries and illnesses. 
That's going to enable us to be better prepared not only to 
enforce the rules, but also to bring with us information and 
advice, referrals to other businesses similarly situated to 
help the employer get some idea of how they could keep people 
from getting hurt.
    The second aspect of this is to encourage our compliance 
officers to consider themselves safety and health 
professionals. They may see things that are not covered by the 
rules. They may see that the safety committee in the plant 
hadn't met for three months. They may see that the safety 
committee had made a bunch of recommendations and the 
management has never responded to it.
    They may see supervisors or executives in the plant walking 
around in areas where you're supposed to wear eye protection 
and not wearing eye protection. These are things that may not 
be violations of the rules, but may demonstrate if there is 
effective employee involvement in the safety program in this 
plant, or if the management demonstrates leadership.
    And frequently, some advice, some consultation, some 
discussion about ways to improve the safety and health program 
is helpful and could lead to fewer injuries in that plant. I 
would like my compliance officers to be aware of these things 
beyond the rules, where they could give good advice, where 
their assistance, their expert assistance, might result in 
fewer injuries and illnesses, even if it is not the subject of 
a violation or citation, and be able to communicate that advice 
to the employer and the employees in that plant.
    Mr. Wicker. Do you have any plans to shift the FTE that you 
initially proposed for compliance based on the judge's stay?
    Mr. Jeffress. No, sir. It has not been our anticipation to 
shift FTE based on the stay of the CCPs in terms of compliance 
assistance versus enforcement. About 15 percent of our field 
efforts are in compliance assistance. I expect that to be 
maintained. We will continue to provide outreach and assistance 
through means that are not stayed, if we can't do it through 
the CCP.
    Mr. Wicker. Well, I note that you've requested an increase 
in enforcement funding of $2.7 million over fiscal year 1998. 
And that is earmarked for 23 new positions, 13 of which would 
be used to implement the agency's Cooperative Compliance 
Program.
    Mr. Jeffress. Yes, sir. At the time this budget was 
prepared, that was our intent. As I say, if we're not able, 
because of the stay, to do that, we'll have to find an 
alternative means to address these 12,000 work places.
    We have identified the places where we most need to work, 
and we still need to pay special attention to them. So I would 
suggest that these are still very necessary and important 
appropriations.

                       small business assistance

    Mr. Wicker. And finally, let me ask you about OSHA training 
grants. I'm told that a vast majority of these, the recipients 
of training grants, were union affiliated. Did you give any of 
these grants to small business development centers, which were 
authorized in the Small Business Act and exist in every 
Congressional district?
    Mr. Jeffress. We have, of course, an open invitation for 
people to apply for and receive these grants. We have a number 
of grants to universities, and non-profit organizations. I'll 
have to check and see if any of them happen to be small 
business assistance centers.
    About 30 percent of the grants went to labor unions, Mr. 
Wicker. It's not a large majority, it's 30 percent. And that's 
30 percent of between $2 million and $3 million.
    On the employer assistance side of things, we have a $35 
million program of State consultation, where we go on-site to 
assist employers with their safety and health concerns. So 
there is a significant percentage of our monies, and a huge 
percentage of our compliance assistance monies directed to 
employer assistance through consultation.
    I appreciate your suggestion, though, of the small business 
development centers. I used them in the community colleges of 
North Carolina as outreach and teaching areas. I think they are 
a very useful thing and a way we can extend our work.
    Mr. Wicker. Well, I thank you very much for your testimony.
    Mr. Jeffress. Thank you, Mr. Wicker.
    Mr. Porter. Thank you, Mr. Wicker.
    There are additional questions that we would ask you to 
answer for the record, Mr. Jeffress.
    Clearly, based upon the number of members in attendance and 
the time of this hearing, you and OSHA are our most popular 
agency by far. [Laughter.]
    Mr. Jeffress. Thank you, I think.
    Mr. Porter. Clearly, I say we, and I say we meaning both 
sides of the aisle and you are on the same track. I think 
that's very, very encouraging.
    So let me thank you for the fine job you're doing, Mr. 
Jeffress, both for the agency, for the Department and for our 
country. We urge you to keep up the good work. We want to work 
with you in every way possible.
    Mr. Jeffress. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here with you for the first time, but I'll be 
back whenever you ask, and I'll be happy to assist the members 
with any questions they have.
    Mr. Porter. Thank you very much, sir.
    [The following questions were submitted to be answered for 
the Record:]


[Pages 580 - 685--The official Committee record contains additional material here.]




                                       Thursday, February 26, 1998.

                 MINE SAFETY AND HEALTH ADMINISTRATION

                               WITNESSES

J. DAVITT McATEER, ASSISTANT SECRETARY FOR MINE SAFETY AND HEALTH
EDWARD L. JACKSON, ACTING DIRECTOR, OFFICE OF BUDGET

                           Opening Statement

    Mr. Porter. Continuing with the hearings for the U.S. 
Department of Labor, we're pleased to welcome J. Davitt 
McAteer, the Assistant Secretary for Mine Safety and Health.
    Mr. McAteer, why don't you proceed with your statement, and 
then we'll go to questions.
    Mr. McAteer. Thank you, Chairman Porter.
    I'm pleased to appear before the committee to discuss 
MSHA's fiscal year 1997 budget request for $211.1 million and 
2,243 FTE. That represents a net increase of $7.8 million and 
57 FTE over the fiscal year 1998.
    MSHA's primary mission has been to reduce illnesses and 
injuries and fatalities in the mining industries in this 
country. The budget that we have submitted, we believe, will 
enable us to concentrate on improving miner safety and health 
to fulfill the Secretary of Labor's strategic goal of fostering 
quality work places that are safe, healthy and fair.
    Since the enactment of the Coal Mine Safety and Health Act 
of 1969, the number of fatal accidents in the mining industry 
has fallen from 400 to 500 a year in the 1960s to a low of 86 
in 1996. Last year, a good year in coal mining, deaths fell to 
an all time low of 30. However, last year was not such a good 
year for the metal-nonmetal miners. Some 60 fatalities occurred 
in 1997, the highest number in 10 years, up from all time low 
of 40 in 1994.
    MSHA is working hard to concentrate on fixing this trend 
and taking steps to reduce the number of fatalities that exist 
in the mines and the metal-nonmetal mining regions. We believe 
that there are several factors which have led to this increase: 
the increase in production in these mines, the increase in 
employment and the increase in the number of hours worked.
    But while no single cause can be identified for the upsurge 
in metal-nonmetal fatals, the appropriation rider that 
prohibits MSHA from enforcing the training requirements at more 
than 10,000 of our Nation's mines, we believe, is a significant 
contributing factor. Over the past two years, for example, 
exempted operations counted for 90 percent of the deaths at the 
surface metal-nonmetal mines, even though they account for less 
than two-thirds of the total employment hours.
    More than 60 percent of the victims, many of them young 
workers with limited experience, have received little or no 
training. All miners must receive adequate training, so that 
they can recognize and avoid safety and health hazards. 
Allowing workers to die because they lack proper training is 
senseless and shameful.
    Following up with a program begun in 1997, we will continue 
to address this safety problem. We are resolved to find the 
right mix of actions to bring down the number of mining 
fatalities. We have attempted to reallocate resources to put 
front line workers where they are most needed, and conduct 
special programs that focus on accidents which claim unusually 
high numbers of victims. Our new FTE request will be targeted 
to address root causes of accidents and injuries.

                            health problems

    In the area of health, we have been working very hard in 
both the metal and nonmetal and coal sides of the house to 
address two major health problems. Deaths from occupational 
lung diseases, particularly pneumoconiosis or Black Lung, still 
result in a number of premature deaths of workers who have been 
in the industry for a long time and workers who have only 
recently entered the industry.
    In addition, silicosis continues to be a serious problem 
for our miners. Proposing 40 additional FTE and $2.7 million to 
expand the Federal dust sampling program for our Nation's mines 
is an effort to rid the industry once and for all of Black Lung 
and silicosis.
    MSHA's budget for 1999 is geared to making progress in 
these areas that we believe are so important to the Nation's 
miners. We hope that we will be able to reduce the number of 
fatals and improve the health of all miners in this country.
    I thank you for the opportunity to appear here today and 
would be happy to answer any questions you might have.
    [The information follows:]


[Pages 689 - 693--The official Committee record contains additional material here.]



                            MINE FATALITIES

    Mr. Porter. Mr. McAteer, when you say coal mine deaths fell 
to a record low, are we talking about deaths per 1,000 workers, 
or are we talking about the absolute number?
    Mr. McAteer. We're talking about the absolute number.
    Mr. Porter. What about deaths per number of workers 
engaged?
    Mr. McAteer. That number is at its all-time low as well.
    Mr. Porter. It is?
    Mr. McAteer. Yes, sir. Both the rate and the actual number, 
30, are the lowest in recorded history in this country.
    Mr. Porter. And what do you attribute that to?
    Mr. McAteer. There are several factors. If we had the full 
answer to that question, we could apply it in other places 
quite readily. We know that education and training is a 
critical element, that enforcement is a terribly important 
element, and that new technology is an element.
    For example, we have a very high level of production in the 
coal industry, similar to the level of production in the metal-
nonmetal industry. But we haven't had the increase in 
fatalities. In fact, we've had a decrease in fatalities in coal 
mining.
    We attribute that to in part the technology that's in place 
now, and the fact that we've had a statutorily mandated 
enforcement program for all coal mines since 1969. I think 
those factors have come together to help us get there.
    I want to say for a moment that in addition to what we do, 
this number is also driven by the people involved, the people 
who are mining the product. I say that from the standpoint of 
both the workers and the managers of these operations. We have 
had good cooperation from the time that I've been Assistant 
Secretary from both management and labor in the coal industry, 
as well as management and labor in the metal-nonmetal industry. 
So we have had excellent cooperation in terms of getting at and 
addressing particular problems.
    In the last several years, in both coal and metal-nonmetal, 
we've had a sizable number of accidents with powered haulage 
equipment, primarily large trucks. For example, a large truck 
drives over a small truck, or a large truck drives over a 
person at a strip operation in large pits.
    Working cooperatively with industry and labor, we 
implemented a new education and training outreach program, to 
talk with industry and labor to identify problems. Our 
philosophy is not a ``gotcha'' philosophy; we identify a 
problem; we develop materials and education and training on 
that problem. Then, we have an enforcement component, which 
says, we're going to come and enforce on this, because this is 
where the problem is.
    In coal mining, our numbers in terms of powered haulage 
accidents have come down. In metal and nonmetal mining, albeit 
similar programs, in fact, mirror image programs, those numbers 
have not come down. I can't explain why.
    Mr. Porter. Do you have a method of adjusting for major 
accidents? In other words, wouldn't a major accident on, let's 
say the coal side, where a number of people are killed, change 
your numbers dramatically for a single year, even though you 
could show a trend line that they were going down for other 
reasons?
    Mr. McAteer. Yes, sir. We have not had a major accident in 
coal, or metal and nonmetal mining for a number of years. But 
the risk that we have in our business is that we can have, at 
any moment in time, an accident of large proportion.
    We had, for example, a number of fires in the last two 
years, at underground coal mines in this country. Some were in 
Illinois. We fortunately were able to put them out without loss 
of life or limb.
    But can we adjust those numbers? I think you have to take 
the--two parts. One, it is the rate issue, and that is the 
number of people injured or killed per number of tons produced 
or number of hours worked, more likely. And secondly, you would 
just have to say, that is an unusual occurrence, and one that 
does not occur regularly, on an ordinary basis.
    We have not had to make that adjustment in the last several 
years. We hope to not have to make that adjustment again.

                             TRAINING RIDER

    Mr. Porter. Now, you said in your oral testimony that, and 
in answer to the question, that you're not certain why there is 
a significant decrease in the record low for coal mine deaths. 
And on the other hand, deaths for metal and nonmetal mines were 
up significantly last year.
    But you also said that a component of this could be the 
exempt operations where you aren't providing miner training. 
Let's discuss that for a minute.
    This bill has for many years contained a prohibition on the 
expenditures of funds by your agency to enforce miner training 
provisions in the Mine Act with respect to certain kinds of 
surface mining operations. You're opposed to this prohibition.
    If we eliminated--first of all, I'd like you to tell me why 
you think the provision got put in originally, because this is 
actually before my time and your time. Then I'd like to know 
why you oppose it, and then if we eliminated the provision from 
the bill, what steps would the agency take to develop 
reasonable regulations with respect to these very extensive 
statutory training requirements? How would you work with the 
mining industry to accommodate their concerns that these 
training requirements are particularly onerous and burdensome 
to them?
    Mr. McAteer. Thank you, Mr. Chairman.
    There are fewer and fewer things that occurred before my 
time, so I'm glad that there are a few----
    Mr. Porter. Mine too.
    Mr. McAteer [continuing]. Still outstanding. Your question 
goes to the rider and to our expenditure of funds to enforce 
the provisions of Section 115 of the Act. My understanding of 
the history of this particular provision is that its placement 
arose from concerns on the part of the newly integrated metal-
nonmetal mining community who were brought under the same 
enforcement provisions as the coal mining community. The 1977 
Act modified the Coal Act of 1969 to include metal and nonmetal 
mining.
    My understanding is that there was concern on the part of 
the mine operators that this would result, then, in application 
of requirements that were geared toward the coalmines in places 
where the risks, the hazards, the concerns, or the problems were 
different than had been addressed under the Coal Act. It was a concern 
at that time that these requirements would be restrictive and would 
constitute quite a stiff penalty on these metal and nonmetal operators.
    The training rider has been in effect now some 20 years. We 
are opposed to it, and we think that it presents a significant 
problem to us. Because health and safety is an art, not a 
science, we are not able to pinpoint how much good education 
and training will do in preventing deaths of exempt metal and 
nonmetal mines. We do know that, as a general matter, training 
works and works effectively.
    So our suggestion is that we would be able to work with the 
industry if we were to lift the rider, to adapt the 
requirements of Section 115. We've gained enough experience 
under the Mine Act to be able to address the concerns that were 
raised back in the 1977 to 1980 time period.
    We also believe that with the number of young people coming 
onto these properties, the increase in production at these 
facilities, and the fact that the new miners are coming on from 
other types of work, really presents an opportunity to help 
these folks by ensuring they receive education and training.
    There are some industry representatives and some companies 
within the metal and nonmetal industry who do adequate and good 
training. There are unfortunately some who do not. The removal 
of the rider would raise the bar for everyone in the industry, 
to bring them up to a common denominator and allow us to 
enforce that requirement.
    We think that removal of the rider would improve markedly 
the numbers of accidents and injuries. I cannot speak to a 
number, but I can tell you that over a period of time, 
education and training indeed works. It works for all of us.

                          training regulations

    Mr. Porter. Answer for me how far you have gone within the 
terms of the prohibition. In other words, have you developed 
any proposals that might lead to regulations? Have you talked 
to the industry officials? Have you done anything in this area 
at all, and then I'd like to ask you what you think reasonably 
we should allow you to do prior to issuing any regulations?
    Mr. McAteer. Mr. Chairman, we have obviously abided by the 
rider and the prohibition. But we have shared our concerns with 
the associations and with the industry generally, and we have 
sat down with them and said, what are your problems with the 
particular set of regulations, and how might we address those 
problems either by policy or by regulation.
    In addition, we've had conversations to try to pick out the 
best practices in this business. Are there companies that have 
developed good, strong education and training programs, that 
are using them, and can we model those for other folks, can we 
share that kind of information?
    We have made information available on our internet site 
about what kinds of problems we're having, about surface 
haulage and other particular kinds of problems. We have 
pinpointed individual problems. But we can't be certain that 
that information is getting to the places where it's needed. We 
are in effect preaching to the converted, we believe. Those 
folks who are not using this information, are the ones that we 
need to get to. And those, I'm afraid, are the people that we 
are being limited from getting to because of the rider.
    Mr. Porter. Do those tend to be the smaller operators?
    Mr. McAteer. As a general matter, I think that's fair to 
say. These are some of the smaller operators, or some of the 
mid-size operators who have many items on their plate. The 
individual who's running the plant or running the facility 
frequently has a multitude of jobs.
    This is not saying that they're not concerned about it, 
it's simply that they have many jobs and education and training 
becomes a lower priority or is dropped off the plate. We'd like 
to get education and training up to the front of this person's 
agenda.
    Mr. Porter. I don't know the reaction of other members of 
the subcommittee, obviously we've run past the hour and we 
thank you for staying past the hour. But I'd be willing to see 
whatever materials you want to present to the subcommittee in 
this area that might make your case for lifting the 
prohibition. We'd be happy to look at those and see whether 
that makes sense in the current context.
    [The information follows:]


[Pages 698 - 705--The official Committee record contains additional material here.]



    Mr. McAteer. Thank you, Mr. Chairman.

                 significant and substantial definition

    Mr. Porter. I would ask Mrs. Northup to take the chair.
    Mrs. Northup [assuming chair]. Thank you, Mr. Chairman.
    I have a couple of questions. First of all, I'm concerned 
about the change in definition of what constitutes a non-
significant substantial violation. And I'm really concerned 
about you, about your organization bypassing the regulatory 
process.
    I think I understand that the Secretary has asserted that 
you all have never adopted a definition. But it seemed to me 
that, I mean, first of all, the definitionwas promulgated by 
the Federal Mine Safety and Health Review Commission, and that you 
picked up the definition of what constitutes a non-significant and 
substantial violation in several of your regulations. You specifically 
adopted it and pointed to it.
    Are you aware of where that exists in other regulations, 
that adoption of the definition?
    Mr. McAteer. Mrs. Northup, the definition of significant 
and substantial has a long history, beginning in 1965, when it 
was used by the Congress to describe what they felt were five 
or six major areas that they wanted the agency to address--
explosions, floods, etc., the larger kinds of things.
    Mrs. Northup. Right.
    Mr. McAteer. When the Coal Mine Safety Act was modified, 
and amended in 1969, and again in 1977, the Congress gave 
direction to the agency as to what it was they believed was a 
significant and substantial violation. The Mine Safety and 
Health Review Commission has addressed it on a number of 
occasions.
    On one occasion, and the occasion to which you are 
referring, they defined the test for what is a significant and 
substantial violation. It is a two-part test that the violation 
posed a risk that was reasonably likely to result in a 
reasonably serious illness or injury to an individual.
    That test is in conflict with the legislative history and 
the language of the Act itself. What we have tried to do and 
what we're doing in the one individual case, and this matter is 
in litigation, is raise the fact that we do not believe the 
definition is consistent with the statutory provisions and the 
legislative history of the Act.
    But in order not to get into a position where we have 
surprised people in the industry, we made a public 
pronouncement of our position and noted that this position 
represented a change in what the Secretary had acquiesced to, 
but not actually adopted some 16, 17 years ago.
    I want to be in the forefront by saying, we want to get 
public involvement in this. To that end, we have asked for 
public comment from industry, labor, and individuals. And we 
have sent that policy interpretation, although we are not 
required to, up to the Hill here, so that there will be input 
from the Congress as well.
    Mrs. Northup. Well, I guess I would disagree with you that 
it is subject to a rulemaking, the rulemaking process. First of 
all, the definition of what is not an S&S violation, 
significant and substantial, I thought was established by the 
Federal Mine Safety and Health Review Commission. That's where 
the language first appeared.
    Now, I realize you're not bound by that. But that is an 
official interpretation of the law.
    The fact is, you seem to bind yourself to it, or to accept 
it, in two very explicit rules that you adopted, one, in the 
regulation of 30 C.F.R. 100.4, and then again in May 21st, 1982 
in the preamble of the final rule. And then you picked it up 
again in another Federal regulation, exactly the same language.
    So it seems to me that while the secretary may have 
changed, and maybe what she wishes had been an acceptable 
definition, the fact is that in terms of consistency and legal 
standing, that that regulation and that definition had been 
adopted through the rulemaking process. And if it had, it seems 
to me that then you have to go through the rulemaking process 
to change it.
    Mr. McAteer. Mrs. Northup, the position of the Secretary is 
that the Congress has dictated what the S&S should be. And that 
the Congress has given us guidance and direction.
    Mrs. Northup. And when was that?
    Mr. McAteer. In 1977.
    Mrs. Northup. And then based on Congress' direction to you, 
the Mine Safety Commission adopted the definition.
    Mr. McAteer. Right.
    Mrs. Northup. And it was found to be in compliance. I mean, 
these are interpretive judgments. But Congress' opinion hasn't 
changed since 1977, is that right? We haven't given you any new 
direction?
    Mr. McAteer. That's correct.
    Mrs. Northup. So based on the previous direction, there was 
a rule, and it has stood and has been used through litigation 
for 16 years.
    Mr. McAteer. Yes.
    Mrs. Northup. Well, I hardly think you can say you've 
changed your rule because Congress gave you that direction. I 
think you have to say you changed your rule because you didn't 
want to proceed under that definition.
    Mr. McAteer. The language to which we speak begins in the 
1969 Act, that is to say, the interpretation of it begins in 
the 1969 Act. It was interpreted by the then Interior Board of 
Mine Operations Appeals, which was equivalent to or similar to 
the Commission.
    That interpretation stood for a number of years as well. It 
was reinterpreted by the Commission some 16 or 17 years ago.
    Mrs. Northup. After the law changed in 1977.
    Mr. McAteer. Yes.
    Mrs. Northup. Okay.
    Mr. McAteer. There have been several interpretations. And 
in fact, when the law was changed in 1977, the Congress gave 
very specific language in the legislative history which said, 
we don't agree with the interpretation of the board. So there 
have been several different modifications over the period of 
time since the Act went into effect in 1969.
    Mrs. Northup. But the law changed in 1977.
    Mr. McAteer. Yes.
    Mrs. Northup. There was a new definition established by the 
Commission.
    Mr. McAteer. That's right.
    Mrs. Northup. It was picked up in at least two places in 
the rulemaking by MSHA. It seems to me that if you plan to 
change that, you have to go through a rulemaking process.
    Mr. McAteer. Madam Chair, I'm certain that if anybody in 
industry or labor would like to bring litigation, that they 
will have an opportunity to do that. We just don't believe that 
it is a rulemaking requirement.

                       coal enforcement increase

    Mrs. Northup. I'd like to ask you another question about 
your new 40 FTEs that you've requested, and for the coal 
enforcement program. Coal fatalities have reached an all time 
low. However, in other areas, fatalities have increased. And 
yet, you have asked for all of your increases to be in the full 
time equivalencies for coal enforcement program. Why is that?
    Mr. McAteer. Let me explain first the use of the 40 FTEs 
for coal, and then answer the second part of your question, why 
is it not in the metal and nonmetal area. Those 40 FTEs are 
specifically requested to develop and deal with the dust 
problems that we have in underground coal mines and in coal 
mines generally.
    You may recall, in 1994-1995, then Secretary of Labor 
Robert Reich empaneled an advisory committee on coal mine 
safety and health made up of representatives from both industry 
and labor, as well as from the academic community. That 
committee made recommendations on how to change the dust 
sampling procedures in the underground mines and in the surface 
mines of this country.
    One of those recommendations is that the Mine Safety and 
Health Administration, take on responsibility for sampling dust 
in the mines, as opposed to having the operators take 
responsibility for compliance sampling. We think that that 
recommendation is sound.
    The requirement to ask an operator or an employer to take 
samples of his work place for compliance purposes would be akin 
to asking you and me and the rest of the population here in the 
Nation's capital, or anywhere, for that matter, to, each time 
we exceeded the speed limit to pull over, fill out a ticket, 
and send it to the state police of your choice. Then they would 
send you back a ticket and a fine some two weeks later.
    We don't think that system makes sense. We think that 
system needs to be changed. In order for us to do that we have 
embarked upon a program to one, look at how we're collecting 
dust samples, secondly, to do some pilot projects, to see 
whether or not we can take over compliance sampling from the 
operators.
    This recommendation was, I might add, a unanimous 
recommendation by both the operators of the industry, the union 
representatives, as well as the academic community.
    Mrs. Northup. Did they ask for the additional inspectors?
    Mr. McAteer. Yes. They knew that there was going to be 
additional FTEs needed. That's why we have put in place this 
three year plan to improve our dust program. We've initiated 
pilot projects in your State of Kentucky as well as in other 
States. And we're trying to go through a systematic process to 
put ourselves in a position where we can, if possible take this 
over.
    The Congress was generous to us last year, and allowed us 
to improve our FTE position somewhat. Now we're back to say 
this next round will put us even closer to being able to do 
that.
    As to the question of why not have more FTE in the metal 
and nonmetal area, I think there are two reasons. One is that 
these budgets are developed ahead. And we have been struggling 
with the reasons for the increase in fatalities and what is 
needed to bring down those numbers.
    Secondly, we're trying to use the resources that we have 
available currently and to fill all the FTE positions to put 
ourselves in a position to have full enforcement and full 
education and training in the metal and nonmetal area where we 
see the problem occurring. So we're very keen on addressing 
just what you've pointed out. That's our most recent problem.
    The difficulty we have, as everybody else does, is you have 
a bit of lag time in your budget. One of the things we've tried 
to do as an agency, however, is to be a little lighter on our 
feet, be able to move quickly.
    When we did have this fatality increase in the last three 
years, we began to put more emphasis on our metal and nonmetal 
area. The beginning of last year, for example, we invited 
industry and labor to counsel with us on how we might address 
the problem. We've come up with a plan of action and have put 
that plan in place.
    I wish I could tell you today, here, it's made a tremendous 
difference. No, it hasn't. The numbers still are pushing us. We 
still are not satisfied. Nor is industry nor labor.
    But we think that by returning to the basics, by adding the 
emphasis that we have in all components, education, training, 
technical support and enforcement, we hope to be able to get at 
the problem.
    Mrs. Northup. Thank you. That's all, and this subcommittee 
meeting is adjourned. Thank you very much for your time and for 
your explanations. I appreciate it.
    [The following questions were submitted to be answered for 
the record:]


[Pages 710 - 751--The official Committee record contains additional material here.]



                                      Wednesday, February 25, 1998.

                  EMPLOYMENT STANDARDS ADMINISTRATION

                               WITNESSES

BERNARD E. ANDERSON, ASSISTANT SECRETARY FOR EMPLOYMENT STANDARDS 
    ADMINISTRATION
JOHN R. FRASER, ACTING ADMINISTRATOR, WAGE AND HOUR DIVISION
EDWARD L. JACKSON, ACTING DIRECTOR, OFFICE OF BUDGET
    Mr. Istook [presiding]. I call the meeting to order. I am 
Congressman Istook. In the absence of Chairman Porter, I have 
been asked to preside for the first hour of the hearing this 
afternoon.
    We appreciate the witnesses from the Department of Labor; 
Mr. Anderson, Mr. Fraser, and Mr. Jackson; Bernard Anderson, 
the Assistant Secretary for Employment Standards 
Administration, and with him the Acting Administrator of the 
Wage and Hour Division, John Fraser, and the Acting Director of 
the Office of Budget, Edward Jackson.
    Gentlemen, thank you for being here. And, Mr. Secretary, I 
think that the first order of business is your statement. We 
appreciate your being here, and the time is yours for that 
purpose.
    Mr. Anderson. Thank you very much, Mr. Chairman. I welcome 
this opportunity to come before you today to represent the 
Employment Standards Administration of the Department of Labor. 
I submitted in advance a written statement that I would like to 
ask be included in the record, so at this time, I would like to 
make a very brief oral statement summarizing the highlights of 
our request.
    As the Assistant Secretary for Employment Standards, I am 
responsible for both labor standards enforcement and disability 
compensation programs. We administer over 100 laws enacted by 
Congress to protect the basic rights of workers, including the 
minimum wage, child labor, overtime pay standards; family and 
medical leave protections; equal employment opportunities for 
employees of Federal contractors; workers' rights as union 
members; and workers' compensation benefits.
    We have 3,900 employees located in offices throughout the 
country to carry out ESA's mission, making our programs 
accessible to the American public. As Secretary of Labor Herman 
has testified, the Department has developed an effective 
strategy for improving the lives of America's working families.
    In working to establish a single, unified Department of 
Labor, the Secretary has established three strategic goals that 
bridge the Department's many agencies and programs. Her three 
strategic goals are a prepared workforce to enhance 
opportunities for better jobs and income; a secure workforce to 
promote the economic security of workers and families; and 
quality workplaces to foster workplaces that are safe, healthy, 
and fair.
    ESA's work is vital to the Department's success in 
achieving the Secretary's goals of a secure workforce and 
quality workplaces. The Departmental goals traverse ESA's 
strategic goals, which are to achieve compliance with the laws, 
Executive Order, and regulations that ESA is charged with 
administering and enforcing; to minimize the social,human, 
financial cost of work-related injuries; and to improve customer 
satisfaction.
    Our fiscal year 1999 budget request supports these ESA 
goals and furthers the achievement of the Secretary's goals. 
The overall salaries and expenses request for fiscal '99 is for 
$346.4 million and 3,917 FTE. This is a net increase of $19.2 
million and a net decrease of five FTE over the comparable 
fiscal year 1998 level.
    This request includes $10.8 million and 74 FTE for new or 
expanded initiatives; and a financing change that will move 
$3.5 million and 62 FTE from the Office of Workers' 
Compensation Programs periodic roll management S&E account to 
the Federal Employees' Compensation special benefit fund 
account.

                  highlights of fy 1999 budget request

    I now would like to provide brief highlights of the fiscal 
year request for each of the four ESA programs beginning with 
Wage and Hour Division. 1998 marks the 60th anniversary of the 
passage of the Fair Labor Standards Act, which in addition to 
minimum wage and overtime protections, established Federal 
provisions to protect young people in the world of work. Our 
nation can be proud of the achievements and advancements we 
have made to eliminate abusive child labor on our shores, but 
there is much more to be done.
    Today in America, over 210,000 working teenagers are 
injured on the job each year. Of that number, about 70,000 
suffer injuries serious enough to warrant emergency room 
treatment, and about 70 youth die each year while working. The 
additional resources we request will help address these 
problems.
    As part of the President's Child Labor Initiative, Wage and 
Hour is requesting $3 million for enforcement activities in 
agriculture with special emphasis on the illegal employment of 
minors. Wage and Hour will be able to double its 1997 level of 
enforcement in agriculture, targeting areas where survey data 
and enforcement experience suggest that child labor violations 
are most likely.
    Another major initiative for Wage and Hour is updating the 
child labor hazardous occupation orders to reflect current 
technologies, hazards, and other workplace conditions. $1 
million is requested for contract services to obtain the 
technical expertise required to begin this process.
    We are also requesting for the Wage and Hour Division 
$375,000 for contract services to help rewrite regulations to 
be more easily understood by the general public and for the 
analytical tools necessary to complete cost benefit and other 
impact statements that are required for new or revised 
regulations.
    The 1999 request supports Wage and Hour's Performance Plan 
aimed at increasing compliance and customer satisfaction by 
focusing resources on select industries to increase compliance; 
raising the level of compliance in new and small businesses; 
and ensuring that employees covered by the Davis-Bacon Act will 
receive prevailing wage rates that are more current and 
accurate.
    In the Office of Federal Contract Compliance Programs, in 
support of the Administration's efforts to strengthen the 
enforcement of civil rights laws, we request an increase of 
$2.1 million for OFCCP programs to implement a compliance 
assistance strategy in civil rights enforcement and to expand 
the Fair Enforcement Initiative.
    OFCCP will provide Federal contractors with practical 
guidance on regulatory requirements, the skills to develop an 
affirmative action plan, and the capability to conduct self-
analysis to identify and resolve problem areas. Special 
emphasis will be devoted to small and new contractors that may 
not have the expertise to develop Affirmative Action Plans.
    The proposed compliance assistance strategy will help to 
achieve OFCCP's primary performance goal of increasing by five 
percent the number of Federal contractors brought into 
compliance with the Executive Order and statutory requirements.
    In the Office of Workers' Compensation Programs, the FECA 
program is proposing to shift the Periodic Roll Management 
Project from ESA's salaries and expenses account to the Federal 
Employees' Compensation Special Benefit Fund account using 
fairshare funding.
    For the Special Benefits Fund, we project approximately 
$1.9 billion in total obligations of which $179 million is a 
direct appropriation of mandatory spending, and that is the 
smallest direct appropriation since fiscal year 1988.
    Since fiscal year 1995, administrative cost assessments 
from certain defined Federal agencies have been used to 
modernize the Federal Employees' Compensation Program's 
information technology systems.
    I should mention that over the past five years, the 
Periodic Roll Management Project has produced $246 million in 
compensation cost savings, and when fully staffed has the 
potential to produce an additional $426 million through fiscal 
year 2002. The return on investment for that relationship is 30 
to 1.
    FECA's careful stewardship of the compensation fund in the 
last few years led in fiscal year 1997 to the first real dollar 
decline in total benefit costs in decades, despite the fact 
that a cost-of-living increase was awarded to beneficiaries in 
March of 1997.

                   fy 1999 proposed program increases

    In fiscal year 1999, we are requesting $20.3 million for 
capital investment and other initiatives to strengthen 
compensation fund control and oversight. The Black Lung Program 
is asking for an additional $3.3 million to replace their 
computer system with a totally year 2000 compliant system. This 
system currently provides monthly benefit payments to more than 
170,000 beneficiaries.
    In the Office of Labor Management Standards, the $500,000 
appropriated in fiscal year 1998 for the OLMS is included in 
the base for fiscal year 1999. These resources will be used for 
developing a system for the electronic filing of reports 
required by the Labor Management Reporting and Disclosure Act, 
and establishing a computer database to permit Internet access 
to information contained in those reports.
    Full implementation of the plan will be conducted over the 
next three years. This long-term effort will strengthen the 
OLMS initiatives to improve the quality of its public 
disclosure program.
    So, Mr. Chairman, that concludes my verbal statement. I 
would be happy at this time to answer whatever questions you or 
members of the committee might have.
    [The information follows:]


[Pages 757 - 761--The official Committee record contains additional material here.]



       funding increase for federal contract compliance programs

    Mr. Istook. Thank you, Mr. Anderson. I want to note that we 
have two other members of the subcommittee, Ms. Northup and Mr. 
Miller, that have arrived. In Chairman Porter's absence, let me 
pose first one of the questions that I know is of significance 
to him, and I have an inquiry of my own.
    But as part of the Office of Federal Contract Compliance, 
you are seeking a nine percent increase in funding. The budget 
talks about a fair enforcement strategy, and the Chairman is 
certainly interested if this is going to be a new strategy. You 
evidently intend to step up enforcement activities, while at 
the same time reducing the compliance and paperwork burdens on 
employers, even as you say you are stepping up enforcement. So 
this seems like there could be some built-in contradiction to 
be doing those simultaneously. So how would you achieve that 
goal, and is it a new strategy for the Office?
    Mr. Anderson. No, it is not a new strategy, Mr. Chairman. 
It is an attempt to streamline and make more cost effective the 
enforcement process. We are in the process now of changing the 
regulations under which OFCCP operates--changing the 
regulations in a way that does several things. One, to reach a 
much larger part of the universe of Federal Government 
contractors.
    As you know, the OFCCP program's responsibilities cover 
only those businesses that have contracts with the Federal 
Government to provide goods and services. And so at the present 
time, OFCCP conducts about 4,000 compliance reviews, which is a 
principal enforcement tool.
    With the changes that have been made in our 60-1 
regulations, there will be a more flexible approach to the 
compliance and review process; that is, instead of using one 
type of review for all contractors, the type of review that 
will be conducted will be determined by the nature of the 
contractors' self-evaluation of their workforce and their 
practices of nondiscrimination.
    Mr. Istook. In terms of your personnel, if you intend to 
step up enforcement, while at the same time reducing the 
burdens of compliance and paperwork, would there be a shift of 
the total number of personnel who are devoted to enforcement 
activities as opposed to compliance activities? What would be 
those old ratios and new ratios with the number of your 
personnel that are working on enforcement, as contrasted with 
your personnel who are working on compliance?
    Mr. Anderson. There are several activities through which 
OFCCP does its work. One activity is the identification of 
discrimination among government contractors. Another is the 
provision of information providing customer outreach, public 
information, technical assistance to contractors so that they 
know what their obligations and responsibilities are under the 
Executive Order and the statutory requirements.
    Mr. Istook. But is there a shift in the number of personnel 
who will be devoted to enforcement, as opposed to those who are 
devoted to compliance, and what are the old ratios and the new 
ratios? That is my question.
    Mr. Anderson. Well, the staff is not deployed in quite that 
way. The same people who are engaged in compliance or in 
enforcement at some time during their work experience at other 
times are engaged in the public outreach, in the technical 
assistance. So it is not easy to distinguish between the 
different activities that are conducted by the same members of 
the staff.
    A compliance officer in the field, for example, would do 
several things on several different days. One day that 
compliance officer might conduct a compliance review with a 
contractor. Another day, that compliance officer might meet 
with a contractor----
    Mr. Istook. Mr. Anderson, you are giving a long verbose 
answer to a simple question.
    Mr. Anderson. Yes.
    Mr. Istook. You are saying that the same persons will be 
doing both jobs?
    Mr. Anderson. Yes, at different times.

           appropriated funding for wage survey improvements

    Mr. Istook. As opposed to separate people. I think that is 
a simple answer. We can cover other subjects as well. I wanted 
to inquire--certainly when it comes to the Davis-Bacon efforts, 
the subcommittee supplied the amount of $3,750,000 as part of 
the effort to increase the reliability of the Davis-Bacon 
surveys. Most of that has been expended, and it has already 
been expended on computer systems.
    I am looking at the information that we have from the 
Office of Inspector General regarding these expenditures. Can 
you tell me not only including Davis-Bacon work, but including 
any other purpose for which the new system servers are being 
utilized, how many terminals or stand-alone computers are being 
networked together in that whole system? Because I know you are 
using it for other purposes in addition to Davis-Bacon. How 
many are networked together in that system?
    Mr. Anderson. I would like to ask Mr. Fraser to help me 
with that. I don't know exactly how many computers were 
purchased last year with the----
    Mr. Istook. Yes, but that is not the question. The question 
is not how many were purchased. The question is how many, 
whether they be a terminal or a computer, are being served by 
the new servers which you purchased? How many are networked 
together?
    Mr. Anderson. Can you provide that answer?
    Mr. Istook. Because I know they are not all Davis-Bacon.
    Mr. Anderson. The Employment Standards Administration has 
3,700 PCs, and the information processing system is one in 
which the ADP requirements of one part of the agency at various 
times will rely on equipment which supports another part of the 
agency. The Department of Labor, for example, has about 60 
different information systems. One of the things that the 
Secretary----
    Mr. Istook. Mr. Anderson, how many are networked on the new 
servers?
    Mr. Anderson. Well, I think most of them are networked.
    Mr. Istook. 3,700?
    Mr. Anderson. Is that correct? By network, you mean how 
many of them are linked together so that they could share 
information and so forth?
    Mr. Istook. How many are linked together and be operated--
certainly. How many because the new system functions as file 
servers that communicate either with a terminal or a stand-
alone PC that does the work. So the file servers that you 
purchased are being utilized to serve a network of 
approximately 3,700?
    Mr. Anderson. Well, they are linked together. Yes.
    Mr. Istook. Yes. Okay. And they are functioning as the file 
servers, for those 3,700, not just for Davis-Bacon purposes, 
but for other purposes as well?
    Mr. Anderson. They are connected, along with many other 
servers, to our ESA network for other purposes, such as 
information collection, analysis, and so forth within the 
agency. Yes.
    Mr. Istook. Okay. Well, you see, the reason I asked that is 
the information indicates that for Davis-Bacon purposes, you 
purchased 50 desktop computers, 11 notebook computers, the 1.5 
million for the file servers, and so forth. Will all 3,700 
systems or just the new systems be used for Davis-Bacon 
purposes in accessing that Davis-Bacon information? I am 
talking about the graphics-intensive utilization where you have 
scanned in the WD-10s?
    Mr. Anderson. I think it would be helpful if Mr. Fraser 
will describe to you how this new equipment will be used.
    Mr. Istook. Yes. Will all 3,700 be----
    Mr. Fraser. No.
    Mr. Istook [continuing]. Accessing the Davis-Bacon system?
    Mr. Fraser. No, just the 50 terminals that we have 
purchased for Davis-Bacon applications in the regions and in 
the national office.
    Mr. Istook. Okay. You see, here is my question. Because it 
appears to me that you have taken the money that Congress has 
provided--intended to upgrade Davis-Bacon capability, and you 
have purchased a system that not only coincidentally does far 
more, but it appears by design is a system that spent the money 
to serve the 3,700 network, when what you really needed was an 
expenditure to serve a network of approximately 60 or so, which 
certainly would not have been an expenditure of an excess of $2 
million, and would have enabled you to use the money for its 
intended purpose of verifying the accuracy of the submissions 
and the process by which the Davis-Bacon surveys are being 
handled.
    Why didn't you just buy a system to handle the Davis-Bacon 
ones instead of going out for a system that is going to let you 
handle 3,700 file servers? What would it have cost if you had 
just said this is the equipment cost to handle the Davis-Bacon 
situation? What would that have cost?
    Mr. Anderson. Mr. Fraser is happy to explain that.
    Mr. Fraser. Perhaps, Mr. Istook, it would be helpful to 
understand how the architecture of our data systems work across 
ESA, and that is that we have offices all over the country in 
all of the different programs that are linked and have been 
linked for years through our data systems. So we have a data 
system platform that supports all the program activities so all 
of the data flow can occur from all the programs through these 
systems and through these processors.
    Our new Davis-Bacon reengineering applications, which we 
identified as we developed those applications and identified 
the system requirements, demanded that we upgrade the whole 
system. Otherwise, we would be creating, again as Dr. Anderson 
indicated, individual systems for individual applications, 
which is not in the long run cost effective. So with the new 
data----
    Mr. Istook. I presume then that since you were to make a 
determination of what was cost effective that you ran a figure, 
and you have then a number that says if your purpose was to 
purchase a system that would have been utilized for Davis-
Bacon, it would have cost so many dollars. What is that figure?
    Mr. Fraser. I do not as we sit here know that figure. I am 
not sure whether a stand-alone, Davis-Bacon-only network option 
was developed in the course of the requirements analysis.
    Mr. Istook. How else would you know what was cost 
effective?
    Mr. Fraser. Well, I do know they looked at a number of 
options in terms of the requirements, and I am sorry, just as I 
sit here, the requirements analysis document is several hundred 
pages long, I don't know whether that was one of the options 
that was included or not.
    However, the requirements that were specified for data 
collection, for data imaging all led to our conclusion that the 
ESA network had to be upgraded to accommodate that additional 
load, and this was the most cost-effective approach to doing 
that.
    Mr. Istook. But the collection of data imaging capability 
is for utilization at approximately 60 workstations, not the 
3,700 workstations?
    Mr. Fraser. That is correct. But, again, the 37----
    Mr. Istook. So you did not need that capability for the 
other what is it--3,640 workstations?
    Mr. Fraser. And the other 3,600 or however many 
workstations aren't utilizing very much of the capacity of this 
equipment at all. They are linked through this system, as are 
all of our application and access devices across the program.
    Mr. Istook. But it has become the file server for the 
entire system, the 3,700 system?
    Mr. Fraser. These servers expand and add to the existing 
file servers that we had.

                 davis-bacon wage survey verifications

    Mr. Istook. Well, I think it is very important to this 
committee to know if you have utilized the money as we 
expressed that it should be, whether you have gone and bought a 
system not to coincidentally serve other purposes, but you have 
taken the money that we wanted to look into the accuracy of the 
Davis-Bacon submissions and used that instead to get your new 
file server for everything else, which means you don't have as 
much money left for the other expenses to verify the Davis-
Bacon submissions.
    Mr. Anderson. May I suggest, Mr. Chairman, that there is a 
different and perhaps more illuminating way to look at this. 
The intent of this committee when it provided the $3.75 million 
for fiscal year 1997 and another for fiscal year 1998 I believe 
was to improve the accuracy, reliability, and timeliness of 
prevailing wage surveys.
    Now, in order to do that, we were engaged for many months 
in an effort to try to identify the best way to achieve that 
goal.
    Mr. Istook. Okay. Mr. Anderson, I am going to interrupt you 
a moment because I am going to go ahead and go vote, and you 
are giving me another long-winded comment, rather than any 
specific information. When he returns, let us have Mr. Miller 
reconvene until I return here so that I can go to the floor and 
vote. In the meantime, perhaps you can organize your thoughts 
and give us some straight answers.
    Mr. Miller [presiding]. I am told we have another set of 
votes coming up which may be a series of two to three votes, 
which makes things even more complicated because you have to 
stay around there a little while. So let us go ahead and begin, 
and when Mr. Istook comes back, we will let him proceed.

                               lm-2 forms

    Mr. Anderson, the LM-2 forms--I see on the proposal you 
have asked for additional funding to continue the automation of 
that form. Can you give me the status report of that?
    Mr. Anderson. Well, we received, Mr. Miller, the $500,000 
for this year to begin the process of trying to find a way to 
have the electronic reporting of the Labor-Management Reporting 
and Disclosure Act forms, and also to establish a way to put on 
the Internet the forms so that they could be more easily 
accessible.
    Since we received those funds in the beginning of this 
fiscal year, only about four months ago, we have had a series 
of discussions with a number of experts in the field, data 
systems. We have had conversations with the various 
stakeholders in an effort to try to identify how best to 
achieve that goal.
    And it is expected that certainly by the third quarter of 
the fiscal year, we will enter into a contract with an expert 
firm to begin developing the system that will ultimately be 
used to achieve the goal of the electronic reporting.
    Mr. Miller. Have you proposed anything in this 
appropriation?
    Mr. Anderson. No. The $500,000 that was provided for fiscal 
'98 is in the base for fiscal '99, and so there was no need for 
an additional request.
    Mr. Miller. Okay. So you planned the contract out to a 
consultant firm that will then, come up with a way to allow for 
electronic filing?
    Mr. Anderson. Yes, and those discussions are well underway.
    Mr. Miller. And so that is proceeding, and you think by the 
third quarter you will have at least----
    Mr. Anderson. By the third----
    Mr. Miller [continuing]. The contract----
    Mr. Anderson. Well, yes. We expect to enter into a 
contract, and then the work will begin to actually develop the 
system and put it online.
    Mr. Miller. What do you think the time line would be on 
getting back the report and starting to implement it? Are we 
talking about five years or ten years?
    Mr. Anderson. Well, I should certainly hope that it is much 
shorter than five years. It usually takes a couple of years to 
begin to put these kinds of systems in place. I don't think we 
are talking about a very long time.
    Mr. Miller. Yes. We have to do it for Federal election 
reports, and the IRS does it so, I mean, the technology is 
obviously there and actually on a much larger scale for issues 
than the LM-2. So I would hope that is not a problem.

                 initiation of wage hour investigations

    Let me ask a couple of questions, and I know in the past we 
have talked about the problems with that Sawyer case and 
political influencing at the Wage and Hour. How many 
investigations under Wage and Hour were not triggered by an 
employee or employee's complaints, but were initiated without a 
complaint by an employee as far as the investigations? I assume 
most of them are overwhelmingly initiated by the employee 
complaints----
    Mr. Anderson. Yes.
    Mr. Miller [continuing]. Do you initiate them on your own?
    Mr. Anderson. Each year, Wage and Hour conducts about 
43,000 investigations. 70 to 75 percent of those investigations 
are in response to a complaint, and only the remainder, 25 
percent or so, are self-directed.
    Mr. Miller. Has that percentage been constant over the past 
years?
    Mr. Anderson. It has been reasonably constant, although the 
directed investigations have increased somewhat in percentage 
terms over the past several years. We had as a performance plan 
goal raising the directed percentage to 30 percent over several 
years.
    Mr. Miller. The directed?
    Mr. Anderson. Yes.
    Mr. Miller. The non-complaint.
    Mr. Anderson. The nonemployee.
    Mr. Miller. And what is that percentage now?
    Mr. Anderson. It is about 26--27 percent.
    Mr. Miller. Why would you want to increase that?
    Mr. Anderson. For several reasons. One is that with limited 
resources, in order to identify the places where noncompliance 
is most prevalent, and in order to target those limited 
resources in a way that would produce the best result with 
respect to increasing compliance, a targeted approach would be 
preferred. Many employees, for example, will not complain about 
the failure to receive the minimum wage or their overtime pay. 
Many are working in conditions in which there is some 
intimidation.
    And so if we relied solely upon complaints as a way to 
achieve the overall goal of the Fair Labor Standards Act, which 
is compliance with the labor standards, then we would not be as 
effective as we could be by identifying industries or parts of 
the economy where the historic enforcement experience, the 
demographic characteristics of the workforce and other 
characteristics of the industry suggest that there might be a 
significant rate of noncompliance with the law. And so you 
target on those areas.
    Mr. Miller. Are you expecting a large increase in your 
enforcement budget? I mean, to increase it to 30 percent--you 
are going to have to follow up on all the complaints. But to 
increase your percentage up to 30 percent, you know, basic 
arithmetic would tell me you are talking about a very 
significant increase in your----
    Mr. Anderson. No, it does not require an increase in the 
budget. It requires a reallocation of the resources that are 
already in the budget. It is a matter of how the available 
budget is used.
    Mr. Miller. Individual complaints--does the total number of 
those change much over from year to year?
    Mr. Anderson. I don't think that they have increased.
    Mr. Miller. But to go to 30 percent, you are talking 
about--if that stays steady, my simple arithmetic tells me you 
are talking about--you know, how are you going to do that 
without a big increase? But you say you are not increasing the 
budget?
    Mr. Anderson. No.
    Mr. Fraser. No, Mr. Miller. We have slight modifications in 
the number of incoming complaints depending on various things 
that are happening in the economy. But we did get a very 
significant increase in resources in the '97 budget, and, in 
part, that is helping us allocate resources to the directed 
program.

                     davis-bacon construction costs

    Mr. Miller. I was at a hearing on the Interior 
Appropriations Subcommittee, and we were addressing the issue 
of some problems in the National Park Service. They built an 
outhouse that cost $333,000 in Pennsylvania, which is a little 
expensive. Then they talked about employee housing out at 
Yosemite and Grand Canyon National Park.
    And one thing we found--this is the Interior Department 
Inspector General and people testifying there--that the 
housing, which is relatively modest housing, not gold-plated--
were in the 4 or $500,000 range per house. And we were trying 
to figure out why were we spending so much on this housing 
situation for employees who need to live within the National 
Park.
    They gave a little report showing one of the reasons is the 
house's cost--$65,000 of additional costs is allocated to 
Davis-Bacon alone. I mean, that is the Interior Departments 
Inspector General I guess it is that came up with those 
numbers, and the Interior Department worked with them on the 
numbers. That is rather surprising, that they say that if it 
wasn't for Davis-Bacon, those houses would be $65,000 less in 
construction costs. Have you heard of such discrepancy in 
numbers like that?
    Mr. Anderson. Oh, I have heard of estimates like that for 
many years, Mr. Miller. Let me say that I am a labor economist 
who is fairly familiar with labor market studies and wage 
determination and all the rest. And the argument has long been 
made that the cost of construction is higher because of Davis-
Bacon than it would be in the absence of Davis-Bacon. There is 
only one problem with that. There isn't a shred of reliable 
evidence that would support that conclusion. The costs----
    Mr. Miller. You are telling me the Interior Department 
doesn't know what they are doing?
    Mr. Anderson. Well, I have not seen the Interior 
Department's study. We are willing to take a look at it.
    Mr. Miller. Would you respond if we can find a copy of it?
    Mr. Anderson. I would be more than happy to respond to it.
    Mr. Miller. See if you can explain why $65,000 per house is 
the estimated additional cost due to Davis-Bacon for these 
single family houses.
    Mr. Anderson. Yes. Sure.
    Mr. Miller. The are basically located in rural Arizona and 
the rural part of California.
    Mr. Anderson. I think the issue is this, Mr. Miller, the 
Davis-Bacon Act requires the payment of prevailing wages for 
workers who are employed on construction projects funded by the 
Federal Government. Now, if the wage that must be paid to those 
workers is the prevailing wage, which means the wage that is 
paid to all workers in that occupation in that local labor 
market, quite apart from projects that are Federally funded, 
then my question would be why would the cost be higher because 
workers who are working on that project have to be paid the 
wages there.
    Now, the other more important issue is that the cost of 
production is not determined solely by the cost of labor, but 
by the productivity of labor. And a study was done by, I 
believe, it was the Congressional Budget Office, when Bob 
Reischauer was the head of it, that indicated that the cost of 
production may not be higher than it would be because you must 
look at the productivity of the labor which the wages buys.
    Mr. Miller. Let me conclude with this statement, and then 
we go to Mrs. Lowey. I think you have time before we go vote. I 
am going to get that information because maybe it is a good one 
to look at. In theory, there shouldn't be, much difference, 
but, Interior Department numbers of $65,000 per house, you 
know, those are not Republican numbers. Those are numbers from 
this Administration. So would you look at those and respond to 
why, these costs are so inflated? There should not be a 
difference like that.
    Mr. Anderson. No. We would be happy to look at that.
    Mr. Miller. Okay. Thank you very much. Mrs. Lowey. I am 
sorry I took more time, but I think you have enough time before 
we vote.
    Mrs. Lowey. Okay.
    Mr. Miller. And we have a series of votes.

              verification of wage survey data submissions

    Mrs. Lowey. Thank you for your presentation, and I do 
apologize that we have been on roller skates this morning. But 
I thank you, and I thank you for your efforts. Last year's 
House report, Mr. Anderson, directed the Department to ``ensure 
that an appropriate portion of the funds appropriated to the 
Davis-Bacon wage survey program is extended to randomly sample 
all data submissions to verify their accuracy. In addition, a 
sample of all data submissions should be selected for onsite 
data verification against actual payroll records.''
    Could you explain what you have done to implement this 
directive, what result has been achieved? Does this take care 
of the criticism that was leveled last year against third party 
submission?
    Mr. Anderson. Well, thank you, Mrs. Lowey. Of the $3.75 
million that was appropriated to the Department last year for 
this purpose, $512,000 were devoted to onsite verification. And 
today all new Davis-Bacon surveys have onsite verification. And 
I think that that process of onsite verification responds 
directly to the concerns of the committee that were raised 
about the quality of the data received from the various sources 
from which it comes, from contractors, from employer 
associations, from trade union organizations, and so forth.
    Mrs. Lowey. As you mentioned, one of the recommendations 
that the OIG made was to improve the system through onsite, 
rather than through the mail. Did you understand what they 
meant by onsite? It wasn't very clear to me from the answer 
they provided to me this morning. Do they mean sending a Labor 
Department employee to each construction site, and how many 
sites would you need to visit, and would this recommendation be 
cost prohibitive?
    Mr. Anderson. Well, it would certainly be cost prohibitive. 
I think what they have in mind is sending aLabor Department 
person to each company to actually collect information by inspecting 
the employer payroll records. That would be very costly. It also might 
not be well received by the contractors.
    This is after all a voluntary data collection system. It 
won't work if the contractors are not willing to cooperate. And 
if you make the data collection process burdensome, then one 
could understand how they might refuse to make that information 
available. And so we believe that quality data can be collected 
through the Davis-Bacon prevailing wage survey system in ways 
other than sending someone to the worksite to inspect the 
employer payroll records.
    Mrs. Lowey. Well, we have a situation currently right now 
where there is a suspicion that a certain contractor in my 
community is not paying prevailing wage. And the union asked 
for this information. It seemed to me they are entitled to it. 
They haven't been able to get it.
    Mr. Anderson. I don't know whether the union was asking for 
information that was collected in a prevailing wage survey or--
--
    Mrs. Lowey. No, no, no, no. This is something else. This is 
not a survey. This is just an instance where a party--it is not 
connected to the question--it is not a survey--it is just a 
party wanted to know were they paying prevailing wage, could 
they see the books, and I guess the contractor doesn't have any 
obligation.
    Mr. Anderson. That is correct. To the contractor--that is 
proprietary information. The contractor provides the 
information to the Department of Labor during the conduct of a 
prevailing wage survey. But----
    Mrs. Lowey. And you haven't had any problem collecting that 
information?
    Mr. Anderson. Well, no, we have not had--we would like the 
rate of response to the voluntary surveys to be greater than it 
is. We get a response rate of about 50 percent or so. We would 
like that to be higher, but many of the contractors who are 
asked to provide the information, in fact, do so.

                   elimination of garment sweatshops

    Mrs. Lowey. Okay. I was interested in the status of the 
Department's effort to try to end sweatshops in America and 
abroad. And your garment initiative project won a Ford 
Foundation Award last year. How are you using these lessons in 
the design of the Child Labor Initiative?
    Mr. Anderson. I am sorry. I did not hear the last part of 
your question.
    Mrs. Lowey. I just wondered how you are using the lessons 
that were learned in your Child Labor Initiative?
    Mr. Anderson. Well, in the garment industry, we think we 
have had a fair amount of success in moving forward to increase 
the rate of compliance in that part of the industry where the 
problem is most severe--the cutting and sewing shops.
    In fact, surveys of compliance have been conducted in Los 
Angeles, San Francisco, and New York City, three of the major 
garment manufacturing sites. And we discovered that in Los 
Angeles, the overall rate of compliance during the time--1994 
to 1996--the garment ``no sweat'' initiative was underway 
increased from 20 percent to 40 percent.
    In San Francisco, the rate of compliance increased from 60 
percent to 80 percent, and in New York City, in which the 
survey was a baseline survey, the rate of compliance was 37 
percent--slightly less than 40 percent.
    In addition to that, we have been successful in getting 100 
manufacturers to agree to and sign monitoring agreements. These 
are agreements in which the manufacturers undertake the 
responsibility themselves to check with the subcontractors with 
whom they deal to see that those companies are obeying the law, 
paying the minimum wage, overtime, and meeting other 
requirements.
    And so we believe we are making progress. You noted the 
recognition that this program has received from the Ford 
Foundation, the Kennedy School, and the award that we received 
last year.
    Now, the approach to this task, that is a combination of 
public education, enforcement, partnerships and recognition, is 
a combination of tools that we are now beginning to apply in 
other low wage industries. Now, there probably will not be a 
one-to-one application of the approach taken in the garment 
industry to other industries because there are differences in 
industries, the way they are structured, the composition of 
their workforce and all the rest.
    But we believe that by making information available to 
employers in the industry, reaching out to those employers and 
encouraging them to comply with the law, conducting surveys to 
find out what the level of compliance is so that we can come 
back later and see whether there is any change by trying to 
develop partnerships with the employers in the industry, we 
think that that combination of tools can be very effective in 
increasing the level of compliance.
    Mr. Miller. Let me ask you----
    Mrs. Lowey. I think we have to go vote.
    Mr. Miller. Yes. We have to go vote. I don't mean to----
    Mrs. Lowey. I want to thank you.
    Mr. Miller. Let me thank you. I think Mrs. Northup has some 
questions, and so if you don't mind, she unfortunately is not 
here, and we are going to vote. And there is a five-minute vote 
right after that, and I don't know if there is a final passage 
vote or not. But if you don't mind waiting around another 20 or 
so minutes, we will take a break. And we won't stay very long 
because we have BLS coming up right after that so----
    Mr. Anderson. We will be here.
    Mr. Miller. Thank you very much, Mr. Anderson.
    [Recess.]
    Mr. Porter [presiding]. The subcommittee will come to 
order. Mr. Anderson, I apologize for not being able to be here. 
I had a meeting with the Speaker, but let me add my welcome to 
the ones that you have already received. We will continue with 
questioning Mr. Istook.

           appropriated funding for wage survey improvements

    Mr. Istook. Thank you, Mr. Chairman. Let me pick up on 
questions regarding the computer system that was purchased with 
the funds allocated by Congress for improving the Davis-Bacon 
accuracy. Who was the contracting officer that approved that 
purchase?
    Mr. Fraser. I don't know, Mr. Istook. I will find out. The 
Departmental contracting function is a separate function at the 
Departmental level, but we can find out for the record for you.
    Mr. Istook. Because I believe there is responsibility and 
liability on the person that approves that to make sure that it 
is within the purview of an expressed appropriation such as 
this was. I think it is very important that we make that 
inquiry of who approved this handling of it.
    Mr. Anderson. Mr. Istook, may I refer to the language of 
the Conference Committee report, which allocated the funding 
for this. The Conference Committee report in the fiscal '97 
Labor-HHS appropriation bill says that $3.75 million is to be 
used to ``test and implement process improvements either 
through the use of alternative wage sources or, if not feasible 
or cost effective, by improving the capacity of the existing 
wage survey system to promote participation and data 
reliability, primarily through investment in technology.''
    The guidance that we received from the committee on this is 
to develop a system that is technologically capable of 
providing the most accurate and reliable prevailing wage 
results. And with respect to the purchase of equipment, we are 
under guidance from a policy of the Department not to invest in 
computer equipment that is used for the exclusive purpose of 
any given program. And I believe that there----
    Mr. Istook. But the Department despite the law, despite an 
Act of Congress signed into law by the President--the 
Department has a guideline that would not permit you to have a 
system to service 60 users unless you purchased a system to 
serve 3,700 users?
    Mr. Anderson. Well, there is another Act of Congress----
    Mr. Istook. Who was making the guideline?
    Mr. Anderson. There is another Act of Congress, the ITMRA, 
information technology guidance, which suggests that Federal 
agencies should not invest in systems that are exclusive 
systems, but rather should have systems that allow one to 
integrate the information needs within the agency.
    Mr. Istook. Mr. Anderson, if you are trying to get us to 
buy an argument that you couldn't buy a system that was needed 
to serve 60 users without spending many times more to purchase 
a system that would serve 3,700 people, that dog ain't going to 
hunt.
    And I don't think any Act of Congress or any act of any 
intelligent person would do that unless your design was to use 
this money, which Congress intended to try to make the Davis-
Bacon system function accurately, and divert it because you 
wanted to upgrade the overall computer systems for the 
Department and chose not to take it out of the accounts which 
would normally be used for that purpose.
    Now, why didn't you allocate part of the money to Davis-
Bacon and another portion of the money to some other portion of 
your budget when you wanted to develop the capability to 
operate for 3,700 users rather than for 60?
    Mr. Anderson. You are asking a very complicated question 
having to do with computer technology.
    Mr. Istook. I am sure your Department can give a simple 
answer.
    Mr. Anderson. And what I would rather do than get into the 
nitty-gritty details of computer technology and how systems are 
developed, with your----
    Mr. Istook. My question there was why you didn't pay for 
this purchase partly from one account and then partly from 
another rather than draining this special Davis-Bacon fund for 
the benefit of a 3,700 user system?
    Mr. Anderson. Well, first of all, we have not drained it, 
but I think Mr. Fraser would answer it. But what I would like 
to do is to respond to you for the record because what we need 
to do is to explain in some detail exactly how we believe 
technology systems, the computer systems can be developed to 
reach the goal that you have in mind and we have in mind to 
improve the Davis-Bacon prevailing wage surveys. But I would 
like John Fraser to elaborate on that point. We will respond to 
you in some detail for the record.
    Mr. Istook. You do agree don't you that you had the ability 
to pay for this system from other accounts, not just this 
Davis-Bacon account, to cover the portion of the cost that was 
attributable to serving these much more expansive needs?
    Mr. Anderson. No, I do not agree with that because we have 
an ADP budget and spending plan appropriated to us for other 
purposes which we are working on. There was no extra money to 
buy for the Davis-Bacon purposes.
    Mr. Fraser. Mr. Istook----

                   utilization of davis-bacon funding

    Mr. Istook. Just a minute. Mr. Anderson, you are telling me 
that you had to use the money for its intended purpose within 
your ADP budget, yet you had no compunctions about using the 
money for Davis-Bacon and, in essence, using it for your ADP 
budget. Now, sir, I think you are contradicting yourself.
    Mr. Fraser. Mr. Istook, if I may, the Congress appropriated 
$3.75 million for Davis-Bacon system improvements. That is what 
those funds were used for. There was no diversion of money to 
cover other needs. There wasn't any sleight-of-hand involved. 
The IG, at your request, just audited the expenditure of these 
funds for fiscal 1997.
    Mr. Istook. Their report was not an audit.
    Mr. Fraser. Excuse me, sir. They just reviewed the 
expenditure and obligation of these funds at your request for 
fiscal '97. They found that the funds were used as the Congress 
directed us to use them. They reported that to you, sir. The 
fact that----
    Mr. Istook. I think you are putting words in their mouth 
that they have not uttered, but please proceed.
    Mr. Fraser. I assume we both read the report, Mr. Istook, 
and those words are in their report and, in particular, those 
words with respect to the obligations of funds for ADP hardware 
and software. The words in their report are, ``These purchases 
were for the reengineering of the Davis-Bacon wage 
determination process.'' Certainly, if there was any 
indication----
    Mr. Istook. What page?
    Mr. Fraser. Page 11, Mr. Istook. If there was any 
indication or any intention that the funds that the Congress 
appropriated for this purpose were going to be used for some 
other purpose than improving the Davis-Bacon wage survey 
process, we would have been the first to tell you.
    There was no such intention. There was no such occurrence. 
And the fact that a computer system supports multiple users--
just like the phone system supports multiple users and multiple 
applications--isn't any indication of any diversion of funds.
    And we will, as Dr. Anderson indicated to you, explain this 
in as great detail as you might like. But there is simply no 
``there'' there, Mr. Istook. There is no misuse of these funds. 
We understood what the Congress wanted. We have been in 
communication with this committee's staff for the last two 
years in terms of what we have been doing. And that, I can 
assure you, is how those funds were spent.
    Mr. Istook. Mr. Fraser, we must be looking at different 
documents because page 11 of my report from the Inspector 
General doesn't have it on it. Perhaps we are looking at 
different reports.
    Mr. Fraser. The first paragraph----
    Mr. Istook. I believe their report also outlines that these 
were not spent exclusively for that function because this 
system was designed and the equipment was purchased to be able 
to provide far more capability than was necessary addressing 
the Davis-Bacon need.
    Mr. Fraser. No, Mr. Istook. There is nothing to my 
knowledge in the report to that effect. The only thing that is 
in the report is the indication that since the Davis-Bacon 
applications are in development, they are not up and running, 
that these systems are supporting other applications. The 
systems are capable of supporting other applications. They were 
not purchased for that purpose. They were purchased and are 
needed and will be necessary for our Davis-Bacon reengineered 
system.
    Mr. Istook. Mr. Fraser, I am asking for if there were any--
if there was ever any effort to determine what it would cost to 
provide the system that was needed for approximately 60 users 
who would be using it for the Davis-Bacon applications. I hope 
that you can find some effort of that because I think we all 
know that it cost a lot less to provide a computer system to 
serve 60 users than to provide a computer system that will 
service 3,700 users, which is what you spent this money for. 
Thank you, Mr. Chairman. I look forward to further information.
    Mr. Porter. Thank you, Mr. Istook. Mrs. Northup.

                         black lung regulations

    Mrs. Northup. Yes. I would like to return where I left off 
last year and ask you a few questions about the Black Lung 
regulations. First of all, I see that in your annual 
performance plan book here, page 25, you said within ESA's 
Black Lung Program that you all will finalize the rules by 
1998.
    I see on the very next page where it says that you are 
going to initiate a comprehensive effort to rewrite your 
regulations in plain language and conduct impact studies for 
part of the Unfunded Mandates Requirement Act, the Regulatory 
Flexibility Act of 1980, and the Small Business Regulatory 
Enforcement Act of 1996. I thought I understood though that you 
didn't follow that plan in terms of the Small Business 
Regulatory Enforcement Act in going through the process on the 
Black Lung Program. Is that correct?
    Mr. Anderson. There are a couple of things, Mrs. Northup, 
that I think are being mixed up in your question, and let us 
talk about the Black Lung first. Following your comments at the 
hearing last year, and I believe your discussions with the 
Secretary at some point----
    Mrs. Northup. Right.
    Mr. Anderson [continuing]. We extended the length of time 
for comment on the proposed Black Lung regulations.
    Mrs. Northup. Yes, you did.
    Mr. Anderson. And we not only extended the length of time, 
we also held two hearings, one in West Virginia, one in 
Washington, in which we received testimony from a number of 
witnesses. We also received thousands of pages--several 
thousand pages of testimony in writing in addition to what was 
collected during the hearings. And we are now in the process of 
examining, evaluating, considering all of that information, 
which is part of the rulemaking process. And so----
    Mrs. Northup. Let me just ask you specifically if you 
complied with the Small Business Regulatory Enforcement Act?
    Mr. Anderson. Well, there is a question as to whether the 
Small Business Regulatory Enforcement Fairness Act applies to 
this type of regulation. We have been in contact with SBA and 
the Small Business Advocate. We have discussions ongoing at the 
present time on this issue. I might add that the Small Business 
Advocate has also had disagreements with some other Federal 
agencies on where that requirement applies and doesn't apply.
    Mrs. Northup. Why would it not apply in this case 
considering how many of the coal companies to which this would 
apply in eastern Kentucky, underground coal mining--are small 
companies?
    Mr. Anderson. Well, there is a question about the 
definition of small business within the meaning of the Black 
Lung Program, the way that is defined compared with the way the 
Small Business Administration defines a small business. And 
this is one of the issues that we are now discussing with them 
to find out whether or not this really is applicable.
    Mrs. Northup. Would you clarify for me what those 
differences are in definitions----
    Mr. Anderson. Yes.
    Mrs. Northup [continuing]. To my office?
    Mr. Anderson. Well, I believe we----
    Mrs. Northup. I don't mean right now but----
    Mr. Anderson. No, but I believe we already did in the 
letter that we sent to you last December. I think if you will 
refer back to that letter, you will see reference there to the 
issue over the SBREFA application to these regulations. And we 
certainly would be willing to provide any additional 
information that you request.
    Mrs. Northup. Well, yes, because I cannot remember what the 
specifics were. But I was under the impression that it had been 
fairly well established that those regulations would fall under 
the Small Business Regulatory Enforcement Act. And the fact 
that what you have here specifically mentions that you are 
going to try to rewrite your regulations to comply with those 
laws. I was just trying to get an idea of why this would be the 
exception.
    Mr. Anderson. I believe, Mrs. Northup, that what you are 
reading there refers to the Wage and Hour rules, not Black 
Lung. I don't have that before me.
    Mrs. Northup. I know that you are in these discussions with 
the Small Business Administration. When do you think that 
question will be resolved, about whether these laws apply to 
this regulation?
    Mr. Anderson. I regret that I can't give you a specific 
date. My experience since being in Washington is that these 
kinds of discussions tend to take a long time. And I would 
certainly want to have it resolved as quickly as possible. We 
are now going through the information that we received during 
the hearings and information that was provided in writing. I 
would certainly expect that we would resolve it in time to have 
that have an effect on the development of the rule as we move 
forward with that.
    Mrs. Northup. Can you provide the subcommittee with a 
summary of your readings and your discussions with SBA?
    Mr. Anderson. We would be happy to do that, yes.
    [The information follows:]
           Discussions With the Small Business Administration
    In accordance with Secretary Herman's assurances to Congress that 
we would consult with the Small Business Administration (SBA) and 
determine the best course of action to insure compliance with the Small 
Business Regulatory Enforcement Fairness Act, we have entered into 
discussions with SBA. In addition to telephone conversations, an 
extensive meeting took place on Tuesday, January 27, 1998, between 
staff of the Department of Labor (DOL) and staff of the Office of 
Advocacy of the Small Business Administration (SBA). DOL staff included 
representatives of the Division of Coal Mine Workers' Compensation, the 
Black Lung Benefits Division of the Solicitor's Office, the Office of 
the Assistant Secretary for Policy and the Office of Small Business and 
Minority Affairs.
    The purpose of the meeting was to review comments submitted by the 
SBA Office of Advocacy in response to the preliminary economic analysis 
published with the proposed changes to the Black Lung Program 
regulations in the Federal Register on January 22, 1997. SBA staff 
comments focused on their desire to see a more detailed analysis 
emphasizing the possible differential impacts of the proposed changes 
upon the various sectors of the coal mining industry, including 
business size, type of mining and possibly geographic locations. 
Examples of analyses prepared by other agencies, such as DOL's Mine 
Safety and Health Administration and the Occupational Safety and Health 
Administration, were discussed as possible models for such analyses.
    DOL staff stressed that the Black Lung Benefits Act mandates 
uniform treatment for all miners who become totally disabled or die as 
a result of exposure to dust in the coal mining industry and that this 
may unavoidably produce differential economic impacts depending upon 
the size, type and location of the mine where such work is performed. 
It was also pointed out that the Act permits some employers to self-
insure their liabilities while requiring all others to purchase 
insurance.
    SBA staff offered their assistance in revising DOL's analysis. Both 
groups agreed to continue the dialogue as work on the regulatory 
proposal continues. No definitive decisions were reached since DOL 
continues to review the comments received in the response to the 
regulatory proposal. This may produce changes from the original 
proposal which could affect its economic impact. No definitive analysis 
of its economic impact will be possible until the substantive content 
of changes, if any, has been determined.

                status of davis-bacon helper regulations

    Mrs. Northup. I think also in the language of the bill that 
this committee passed last year, there was the request that 
your office provide the information on helpers and helper 
regulation by December 31 of last year. And I don't believe 
that you met that deadline to finalize the rule.
    Mr. Anderson. To finalize the rule, rather than provide 
information on our consideration of the rule.
    Mrs. Northup. Right. I think it has been how many years--a 
number of years that the rule has been left not finalized.
    Mr. Anderson. This is an issue that, unfortunately, extends 
back almost two decades as various Administrations, both 
Democratic and Republican, have grappled with the helper issue. 
There has been prolonged litigation on this. One Court case 
just ended in the latter part of 1997. There have been various 
administrative actions taken.
    There has been the consideration of rules, and the very 
fact that it has taken this long to resolve the issue is an 
indication of how difficult it is. And if you would just give 
me one minute, not more than that, to try to just sketch for 
you the difficulty of the problem.
    Under the Davis-Bacon Act, the Department of Labor is 
obligated to recognize wage practices that are prevailing in 
the community in which the construction work is to be done. And 
in the identification of a specific occupation, there are three 
tests that must be met. One is that there be a very clear and 
unequivocal specification of the duties of a person performing 
that occupation.
    The second is that there be an established prevailing 
practice concerning the use of that occupation in a particular 
community. And with specific reference to helpers, the third 
test is that there must be a clear and distinct and unequivocal 
difference between a helper and a trainee. The difficulty in 
coming to closure on the helper regulation is how to define a 
helper.
    When we went through the rulemaking process concerning the 
suspension of the rule, about a year ago, and we received 
comments from contractors, what we discovered was that there is 
no uniform definition or understanding within the industry on 
exactly what a helper is.
    Now, in the absence of being able to clearly define the 
occupational group called ``helper,'' it would be very 
difficult for the Department of Labor to administer such a 
rule. To attempt to administer a rule under circumstances 
without a clear and unequivocal definition of what a helper is 
would mean we would jeopardize the occupational and wage 
position of other occupational groups within the construction 
industry.
    Mrs. Northup. Mr. Anderson, am I not correct that you have 
already drafted this regulation? Wasn't it already drafted?
    Mr. Anderson. No. We have not drafted the regulation.
    Mrs. Northup. The regulation has never been drafted? I 
thought you suspended it.
    Mr. Anderson. Oh, there was a regulation, yes, in existence 
I think in 1991.
    Mrs. Northup. What was wrong with the definition that 
appeared in that regulation?
    Mr. Anderson. Well, it is interesting that you raise that 
question because the Labor Department's attempt to administer 
that regulation created enormous difficulties.
    Mrs. Northup. Don't the firms that are in the construction 
industry that are not unionized use helpers regularly?
    Mr. Anderson. They do not use helpers with a consistent 
definition of what a helper is. In some cases, the helper is a 
semiskilled person. In other cases, what they call a ``helper'' 
is largely an unskilled person. In still other cases, the 
helper is a person who appears to be in a process of training 
for a skilled position. And so what the industry considers a 
helper tends to differ all over the lot. That means that it is 
impossible to administer a law or a regulation with that kind 
of uncertainty.
    Mrs. Northup. This is very much like the chicken or the 
egg. As long as you don't define it and apply a rule, there 
never will be a definition of a helper. And they will be 
whatever exists on a particular worksite at any specific time.
    On the other hand, if you define it, there will become an 
understanding of what a helper is. Of course, there is no 
definition. It is like that in every division of jobs. Until 
you begin to specify, the interpretation is whatever somebody 
thinks it is on a particular site. In the meantime, the 
regulation goes without a rule to accommodate it. My feeling is 
that you all don't want to implement that regulation just as 
importantly as the impossibility of it.
    Surely you could pull all the sides together and finalize 
what a general definition of a helper is, just like you have 
for a mason and every level of plumber and every level of every 
other building trade job that exists.
    Mr. Anderson. The difficulty here, Mrs. Northup, is that it 
is not the purview of the Department of Labor to define what a 
helper is. Under the Davis-Bacon Act, it is necessary to look 
at the industry and take the experience of the industry as to 
what a helper is in the same way that you can look at the 
construction industry and see what type of duties are contained 
in that type of job called ``electrician'' or that type of job 
labeled ``plumber'' and so forth--a consistent specification of 
duties performed by an individual in that occupation across all 
of the different pursuits in which that person is employed.
    But let me say we are working on this helper regulation. It 
is a source of grief and difficulty. We are continuing to try 
to come to closure on it, and I would hope that we would be 
able to conclude these discussions in the period before I or my 
successor come back before you next year.
    Mrs. Northup. Well, Mr. Anderson, I think this committee 
would be very interested in a summary of the continuing work 
that you are saying you are doing--the meetings and the 
discussions that are taking place. In the meantime, what I have 
understood is that the industry has not provided you with a 
definition, and that is what--it is their responsibility. So I 
will be happy to take that message back to the industry that 
their lack in securing a definition is what is causing you all 
the problem.
    Mr. Anderson. Thank you.
    Mr. Porter. Thank you, Mrs. Northup. I have to say, Dr. 
Anderson, that I find your answer terribly disingenuous. I 
think you know what needs to be done here, and you are simply 
holding up the regulation. But I would be interested in seeing 
in the record what you have done over the last year to advance 
this, and I would like a thorough explanation as to why this 
can't be issued since the subcommittee specifically asked you 
to issue it in this fiscal year.
    [The information follows:]

                        Semi-Skilled Helper Rule

    The semi-skilled helper rule was suspended after formal 
rulemaking, upon publication of the final rule of the Federal 
Register on December 30, 1996. (The validity of the rulemaking 
and suspension was subsequently upheld by the U.S. District 
Court for the District of Columbia on July 23, 1997, with that 
court's dismissal of a lawsuit challenging the rule. Associated 
Builders & Contractors, Inc. v. Herman, 976 F. Supp. 1 (July 3, 
1997).)
    The Department of Labor formally continued the temporary 
suspension of the semi-skilled helper rule while the Department 
has been determining whether to propose changes to the rule 
through additional rulemaking. The Department had hoped to 
complete that rulemaking process by the end of December 1997, 
in light of the Committee's request to that effect. 
Unfortunately, however, the Department's review of the rule has 
taken longer than anticipated.
    The Department's consideration during the past year of 
potential options for amending the rule so that it both more 
accurately reflects actual practice in the industry and is 
capable of being enforced and administered has been time-
consuming, due to the complexity and difficulty of the issue. 
Nevertheless, the Department expects to initiate additional 
rulemaking on the helpers regulations in the near future.

                         child labor initiative

    Let us talk a moment if we may about child labor. The 
President's budget proposes some significant increases related 
to the abuse of child labor. Can you tell us how serious a 
problem this is in our country. Would your Wage and Hour 
investigators be spending more time on this, or how would you 
address this problem within the context of the budget 
justification?
    Mr. Anderson. Well, thank you, Mr. Porter, and I am happy 
to see you here. I mentioned in my opening verbal statement 
this afternoon some information on this, and that is every year 
approximately 200,000 young people are injured while at work. 
About 70,000 of them are injured seriously enough to require 
emergency hospital room treatment. And I believe last year 70 
young people died while at work.
    I think that is an indication that although this country 
has made great progress in reducing substantially the incidence 
of abusive child labor practices, and we are this year 
celebrating the 60th anniversary of the child labor laws, 
nonetheless, there continues to be a serious problem with 
injury, and the threat of injury to young people who are 
working.
    And that problem appears to be quite serious in the 
agriculture industry. Some 65--75,000 young people are employed 
in agriculture as part of the migrant worker stream. These are 
young people who work under the most dreadful conditions. Many 
of them are without any educational opportunities.
    Mr. Porter. Could I ask a question here? I think you are 
going down a line that I wasn't referring to. Are we talking 
about violations of child labor laws when we talk about the 
abuse of child labor, or are you simply referring to the safety 
regulations that apply to all workers that are being violated 
and children happen to be victims in this case?
    Mr. Anderson. No. There are special regulations affecting 
young people----
    Mr. Porter. All right.
    Mr. Anderson [continuing]. Below the age of 16--actually 
below the age of 18.
    Mr. Porter. When you cite the deaths and injuries, you are 
saying that those are deaths and injuries because the safety 
regulations are being violated by the employer?
    Mr. Anderson. In many instances that would appear to be so.
    Mr. Porter. Okay. Please proceed.
    Mr. Anderson. Well, with specific reference to the budget 
request, the funds that are requested would be used to move 
forward with additional enforcement activities affecting young 
people, especially in the agriculture industry. And I should 
mention that the search for possible violations of the child 
labor laws is part of every Wage and Hour investigation.
    And so in addition to those special efforts that are from 
time to time directed toward looking for child labor violations 
alone, there is a desire to look for such violations when other 
investigations are conducted in the field. These funds----
    Mr. Porter. Is it your responsibility to look at safety 
violations, as well as Wage and Hour violations?
    Mr. Anderson. Yes.
    Mr. Porter. Okay.
    Mr. Anderson. Well, the child labor laws include 17 
hazardous occupations in which young people are not expected to 
be employed. Now, the hazards in those 17 occupations are 
essentially safety hazards. Young people, for example, working 
with dangerous machines or working on roofs; young people 
engaged in other kinds of employment in which an adult might 
not be at risk but in which a teenager would be at risk because 
of their age, and their inexperience, and, in many cases, their 
immaturity.
    And so when there is an investigation initiated either by a 
complaint or an investigation that is self-directed, as we were 
mentioning earlier in response to Mr. Miller, an effort is made 
to find out whether there are any violations of the child labor 
laws, in addition to minimum wage and overtime violations.
    And the funds that are requested for the initiative in 
agriculture will be used to try to identify where there might 
be violations and to do several things. One, to work with 
employers in the industry to be sure that they understand what 
the requirements are; and, to try to develop partnerships with 
employer groups to be sure that young people are working safe. 
We want young people to be employed, but we want them to be 
employed under safe conditions.
    The funds that are being requested also will help in the 
process of reviewing and possibly revising the child labor 
regulations with respect to the hazardous occupations.
    Mr. Porter. Your job though is really to determine whether 
or not an underage employee is employed in a hazardous 
occupation, not to enforce safety standards, which would be an 
OSHA responsibility, but rather to see that they are not 
performing any one of these jobs?

                 federal employees compensation program

    Mr. Anderson. That is correct. Yes.
    Mr. Porter. All right. Can we talk a moment about the 
Federal Employees' Compensation Program? You are proposing some 
significant changes for the next fiscal year for some of the 
administrative costs related to the Federal Employees' Workers' 
Compensation Program. You are proposing to shift the financing 
of some of these costs from the discretionary side of the 
budget to the mandatory side by paying for them out of the 
account that is used to pay compensation benefits. Why is this 
a good idea?
    Mr. Anderson. Well, for the past three years, Congress has 
permitted us to use some of the funds in the fairshare account 
to invest in technology, to upgrade the computer systems that 
are used to analyze to determine eligibility and also to pay 
benefits out of the FECA program. As it turns out----
    Mr. Porter. Well, could you explain what fair share funds 
are? Where do these funds come from?
    Mr. Anderson. There are about 23 nonappropriated executive 
agencies like the Postal Servicewhich do not receive 
appropriated FECA funds but pay dollar-for-dollar into a special 
benefits fund for the benefits that they have to pay their employees 
who are injured on the job.
    And in addition to paying the dollar-for-dollar value of 
the benefits, they also pay I think it is 4 percent for the 
administrative cost for the FECA program to provide those 
benefits. And that creates a fund which is available to support 
the FECA cost for employees of the nonappropriated agencies.
    Mr. Porter. Congress has allowed you to use a portion of 
these funds for computers and automation, but now you are 
proposing to use them for staff. Is that correct?
    Mr. Anderson. Well, the staff is staff of the Periodic Roll 
Management Project. This is a project which was initiated six 
years ago that focuses on the long term disabled population. I 
think it is a matter of some significance that over the past 
six years $246 million in FECA costs have been saved as a 
result of the PRM project.
    And we project that over the next four years an additional 
$426 million will be saved through this project. The current 62 
FTE who are now funded by the ESA Discretionay S&E account 
would be financed by the fairshare funding in the Special 
Benefits account. The 58 additional FTE we requested would 
enable us to expand the project and move forward and gain the 
benefit of providing the services to the long-term disabled to 
get them back to work or to adjust those numbers in another 
way. This is a very cost-effective project.
    Mr. Porter. Well, if there are more than ample funds in the 
Fair Share funds account, why should these funds not, in other 
words, the funds that are set aside--not be cut back and 
subject to appropriations? Why do we have to pay them out of a 
mandatory account?
    Mr. Anderson. Well, the funds certainly could be made 
available through the general fund and appropriated, but as a 
matter of cost efficiency and maximizing the rate of return on 
investment, if you have in the PRM project a rate of return on 
investment of 30 to 1, it seems to me that that is pretty good 
investment and a very wise use of the fairshare funds for the 
purpose of improving----
    Mr. Porter. So is this all income then from the investment 
that we are talking about?
    Mr. Anderson. I am using an investment terminology to show 
the relationship between the cost that goes into administering 
the PRM project with the return to the government as a result 
of that project in getting people back to work, reducing the 
cost in the payment of FECA benefits, and medical benefits. 
That is the 30-to-1 ratio. And the funds that go into the Fair 
Share if there is any difference at the end of the year, those 
funds would simply go back to the Treasury.
    Now, I think the Department of Labor can certainly request 
that Congress appropriate from S&E the $13 million a year for 
ADP systems and other purposes that are requested through the 
fairshare funding, but I am not sure with our interest in 
balancing the budget and trying to reduce the rate of 
government spending that that would be the best way to fund 
this, since that would require an increase in discretionary 
funding.

                         fairshare expenditures

    Mr. Porter. I guess you are talking to an appropriator who 
doesn't believe that mandatory spending is the best way to have 
oversight and control of the expenditure of any funds. We 
prefer to have them all subject to appropriations so we can 
know where they are going and restrict them if we don't think 
they are being spent properly.
    You have been financing the Periodic Roll Management 
Project staff from discretionary salaries and expense funds for 
several years now. Why do you want to change all of a sudden to 
a new financing method? Aren't you just trying to shift some of 
your administrative costs out of your own budget?
    Mr. Anderson. Well, the number of PRM staff has fluctuated 
over time. The original plan I believe was for 200 staff, but 
if I recall in fiscal year 1995-96 when there was a very 
serious problem with the budget, in an effort to try to move 
toward balance, our appropriations were cut. And in order to 
balance that off within the FECA program, adjustments had to be 
made in the number of people who were employed in the PRM 
project.
    What we are proposing now is to try to get back to a 
satisfactory level of staffing in that project in order to 
benefit from the great returns that the PRM project produces in 
the form of FECA cost savings.
    Mr. Porter. Doesn't the PRM project benefit all Federal 
agencies and not just the 23 nonappropriated fund agencies who 
pay the so-called fairshare costs? Why should those 23 agencies 
pay for the project for all agencies?
    Mr. Anderson. I don't believe--the 23 nonappropriated 
agencies you are saying would through their fairshare 
contributions pay for the entire FECA program?
    Mr. Porter. No, the periodic roll management project. It 
benefits all agencies. Correct?
    Mr. Anderson. It benefits the FECA program, yes--the 
administration of the FECA program, the payment of the benefit.
    Mr. Porter. But not just the 23 nonappropriated fund 
agencies who pay the so-called Fair Share costs?
    Mr. Anderson. That is correct. But----
    Mr. Porter. So why should those 23 agencies pay for the 
project for all agencies?
    Mr. Anderson. I would say that the 23 agencies are not 
paying for all of the agencies. You think of this as 
obligations that those 23 agencies would have to pay into a 
fund somewhere in order to provide benefits to their employees 
who are injured on the job or those who lose their lives, of 
course.
    And so there is no increase in the cost to those 23 
agencies as a result of the use of some of those funds, which 
otherwise would be returned to the Treasury, in order to 
upgrade and modernize and streamline the automatic data 
processing systems that are used to provide benefits to all 
FECA beneficiaries.
    Mr. Porter. All right. Dr. Anderson, thank you very much.
    Mr. Anderson. Thank you, Mr. Chairman.
    Mr. Porter. I am sorry we didn't have more time, and we 
were interrupted by votes. We very much appreciate your 
appearance before the subcommittee and your answering our 
questions. We will have additional questions for the record 
that we ask that you answer as well.
    Mr. Anderson. Thank you.
    Mr. Porter. Thank you very much.
    [The prepared questions were submitted to be answered for 
the Record:]


[Pages 784 - 822--The official Committee record contains additional material here.]



                                      Wednesday, February 25, 1998.

                       BUREAU OF LABOR STATISTICS

                               WITNESSES

KATHARINE G. ABRAHAM, COMMISSIONER, BUREAU OF LABOR STATISTICS
WILLIAM G. BARRON, DEPUTY COMMISSIONER, BUREAU OF LABOR STATISTICS
DANIEL J. LACEY, ASSOCIATE COMMISSIONER FOR ADMINISTRATION
KENNETH V. DALTON, ASSOCIATE COMMISSIONER FOR OFFICE OF PRICES AND 
    LIVING CONDITIONS
LOIS ORR, ASSOCIATE COMMISSIONER FOR OFFICE OF EMPLOYMENT AND 
    UNEMPLOYMENT STATISTICS
EDWARD L. JACKSON, ACTING DIRECTOR, OFFICE OF BUDGET
    Mr. Porter. Next, the subcommittee is pleased to welcome 
Dr. Katharine G. Abraham, the Commissioner of the Bureau of 
Labor Statistics, and members of her staff--quite a few members 
of her staff. Would you like to introduce the people who are 
with you, Dr. Abraham? It is good to see you again, and then 
proceed with your statement.

                       Introduction of Witnesses

    Ms. Abraham. Starting from my left, those with me are Lois 
Orr, who is our Associate Commissioner for Employment and 
Unemployment Statistics; Kenneth Dalton, our Associate 
Commissioner for Prices and Living Costs; Bill Barron, whom I 
believe you know, our Deputy Commissioner; Dan Lacey, our 
Associate Commissioner for Administration; and then, of course, 
not of my staff, Ed Jackson, the Department's Budget Officer.

                           Opening Statement

    I appreciate the opportunity to be here to discuss the BLS 
appropriation request with you. I do have a formal statement 
that I would like to submit for the record. I don't think I 
need to describe either to you or to Mr. Istook the work that 
the Bureau does in producing data on employment and 
unemployment, prices, wages, productivity, and then the 
development of occupational employment projections.
    With respect to our work, I would note the achievement of 
one important milestone over the past year. Just yesterday we 
released the January 1998 Consumer Price Index, which was the 
first month's worth of data to incorporate the updated market 
basket and updated geographic sample that we have been working 
towards as part of the CPI revision. So I am happy to be able 
to say that milestone occurred on schedule.
    The budget that we have requested would provide funding to 
allow the BLS to continue its work on its core programs. We 
have requested $398,870,000 in support for just under 2,500 
staff. I would note that in our budget submission that we have 
requested increases in funds for two programs. First, we have 
requested just over a $9 million increase for our CPI 
Improvement Initiative. This would be the second year in 
funding for this improvement initiative and would allow us to 
do some very important things towards improving the CPI.
    Secondly, we have requested $3.3 million in additional 
funding to launch a Job Openings and Labor Turnover survey that 
would provide important information on the state of the labor 
market that would allow us to answer questions that we can't 
currently answer about where things seem to be headed. With 
that, I will stop, and we would, of course, be happy to take 
any questions you might wish to raise.
    [The information follows:]


[Pages 825 - 827--The official Committee record contains additional material here.]



                            cpi improvement

    Mr. Porter. Thank you, Dr. Abraham. In last year's bill, we 
provided the increase that you requested for additional CPI 
improvements. Now you are back with a larger request in this 
area for 1999. You just mentioned that you are asking for $9 
million additional for this purpose. Last year, I believe you 
indicated to the committee that this CPI initiative would cost 
about $10 million per year in the future. This year on page 43 
of the justification you state the cost would be $14 million 
per year. Why have the estimates gone up so much in one year?
    Ms. Abraham. There are really two reasons for that. The 
first is that the biggest part of the cost for the improvement 
initiative is the added expenditure to expand the size of our 
Consumer Expenditure Survey sample. That is the survey that the 
Census Bureau does for us where they go out and ask people 
about how they are spending their money. The Census Bureau had 
to revise their estimates because we increased the size of the 
sample and changed the schedule to expand the sample earlier 
than was originally planned. As a result, the Census Bureau 
estimates increased.
    The other piece of the higher cost estimate is that we have 
added funds to the initiative to support testing and evaluation 
of what we are collecting as part of the Consumer Expenditure 
Survey. This is a very complicated survey. It is difficult to 
go out and get people to give us accurate information on how 
they are spending their funds. And we thought upon reflection 
that it was important to add funds to do more than we have done 
in the past on evaluating what we are getting and improving the 
quality of the survey.

                            january 1998 cpi

    Mr. Porter. Isn't it amazing that a year ago and prior to 
that time there was a great deal of talk about either changing 
the CPI dramatically or deflating the figure that you arrive at 
in order to make our budget look better? And here we are with 
an economy that has made the budget look much better, and 
nobody is talking about doing that except to the extent that 
you have already done it anymore at all.
    So we hope that you continue to gather good figures for us 
in an expanding economy for a long time to come. Why don't you 
tell me what exactly the changes have been in the CPI, and 
reflected in this first month of the revised CPI, and how they 
improve the accuracy of that measure?
    Ms. Abraham. We have done two important things that are 
reflected in the changes introduced with January's data. The 
first thing that we have done is to update the market basket 
for the CPI. In order to construct the CPI, we need to have 
information on how people are allocating their funds across 
categories of items.
    Up until the data that we released yesterday, that market 
basket had been based on information from 1982 to 1984, so it 
was quite out of date. As of the January data, it is based on 
expenditure patterns as of 1993 to 1995, which obviously is 
much updated. Along with that, we have taken advantage of the 
fact that we were engaged in a revision to update the way that 
the item categories are put together, which may sound pretty 
arcane, but is important in terms of how the information gets 
presented.
    We now, for example, have a category for information 
processing equipment that has within it separate categories for 
personal computers and software, which we didn't have before. 
We just had a small category for information processing. This 
sort of change reflects how people's spending patterns have 
changed, and it means that we will now be producing information 
that gets at what is happening to the costs of those kinds of 
items. We have changed the item structure that we are using for 
publishing the data.
    We also have updated the sample of cities where we are 
collecting information. This hasn't gotten as much attention, 
but as you well know, the population of the country has shifted 
over time towards the South and towards the West. We have 
changed where we are collecting data to accord with how the 
population has shifted. So we added in data from 36 new cities 
effective with the data released yesterday that go along with 
updating the geographic sample.

                           cpi market basket

    Mr. Porter. When you figure a market basket, if you look at 
any particular two-year period, it could be a period 
ofrelatively flat or even negative growth on the one hand, or it could 
be a period of expansion on the other. Don't people's purchasing habits 
change when they feel worried about their economic future? Don't they 
shift from certain products to other products--substitute, in other 
words--to reflect their feelings about what the economy may hold for 
them in the future?
    Ms. Abraham. Certainly.
    Mr. Porter. And how do you adjust for that in picking any 
particular period?
    Ms. Abraham. Historically the way the CPI has always been 
put together is to pick a period and use that.
    Mr. Porter. And just use it.
    Ms. Abraham [continuing]. As a reference base, and then 
from that point not to adjust for----
    Mr. Porter. For anything.
    Ms. Abraham [continuing]. Changes in consumption patterns 
that may have occurred.
    Mr. Porter. But you may pick a period where people like 
today are choosing steak because they feel good about the 
economy and have to apply that measure when they have changed 
to chicken because they can't afford steak anymore--feel they 
can't. And is there any way to deal with that?
    Ms. Abraham. Ken Dalton is commenting, correctly, that 
using a three-year average rather than data for a single year 
probably helps with that. But I think you are raising a more 
general question, which is how do you take substitutions that 
may occur over time into account in constructing the index. In 
the CPI as currently constituted, we don't take into account 
substitutions due to changes in relative prices that affects 
the market basket. We are looking at a couple of things to try 
to get at that sort of substitution behavior.
    The way that the CPI is constructed is to first construct 
the subindexes for the different items and then to aggregate 
them up. We are looking at changing the way that we construct 
the subindexes to take into account substitution that may occur 
among items at that level. We expect to announce a decision 
about what we are going to do on that sometime next month.
    We also are looking at producing a measure that takes into 
account substitution that occurs across broader categories of 
the index that would augment the official CPI. BLS would 
produce this separately from the CPI for operational reasons 
that I could go into if you would like, we can't do this on a 
monthly cycle.
    I would like to add that we do know something about how 
important all of this is. Although there have been sometimes 
dramatic changes in consumption patterns, the impact on the 
rate of growth of the index is relatively modest--important, 
undoubtedly, but nonetheless relatively modest.
    Mr. Porter. '93 was a recovering year. '94 and '95 were 
pretty good years, were they not? And if you apply such a CPI 
derived from those figures to a period when we are in a 
recession let us say, you are going to get a bigger adjustment 
than may be justified by the circumstances. Is that correct?
    Ms. Abraham. In very general terms----
    Mr. Porter. Maybe that is a good thing overall. I am not 
sure.
    Ms. Abraham. In very general terms, if you use a market 
basket that is more out of date, whether it is going from a 
good economic period to a bad economic period or vice versa, it 
tends to give you an index that grows a little bit more 
rapidly. But there is no real precise relationship there.
    Mr. Porter. Ideally, we should change the CPI every year to 
reflect the most recent three-year period and keep it moving 
perhaps?
    Ms. Abraham. Well, in fact, I think so doing that could 
cause problems.
    Mr. Porter. That could cause problems.
    Ms. Abraham. To give an illustration, suppose we were to 
update the market basket used to construct the index every 
year. Imagine that we had a run-up in energy prices, we started 
with a given level of consumption of energy and then energy 
prices ran up, and we captured that. Then if over that period, 
people moved away from using so much energy and energy prices 
subsequently came back down, that price decline would get a 
smaller weight. You would end up with a CPI that was higher 
than where you had started, even if energy prices came back 
down to where they had started. And so that could be 
problematic.
    I think that what would be ideal, rather than just updating 
the market basket every year, would be to construct a different 
type of measure that is designed to capture the impact of 
substitution that occurs, but that isn't just updating the 
market basket more frequently.
    Mr. Porter. Yes. Ideally----
    Ms. Abraham. Producing that other kind of measure as part 
of our set of official statistics is part of the CPI 
improvement initiative for which we have requested funds.
    Mr. Porter. All right. I guess you have answered, do you 
think the CPI should be revised more often than every 10 years?
    Ms. Abraham. I think it probably should be.

                 job openings and labor turnover survey

    Mr. Porter. Yes, yes. Your other significant budgetary 
increase in 1999 is $3,300,000 for a job openings survey. How 
would the survey be conducted? Would it provide data by local 
area or only on a national basis? And how much will this survey 
cost in the future on an annual basis?
    Ms. Abraham. Taking your questions in reverse order, if I 
could, our expectation is that funding would continue at the 
same level, $3.3 million adjusted for unavoidable cost 
increases--mandatory cost increases. The intention is to 
produce National data only. We would have National figures 
overall and then by industry divisions. There would be some 
industry detail. It is not designed to produce local area 
information at this level of expenditure.
    Our intention is to conduct the survey using computer-
assisted telephone interviews. Once we have initiated them into 
participation into the survey, perhaps we would convert 
respondents over to entering their numbers for us each month, 
using touch-tone data entry over the telephone, the same kind 
of approach that we are using with our monthly payroll 
employment survey.
    Mr. Porter. And how would this survey be used?
    Ms. Abraham. The survey would give us important information 
on what is happening to the tightness of the labor market. I 
have started to get questions that I am simply unable to answer 
from various people about whether employers are experiencing 
more difficulty in filling jobs than they were a year ago, or 
two years ago. I simply don't have the information to answer 
that question.
    Mr. Porter. Yes, but don't we know that kind of anecdotally 
and intuitively even? I mean, what do you do with the national 
data on job openings?
    Ms. Abraham. Well, there are some things that you don't do 
with National data on job openings. You don't use this kind of 
information to figure out what sort of job training programs 
you should be designing or that kind of thing at any level of 
detail. I would agree that intuitively, when unemployment 
falls, you would expect that employers are probably going to be 
having more difficulty recruiting people. But the extent to 
which that is true really could be quite different depending on 
the circumstances.
    Mr. Porter. Or quite different by area.
    Ms. Abraham. It could be quite different by area as well. 
Until now, people have been forced to try to put together 
information on job openings from things like help wanted 
advertising, which does not really give you a very good 
indication of vacancy trends, but is the only thing that we 
have had.
    The Bureau of Labor Statistics has done job opening surveys 
on a pilot basis from time to time. Looking back at these, we 
see that at any given level of unemployment, job vacancies may 
be quite a lot higher or quite a lot lower at different points 
in time. It is not just a one-to-one correspondence, and I 
thinkwhat this information would tell us, is whether at a given 
level of unemployment things are relatively difficult for employers or 
relatively easy. Having industry information would start to let you 
focus in on where the hiring bottlenecks were.
    Mr. Porter. Did you suggest this survey to OMB?
    Ms. Abraham. Yes.
    Mr. Porter. And it is in response to what?
    Ms. Abraham. It is in response to questions that the 
Secretary of Labor and others have raised about the relative 
difficulty that employers are experiencing in filling jobs that 
we have just not been able to answer.
    Mr. Porter. And I personally just can't figure out what you 
are actually going to do with this data. The only thing I can 
imagine you could do with it is it might affect immigration 
somehow because it is national data.
    Ms. Abraham. Well, really it is an economic indicator.
    Mr. Porter. Oh, you are going to use it as an economic 
indicator?
    Ms. Abraham. It is an indicator of the state of the labor 
market.
    Mr. Porter. State of the economy. All right.
    Ms. Abraham. It is not something that I would envision we 
would use for operational purposes.
    Mr. Porter. I see. Okay. Now I understand it better. Do you 
consider this one of the highest priorities for the Bureau?
    Ms. Abraham. It is something that I personally have long 
thought was an important hole in our set of economic 
statistics. It is something that I do believe would be 
valuable.

                              davis-bacon

    Mr. Porter. Okay. You have been doing some work with the 
Wage and Hour Division with respect to Davis-Bacon wage 
surveys?
    Ms. Abraham. That is correct.
    Mr. Porter. What kind of work do you do for them, and are 
they transferring resources to you for doing this work?
    Ms. Abraham. Yes. We are doing some work for them, and we 
have contracts with them to cover the costs of doing this work. 
We are doing two things. One thing that we are doing is testing 
the collection of information on fringe benefits.
    The administration of Davis-Bacon requires information on a 
whole set of fringe benefits, and we are testing our ability to 
collect that information. We expect to have data--for two 
cities where we have been collecting these data--published 
later this year.
    As part of our Occupational Employment Statistics program, 
which is a program that produces data on occupational 
employment and as of last year occupational pay, we also are 
looking into the feasibility of getting employers in the 
construction industry to report to us on the union versus the 
nonunion status of workers for which they are reporting.
    Mr. Porter. When we talked to Mr. Masten, the IG, today 
there was some talk about how this data is gathered--Wage and 
Hour data. Is that your responsibility, or the Wage and Hour 
Division?
    Ms. Abraham. The Wage and Hour Division.
    Mr. Porter. They gather the data. Okay.
    Ms. Abraham. The data that are currently being used for 
Davis-Bacon purposes.

                            census contracts

    Mr. Porter. Roughly, how much of your annual budget is 
allocated to the Census Bureau for work that they perform for 
you?
    Ms. Abraham. I believe that is about $58 million. We have 
an exact figure.
    Mr. Porter. And what do they do?
    Ms. Abraham. They do several important things for us. They 
conduct the Current Population Survey, which is our monthly 
household survey that is the source of the unemployment rate 
figures and other information. They conduct the Consumer 
Expenditure Survey for us, the survey that we already discussed 
that provides input into the CPI on how people are spending 
their money.
    They also conduct for us the Point of Purchase Survey, 
which is also an input into the Consumer Price Index Program. 
So most of the surveys that support our work that involve 
interviewing folks in households they do for us.
    Mr. Porter. And has the amount that you have been 
transferring to the Census been increasing faster than the rest 
of your budget in recent years?
    Ms. Abraham. This year that is true because we have 
proposed a big increase in the size of the Consumer Expenditure 
Survey sample as part of our CPI Improvement Initiative. And as 
I indicated, most of that increase is the added cost of 
conducting the Consumer Expenditure Survey.
    Mr. Porter. And will that continue in out years, the survey 
itself, and the costs also?
    Ms. Abraham. The costs will continue, not the increases.
    Mr. Porter. Yes.
    Ms. Abraham. There is some further planned increase but 
costs are not going to continue to go up.

                             bls' workforce

    Mr. Porter. The Bureau's employment level has been fairly 
steady for quite a few years. What happens to the staff that 
you have been using to do the CPI revision project as it phases 
down? Do they leave the agency, or do you reassign them 
elsewhere?
    Ms. Abraham. Ken Dalton can speak to this better than I can 
I suspect, but the biggest part of that staff is a field staff 
that are out in cities where we used to collect data and are no 
longer collecting data. So by and large they leave the Bureau. 
They are typically part-time data collectors, and we don't 
typically have other work for them in the same locality.
    Mr. Porter. Do you have any great difficulty in recruiting 
and retaining the staff that you need?
    Ms. Abraham. We are starting to experience problems.
    Mr. Porter. Just like every other employer?
    Ms. Abraham. Right, though I would hate to generalize from 
our experience to draw general conclusions that wouldn't 
necessarily be statistically supported.
    Mr. Porter. Are you competitive with private industry on 
salary and benefits levels?
    Mr. Lacey. It varies, Mr. Chairman. We are experiencing 
some difficulty. The occupations that primarily are used within 
the BLS are economists, mathematical statisticians, and 
computer scientists and specialists. Within those categories--a 
very highly sought after group of individuals--it is becoming 
more of a problem for us.
    Our attrition rate in those ranks is, in fact, increasing. 
We have some anecdotal information, although as the 
Commissioner said, not definitive information, about our 
competitive edge. In the computer arena, we are falling behind 
in what young people can make in private industry by a 
considerable margin, as much as $15,000 or $20,000 of a margin.

                              state grants

    Mr. Porter. How much of your annual budget is allocated 
each year to the states for work that they perform for you or 
with you?
    Mr. Barron. It is about $72 million in aggregate if you 
count both contracts and grants.
    Mr. Porter. And has that been holding fairly steady over 
the past several years?
    Mr. Barron. It has. This year we have some puts and takes. 
We have a decrease that is occurring due to some data 
collection work that is going to be handled by contractors 
rather than states. Then, of course, we have some mandatory 
cost increases, but between last year and this year it is 
staying at about the same level.
    Mr. Porter. And what data do they collect for you?
    Ms. Abraham. They collect a lot of our labor force data. 
They are involved in collecting the data for our monthly 
employer payroll survey and, our occupational employment 
statistics survey. They also are involved in producing local 
area unemployment statistics.
    They are involved in collecting occupational safety and 
health statistics as well.
    Except for our Current Population Survey, basically all of 
our labor market data collection programs are conducted jointly 
with the states.

                                G.P.R.A.

    Mr. Porter. Now, let us turn finally to GPRA, and tell us 
what impact the Act has had on your Bureau. Are you doing 
things differently now than you were before the Act was 
implemented? And give us an overview of your work under GPRA as 
it applies to the Bureau.
    Ms. Abraham. I guess that I would say that a lot of the 
things that GPRA calls for are things that we were doing anyway 
prior to 1993. For example, one of the things that GPRA calls 
for is shifting towards program-by-program budgeting, which is 
something that we have always done. We have had performance 
indicators in our budget since 1991. So many of the things that 
the Act calls for are things that we had been doing anyway. We 
have done a lot of work on our strategic plan. That was a 
lengthy process in which all of us at this table, as well as 
our other senior managers, were very involved.
    Mr. Porter. And did the GAO look at that?
    Ms. Abraham. I don't know whether they looked specifically 
at the BLS plan.
    Mr. Lacey. No, they did not, Mr. Chairman. They focused 
their attention on the Department's strategic plan and its 
performance plan.
    Mr. Porter. Well, Dr. Abraham, thank you for testifying 
this afternoon. Thank you for the fine job you are doing. I am 
glad we don't have to talk about CPI deflators any longer, and 
I am sure you are also.
    Ms. Abraham. We have continued to work hard on improving 
the CPI program.
    Mr. Porter. Thank you very much. The subcommittee will 
stand in recess until 10 a.m. tomorrow.
    [The following questions were submitted to be answered for 
the Record:]


[Pages 836 - 845--The official Committee record contains additional material here.]



                                      Wednesday, February 25, 1998.

                  PENSION BENEFIT GUARANTY CORPORATION

              PENSION AND WELFARE BENEFITS ADMINISTRATION

                               WITNESSES

DAVID M. STRAUSS, EXECUTIVE DIRECTOR, PENSION BENEFIT GUARANTY 
    CORPORATION
OLENA BERG, ASSISTANT SECRETARY, PENSION AND WELFARE BENEFITS 
    ADMINISTRATION

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order. We 
continue our hearings this morning on the budget for the 
Department of Labor. This morning we will focus on pension 
agencies and want to welcome Olena Berg, the Assistant 
Secretary, Pension and Welfare Benefits Administration, and 
David M. Strauss, the Executive Director of the Pension Benefit 
Guaranty Corporation. Thank you both for coming this morning. 
If you will proceed each with your statements, and then we will 
go to questions.

                         PWBA Opening Statement

    Ms. Berg. Thank you, Mr. Chairman and members of the 
subcommittee. It is a pleasure to be here with you this morning 
to discuss PWBA's budget request for fiscal year 1999. As you 
know, our primary mission in PWBA is to promote and protect the 
pension, health, and other benefits of over 150 million 
participants and beneficiaries in over 6 million private sector 
benefit plans that all together hold more than $3.5 trillion in 
assets.
    Safeguarding and promoting the benefit security of American 
workers is an enormous challenge for all of us, but one we face 
with a strong resolve to succeed and a growing sense of pride 
in what we have been able to accomplish with the resources 
available to us.

                            1997 Activities

    We have had a busy year since I last appeared before this 
committee, and I would like to tell you a little bit about some 
of our activities and results. For fiscal year 1997, our civil 
enforcement actions resulted in the restoration of over $360 
million to employee benefit plans and our criminal 
investigations resulted in another $3 million restored to those 
plans.
    As of last month, we had opened a total of almost 3,000 
investigations of 401(k) plans and recovered about $38 million 
for the participants in those plans since we started this 
crackdown on 401(k) fraud in 1995. We have also opened 331 
investigations of health plans where employee contributions may 
have been misused and recovered about $10 million in those 
cases.
    Additionally, we have opened over 100 criminal 
investigations into the misuse of employee contributions to 
401(k) and health plans, and these cases resulted in the 
criminal prosecution of 54 people.
    In addition to these enforcement actions and our efforts to 
encourage compliance with the law, we have conducted 
educational outreach program workshops around the country to 
provide assistance to plan professionals about ERISA's 
requirements and how to avoid problems.
    We have also tried to help people get into compliance with 
the reporting aspects of ERISA. Our Delinquent Filer Voluntary 
Compliance Program, with vastly reduced fees and penalties, 
resulted in almost 3,000 new and corrected annual report 
filings that are now back in the system.
    We have been trying to help in some of the more difficult 
aspects of the law by providing guidance. For instance, we put 
out a comprehensive book on qualified domestic relations 
orders, known as QDROs, to assist all parties to a divorce 
proceedings in understanding ERISA's sometime arcane 
requirements and making sure that parties are able to come to 
the best conclusion in those kinds of cases.
    As I am sure you remember, we have major new 
responsibilities facing us as a result of the health laws 
enacted in 1996. In the past year we developed nine interim 
final regulations implementing the major portions of HIPAA's 
portability provisions.
    We continue to try and help the public. We responded to 
about 155,000 inquiries and, as a result of assisting people 
who call with questions and problems, were able to recover 
almost $30 million in individual benefits for plan participants 
who were involved in a dispute with their plans last year. That 
is a 20 percent increase over the year before.
    As you know, in 1995 we launched our Retirement Savings 
Education Campaign with the goal of increasing the basic 
information available to people about pension and retirement 
planning issues and the importance of personal savings. In the 
last year, we have published 15 new helpful brochures asa part 
of that campaign, some in Spanish for the first time ever.
    We have implemented a toll-free brochure request line so 
that people can easily access this information. We, ourselves, 
distributed over 450,000 copies of these materials and our 
private sector partners in the campaign were able to vastly 
leverage our resources by distributing almost 5 million of our 
publications for us.

                  form 5500 reports processing system

    We also have undertaken a multiagency effort, along with 
the IRS, the Social Security Administration, and PBGC, to 
develop requirements for the EFAST, a new Form 5500 reports 
processing system. The new system will use state-of-the-art 
technology and be far less costly to operate than the current 
IRS processing system. The new system will improve the accuracy 
and the quality of the data processed and speed our ability to 
use this data in safeguarding pensions.
    I would like to take a moment right here to personally 
thank you, Mr. Chairman, and the committee for giving us the 
resources to undertake this effort and begin the development of 
this new system. We expect to be able to award the development 
contract in the next few months and to implement the system in 
late fiscal year 1999.
    Finally, and again in coordination with the other agencies, 
we have developed a revised form 5500 series report. It is 
designed to streamline and facilitate compliance with ERISA's 
requirements by making it much easier for plan administrators 
and fiduciaries to understand what they need to fill out. It 
will be far simpler. It will save us time and effort and the 
business community as well.

                            1998 activities

    In 1998, we will be building on all of these activities and 
accomplishments. In addition we are starting some new 
initiatives. We held a hearing last November on the issue of 
401(k) fees because, over time, one would have expected--with 
the growth of the system, possibly economies of scale and new 
technologies--to see fees for these plans going down.
    In fact, the opposite seems to be the case, and 
participants are being asked to bear more of the cost of fees. 
In many cases participants don't understand, and sometimes plan 
administrators don't understand, what they are actually paying 
because of the variety of fee arrangements out there.
    As a result, we are beginning to look into this area. We 
held a hearing and are doing some follow-up investigative and 
research work to see what more may be required in terms of 
education or possibly disclosure in the area of fees.

                               saver bill

    And as a result of the passage of the SAVER bill, we are 
coordinating a National White House Summit, which will be 
jointly hosted by the President and the congressional 
leadership, on retirement savings education issues. It is 
tentatively scheduled for early June and, again, we will build 
on the work of our Retirement Savings Education Campaign to see 
what more might be done to help people get the tools they need 
to ensure that their retirements are secure.

                      regulatory work under hipaa

    Finally, I mentioned already the extensive regulatory work 
we have been doing under HIPAA. We will also be implementing 
the aspects of the Consumer Bill of Rights recommended by the 
President's Commission on Consumer Protection and Quality in 
the Health Care Industry for which we have regulatory 
responsibility.

                              gpra status

    I would also like to briefly mention our GPRA and strategic 
goals. As you know, the Department of Labor overall has 
established three strategic goals to help America's workers 
meet the challenges they face today and in the future. Our 
plans in PWBA, and our budget request for 1999, fall under the 
Department's second strategic goal: A Secure Workforce.
    Our role is to promote the economic security of workers and 
their families by expanding, enhancing, and protecting workers' 
pension, health, and other benefits. To accomplish this, we 
have established four major goals within PWBA.
    First, we will assist workers in understanding their rights 
and protecting their benefits. Second, we will deter and 
correct violations of the relevant statutes. Third, we will 
facilitate compliance by plan sponsors, plan officials, service 
providers, and others in the regulated community. And, fourth, 
we will work to encourage the growth of employment based 
benefits.
    In developing the GPRA plans, we selected performance 
measures that challenge us to improve our regulatory and 
compliance assistance, enforcement, educational and customer 
service activities. We also have other performance indicators--
such as assets restored to plans--which when taken as a whole 
with the measures in our strategic plan and annual performance 
plan, more completely present the full picture of the work that 
our agency does.
    We realize that there is a lot more to be done in the next 
several years as we continue the work of refining the strategic 
plan and move more toward an outcome focus. But I think it is 
important to point out in the midst of all this that we can say 
that there is a good and positive return on investment to the 
taxpayer for its investment in PWBA.
    As I mentioned earlier, in fiscal year 1997, we restored 
assets to plans totaling over $360 million. If you convert that 
into a return on investment measure, that is a return on 
investment of over 400 percent of our agency's total budget, 
even though we do many other things as well.
    To accomplish all of these goals, we will continue to 
analyze and evaluate our operations. There are areas, however, 
where we do need additional resources to effectively administer 
our new and growing responsibilities. Our budget request for 
fiscal year 1999 totals $91 million and 764 FTE. Included in 
these amounts are requested program increases of $9.6 million 
and 55 FTE.

                          1999 budget request

    Again, there is a more complete explanation of these 
requested increases in my written testimony, but I just wanted 
to mention briefly that primarily most of the money is for 
health care compliance with our new responsibilities under 
HIPAA and the other laws that passed last year and the 
continuing work that needs to be done in this area.
    Enactment of the new health laws was a major expansion of 
PWBA's responsibilities. We have been working actively to put 
out the regulatory guidance that is necessary. We know from our 
experience with COBRA some years ago the volume of inquiries 
that we will be getting from the public and from practitioners 
as they begin to understand their responsibilities under the 
new law. We are asking for the resources, both on the 
regulatory and interpretive side, as well as the customer 
assistance side, to be able to meet that challenge.
    We are also asking for the funds that we will need to 
commit at the end of fiscal year 1999 for the conversion phase 
from the old IRS processing system to the new EFAST system. We 
will have to continue paying into theIRS system for processing 
the 1998 Form 5500s at the same time, an overlapping period, that we 
start processing the 1999 forms on the new system. This is a one-time 
expenditure to get us through that one year, as we are converting from 
one system to the other.
    As I mentioned in my written statement, this budget request 
reflects our strong commitment and the commitment of this 
Congress to improve the lives of America's working families by 
promoting their economic security. We think our GPRA plans and 
our requested resources will help us accomplish these goals in 
a more efficient and effective manner. With that, I conclude my 
opening remarks and would be happy to answer any questions that 
you may have.
    [The information follows:]


[Pages 852 - 872--The official Committee record contains additional material here.]



    Mr. Porter. Ms. Berg, that was wonderful. Thank you very 
much for that very comprehensive and direct statement. We 
appreciate it, and, of course, we will have questions. Mr. 
Strauss.

                         PBGC Opening Statement

    Mr. Strauss. Thank you, Mr. Chairman. I appreciate the 
opportunity to appear before you today. It is an honor for me 
to appear before the Labor-HHS Subcommittee. As PBGC's 
Executive Director, I am acutely aware of how essential PBGC's 
insurance program is to safeguarding the pension benefits of 42 
million American workers.
    Since its creation almost 25 years ago, the PBGC has 
assumed responsibility for the pension plans of nearly 500,000 
workers and retirees. In just the last year alone, a time when 
the economy's performance has been strong and ongoing pension 
plan assets have been growing, we have trusteed pension plans 
covering more than 50,000 participants.

                           PBGC'S PRIORITIES

    Since joining the PBGC, I have set out three priorities for 
the corporation: one, safeguarding PBGC's solvency; two, making 
PBGC a premier customer service agency; and, three, promoting 
defined benefit pension plans.
    With regard to our first priority of keeping PBGC solvent, 
the corporation had its first surplus in history last year, and 
we fully expect to report good news again this year, thanks to 
a healthy economy and good asset returns. When PBGC's financial 
statements are completed for FY '97, they will show that our 
reserves continued to grow for both the single and 
multiemployer programs.
    But despite our good returns, PBGC must remain vigilant 
because there are many factors affecting our financial health 
that are beyond our control. For example, we are always taking 
on new plans and assuming new unfunded benefit liabilities even 
when the economy is strong. And changing economic conditions, 
such as a dip in the stock or bond markets, can reduce the 
value of the assets that we manage.
    My second priority is making PBGC a premier customer 
service organization, not only for the workers and retirees we 
protect, but also for the employers who pay our premiums and 
the pension professionals who advise them. In my written 
testimony, I have provided you with a number of examples of 
where we have taken steps to improve our customer service.
    My third priority is to promote defined benefit pension 
coverage for American workers as mandated in ERISA. Defined 
benefit plans can help build secure retirement savings quickly, 
and they are especially needed for small business employees 
where defined benefit coverage has declined.
    An important step in addressing defined benefit coverage 
among small employers is a bill sponsored by your colleagues, 
Congresswoman Johnson and Congressmen Fawell and Pomeroy, which 
creates a simplified defined benefit plan for small business.
    There is broad, bipartisan support for this type of 
legislation, and President Clinton has proposed something 
similar in his 1999 budget request. The Administration 
initiative blends some of the best features of both defined 
benefit and defined contribution plans, such as guaranteed 
retirement benefits and individual pension accounts.
    These priorities--maintaining PBGC's financial solvency, 
improving customer service, and promoting defined benefit 
pension plans--are aligned with the goals in PBGC's Strategic 
Plan and the Secretary of Labor's priority to promote the 
economic security of workers and their families.

                          GPRA IMPLEMENTATION

    I know this committee is particularly interested in how 
agencies have implemented the requirements of GPRA. And I am 
pleased to report to you that we are actually in our second 
year of integrating PBGC's Strategic Plan with our budget 
formulation process.
    Since PBGC last testified before you, we have further 
refined our Strategic Plan and are now able to better target 
our budget resources to our strategic goals. We are pleased 
that we can now report annually on five of the eight PBGC 
outcome measures discussed with this committee last year, and 
we expect to be able to report on the remaining three outcome 
measures by the end of this year.

                          1999 BUDGET REQUEST

    That takes me to our FY '99 budget request before this 
committee. For FY '99, PBGC is requesting a total of $158.7 
million for operating expenses. The need for the $10.9 million 
increase is primarily threefold: one, to manage the large 
growth in our investment assets; two, to handle the increase in 
the number of claims under plans entrusted to our care; and, 
three, to speed up our processing of final benefit 
determinations for participants. It is also needed to increase 
our productivity through automation and training and to enhance 
customer service.
    Our $158.7 million budget request is directly linked to 
PBGC's four strategic goals, and I will break that down for you 
here. Under our strategic goal number 1, which is to protect 
existing defined benefit plans and their participants and to 
encourage new plans, we are requesting $25 million for PBGC's 
early warning and legal enforcement programs. In FY '97 alone, 
PBGC's early warning program secured $770 million of lost 
prevention protection for underfunded pension plans.
    For goal number 2, to provide high quality services and 
accurate and timely payment of benefits to participants, we are 
requesting $77 million in FY '99. This goal encompasses the 
largest program area for the corporation in terms of both 
dollars and people. PBGC expects the number of trusteed plans 
to climb to 2,730 during FY '99, which is a 50 percent increase 
in only five years.
    PBGC will also be responsible for the benefits of some 
565,000 people in FY '99, another 50 percent increase since FY 
'94. This workload growth is long term in nature because 
beneficiaries normally receive benefits and services for 
decades.
    And when I say that it is long term in nature, I think that 
it is pertinent to point out that there are still two 
Confederate Civil War widows who are still living and 
collecting pensions. So when we say long term, we mean very 
long term. We expect to speed up the processing of our trusteed 
plans and final benefit determinations for participants as 
described in PBGC's FY '99 annual performance plan.
    Under our third goal, to strengthen financial programs and 
systems to keep the pension insurance system solvent, we are 
requesting $39 million in FY '99. This goal includes efficient 
premium collection, strong accounting controls, and pension 
asset investment responsibilities. Increased funds are 
primarily needed in FY '99 to manage our investment portfolio, 
which grew from $8.2 billion five years ago to $15.6 billion at 
the end of FY '97. In other words, a 90 percent increase.
    Finally, under our fourth goal, which is to improve 
internal management support operations, we are requesting $18 
million in FY '99. This goal includes central computer systems, 
operation support, and specialized pension-related training for 
staff. Over half the amount requested for this goal will 
support ongoing computer operations and initiatives such as 
addressing the year 2000 computer issues. In closing, I look 
forward to working with each of you, and I thank you for giving 
me the opportunity to appear this morning.
    [The information follows:]


[Pages 876 - 887--The official Committee record contains additional material here.]



    Mr. Porter. Thank you, Mr. Strauss. Mr. Obey.

              discontinuation of health benefits-retirees

    Mr. Obey. Thank you, Mr. Chairman. I just have one 
question, and it involves an episode in my district. I am not 
quite sure how to state this and be polite about it. But I 
think that your agency is one of those agencies that most 
people ignore and are not even familiar with until they 
discover they need some help in a hurry. And nine times out of 
ten, because of the state of the law, they still don't get it. 
And that is not your fault, that is the fault of the Congress.
    I want to make clear I believe in capitalism. I don't 
believe in Ayn Rand capitalism. I sure as hell don't believe in 
Charles Darwin capitalism, and that is what we have got in this 
country all too often.
    I would like to give you the particulars of the case in my 
own district--my own hometown. The company is A.D. Getz, and 
what is happening is that the retirees in that company just 
abruptly saw their health benefits disappear by a successor 
company, T & N Industries, after T & N bought the company.
    Even though it is my understanding that T & N Industries 
promised the employees and the retirees a decent long-term 
package, my understanding is that, in fact, the notice that 
they were given was so abrupt that--well, my understanding, for 
instance, is that they were given notice of the intent to 
withdraw health benefits from retirees on December 22--a letter 
dated December 22, which retirees did not even receive until 
close to January 1, and January 1 was the date of termination 
of the benefits.
    My understanding further is that despite the fact that the 
workers thought that they had and the retirees thought that 
they had clear guarantees of coverage, that this was having 
such a way that they were not even afforded any opportunity to 
continue coverage under the Federal provisions of COBRA or 
under state law. I am not certain of the details of that, but 
that is what has been described to me.
    I would simply like to give you the information that I have 
about this case, and I would ask if you could give it expedited 
consideration in reviewing the facts of the situation to see 
whether or not there is any way that these workers can get some 
protection under the law.
    Now, I understand also that there are many loopholes which 
are in these contracts which lead workers to believe that they 
are protected because slick lawyers wrote it that way, but, in 
fact, they wind up not being protected because of get-out 
clauses that are fairly obscure. I have just run into another 
case involving this in another city in my district, and that is 
in Wisconsin.
    What I would like you to do is to immediately investigate 
the situation with respect to this company and let me know 
whether or not there is any redress these workers have under 
the state of the laws that exist now. I would also like to know 
if they don't, I would like you to identify for me some of the 
common practices and the common language that is used in 
contracts which leads workers to have the false impression that 
they have protection when, in fact, they don't.
    And I would like to ask you to go even further. My 
understanding is that T & N may itself be shopping around for a 
buyer. My understanding is that one of the potential buyers is 
a company by the name of Federal Mogul, which is a $2 billion 
global manufacturer. And my suspicion is that either T & N 
wants to drop these health benefits, but they can sweep them 
into the buyer packages for their own executives when their 
company is bought out, or else my suspicion is that it may be 
being told by Federal Mogul or someone else looking at that 
firm that they ought to drop these liabilities before they will 
buy them out.
    So I would also like your observations about what forces in 
the marketplace contribute to the decision of the corporations 
to pull the plug on benefits like this, even when the workers 
are under the impression that they have them.
    I know that that runs somewhat far afield of your narrow 
expertise, but if we are to design policy in this place that is 
aimed at correcting not only corporate conduct that is on the 
line but of correcting the wonders of market forces, which are 
sometimes nothing but an obscene aberration of real markets, I 
would like to know what observation you have on that score as 
well.

              marketplace forces on benefits for retirees

    Ms. Berg. Congressman, we will be happy to follow up on 
each of those requests. You have identified, I think, a very 
troublesome policy area in ERISA. When I try and describe ERISA 
to my daughter, for instance, in a very shorthand way to say 
what does this law do, what I usually say is that it doesn't 
require that employers provide any particular kind of benefit 
or that they require benefits at all. They have a lot of 
flexibility. But the way the law works is if they make a 
promise, they have to keep that promise.
    In this case, I think the law is failing the participants 
as a result of some of the developments that you mentioned. The 
Courts for a while seemed to be all over the map on this issue, 
but increasingly the trend seems to be toward a conclusion that 
if a company has reserved anywhere in the underlying 
documents--even if the participants in the documents may not be 
aware of it at all--that right to amend the plan, the Courts 
seem to be holding that they are able to do that.
    So what we know at this point is out of about a million 
people who are receiving health benefits and retirement from 
their employers, about 800,000 of them think they have lifetime 
benefits and very many of those people probably don't if the 
employer decided to make a change and did indeed have that 
reservation of right somewhere in the documents.
    We have been trying to assist in these cases. I think about 
a year ago we issued a Brief for people to say here iswhat to 
look for, here is how to try and find out for yourselves whether you 
are really protected or not.
    We have participated as an amicus in any number of these 
cases--Pabst, for instance--in trying to help the participants 
and trying to encourage the Court to take all the evidence into 
account and really look at what these participants have been 
promised. But, again, I have to say in general, the trend is 
moving against us. So, we will be happy to look into the 
particulars of this case to see what, if anything, we can do to 
be helpful and to answer your broader questions as well.
    [The information follows:]


[Pages 891 - 893--The official Committee record contains additional material here.]



    Ms. Berg. Now, in terms of what might encourage companies 
to drop this kind of coverage, I think a lot of commentators 
have looked back to the change--the FASB change--that was made 
some years ago in the accounting for these benefits and putting 
them on the balance sheet because we did see, after that 
accounting change, a lot of companies reevaluate what they were 
doing in the area of retiree health benefits.

                          1999 budget request

    Mr. Obey. Okay. Let me just ask one more question. You are 
asking for an increase of how much in your budget this year?
    Ms. Berg. $9.6 million.
    Mr. Obey. Just given my experience, in Ashland, for 
instance, these workers--all of a sudden the plant was shut 
down, no notice, no cooperation from the company in terms of 
requests from the local mayor to leave a couple table machines 
or even though that would have been purchased by another 
company, the company stiffed the community, they stiffed the 
mayor, they stiffed the workers.
    And when it got to questions about promises that they were 
making retirees in the new contract, the union itself was 
strapped. It had got a lot of contracts to come out at the same 
time. The union itself is able to give virtually no meaningful 
help to that local. I find it amusing for people who talk about 
big labor when, in fact, it is my experience that labor is 
usually weak as hell when it comes to trying to protect the 
workers on many of these issues.
    And I guess I would like to know how on earth you can 
really deal with all of your responsibilities, especially I 
would think your responsibilities for providing additional 
information to at least let them know what the traps are before 
them, with such a small budget increase? In your best 
professional judgment, what kinds of activities would you 
increase if you were to receive an additional $10 million above 
the Administration's budget request?
    Ms. Berg. I would increase, given the size of our 
universe--I talked about the 2.5 million health care plans and 
700,000 pension plans with 150 million participants--the area 
of customer service, of answering inquiries and being able to 
follow up and help people in these areas. This is something 
that we have been working very, very hard to expand our efforts 
to make people more aware that we are there to assist them.
    And so to the extent that we have been given additional 
resources in the last couple of years, those resources have 
gone into customer assistance. We have established new 
positions in every one of our field offices to help people. It 
used to be that if someone called one of our offices, they had 
to be referred to an office in Washington. In too many of these 
cases, we told people, sorry, we can't help you. You will have 
to get an attorney.
    We now try and follow up on these situations and as we do 
more of this, and as more people become aware of the fact that 
we are doing it, we are seeing substantial increases in the 
number of calls and inquiries that we are getting. For 
instance, in the health care area, there was a 45 percent 
increase in the number of inquiries that we received in a 
year's period. Clearly, additional resources would help us in 
the customer assistance area.
    Mr. Obey. Thank you. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Obey. Let me begin by giving you 
a very short sermonette. I doubt very much that the revenue 
increases that the President suggests in his budget are going 
to be enacted; and certainly not in my judgment this year. That 
means that the spending side of his budget is also under some 
downward pressure, given the fact that we won't have the 
revenues to work with.
    I would also say that if you give me a chance to raise the 
tax on tobacco in the way that the President's budget 
indicates, I would be happy to do that. But, I don't think that 
matter is going to come up before the Congress this year. I 
think the revenues are not going to be there, and that is going 
to make it more difficult for us to accede to anyone's budget 
request at the levels that have been suggested by the 
President.
    Mr. Strauss, doing the arithmetic, it seems to me that the 
Civil War widows must have been 20 years old, marrying 90-year-
old veterans.
    Mr. Strauss. It is something like that, yes, sir.
    Mr. Porter. Is that about right?
    Mr. Strauss. About right.
    Mr. Porter. Yes, and they have got to be pretty near the 
end of life also.
    Mr. Strauss. One of the widows is 97 and the other is 82, 
just for the record.
    Mr. Porter. Yes. Let me say before we begin the detailed 
questions that personally I would like to see us--and this 
would reflect on Dave's concern also--I would like to see us 
over the next 25 years move from the kind of public and private 
pension system that we have in America today to a public 
pension system that would be owned by the workers, rather than 
owned with promises by the government, which is our present 
Social Security system.
    I would like to see a system where every worker owns their 
own account, to be used as the basis for our private pension 
system so that people are not given promises that they will 
receive a corporate pension or a union pension somewhere down 
the line.
    Workers will with every paycheck have money paid into their 
own private account that they own from that moment on and 
invest for themselves. They would have the protection that this 
new system would provide them instead of having corporations 
that steal their assets out of the pension fund and then go 
bankrupt or unions that do the same thing.
    In other words, I think we ought to now have a vision for 
our country that we can create this system, and that we have 
the resources to do this. It can be done, believe me, with not 
that much difficulty because of the great lack of faith that 
young people have in our public pension system today, Social 
Security.
    If we aim for it, we can move toward a system where every 
worker owns their own account, and don't have to depend on 
anybody for their retirement. They would have it in their hand, 
and invest it, and have it available to them when they reach 
retirement age.
    That I think is something that we need to state as our 
national goal and work toward it very, very strongly. I think 
that of all the problems that you deal with every day, a lot of 
them must come from the kinds of pension systems that we have 
today that depend upon promises that often aren't kept by the 
government or by private industry.

                       pbgc investment portfolio

    Having said that, let me ask a question of Mr. Strauss. 
Your testimony indicates you have about $15.6 billion in 
investments. What portion of those investments are in U.S. 
Government obligations?
    Mr. Strauss. About 60 percent.
    Mr. Porter. Is that pegged by judgment or by law?
    Mr. Strauss. The 60% represents the assets of the revolving 
funds, which by law must be invested in either U.S. Treasury 
securities or debt obligations. PBGC's Board of Directors has 
directed that our revolving funds be invested in only Treasury 
securities. Our board consists of three cabinet secretaries, 
the Secretary of Labor, Secretary of the Treasury, and 
Secretary of Commerce. And so our investment policy is 
basically established by our board of directors.
    Mr. Porter. And that means that you have $60 billion in 
other types of investments, roughly?
    Mr. Strauss. The number in my testimony----
    Mr. Porter. 6 billion. I am sorry.
    Mr. Strauss. $6 billion. And the other $6 billion is 
managed by about 10 private sector equity managers--10 
different managers with different philosophies.
    Mr. Porter. And the reason for that is that you would have 
an inordinate impact on the market if you made a decision at 
one central place about one particular security, for example?
    Mr. Strauss. I don't think that our numbers are large 
enough that we would have an inordinate impact on the market. I 
think it is more a diversification issue.

                     performance data availability

    Mr. Porter. Okay. Let me begin by asking each of you to 
answer this question for the record. The GAO has expressed 
concern in recent testimony before the subcommittee about the 
Department's lack of reliable and consistent information needed 
to monitor performance of individual activities.
    Are you confident that the performance data that you have 
for your activities will tell us what we need to know to assess 
whether they are meeting their objectives? This is in reference 
to GPRA. You can answer that for the record.
    [The information follows:]


[Page 897--The official Committee record contains additional material here.]



    Mr. Porter. Describe for us your new responsibilities under 
the health care legislation passed in 1996.
    Ms. Berg. We have always had fiduciary obligations with 
respect to health plans and pension plans and going in and 
looking at dollars held in trust. For the first time under 
ERISA--as amended by HIPAA--we have responsibilities for issues 
that relate to regulatory plan design requirements.
    HIPAA has the portability requirements that are imposed on 
employers, the obligation to provide participants with 
certificates as they leave a plan and enter a plan that attests 
to their previous coverage, and all sorts of things like that, 
which we are now required to enforce; a whole different role 
for us.
    Similarly, the Newborn and Mothers Act has requirements 
about hospital stays for group health care plans that we are 
now required to enforce. So we have obligations to provide 
guidance to the affected providers of health care and to the 
participants in all of these plans on a variety of issues 
involved in HIPAA.
    In addition to that, we have the customer service 
obligation that I talked about earlier, and we have numerous 
regulatory or guidance and interpretive projects that we have 
to undertake and studies that the law requires of us as well.

                          volume of inquiries

    Mr. Porter. And are you able to handle the volume of 
inquiries that you are now responsible for?
    Ms. Berg. Well, again, this is a major focus of our 
requested increase. We are looking back to our COBRA experience 
and projecting from that data the kind of volume that we expect 
to receive by the year 1999. That is the year where we think we 
will be hit most heavily because at this point, plans are still 
coming into compliance.
    Most of the provisions of HIPAA took effect in the first 
plan year after the effective date of the legislation. Many 
plans are just now beginning to come under HIPAA's 
requirements, and so we expect an increase in the volume of 
calls, and 1999 is the year that we anticipate being hit hard, 
as both providers and participants are beginning to try to 
understand this new law.
    Mr. Porter. But you have calls now?
    Ms. Berg. Oh, yes, yes; as I mentioned, a 45 percent 
increase in the number of calls on health care in the last 
year.
    Mr. Porter. Do you have an 800 number, or do you answer 
those at your local offices?
    Ms. Berg. No. Again, we created the ability at each one of 
our regional field offices and here in Washington, D.C., to 
answer those calls. We have one toll-free number for people to 
get the brochures that I mentioned earlier. Included among 
those materials is a book on the new health care laws and the 
requirements and questions and answers for both providers and 
participants. That has been a popular book since we put it out.

               workload associated with health care fraud

    Mr. Porter. The justification mentions that the rise in 
health care fraud has been a contributing factor to expanding 
your workload. Can you expand on that a little bit?
    Ms. Berg. There are a number of areas where we have really 
been investigating health care fraud. One has been a continuing 
problem for us and for state authorities as well, and that is 
what are referred to as fraudulent MEWAs, Multiple Employer 
Welfare Arrangements, and this has to do with operators who 
take advantage of the good intentions of small business people 
trying to offer affordable health care to their employees.
    These operators come in and try to get out from under state 
regulation by asserting that they are an ERISA-covered plan 
because typically they maintain that they are a union--they are 
really a sham union--or that they are an employee leasing 
company in a single employer plan. These are very sophisticated 
people. We try to stamp them out in one state and they will pop 
up later someplace else. What they do is sign up a lot of 
people and collect premiums.
    The reason they are trying to get out from under state 
requirements is so they don't have to worry about issues like 
solvency requirements and reserves and things like that. They 
collect premiums. They may pay a few claims at the beginning, 
but the payment of claims then gets very, very slow. By the 
time people discover that their health care claim isn't going 
to be paid, these people have disappeared. Those cases are 
tragic. The workers are stuck with enormous health care bills 
in some situations. As a result we have made a major and 
continuing enforcement effort to go after those kinds of 
operators.
    In the health care area, we are also finding situations 
where service providers to plans negotiate discounts with 
hospitals and doctors and other health care providers and don't 
reveal those to the plans. Now, if this is all out in the open 
and everyone understands that this is being done and that the 
premium that they are paying takes that into account, then that 
is fine under ERISA.
    But where it is not disclosed, you see situations where it 
affects the participants. If they have, for example a 20 
percent co-pay and they have gone into the hospital for an 
expensive operation--a $50,000 operation--and the hospital has 
negotiated a discount where they really are only charging 
$25,000, but the participant is still being charged the 20 
percent co-pay based on the higher amount, this is harming 
participants. So we have investigative efforts where we are 
going after those kinds of arrangements as well.

                              simple plan

    Mr. Porter. Do you suggest changes in the law where they 
seem appropriate and bring those before the Congress?
    Ms. Berg. Yes, we certainly do.
    Mr. Porter. And has Congress been responsive to those?
    Ms. Berg. I would say very much so. One of the early 
indications was the SIMPLE plan that Congress passed last year. 
We are trying to encourage more coverage, and David talked 
about this earlier, but we know that small businesses have 
particular difficulty providing pension benefits to their 
employees.
    We know that about one out of every four employees in a 
small business has pension coverage as opposed to three out of 
four in large businesses. We have been trying to see how can we 
reach out to small businesses and encourage them to set up 
plans. In the first six months after it became effective--I 
don't have more recent data--something like 18,000 small 
companies, the majority of them with less than 20 employees, 
set up these plans covering about 100,000 people who did not 
have coverage before.
    That kind of effort is very encouraging. Also as David 
mentioned, the work that people have been doing in trying to 
design a simple defined benefit, a traditional pension that 
might work for small businesses as well.
    Mr. Porter. If you had your own retirement account that you 
owned and invested throughout your working lifetime and your 
employers paid into it with each paycheck you would not have to 
worry about portability. You would not have to worry about 
vesting. You would not have to worry about any of the things 
that people have to worry about today and I think it would be a 
much, much better system.
    To what extent on MEWAS do you interface with the Inspector 
General's Office who also does a great deal of work in that 
area?
    Ms. Berg. We work with the Inspector General. In some cases 
there are joint investigations. It depends on the 
circumstances, but we have tried to work closely with them.

                          limited scope audits

    Mr. Porter. We know that you testified recently before 
another House subcommittee on government reform and oversight, 
on the matter of limited scope audits under ERISA. This matter 
has been discussed by the IG and others for years now. Can you 
review for us your concerns in this area? Why is this a 
problem?
    Ms. Berg. Certainly. ERISA requires that any plan with over 
100 employees receive an annual audit by an outside independent 
auditor and that, of course,given the size of the universe 
versus the size of my agency, really is the best protection that people 
can have--an early outside look. I think this is a perfect private 
sector kind of operation where auditors come in and look at the 
operations of the plant.
    When ERISA was passed it allowed plan administrators to opt 
for what is called a limited scope audit. This was done to try 
and keep auditing costs down and recognize that regulated 
financial institutions, where many plans were placing their 
money, also received an audit. This is the only place in law 
that we are aware of where this provision exists. Therefore, to 
the extent that the plan had any money in a regulated financial 
institution, they could decide to do an audit where the auditor 
did not look at those assets when performing the audit.
    After the passage of ERISA, accounting conventions changed. 
When auditors are asked by the plan administrator to do a 
limited scope audit they will not render an opinion on the 
safety of the overall assets of the plan--not on the assets in 
the financial institutions and not on any other assets of the 
plan.
    The assets might be in real estate or anything like that. I 
would be happy to show you the language that we get in a 
qualified opinion. It simply says we have not looked at 
everything so we can't tell you anything about the overall 
safety of these assets.
    Mr. Porter. What leads the audit?
    Ms. Berg. These audits are no good. They do nothing for us 
and there are about $950 billion in assets that are subject to 
that kind of audit right now. The GAO and the Inspector 
General, as you mentioned, have been pointing out this problem 
for years. We are really urging Congress to act on this.
    Mr. Porter. You have suggested that this is an area where 
new legislation is needed.
    Ms. Berg. Absolutely. We have proposed new legislation in 
this area for our third year now.
    Mr. Porter. How much of the plan assets would that include?
    Ms. Berg. About $950 billion is subject to limited scope 
audits right now.

                          erisa filing system

    Mr. Porter. All right. Ms. Berg, the Congress has given 
your agency $9 million over the past two fiscal years to 
develop a new ERISA filing system. Where exactly do we stand 
currently with this new system and when will you award the 
contract?
    Ms. Berg. We went out for requests for information, 
received substantial comment from the private sector, and 
responded to all of the comments. We think we are about ready 
to issue the contracts in the next couple of months. Our plan 
is to issue two contracts and have two vendors build prototypes 
at the same time. We are trying to protect ourselves from what 
happens too often in these cases where you start down a project 
with one contractor and 80% into the project you find out that 
you have spent a lot of money and aren't going to get the 
product.
    So, we are proceeding by working with two contractors, two 
prototypes, and we will make a decision in September of 1999 on 
which vendor will scale up their prototype in time to have the 
system operational. We are on track in using the money that you 
have provided to us. I think there has been a little confusion 
because we have been asked if we are behind schedule because, 
at the same time that we are moving the system along--and we 
are on track--we are also working on the new form that we will 
process on the system.
    We put out for public comment a proposed new form. The 
major comment that we got back from virtually everyone was that 
they needed enough time to adjust their systems to the new form 
and asked for an extra year to do so. We just recently 
announced that we would give plan sponsors that extra year to 
accommodate their systems to the new form.
    Our movement to the new system, however, remains on 
track.This actually gives us a little bit more time to bring the new 
form and the new system together.

                   PBGC involvement in new erisa form

    Mr. Porter. Mr. Strauss, how much involvement has PGBC had 
in the development of this new automated system?
    Mr. Strauss. I don't know that we have had much involvement 
in the----
    Ms. Berg. Oh, yes.
    Mr. Strauss. Okay.
    Ms. Berg. I am sorry. Mr. Strauss wasn't here for most of 
this.
    Mr. Strauss. Okay. I will be happy to provide more 
information for you for the record on this. I have been there 
about seven months and would be happy to provide that 
information for the record.
    Mr. Porter. How will it benefit the guarantee corporation?
    Mr. Strauss. I think that I will just provide this 
information for the record. I would be happy to do that.
    [This information follows:]
            PBGC's Involvement in Development of ERISA Form
    PBGC is part of the Interagency Working Groups headed the Pension 
and Welfare Benefits Administration (PWBA) that are designing the new 
processing system and streamlining the annual reporting forms and 
instructions.
    While our use of data from these reports is not as extensive as the 
PWBA's we use parts of the Form 5500 to analyze trends in pension plan 
coverage, participation and funding; monitor plans under our Early 
Warning Program; and determine whether a troubled plan should be 
terminated. Due to processing lags, however, the available data is 
often quite old. The new system will enable us to receive current data 
more quickly, and in a format that will be more useful.

                     surplus in pbgc insurance fund

    Mr. Porter. All right. I will have some other questions 
along those lines also that you can answer for the record. Mr. 
Strauss, for many years the PGBC had a long-term actuarial 
deficit in its insurance fund. Now that has been turned around 
and you now have a large surplus as we understand it. Is that 
an accurate portrayal and if so tell us how this favorable 
situation has come about.
    Mr. Strauss. This is a question that I am happy to address, 
Mr. Chairman. As you know, as recently as 1992 there were 
stories written in the New York Times about the PBGC being the 
next savings and loan debacle and in this year it will only be 
the second year out of 24 years of history of the PBGC where we 
will actually show a financial statement that is in the black.
    And I think that this has really been a tremendous success 
story. Clearly, the new tools that we were provided by the 1994 
law--to provide for stricter funding of pension plans, to 
provide for participant notification when the funding limit 
drops below 90% which is a very high standard, and taking the 
cap off of our variable rate premiums--have all had a very 
positive impact on our bottom line.
    In addition to that, the strength of the economy had a 
tremendous impact on our investments and it has also had a very 
positive impact on the balances of the plans that we insure. 
And I think that our primary focus now is to make sure that we 
build a large enough reserve so when an economic down turn 
comes, you know, at some point down the road we have a large 
enough cushion there that we will be prepared for it.
    When you look at the plans that we have taken in 
historically, especially the big plans, it is very cyclical and 
so in the early '90s we were taking in significant numbers of 
big plans and we just want to make sure that we build an 
adequate cushion so if we have an economic down turn that we 
are prepared for it.
    Mr. Porter. At the moment you cannot say you are prepared 
for that but you are on a much more sound basis than you were 
previously.
    Mr. Strauss. We are on a much more sound basis and two 
years just is not a big enough snapshot to make a judgment 
about that right now.

               top 50 companies with underfunding problem

    Mr. Porter. For a number of years you put out a list of the 
top 50 companies who have the largest underfunding problem. 
Apparently you are not doing that any longer. Is that because 
there aren't that many?
    Mr. Strauss. I think it is important to explain what the 
top 50 list was. The companies that were put on the top 50 list 
were put there on the basis of their dollar underfunding, so 
you had companies that had pension plans that on a percentage 
basis were very well funded. Because they were large plans the 
dollar amount looked substantial.
    When you look at the history of all the plans that we have 
taken in, only 2% of the dollar claims came from plans that 
were 75% or more funded so what we were doing was putting 
together a list that was stigmatizing some companies for a 
dollar underfunding level that may have posed no risk to the 
participants in those plans or to the insurance system based on 
our historical data.
    Based on the new tools that we have in the 1994 law, if 
your pension plan is funded less than 90%, the employer is 
required to notify each participant that the plan is funded 
under 90% and what the PBGC guarantees would be if the plan 
went under. And so because of these changes the top 50 list was 
really no longer necessary.
    Mr. Porter. But you could do a top 50 list of companies 
whose plans were underfunded by a certain percentage?
    Mr. Strauss. In our monitoring program we are monitoring 
about 500 plans that have $25 million or more of underfunding 
or 5,000 employees. We are still looking at plans where we 
think that there may be a significant problem, but we are no 
longer stigmatizing companies that pose no risk to their 
participants or to the insurance program.
    Mr. Porter. Would you put in the record that list of 
companies that seem most in difficulty?
    Mr. Strauss. I will consult with our counsel and give you 
whatever is appropriate to provide.
    Mr. Porter. That would be fine.
    Mr. Strauss. Thank you.
    [The information follows:]
                Top 50 List of Underfunded Pension Plans
    After consultation with committee staff, it was decided that due to 
the confidential nature of this information it will not be forwarded at 
this time.

                       year 2000 computer problem

    Mr. Porter. I think you mentioned, Mr. Strauss, that you 
have a year 2000 computer problem?
    Mr. Strauss. We do not have a year 2000 computer problem 
but I have assigned a dedicated manager to work with the team 
of people that we have put together. We are looking at 15 
critical systems. We are also working with our paying agent 
which is State Street Bank in Boston and we feel that we will 
meet our deadline by early 1999 in terms of our year 2000 
issues.
    Mr. Porter. And, Ms. Berg, you addressed this. You are 
going to meet the deadline also?
    Ms. Berg. Yes, but with the new system we will not have a 
year 2000 problem internally. We are also taking steps to 
remind our plan fiduciaries of their responsibilities so that 
in the outside world, as well, we are assured that the people 
responsible for these plans are taking the steps they need to.

                       401(k) investment savings

    Mr. Porter. Ms. Berg, a recent Wall Street Journal article 
discussed the fact that recent studies show that Americans have 
as much as one-third of their 401(k) savings invested in the 
shares of their own employers' stock. In your opinion is this a 
healthy situation for most employees?
    Ms. Berg. What you have going on here are two very good 
policy objectives bumping up a bit against each other.One is 
retirement security which of course requires, among other things, 
diversifying the assets that you are holding and the other is a 
company's desire to have their employees have a stake in the firm's 
fortunes.
    And one of the ways that they may typically do that is by 
giving a match to their 401(k) plan in company stock because 
they want their employees to share in the firm's prosperity.
    We need to look a little bit into the numbers because what 
we find is the number looks very large regarding the amount of 
employee money in employer's stock, but many, many of those 
employees have the 401(k) on top of a traditional defined 
benefit plan. These are typically larger companies where people 
have the defined benefit plan, as well as the 401(k).
    So in terms of people having no protections whatsoever that 
doesn't seem to typically be the case. When I have talked to 
plan sponsors the clearest and easiest solution to this--
because I think increasingly it is a plan design issue that we 
ought to be talking about--is to allow people to diversify out, 
even if you give them the stock. Allow them, either immediately 
or at some point to diversify out into other plan options.

                  defined pension benefit plan demise

    Mr. Porter. I assume your answer to this question would be 
yes, but in your opinion are we seeing the demise of the old-
fashioned defined benefit pension plan in this country in favor 
of a defined contribution plan like the 401(k) where the 
investment risk is transferred from the employer to the 
employee?
    Ms. Berg. Yes. We are not seeing it in the sense that we 
are not seeing companies terminating their defined benefit plan 
and starting up a new kind of plan instead. There is not a lot 
of that going on but clearly the growth in the system is all in 
the 401(k) type plan.
    In slightly more than a decade, a dramatic move in that 
direction has taken place, where in 1984, something like over 
80% of people had as their primary pension plan, if they had 
pension coverage, a traditional pension plan. Now that number 
is about 50/50.
    Mr. Porter. And, Mr. Strauss, how do you feel about that?
    Mr. Strauss. Well, as the government official, who has as 
part of his ERISA mandate promoting defined benefit pension 
plans, there are more than 40 million workers and retirees who 
are in defined benefit pension plans and when you look at large 
companies with defined benefit pension plans with 10,000 or 
more employees they are actually growing. This is the reason 
why our focus has been among small employers to create a true 
defined benefit vehicle for them that will give the small 
employer who opts to do this a vehicle where he can provide his 
workers with a predictable guaranteed benefit for life.
    And we have been working with the folks in industry who 
would be selling these sorts of packages to try and come up 
with something that will work for small employers to make this 
option available for those who are interested in providing this 
kind of benefit for their employees.
    I understand the way the trend lines are going but I think 
that it is important that we analyze the trends correctly and 
among big companies the participation in these plans are 
actually growing. It is among small business where there is a 
problem and that is where we are focusing.
    Mr. Porter. Ms. Berg, Mr. Strauss, let me thank you both 
very much for your very direct and candid answers to our 
questions. We appreciate it. We have additional questions for 
the record and thank you both for coming to testify this 
morning.
    Mr. Strauss. Thank you, Mr. Chairman.
    Ms. Berg. Thank you.
    [The following questions were submitted to be answered for 
the record:]


[Pages 906 - 937--The official Committee record contains additional material here.]



                                      Wednesday, February 25, 1998.

                      OFFICE OF INSPECTOR GENERAL

                               WITNESSES

CHARLES C. MASTEN, INSPECTOR GENERAL
PATRICIA A. DALTON, DEPUTY INSPECTOR GENERAL
    Mr. Porter. We will come to order. We continue our hearings 
with the testimony of the Inspector General, Charles C. Masten, 
accompanied by Patricia A. Dalton, the Deputy Inspector 
General. We welcome both of you. Mr. Masten, why don't you 
proceed?

                           Opening Statement

    Mr. Masten. Thank you. Mr. Chairman, members of the 
Subcommittee, thank you for inviting me to appear before you in 
my capacity as the Inspector General of the U.S. Department of 
Labor. I am pleased to appear before you today to discuss our 
Fiscal Year 1999 appropriations request, and proposed 
activities.
    As you stated, I am accompanied by the Deputy Inspector 
General, who will participate in answering questions at the end 
of my summary and I ask that my entire statement be entered 
into the record.
    Mr. Chairman, as required for most federal agencies the 
context in which the Office of Inspector General (OIG) program 
is administered is the Government Performance and Results Act 
(GPRA) of 1993. In conformance with GPRA, the OIG developed a 
strategic plan which details our mission, vision, goals, 
objectives, and strategies.
    My full statement contains a list of accomplishments for 
Fiscal Year 1997 that helps to illustrate how we are working to 
achieve our goals. The OIG strategic plan also establishes 
performance measures and indicators that help to evaluate our 
success in achieving our strategic goals.
    These measures are directed toward ensuring the quality of 
the work and customer service the OIG provides to the 
Department and the Congress. Mr. Chairman, our primary goal is 
to ensure that the information provided to the Department of 
Labor and Congress, through our work products, will be helpful 
in the management and oversight of the Department.
    In addition, we will provide technical assistance to help 
Department of Labor management address challenges and prevent 
problems from arising. In 1999 we will carry out activities in 
the areas of departmental management, employment and training, 
occupational safety and health, worker benefits, and labor 
racketeering.
    Our request provides examples of activities we will conduct 
in each one of these areas. I would like to briefly elaborate 
on the planned activities in the labor racketeering area. We 
will continue our efforts to reduce the influence of organized 
crime and labor racketeering in labor unions, union-affiliated 
employee benefit plans, and labor-management relations.
    Recently, the Department of Justice launched an initiative 
to crack down on pension abuses through a joint effort with the 
Office of Inspector General at labor and other federal 
agencies. To strengthen the attention given to the pension 
area, the OIG is proposing funding $1.6 million to conduct a 
pro-active initiative focusing on corrupt pension plan service 
providers.
    This is an area that we have identified through our case 
work as being especially vulnerable to labor racketeering 
activities and abuses. It is also an area that can result in 
large dollar losses to pension assets.
    Mr. Chairman, we believe this is an opportune time to 
perform a comprehensive examination, with long-term strategies 
to address this problem. However, investigations of this type 
of criminal activities are extremely complex because the abuses 
are perpetrated by sophisticated investment advisors and plan 
administrators, who have the opportunity and ability to 
structure financial schemes to conceal the criminal activity.
    Therefore, our proposals to utilize the funds appropriated 
for this initiative is to, number 1, provide specialized 
training to our agents regarding the intricate financial 
schemes utilized to defraud pension assets, number 2, to 
develop a computer data base capabilities to identify 
problematic investment advisors who are associated with union 
plans, and number 3, to significantly increase the case load in 
our inventory at the end of fiscal year 1999.
    Mr. Chairman, that concludes the summary of my statement, 
Ms. Dalton and I are prepared to answer any questions you or 
any member may have at this time.
    [The information follows:]


[Pages 941 - 949--The official Committee record contains additional material here.]



                        inspector general tenure

    Mr. Porter. Thank you, Mr. Masten. How long have you been 
the Inspector General?
    Mr. Masten. Since December of '93. I hesitated because I 
was acting for a period of time. I kind of got lost as to when 
I became the Inspector General.
    Mr. Porter. Well, how long have you been acting as the 
Inspector General?
    Mr. Masten. I was acting from March through December of 
1993.
    Mr. Porter. Okay. Given your perspective, what programs in 
the department cause you the most concern in terms of either 
weak management or financial vulnerability? Where do we have 
the greatest potential problems?

                        VULNERABLE DOL PROGRAMS

    Mr. Masten. I think our biggest concern would probably be 
in the employment training area because this is the area that 
is focusing on preparing people for work, and providing 
training for welfare recipients. It is one of the highest goals 
in the department and for the Secretary.
    Mr. Porter. Any others where you see problems?
    Mr. Masten. Mr. Chairman, there are problems throughout----
    Mr. Porter. Everywhere, but I am talking about programs 
where there are more likely to be problems than other areas.
    Ms. Dalton. I think another program would be Federal 
Employees' Compensation Program, and we proposed some changes 
in that program in terms of the benefits that are paid, and 
when they are paid. For example, generally when a person goes 
on workers' compensation there is a three-day waiting period 
before the benefits start. But, under FECA it is at the end of 
a 45-day continuation of pay period. So a federal employee has 
continuation of pay for 45 days and then a three-day waiting 
period and then you get benefits. In many other programs the 
three-day waiting period is at the beginning, as opposed to the 
end of the compensation process.

                          OIG RECOMMENDATIONS

    Mr. Porter. So you would make recommendations to 
departmental management concerning how to address these problem 
areas, correct?
    Ms. Dalton. Correct.
    Mr. Porter. And what kind of reception do your 
recommendations and advice to the department get?
    Ms. Dalton. I think it varies depending on what the 
recommendations are. In many cases, they are very receptive. In 
other cases it takes some selling on our part. In some cases, 
there is a number of procedural hurdles to overcome. For 
example, in our grant and contract audits there can be a very 
long appellate process before there is a final resolution.
    Mr. Porter. Is there any particular area where the 
department does not take your recommendations or advice into 
account or ignores them?
    Ms. Dalton. I don't think they have ever ignored what we 
have had to say.

                         SAVINGS FROM IG'S WORK

    Mr. Porter. Good. In our committee report for the past two 
years we have asked all of the IGs in our bill to submit 
quarterly reports documenting the actual payments made to the 
government as a result of their efforts and how funds that 
could be put to better use as identified in IG reports were 
actually used by departmental management.
    Your latest report was submitted on January 30. You 
indicated in your January 30 letter to the committee that you 
have tried to work with the Justice Department to improve the 
reporting of fines and forfeitures but that you have not been 
successful thus far and are not able to meet the committee's 
request for accurate information. Has the Department of Justice 
been cooperative with you? Is there anything the committee can 
do to help you out in this regard?
    Ms. Dalton. The Department of Justice's system is 
decentralized and that has been causing much of the problem. 
They initially asked us to provide individual case information 
so that they could track the recoveries. We provided 
information on 700 cases. They then came back to us and said 
that it would be too burdensome to track this information 
through the individual judicial districts.
    The Justice Department's systems are being redone and new 
systems are going to be put in place. They are taking our 
requests into consideration. It certainly would be helpful if 
that could be identified as a priority in any of the Justice 
Department bills.
    Mr. Porter. The IG for HHS has not reported the same 
difficulty with the Justice Department. Why would you have this 
difficulty and HHS would not?
    Mr. Masten. Well, for one thing, Mr. Chairman, the health 
care bill, HIPAA, requires statutorily that this information be 
captured for health care fraud and that is not the case for the 
rest of the agencies. The majority of the recoveries of HHS are 
along the lines of health care fraud. That is the big 
difference.
    Mr. Porter. Would you suggest that the law be changed to 
deal with your data in the same way?
    Mr. Masten. Most definitely. It is my understanding the 
Department of Education has similar type problems that we have 
so I think the law would not only help the Department of Labor 
but, as well, would help education.
    Mr. Porter. So we are not going to have this information 
until Justice makes the changes that they are contemplating?
    Ms. Dalton. Correct. We are still continuing to work with 
the Department of Labor though, to accumulate information on 
the audit side in terms of recoveries, and adjustments are 
being made in the departmental accounting systems, so that as 
we actually collect money, it is recorded and we can reflect it 
back and report it to the committee.
    Mr. Porter. I noticed in your latest semi-annual report 
that there remain significant unresolved audits and disputes 
over funds put to better use. Can you discuss the reasons for 
the delay in having management resolve these issues, the impact 
of the failure to resolve issues and how they can be resolved?
    Ms. Dalton. I think one of the biggest difficulties is, as 
I said, the lengthy appellate process that can go on when we 
recommend that funds be disallowed or we have questioned costs. 
For example, I think, you know, it might be good to just 
illustrate it with an audit we issued back in the mid-'80s on 
the city of Detroit related to the CETA program. That audit was 
just resolved in the last couple of years.
    We had questioned costs and it was resolved for $2.2 
million. The Secretary's order on resolving that disallowed 
$4.4 million and then DOL entered into a settlement for $2 
million. That audit had been outstanding for well over ten 
years. One of the issues is that, in the appellate process, 
there are a number of steps that it goes through, in the 
department to ensure due process.
    As it is going through this due process there isn't any 
interest that is being accrued so needless to say, for 
grantees, it is in their interest to appeal any audit and it 
can be a very, very lengthy process to reach a final 
resolution. Often times, there are significant negotiations 
that go on in order to get some dollar return.

                           MONEY OWED TO DOL

    Mr. Porter. How much money is currently claimed to be owed 
to the department?
    Mr. Masten. We need to provide that information for the 
record, Mr. Chairman, because I am not sure off the top of my 
head.
    [The information follows:]


[Page 953--The official Committee record contains additional material here.]



                      proposed pension initiative

    Mr. Porter. Your 1999 budget includes an increase of $1.6 
million for a significant pension plan initiative. It looks 
like you are planning to hire 11 new employees as part of this 
project which would account for part of the money. What else 
will you pay for with that $1.6 million?
    Mr. Masten. Well, the $1.6 million that I explained would 
go toward helping to train our agents, regarding these 
financial schemes, so we can get them involved into this 
initiative, as well as develop a computer data base, so that we 
can analyze the information that we have gathered through our 
intelligence sources and from information we have received from 
the SEC or from NASDAQ. We will also increase our inventory of 
cases in this area. That is where that money is going.
    Mr. Porter. And do you work with Ms. Berg at PWBA on this 
or is this strictly your operation?
    Mr. Masten. We work some cases with PWBA. That agency was 
part of the initiative that the Department of Justice was 
putting together, I believe, in April of last year. That was 
one of the federal agencies that was involved in the 
initiative, so they are involved in it as well. We focus on the 
criminal side of it more so, as it relates to labor 
racketeering than PWBA.

                       dol implementation of gpra

    Mr. Porter. Let us talk for a moment, Mr. Masten, about 
GPRA. Can you give us your overall assessment of where the 
Department of Labor stands with respect to the implementation 
of GPRA? What do you think of the criticisms that GAO has 
leveled at the department in this regard?
    Mr. Masten. I believe the criticisms early on were valid, 
but since that time, since the Secretary has come on board, 
this has been her main focus. She has had two retreats 
involving the executive staff at the first one, and then one 
involving the senior executive staff throughout the department, 
to explain to the staff that what she was looking for was the 
bottom line return on investment.
    I think the agencies are getting on board with that now. My 
agency is playing a consultative role in that with the 
department, so that we can be involved up front as opposed to 
on the bottom end. So, they are moving along. They have a ways 
to go, but they are moving along and I think if GAO would go in 
there now they would have a better assessment--a higher 
assessment than they had before.

                       oig implementation of gpra

    Mr. Porter. Now let us look at your own office. How is it 
complying with GPRA and how did you establish actual 
performance measures for your office?
    Mr. Masten. We are conforming with GPRA as well as any 
other agency. We have developed----
    Mr. Porter. Who is watching you?
    Mr. Masten. Well, right now I believe Ms. Dalton is looking 
at me because the strategic plan was really part of an 
initiative that she headed up. We have our strategic plan in 
place that will cover the period between now and the year 2002 
and in that plan we have articulated our five goals.
    We have established measurements to see if we are living up 
to those. We have them in place and look at them every year and 
if they are not working we will make adjustments. We are also 
trying to conform as well with the agencies the department.

                          legislative changes

    Mr. Porter. Thank you. In your opinion what are some of the 
most important legislative changes that need to be made in 
departmental programs?
    Mr. Masten. Mr. Chairman, I could give them to you for the 
record or I can give you the headlines. Some of them Ms. Dalton 
has already mentioned. They include strengthening the 
enforcement of ERISA, the limited scope audit is one area that 
we talked about for years. You talked to Ms. Berg about that 
earlier. That is something that we can do. I think there is a 
vulnerability out there that we have talked about. It is there 
and we need to shore that up.
    On the FECA program, establishing the waiting period I 
think that is an area that would save the government a lot of 
money. There is another area along with a workers' compensation 
program where we have employees who go out on a workers' 
compensation claim and they are beyond the age of the average 
retirement age, and they are still getting tax free workers' 
compensation pay. I think that is an area that needs to be 
shored up. I cannot recall the exact percentage of the number 
of recipients along those lines, but it is very, very high.
    Mr. Porter. Do you suggest these changes directly to the 
authorizing committees of Congress or do you suggest them just 
to the department?
    Ms. Dalton. We suggest them to both. We include the 
discussion of suggested legislative changes in our semi-annual 
report and we discuss them specifically with each of the 
committees.

                     changes to davis-bacon program

    Mr. Porter. Have you made any recommendations for changes 
in the Davis-Bacon Act or have you simply suggested 
administrative changes to the department?
    Ms. Dalton. We issued a report about a year ago on Davis-
Bacon concerned with the accuracy of the information used in 
the wage determination process. Those recommendations dealt 
primarily with the way that the surveys are conducted, and we 
made three basic recommendations there. One, that the surveys 
be done on a statistical basis; two, that we get as close to 
the payroll records as possible; and three that the Wage and 
Hour Division work with the Bureau of Labor Statistics to 
develop some statistical methodologies that would improve the 
overall survey, but we did not make specific legislative 
recommendations on changing the Act.
    Mr. Porter. Those are administrative.
    Ms. Dalton. Correct.
    Mr. Porter. Do you believe that Davis-Bacon has a serious 
problem with fraud or do we just have problems with the 
validity of wage data collected?
    Mr. Masten. Mr. Chairman, we have not done anything to 
establish a position on the pervasiveness of fraud but we 
definitely think it has a problem with validity of the data. 
That is one of the reasons we recommended going directly to the 
records as opposed to using third party data. We think that is 
where the problem lies and we explained this in our last audit 
of that area.

                federal employees' compensation program

    Mr. Porter. There are members of the subcommittee that are 
very concerned in this area--as you are probably well aware--
who feel that there is a serious problem there as well. On 
pages 17 and 18 of the justification you talk about some of the 
problems with the Federal Employees' Compensation Program 
particularly in the area of medical payments. You havementioned 
this several times in your oral testimony.
    Is the Office of Workers' Compensation Programs doing an 
adequate job of monitoring the medical and hospital payments in 
the program?
    Ms. Dalton. We issued a report to the program in the past 
year where we recommended that they start using a screening 
program to screen the medical bills as they are being processed 
to identify potentially improper billing.
    In our study, we had used a sample of medical bills and 
processed them through a number of screening packages and 
identified-I believe it was approximately $7 million of 
potentially improper billings. I believe that the FECA program 
has included a screening program in their budget request for 
this year.

                   dol information technology systems

    Mr. Porter. How much attention are you devoting to the 
department's information technology systems and do you have an 
extensive audit program in this area?
    Mr. Masten. We haven't established an extensive audit 
program in the area but we have a meeting scheduled. In fact, 
we are meeting with the CIO so that the OIG can work in a 
consultative role there, as I alluded to earlier. That is one 
of the areas that we want to concentrate in, up front, before a 
problem develops.
    Mr. Porter. How many major systems does the department 
currently have under development and is your office monitoring 
these as they are developed?
    Ms. Dalton. I don't know the exact number. We can provide 
that for the record, but we are monitoring a number of the 
systems as they are developed. In particular, we are watching 
and evaluating the EFAS system that Ms. Berg talked about 
earlier and are monitoring that as they are going through and 
developing it, and providing recommendations and suggestions 
through the whole development process.
    For example, we were working with them and recommending 
that they do prototype systems and not risk development of a 
single system and invest significant amounts of money and find 
out that they got a major problem. They need to develop it to a 
certain stage before making the decision on which way to go.
    We have also made recommendations related to direct filing 
entities as well as electronic submission of data, which they 
have under consideration now.
    Mr. Porter. The GAO told our committee that they thought 
there was a serious problem with having so many data systems 
within the department, a lack of transferability of data and 
the like. I assume you are working with them to address that.
    Ms. Dalton. Yes.
    Mr. Masten. Mr. Chairman, I can answer the question you 
asked on how many systems. There are a total of 61 systems that 
we are concerned with. I thought it was 61 and I did verify 
that. If you have a more detailed question we can get that for 
you.
    Ms. Dalton. I think that 61 mission-critical systems have 
been identified.

                               year 2000

    Mr. Porter. Well, time to address that problem. How does 
the department stand with respect to addressing the year 2000 
computer problem? I have asked everyone this question but your 
answer would probably be more relevant than anyone's. How do 
you see it and do you have serious concern that the department 
will not meet its goals in this area?
    Ms. Dalton. As I said, there are 61 mission-critical 
systems. I believe the department is claiming 11, actually I 
think it is 13, as of their latest report, that are now Year 
2000 compliant.
    Mr. Porter. Are now or not?
    Ms. Dalton. Yes, are now.
    Mr. Masten. Are now.
    Ms. Dalton. So they have a major task to undertake over the 
next 20 months or so, and realistically it is probably closer 
to 12 months that they have to get this completed. So it is a 
very high risk area. As Mr. Masten said, we are working with 
the CIO. They have asked us to come in and assist them. We will 
be doing some consultative work for them.
    We are constrained by the resources that we have available 
to us, but it is definitely a high priority. The department has 
a vulnerability here. They do have a very large task ahead of 
them. But they are working through the 61 systems and are 
prioritizing within those 61 as to which ones are most 
critical.
    For example, there is agreement that the most critical ones 
of the 61 are those that are going to be making payments, 
financial systems, our benefit systems, our grant systems where 
we have to get money out the door on January 1, of the year 
2000. And then we step down from there.
    Mr. Porter. Thank you. Mrs. Lowey.

                     davis-bacon program weaknesses

    Mrs. Lowey. Thank you, Mr. Chairman. Following up on the 
Chair's questions concerning the Davis-Bacon wage determination 
process. You found what you considered to be a large error 
rate. Could you share with us what source of data was 
responsible for the largest overall number of errors?
    Ms. Dalton. I think the largest number of errors came from 
the information that was provided by third parties. And I can 
give you----
    Mrs. Lowey. That is not what we understand. We understand 
in our reviewing your study that the largest number of errors 
were from employers.
    Ms. Dalton. I am sorry. I was doing it on a percentage 
basis.
    Mrs. Lowey. So I just wanted to clarify that for the 
record.
    Ms. Dalton. Okay.
    Mrs. Lowey. There has been a lot of discussion in this 
committee about third party and I understand that--I was 
surprised to see that the largest number of errors was actually 
from employers.
    Ms. Dalton. What we had done is we had tested--and this is 
from our report of a year ago, 837 wage determination form 
submissions. Approximately 609 of those were from employers. 
227 came from third parties for the 609 wage determinations 
from employers, 57 had errors in them. For 227 third party 
submissions, 38 had errors in them.
    So, you are correct in terms of the total. In terms of 
numbers, on a percentage basis, that goes the other way.
    Mrs. Lowey. Now based on the methodology you used to 
conduct the survey, specifically your sample size, can we 
conclude that your findings are statistically valid, that is, 
can they be generalized to the entire universe of Davis-Bacon 
wages?
    Ms. Dalton. No, they cannot.
    It was not statistically drawn, so we cannot project it on 
a nationwide basis.
    Mrs. Lowey. I just want to make a comment that I strongly 
support the effort which the Wage and Hour Division is 
undertaking to improve its wage determination process. We 
should have the most reliable Davis-Bacon wage determination 
system possible. And if improvements need to be made, then I 
certainly applaud the Department for recognizing that and 
making these improvements.
    And I just wanted to state for the record that the OIG's 
report last year did not find systematic bias in the errors. In 
other words, the wages were not inflated. In fact, in my review 
of it, as a result of the OIG findings, more of the wage rates 
had to be adjusted upwards than downwards. Is that correct?
    Ms. Dalton. I am not sure whether it was more or not. We 
certainly did find there were instances where the wages had to 
be adjusted upwards, as well as, the other way around. There 
was no skewing one way or the other, really.
    Mrs. Lowey. In looking at the numbers of the rates that had 
to be decreased, only one changed by more than 10 percent. 
Close to half of the overall changes that resulted from the OIG 
report were one percent or less. So, again, I think we need to 
have the most accurate system possible, but in my review of it, 
it doesn't seem as if we are talking about major errors here. 
Could you comment?
    Ms. Dalton. In many instances, the errors were fairly 
minor. In some cases, they were larger. When we are talking, 
you know, a dollar an hour to someone that is working, that is 
a lot of money to them. So, yes, many of them were minor, but 
there were some that were fairly large.
    Mrs. Lowey. One of the recommendations that you made to 
improve the system was to require that the data be collected 
only on site rather than through the mail. Could you explain 
what you mean by on site? Do you mean sending a Labor 
Department employee to each construction site, and how many 
sites would have to be visited?
    Ms. Dalton. What we were recommending was, first of all, 
that the closer you can get to the actual payroll information, 
the more accurate the information would be. In conjunction with 
that though, we were also recommending that the Wage and Hour 
Division explore a statistical approach to developing their 
wage determinations, as opposed to sending out a general mail 
survey and waiting to see who responded. To look at a smaller 
number, by identifying them on a statistical basis, so that it 
would be projectable and the determination verified that way.
    So there were two recommendations that were made related to 
improving accuracy, and we felt that using the statistical 
approach would lessen the burden both on the Department, as 
well as, on employers in terms of providing information to us.
    Mrs. Lowey. I am still not clear about the specific 
recommendation regarding onsite. And what would that cost?
    Ms. Dalton. I don't have a cost estimate for you.
    Mrs. Lowey. Could you explain and expand upon what the 
specific onsite recommendation was?
    Ms. Dalton. Basically, it would be to go and look at what 
has actually been paid to people. To go to the employer and get 
the information from the employer as to the wage rates that 
they had paid for the period of the survey, as well as, the 
fringe benefits. And currently, I believe the Wage and Hour 
Division is doing some data verification on a statistical basis 
of their wage surveys.
    Mrs. Lowey. Isn't it true that the Bureau of Labor 
Statistics does collect much of its data through the mail, and 
it is considered statistically valid? Isn't that correct?
    Ms. Dalton. I am not sure.
    Mr. Masten. Neither am I. To follow up on the 
recommendation made, we were stating that the payroll records 
are the most valid records from which you can get this 
information. The second option to that was to come up with a 
statistically sound survey in accordance with some of the 
methodology used by BLS, to also get this information. That way 
you would not have to go to every site to verify the records. 
You could go to only some sites.
    So in keeping with trying to get valid information, we made 
those two recommendations. The best one is to take it directly 
from the payroll records. That is the most accurate way of 
doing it. And the next option----
    Mrs. Lowey. And you end up with the cost----
    Mr. Masten. And that is the one thing we have not 
determined--the cost of doing that on a statistically--sound 
basis. We haven't done it. I think we used seven states during 
the audit that we gave you the results on. We haven't used a 
national statistically projectable sample.
    Mrs. Lowey. But isn't it true that the Bureau of Labor 
Statistics does collect most of its data through the mail, and 
that is considered statistically valid?
    Ms. Dalton. They certainly conduct some of their data 
through the mail. Some of it is done I believe onsite or, you 
know, direct acquisition of information.
    Mrs. Lowey. I thought it was much, but if you can----
    Mr. Masten. We have not audited that procedure, and as you 
know, they have confidentiality agreements there. So we really 
don't know how much of their information they get strictly 
through the mail, or the complete methodology used. That is the 
reason we encourage the Wage and Hour people to go get with 
them to come up with the methodology that they used and have 
been very successful with, and to use whatever they were using.
    Ms. Dalton. Currently, the Bureau of Labor Statistics is 
conducting a number of fringe benefit surveys for the Wage and 
Hour Division to specifically assess the issue of whether or 
not information can be collected and the quality of the 
information. Those surveys are in the developmental stage at 
this point, and the Wage and Hour Division won't be making 
decision on those until they are completed and they have 
complete information as to their viability.
    Mrs. Lowey. I just think it is important that we get as 
reliable information as possible because this has been a 
subject of interest in this committee, and we are trying to get 
to the bottom. I think we all want accurate information, and 
what we are trying to do is wade through different evaluations 
as to what is the most accurate and what is the cost--how is 
the cost affected.
    Another point. In your February 19 report on the uses of 
the FY '97 and FY '98 appropriations received by the Wage and 
Hour Division, the Davis-Bacon improvements, you note that the 
largest computer purchase is presently being used by other 
programs within the Employment Standards Administration.
    My understanding is that more Davis-Bacon functions will be 
used on this system as the Davis-Bacon reengineering moves 
forward. However, I also understand that these systems are 
large enough that they can accommodate some of the other ESA 
program needs. Is there any reason why we shouldn't be 
promoting the shared use of computer systems within a single 
department, let alone a division within that department?
    In fact, it would seem to be a much more efficient way to 
do it. I continue to be amazed, and I have been here--this is 
my tenth year--that we keep talking about upgrading our 
computer systems and making them talk to each other. And it 
just absolutely blows my mind that there should be 61 different 
computer systems within this department.
    Ms. Dalton. I agree with you that sharing equipment and 
systems makes good sense. However, going hand-in-hand with that 
is sharing the cost of the systems.
    Mrs. Lowey. Pardon me?
    Ms. Dalton. Going hand-in-hand with that is sharing the 
cost of those systems.
    Mrs. Lowey. I would be interested in following this through 
because the complexity of having 61 different systems is 
extraordinary to me.
    Ms. Dalton. We agree with you.

                cost-feasibility of oig recommendations

    Mrs. Lowey. Just lastly, I want to say that I applaud the 
OIG's efforts to ensure that the taxpayer money is being spent 
appropriately. However, one concern I have is that the 
recommendations can be difficult for the Department to 
implement because of departmental budget restraints, such as 
the onsite verification of data under the Davis-Bacon program.
    Sometimes the perfect can be the enemy of the good. A 
solution that seems to be perfect on paper may be impossible to 
achieve because of practical resource constraints. What extent 
do you take into account the resource constraints of the 
Department when you are making program recommendations, and 
would it be possible for the OIG to better reflect these real 
world constraints when it issues its recommendation?
    Ms. Dalton. We certainly do try to take into account the 
resource constraints and the issues facing any of our agencies 
as we are making recommendations. And I think that is why when 
you look at, for example, the Davis-Bacon report, we are 
recommending a statistical approach which would we would hope 
save resources. To the extent we can, we try to cost those out.
    Through our audit resolution process we try to make the 
most realistic recommendations to improve the programs and the 
delivery of services of the Department. And then through the 
entire audit process, and the resolution process, there is an 
ongoing discussion with the managers of the Department about 
what is the most practical solution, and whether these are 
viable. And I think, we do in most cases reach a good 
resolution and ultimately improve the program's delivery of 
services.
    Mrs. Lowey. Thank you and thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mrs. Lowey. Mr. Masten and Ms. 
Dalton, thank you very much for answering all of our questions 
and for the job you are doing. Thank you very much for 
appearing today. The subcommittee stands in recess until 2 p.m.
    [The following questions were submitted to be answered for 
the record:]




[Pages 962 - 2461--The official Committee record contains additional material here.]














                           W I T N E S S E S

                              ----------                              
                                                                   Page
Abraham, K. G....................................................   823
Anderson, B. E...................................................   753
Barron, W. G.....................................................   823
Berg, Olena......................................................   847
Borrego, Espiridion..............................................   403
Dalton, K. V.....................................................   823
Dalton, P. A.....................................................   939
Fraser, J. R.....................................................   753
Herman, A. M.....................................................    59
Jackson, E. L...................................403, 539, 687, 753, 823
Jeffress, C. N...................................................   539
Joyner, C. C.....................................................     1
Lacey, D. J......................................................   823
Levie, L. L......................................................     1
Masten, C. C.....................................................   939
McAteer, J. D....................................................   687
Nilsen, S. R.....................................................     1
Orr, Lois........................................................   823
Rectanus, Lori...................................................     1
Silva, Mary......................................................   403
Strauss, D. M....................................................   847
Uhalde, R. J.....................................................   403













                               I N D E X

                              ----------                              

                           Secretary of Labor

                                                                   Page
Affirmative Action...............................................   383
AFGE Local 2391..................................................   122
Appointment of Assistant Secretaries.............................   104
Assessment of Skill Training Programs............................    93
Beck Decision....................................................   340
Black Lung:
    Black Lung Regulations.......................................    89
    Peer Review of Black Lung Regulations........................    90
Budget:
    Budgetary Resources Used for Rule Making.....................   131
    DOL Budget Request...........................................   355
    ETA and ILAB Budget Increases................................   358
    OASAM Budget Increase........................................   311
Child Care:
    Access to Quality, Affordable Child Care.....................   396
    Child Care.................................................120, 386
Child Labor:
    Child Labor Budget Request...................................    80
    Combining Child Labor Abuses.................................   113
    Domestic Child Labor Initiative..............................   352
    Increase in the Programme for the Elimination of Child Labour 
      (IPEC).....................................................   350
    International Child Labor....................................   102
Cooperative Compliance Program:
    Compliance Officer Training..................................   347
    Cooperative Compliance Programs..............................   115
    Definition of Compliance Officer.............................   348
    Enforcement and Compliance Assistance Resources..............   347
    List of Cooperative Programs.................................   157
    Selection of Participants in CCP.............................   133
    Solicitation of Prior Comments on CCP........................   358
Davis-Bacon:
    Davis-Bacon Art..............................................   364
    Davis-Bacon Prevailing Wage Surveys..........................   161
    Davis-Bacon Wage Survey Process.............................97, 340
    Davis-Bacon Helper Regulations..............................91, 311
    Davis-Bacon Wage Survey Program.............................95, 117
    Faulty Davis-Bacon Information...............................   370
    Implementation of Davis-Bacon Helper Regulations.............   107
    Improvement in Davis-Bacon Wage Survey Process...............    96
Departmental Computer Systems....................................   106
Dislocated Worker Program........................................   400
Employment Training:
    Employment Training..........................................   375
    Level of Service in Employment and Training Programs.........    87
Ergonomics:
    GAO Report on Ergonomics.....................................   394
    Proposed Ergonomics Standard.................................   117
    Regional Conferences on Ergonomics...........................   393
    Scientific Research on Ergonomics............................    84
Evidence of Skill Shortages......................................   392
Family and Medical Leave Act.....................................   343
Government Performance and Results Act...........................    78
Hudson Foods Citations...........................................   132
Injury and Illness Trends in Targeted Industries.................   360
Interpretation of Section 9(A) of OSH Act........................   136
Introduction of Witness..........................................    59
Job Corps Funding..............................................104, 135
Job Training:
    Job Training Reform..........................................   105
    Job Training to Severely Distressed Communities..............   130
Labor Department Guidance........................................   363
Labor-Management Reporting and Disclosure Act....................   315
Learning Anytime, Anywhere.......................................   391
LM-2 Forms:
    Electronic Filing of LM-2 Forms............................100, 310
    LM-2 Forms...................................................   314
Minimum Wage:
    Minimum Wage and the Welfare-to-Work Initiative..............   401
    Minimum Wage Increase........................................   395
Modification of DOL Workplaces to Accommodate the Specific Needs 
  of People with Disabilities....................................   309
National Disability Task Force:
    National Task Force on Employment of Adults with Disabilities   312
    Task Force on Employment of Adults with Disabilities.........   371
New Assistant Secretary for OSHA.................................   103
One-Stop Career Centers:
    One-Stop Career Centers......................................   390
    Social Service Program Coordination with One-Stop Career 
      Centers....................................................   387
Opening Statement................................................    59
Opportunity Areas for Out-of-School Youth......................110, 377
Oversight of Federal Agencies....................................   108
Peer Review for Regulations......................................   356
Pension Security.................................................   106
Performance Goals:
    Performance Goal Validation..................................   308
    Performance Goals............................................   361
Performance Plan.................................................  1956
Poultry Processing Initiative....................................   348
President's Civil Rights Initiative..............................   354
Procedural Changes in the Rule Development Process...............   131
Project Labor Agreements.........................................   357
Proposed Tuberculosis Standard...................................   124
Protecting Workers from Discrimination in the Workplace Based on 
  Genetic Information............................................   381
Rules Resulting in GAO Reports...................................   131
Sawyer Case......................................................   342
School-to-Work...................................................   389
Small Business:
    Small Business Initiatives...................................    95
    Small Business Liaison.......................................   132
Sweatshops.......................................................   397
Targeting of Federal Contract Compliance Reviews.................   382
Third Party Data Submissions...............................98, 105, 316
Unemployment:
    Cities with Unemployment Rates Above 9 Percent...............   384
    Communities with Unemployment Rates Higher than 14 Percent...   126
    Growing Unemployment Rate Among African American Teenagers...   373
    Minority Unemployment........................................    84
    Unemployed in Distresses Communities.........................   384
Use of General Duty Clause.......................................    84
Wage Survey:
    Wage Survey Program..........................................    95
    Wage Survey Process..........................................    97
Welfare-to-Work:
    Minimum Wage and the Welfare-to-Work Initiative..............   401
    Welfare-to-Work.............................................88, 378
    Welfare-to-Work Grants Funding Process.......................   363
Widening of Gap Between ``Haves'' and ``Have Nots''..............   398
Work Flex Demonstrations.........................................    83
Year 2000 Compliance:
    DOL's Efforts to Become Year 2000 Compliant..................   306
    Year 2000 Conversion.........................................   101
Youth Offender Grants............................................   113

                 Employment and Training Administration
                   Veterans' Employment and Training

Employment and Training Administration:
    Alien Labor Certification....................................   482
    America's Job Bank...........................................   449
    America's Learning Exchange................................488, 530
    Apprenticeship.............................................513, 521
    Budget Request.............................................405, 416
    Budget Justification.........................................   972
    Career Self Testing..........................................   490
    Competition with Private Sector Products.....................   521
    Demand for Services..........................................   461
    Dislocated Worker Funding..................................436, 506
    Distribution of Resources....................................   440
    Effect of Low Unemployment on Program Operation..............   443
    Effectiveness of ETA Programs..............................403, 498
    Eligible Employment Training Participants....................   537
    Employment Service...........................................   494
    FTE Increase.................................................   507
    Government Performance and Results Act.....................412, 459
    Groups With Lingering Unemployment Problems..................   441
    Hathaway Decision............................................   466
    High Tech Jobs...............................................   529
    Impact of Good Economy on ETA Programs.......................   433
    Job Corps:
        Child Care...............................................
          446, 461...............................................
        Construction.............................................   438
        Expansion................................................   452
        General Information......................................
          492, 514...............................................
        Head Start...............................................
          437, 534...............................................
    Job Training Reform...............404, 412, 445, 450, 467, 496, 509
    Labor Market Information...................................481, 491
    Migrant and Seasonal Farmworkers.............................   451
    National Council of Senior Citizens........................445, 504
    One Stop Career Centers......................................   480
    Opening Statement..........................................403, 408
    Opportunity Areas for Out-of-School Youth.............476, 525, 526
    Performance Plan.............................................  2043
    Problem Areas................................................   435
    Program Evaluations..........................................   473
    Program Performance........................................454, 511
    Provision of Skills to Those Most in Need....................   463
    Ranking of Programs..........................................   434
    Response to GAO Criticism..................................456, 537
    School-to-Work..............................443, 478, 502, 519, 535
    Unemployed in Distress Communities...........................   527
    Unemployment Insurance.....................................483, 532
    Waivers......................................................   468
    Welfare:
        TANF/CCDBG Funding.......................................   447
        Wages for Welfare Clients................................   448
        Welfare Client Followup..................................   449
        Welfare-to-Work Program..................................
          471, 507...............................................
    Work-Flex....................................................   492
    Youth Offender Demonstration.................................   478
Veterans' Employment and Training:
    Budget Justification.........................................  1821
    Budget Request...............................................   429
    GPRA Incentives for Managers.................................   459
    Homeless Veterans..........................................470, 533
    Impact of Good Economy on ASVET Programs.....................   433
    Job Training for Veterans....................................   538
    National Veterans Training Institute.........................   470
    Opening Statement..........................................412, 426
    Performance Plan.............................................  2416
    Performance Goals............................................   523
    Problem Areas................................................   435
    Ranking of Programs..........................................   434
    Response to GAO Criticism....................................   458
    Services to Veterans.........................................   460
    Training for Disabled Veterans...............................   536
    Unemployment Rate Among Veterans...........................465, 533

             Occupational Safety and Health Administration

Advisory Committees..............................................   666
Agency:
    Changes....................................................548, 574
    Staffing.....................................................   583
Assistance:
    Small Business...............................................   578
Budget Justification.............................................  1472
Citations:
    Breakdown for 1997 and 1992..................................   614
    Database.....................................................   575
    Paperwork Citations..........................................   652
Common Sense Standards.........................................542, 546
Comparisons with Global Counterparts.............................   684
Compliance Safety and Health Officers:
    Activities...................................................   584
    Funding for..................................................   667
Consistency of Policies..........................................   551
Contractors:
    Responsibilities.............................................   649
Cooperative Compliance Program (CCP):
    Data Collection..............................................   675
    Definition of CCP.....................................541, 582, 680
    Lawsuit/Stay................................563, 568, 577, 611, 663
    Number of Inspections........................................   567
    Participation in CCP..................................555, 565, 673
    Requested Increase for Enforcement...........................   674
    Site Specific Data...........................................   683
    Targeted Workplaces........................................561, 564
Data Initiative..................................................   583
Decline in Constructive Industry Rates...........................   549
Department of Energy--Transfer of Jurisdiction...................   678
Employer Audits--Internal........................................   664
Enforcement:
    Commonwealth of the Northern Marianas (CNMI).................   670
    Enforcement, Partnership and Compliance Assistance....546, 572, 577
    Requested Increase for Enforcement.........................651, 674
Ergonomics:
    Enforcement..................................................   552
    Estimates for Ergonomic Related Injuries...................554, 571
    GAO Report...................................................   682
    Injuries...................................................573, 603
    Proposed Standard............................................   587
    Scientific Evidence--Evaluation of...........................   607
    Spending on Research.........................................   603
    Stakeholder Meetings.........................................   610
    Targeting....................................................   608
    Training for CSHOs...........................................   609
General Duty Clause............................................557, 589
Government Results and Performance Act (GPRA)..................545, 580
Guidelines.......................................................   587
Hazards:
    Top Hazards in General Industry..............................   649
Illness:
    Latex Allergies..............................................   684
    Teenagers....................................................   679
    Tuberculosis.................................................   565
Injuries:
    Back Injuries................................................   564
    Construction Industry--Reduction of Injury Rates.............   679
    Declining of Injuries........................................   581
    Ergonomics Injuries...................................554, 571, 573
    Teenagers....................................................   679
Lost Work Day--Definition........................................   554
Nationally Recognized Testing Laboratories.......................   585
Natural Rubber Latex--Draft Bulletin.............................   592
Paperwork:
    Citations....................................................   652
    Reductions...................................................   652
Peer Review Process..............................................   666
Performance Plan.................................................  2205
Plain Language Initiative......................................663, 670
Postal Service--United States....................................   672
Poultry Initiative...............................................   570
Proposed Changes to Law..........................................   549
Opening Statement..............................................539, 544
OSHA Focus.......................................................   544
Small Business:
    Assistance...................................................   578
    Initiatives................................................551, 681
Standards:
    Cited in FY 1997.............................................   632
    Cited in FY 1992.............................................   641
    Cited in FY 1992, By Frequency...............................   624
    Cited in FY 1997, By Frequency...............................   615
    Ergonomics--Proposed.........................................   587
    Hazard Communication Standard................................   649
    Methylene Chloride.........................................576, 583
        Hanna Letter.............................................   667
    Peer Review................................................560, 675
    Safety and Health Program--Proposed..........................   661
    Standard for Tuberculosis--Proposed........................590, 597
Strategic Plan............................................540, 545, 580
Subcontractors:
    Responsibilities.............................................   649
Third Party Consultations......................................613, 661
Training Grants..................................................   668
Unnecessary Regulations--Elimination of..........................   664
Violations Commonly Cited........................................   589
Voluntary Compliance Initiatives.................................   661
Witnesses........................................................   539
Workplace Violence.............................................550, 681

                 Mine Safety and Health Administration

Abnormal White Center Litigation...............................742, 748
Agency Staffing..................................................   737
Allocation of Resources..........................................   748
Budget Justification.............................................  1527
Coal Enforcement Increase........................................   708
Coal Mining Industry.............................................   716
Enforcement Activities...........................................   746
Fatalities......................................689, 694, 711, 718, 740
Government Performance and Results Act (GPRA)..................692, 710
Hazard Targeting.................................................   692
Health Problems..................................................   688
Information Access and GPRA......................................   692
Injury and Fatality Data.........................................   711
Inspection Procedures..........................................742, 747
Metal/Nonmetal Fatalities........................................   718
Metal/Monmetal Mines...........................................743, 746
Mine Dust Problem................................................   720
Mine Safety and Health Academy...................................   714
Mining Data by State.............................................   723
Opening Statement..............................................687, 689
Performance Plan.................................................  2242
Policy Initiatives...............................................   741
Rationale to Eliminate Surface Mining Training Rider.............   698
Respirable Dust Program..........................................   691
Significant and Substantial................706, 738, 739, 744, 745, 749
Staffing, Agency.................................................   737
State Data.......................................................   723
State Enforcement Programs.......................................   721
Surface Mining Training Rider..................................695, 698
Training Regulations.............................................   696
Training Rider.................................................695, 698
Witnesses........................................................   687

                  Employment Standards Administration

AFGE Local 2391..................................................   797
Black Lung Program...............................................   795
    Regulations..................................................   775
Budget Justification.............................................  1380
Child Labor....................................................779, 788
Complaint Investigations.........................................   806
Conciliation and Linkage Reports.................................   817
Davis-Bacon......................................................   785
    Constructions Costs..........................................   768
    FECA Allocation..............................................   803
    Funding Utilization..........................................   773
    Helper Regulations--Status of................................   777
    Prevailing Wage..............................................   809
    Prevailing Wage Surveys......................................   803
    Prevailing Wage Survey System Expenditures...................   811
    Requirements Analysis........................................   801
    Wage Data Verification.....................................765, 798
    Wage Survey Improvements.....................................   818
EEO Affirmative Action:
    Exemplary Programs...........................................   818
Electronic Submission of LM-2 Forms..............................   805
Fair Share Expenditures..........................................   782
Fair Share Funding...............................................   789
    Usage for Automation.........................................   791
Federal Contract Compliance Programs:
    Funding Increase.............................................   762
Federal Employees Compensation Program...........................   781
FY 1999 Budget Request:
    Highlights...................................................   754
    Proposed Program Increases...................................   755
Garment Sweatshops--Elimination of...............................   770
Government Performance and Results Act...........................   784
LM-2 Forms.......................................................   766
Minimum Wage Increase............................................   820
National Race Initiative.........................................   816
Opening Statement..............................................753, 757
Pay Gap Between Men and Women....................................   819
Performance Plan.................................................  2159
Screenings of Payments by FECA Medical Providers:
    OIG Recommendations..........................................   810
Union Officer Elections..........................................   809
Wage and Hour....................................................   794
    Investigations...............................................   767
Wage Survey Improvements:
    Appropriated Funding.......................................763, 772
    Verification.................................................   769
Witnesses........................................................   753
Workplace Discrimination.........................................   813

                       Bureau of Labor Statistics

1999 Initiatives.................................................   826
BLS' Workforce...................................................   833
Boskin Commission Recommendations, general.......................   836
Budget Justification.............................................  1580
Census Contracts.................................................   833
Consumer Price Index (CPI):
    Experimental CPI-U table...................................844, 845
    Improvement Initiative.......................................   828
    January 1998 Release.........................................   828
    Market Basket................................................   829
    List of Improvements.........................................   841
    Impact of methodological changes table.......................   843
    Revision...................................................826, 839
Davis-Bacon Surveys............................................832, 837
Government Performance and Results Act (GPRA):
    Annual Performance Plan......................................   825
    Cost Accounting..............................................   836
    General GPRA.................................................   834
Helpers and Trainees, wages paid to..............................   838
Job Openings and labor Turnover Survey.........................827, 831
Opening Statement................................................   823
Performance Plan.................................................  2267
State Grants.....................................................   834
Subjourneymen and pre-apprentices, wages paid to.................   838
Training as a fringe benefit.....................................   839
Use of BLS Statistics............................................   826
Workers in cross-skilled positions...............................   839

                  Pension Benefit Guaranty Corporation

1999 Budget Request............................................874, 883
Budget Justification.............................................  1339
Defined Pension Benefit Plan Demise..............................   904
Government Performance and Results Act (GPRA):
    Implementation...............................................   874
    Performance Data Availability................................   897
Hiring Plans for 1999............................................   911
Opening Statement..............................................873, 876
PBGC Investment Portfolio......................................896, 909
PBGC's Priorities..........................................873, 877-882
Performance Plan.................................................  2150
Recent Major Plan Terminations...................................   911
Surplus in Insurance Fund........................................   902
Top 50 List......................................................   903
Year 2000 Computer Issues......................................903, 910

                Pension Welfare Benefits Administration

1997 Activities..................................................   847
1998 Activities................................................849, 860
1999 Budget Request............................................850, 867
    Program Increases..........................................867, 894
Budget Justification.............................................  1293
401 (K) Investment Savings.......................................   904
    Plan abuses..................................................   922
Abuses by Pension Plan Service Providers.........................   928
Accomplishments..................................................   854
Challenges PWBA faces............................................   853
Condition of Nation's Benefit Plans..............................   926
Defined Pension Benefit Plan Demise..............................   904
Encouraging Retirement Savings.................................912, 923
ERISA Limited scope audits.......................................   900
ERISA Filing system..................................847, 901, 907, 913
    PBGC involvement in development..............................   902
Health Care Implementation................................857, 862, 935
Health Care Quality Commission...................................   933
HIPAA Volume of customer inquiries...............................   898
    Workload associated with health care fraud...................   898
    Regulatory Work under HIPAA..................................   849
Improving Plan Audits............................................   932
Information Technology.........................................860, 865
Information Systems..............................................   914
Mental Health Parity Act of 1996.................................   929
Opening Statement..............................................847, 852
Outreach and Education efforts............................856, 861, 920
Participant Assistance.........................................859, 863
Performance Plan.................................................  2130
Regulatory and Legislative Program.............................858, 862
Retiree Benefits:
    Discontinuation of Health Benefits...........................   888
    Marketplace forces on benefits...............................   889
    Information about A.D. Goetze................................   891
    Health benefits language in Retiree contracts................   891
    Corporation's reasons for dropping Retiree Benefits..........   893
    Health care coverage for early retirees......................   930
Retirement and other Benefit Plans, condition of.................   917
Retirement Savings Summit........................................   925
Retirement Education...........................................859, 864
SAVER Bill.......................................................   849
SIMPLE Plan......................................................   899
Staffing Increases...............................................   906
Women and Pensions...............................................   930
Year 2000 Computer Issues........................................   910

                      Office of Inspector General

Accomplishments..................................................   948
Background.......................................................   941
Budget Justification.............................................  1903
Conclusion.......................................................   947
Cost-Feasibility of OIG Recommendations..........................   961
Davis-Bacon:
    Data Validity................................................   964
    Program Changes..............................................   955
    Program Weaknesses...........................................   957
DOL Implementation of GPRA.......................................   954
DOL Information Technology Systems...............................   956
Enforcement of Labor Regulations.................................   963
Federal Employees' Compensation Program..........................   956
Inspector General Tenure.........................................   950
Job Training Programs............................................   965
Legislative Changes..............................................   955
Maintaining a Strategic Management Process.......................   943
Money Owed to DOL................................................   952
Notes to Consolidated Financial Statements.......................   953
OIG Consultation and Technical Assistance........................   946
OIG Davis-Bacon Audit Sample.....................................   962
OIG Implementation of GPRA.......................................   954
OIG Quotas.......................................................   967
OIG Recommendations..............................................   950
OIG Work Plan for Fiscal Year 1999...............................   943
Opening Statement................................................   939
Overview of the OIG Strategic Plan...............................   942
Peer Reviews.....................................................   963
Performance Plan.................................................  2445
Proposed Pension Initiative......................................   954
Year 2000........................................................   957
Quality Workplaces...............................................   944
Savings from IG's Work...........................................   951
Vulnerable DOL Programs..........................................   950
Workforce:
    Preparedness.................................................   944
    Security.....................................................   944