[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




 
                   MOVING FROM UNEMPLOYMENT CHECKS TO
                  PAYCHECKS: ASSESSING THE PRESIDENT'S
                         PROPOSALS TO HELP THE
                          LONG-TERM UNEMPLOYED

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 6, 2011

                               __________

                          Serial No. 112-HR08

                               __________

         Printed for the use of the Committee on Ways and Means




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                      COMMITTEE ON WAYS AND MEANS

                    GEOFF DAVIS, Kentucky, Chairman

ERIK PAULSEN, Minnesota              LLOYD DOGGETT, Texas
RICK BERG, North Dakota              JIM McDERMOTT, Washington
TOM REED, New York                   JOHN LEWIS, Georgia
TOM PRICE, Georgia                   JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee
CHARLES W. BOUSTANY, JR., Louisiana

                       Jon Traub, Staff Director

                  Janice Mays, Minority Staff Director


                            C O N T E N T S

                               __________
                                                                   Page
Advisory of October 6, 2011 announcing the hearing...............     2

                               WITNESSES

 PANEL 1:
  The Honorable Ron Wyden, Senator from the State of Oregon......     6
  The Honorable Jim Renacci, Representative from the State of 
    Ohio.........................................................    12
  The Honorable Hansen Clarke, Representative from the State of 
    Michigan.....................................................    15
PANEL 2:
  The Honorable Jane Oates, Assistant Secretary, Employment and 
    Training Administration, U.S. Department of Labor............    16
PANEL 3:
  Maren Daley Executive Director, Job Service North Dakota.......    52
  Dawn Deane, Unemployed Worker..................................    61
  Don Peitersen, Director of Unemployment/Workforce Project, 
    American Institute for Full Employment.......................    66
  Chris McConnell, Workforce Consultant, AlliedBarton Security 
    Services.....................................................    82

                       SUBMISSIONS FOR THE RECORD

Aaron Benjamin, Statement........................................   136
American 99ers Union, Statement..................................   142
TrueBlue, Statement..............................................   145

                        QUESTIONS FOR THE RECORD

The Honorable Geoff Davis........................................    90
The Honorable Rick Berg..........................................   113
The Honorable Tom Reed...........................................   119
The Honorable Llyod Doggett......................................   126


                   MOVING FROM UNEMPLOYMENT CHECKS TO
                  PAYCHECKS: ASSESSING THE PRESIDENT'S
                         PROPOSALS TO HELP THE
                          LONG-TERM UNEMPLOYED

                              ----------                              


                       THURSDAY, OCTOBER 6, 2011

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.

    The subcommittee met, pursuant to notice, at 9:03 a.m. in 
Room B-318, Rayburn House Office Building, the Honorable Geoff 
Davis [Chairman of the Subcommittee] presiding.
    [The advisory announcing the hearing follows:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

               Chairman Davis Announces Hearing on Moving

                 from Unemployment Checks to Paychecks:

 Assessing the President's Proposals to Help the Long-Term Unemployment

October 06, 2011

    Congressman Geoff Davis (R-KY), Chairman of the Subcommittee on 
Human Resources of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing reviewing unemployment 
benefit proposals in the President's latest jobs plan and assessing 
whether they will help the long-term unemployed return to work. The 
hearing will take place on Thursday, October 6, 2011, in Room B-318 
Rayburn House Office Building, beginning at
9:00 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include a representative of the U.S. Department of Labor 
(DoL) as well as other public and private sector experts on 
unemployment benefits and employment security policies designed to 
promote reemployment. However, any individual or organization not 
scheduled for an oral appearance may submit a written statement for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.
      

BACKGROUND:

      
    In August 2011 (the most recent official data), the U.S. 
unemployment rate was 9.1 percent, 14.0 million individuals were 
unemployed, the average duration of unemployment was a record high of 
over 40 weeks, and 6.0 million individuals were long-term unemployed--
defined as unemployed for 27 weeks of longer.
    The Federal-State unemployment compensation program created by the 
Social Security Act of 1935 assists unemployed individuals by offering 
weekly unemployment benefit checks while they search for work. 
According to DoL, in order to be eligible for benefits jobless workers 
must have a history of attachment to the workforce and must be able and 
available for work.
    As a result of a series of Federal extended benefit laws enacted 
since 2008 that now provide up to 73 weeks of Federal benefits, the 
maximum number of weeks of unemployment benefits payable per person has 
grown to a record 99 weeks, which is currently available in 21 States 
with especially high unemployment rates. Since mid-2008, $180 billion 
in Federal extended unemployment benefits have been paid, with most 
supported by Federal general revenues.
    As weeks of unemployment benefits and total spending have grown, so 
have total payments made in error. According to DoL, improper payments 
of unemployment benefits reached record highs in 2010, with $17.2 
billion paid in error, equal to 11.2% of all payments.
    On September 8, 2011, the President announced his most recent plan 
to assist the long-term unemployed in returning to work. This plan 
would extend the availability of up to 99 weeks of total unemployment 
benefits through CY 2012, at an estimated cost of $44 billion. Also 
within the Subcommittee's jurisdiction, the President's plan proposes 
providing an additional $10 billion in one-time Federal funds to States 
to promote various return-to-work efforts, including wage subsidies, 
subsidies for employer training of UI recipients (along the lines of 
the ``Georgia Works'' program), work sharing, wage insurance, and 
reemployment assessments, among other of what the Administration terms 
``promising strategies.''
    In announcing the hearing, Chairman Davis said, ``This hearing will 
review a number of measures the President recently proposed to assist 
especially the long-term unemployed in returning to work. I hope we can 
build on our previous findings on the importance of better engaging the 
unemployed and providing States more flexibility in assisting them. I 
look forward to identifying possible common ground when it comes to 
helping more long-term unemployed beneficiaries return to work, and 
doing so in a fiscally responsible manner.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on a review of the President's recent 
proposals designed to help long-term unemployed individuals return to 
work.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word 
document, in compliance with the formatting requirements listed below, 
by the close of business on Thursday, October 20, 2011. Finally, please 
note that due to the change in House mail policy, the U.S. Capitol 
Police will refuse sealed-package deliveries to all House Office 
Buildings. For questions, or if you encounter technical problems, 
please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word format and MUST NOT exceed a total of 10 pages, including 
attachments. Witnesses and submitters are advised that the Committee 
relies on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                 

    Chairman DAVIS. Good morning. Thank you all for joining us 
today. Today's hearing is on the President's proposals to help 
the long-term unemployed get back to work, which are part of 
his latest jobs plan.
    There is certainly bipartisan agreement on that goal of 
getting people back to work, but we need to do a better job 
helping all of the unemployed return to work, because today's 
short-term unemployed workers risk becoming tomorrow's long-
term unemployed. For example, one of America's 14 million 
unemployed workers, Ms. Dawn Deane, will testify shortly about 
her experience since being laid off in June. She's not ``long-
term unemployed,'' but why should we wait until she reaches 
that stage before she gets effective help in getting back to 
work?
    Yet that's largely what the President's latest plan 
proposes, starting with its call to extend unemployment 
benefits for up to 99 weeks for another year. That has a 
familiar ring, because this would be the tenth extension since 
mid-2008. That's left a long track record of assessing whether 
extending unemployment benefits will create jobs, as some have 
claimed.
    For instance, then-Speaker Nancy Pelosi last year said that 
extending unemployment benefits is ``one of the biggest 
stimuluses [sic] to our economy. . . . It creates jobs faster 
than almost any other initiative that you can name.'' But in 
reality, since federal extended benefits began, the 
unemployment rate rose from 5.6 to 9.1 percent, and over 6 
million jobs disappeared.
    Federal benefits have already added $180 billion to the 
deficit, and today we are being asked by the President to spend 
another $50 billion next year. Other proposals in this plan 
have a familiar ring, too. For example, like provisions in the 
Democrats' 2009 stimulus law, the President's latest plan 
proposes more temporary federal funds if states adopt UI 
policies dozens of states already support. If these programs 
have merit, and many states already use them, why must the 
Federal Government again spend billions of dollars for other 
states to adopt them, too?
    There is no free lunch here. The Administration has 
proposed new taxes on job creators to pay for this new 
spending, but Senate Democrats have already rejected some of 
those. Meanwhile, the Administration's budget, which was 
unanimously rejected in the other body, called for nearly $60 
billion in permanently higher unemployment taxes on jobs in the 
coming decade. It is hard to see how permanently higher taxes 
on jobs will help the unemployed get back to work.
    The President's plan is noteworthy for steps it does not 
take, such as providing states more flexibility over UI funds, 
so fewer people become long-term unemployed. This committee 
approved such UI waiver authority to the states earlier this 
year. Just last week, President Obama signed into law a bill 
cosponsored by my friend Mr. Doggett, among others, to provide 
states waiver authority in child welfare programs. I had the 
privilege of being in the Oval Office last Friday to see that 
bill enacted into law. And that shows that we can make progress 
from a bipartisan perspective, focusing on the process and the 
real economics and opportunities to help people move forward.
    If states can be trusted to design better programs for 
children at risk of abuse and neglect, can't they be trusted to 
test ways to better help the unemployed get back to work, using 
their own state funds?
    Other important reforms are missing, too, like 
strengthening work search and better engaging unemployed 
workers in training--reforms that were needed even before the 
recession. The good news is these sources of improvements to 
help all unemployed workers can and should be included in any 
legislation enacted this year to help the unemployed return to 
work.
    I look forward to working with my colleagues and the 
Administration to that end, and welcome all of our witnesses 
today to discuss how we can craft the most effective policies 
to do just that.
    Without objection, each Member will have the opportunity to 
submit a written statement and have it included in the record 
at this point. And I would like to yield now to my friend, 
Lloyd Doggett.
    Do you care to make an opening statement?
    Mr. DOGGETT. Thank you very much, Mr. Chairman. This is an 
opportunity to review the proposals of the President to assist 
the unemployed find work, and to listen to the creative 
recommendations of our colleagues.
    Today in America the problem that we face is not the 
unemployed, but unemployment. Too many Americans remain 
unemployed because of lack of work, not for their lack of 
wanting to work. We must stop the blame-the-victim approach of 
just blaming unemployment on the unemployed. Thus far this year 
we have yet to vote in the House on a single meaningful jobs 
bill. And threats of default on our debt and threats to shut 
down the government only set back our economic recovery and 
cost us more jobs.
    There is a great difference in this country between what 
happens to some unemployed citizens. Those at the top of the 
economic ladder don't need to worry about unemployment 
insurance. Last month the executive at Hewlett Packard, HP, got 
a $13 million golden parachute after he was dismissed when his 
company's stock price fell by half. But for the rest of 
America, and particularly the working-age poor, of whom we have 
more than at any time in about 50 years, things are 
considerably different.
    As luxury goods fly off the shelves at some specialty 
stores, Wal-Mart has reduced the size of its toilet tissue 
rolls because so many people can't afford to buy the old size. 
When folks lose a job through no fault of their own, the least 
we ought to do is extend a life line.
    In examining the provisions of the President's Americans 
Job Act relating to unemployment, there are several new 
initiatives that merit our study. If Congress fails to act by 
December 31st on extending Federal unemployment insurance 
benefits, more than 2 million people will lose their 
unemployment assistance by the middle of February. And 
throughout next year, a total of six million Americans will be 
without assistance.
    The President's proposal is a good place to start in 
addressing this problem. This doesn't mean I think that every 
aspect of his proposal has the right answers, or that he even 
has the best answers on all aspects of this problem. But I 
especially emphasize the need to extend Federal unemployment 
assistance at this time of continued economic downturn. 
Terminating unemployment assistance would hurt our nation's 
economy by further suppressing consumer demand and confidence.
    The Economic Policy Institute has estimated that allowing 
the extended Federal unemployment program to expire would cost 
this country over half-a-million jobs. This amounts to a double 
whammy for the unemployed. They lose their benefits, and jobs 
become even more difficult to find.
    And there is near unanimity among economists that few 
government expenditures have more positive stimulative effect. 
It's true, it doesn't solve all the jobless problem in the 
country. But economists of all political stripes agree that one 
of the best ways to stimulate the economy is to make payments 
to those who have no choice but to spend those dollars 
immediately on the necessities of life.
    But things could get even worse for the unemployed if the 
proposal before the House Appropriations Committee to cut job 
training and unemployment services by 75 percent is effective.
    Finally, while there is much ballyhooing about the so-
called Texas Miracle, the unemployment rate in my state, 8.5 
percent, stands higher today than at any time in the last 
quarter of a century. Our state is also a good example of what 
happens when ideological constraints and political imperatives 
produce decisions that harm both employers and employees.
    Let's hope that this hearing is just the first step in 
forging a stronger consensus that we must not abandon the 
millions of our neighbors who depend on unemployment insurance 
to make ends meet until they can be successful in securing a 
new job. Let's work together to move our economy forward, and 
increase the opportunity for folks looking for work to find it. 
Thank you, Mr. Chairman.
    Chairman DAVIS. Thank you, Mr. Doggett. Before we move on 
to our testimony, I would like to remind our witnesses that all 
oral statements need to be limited to five minutes. And, 
however, without objection all of the written testimony will be 
made part of the permanent record.
    On our panel today we will be hearing from several of our 
distinguished colleagues. First will be the Honorable Ron 
Wyden, Senator from Oregon. Welcome to the panel. The Honorable 
James Renacci of Ohio, accompanied by the Honorable Hansen 
Clarke of Michigan. Thank you all for joining us today.
    Senator Wyden, please proceed with your remarks.

 STATEMENT OF THE HONORABLE RON WYDEN, A UNITED STATES SENATOR 
                    FROM THE STATE OF OREGON

    Senator WYDEN. Thank you very much, Mr. Chairman, and it is 
a pleasure to be with you and Congressman Doggett. I had a 
chance to serve in the House of Representatives. It is good to 
be back. And let me first of all say I am going to spare you 
the filibuster this morning. And if I could just make my 
prepared remarks a part of the record, perhaps just kind of 
summarize a few thoughts.
    Chairman DAVIS. Without objection.
    Senator WYDEN. Thank you, Mr. Chairman. I particularly 
appreciate the way you, Mr. Chairman, and others are looking at 
trying to find a bipartisan way to make some changes in the 
unemployment system to provide more opportunities for our 
workers, folks that are hurting, to get ahead.
    And what I want to do is just start this brief discussion 
with my belief that this isn't our grandparents' job market. I 
think we all understand that we saw our grandparents and our 
parents very often get caught up in the typical business cycle 
caused by bad weather, or an increase in the price of raw 
materials, something like that. They would be unemployed for a 
few months, six, eight months, but their jobs would come back.
    We know today that a lot of lost jobs aren't coming back, 
and we have to start with that basic understanding. And so, I 
come to offer the theory that, in a bipartisan way, we could 
start with the proposition that a significant number of folks 
who are unemployed are essentially treading water in the 
unemployment system with no way of getting ahead. And these are 
folks who now have one of two choices.
    They've got these two choices, which aren't particularly 
good for them, and they aren't particularly good for taxpayers. 
They can take their unemployment check and keeping looking for 
jobs that no longer exist or they can take their unemployment 
check and go into a training program that is not as valuable as 
the knowledge in their head and the work ethic in their body.
    So, what I would like to suggest is that, on a bipartisan 
basis, we look at the idea of reforming the unemployment system 
to give those who are qualified to do so the opportunity to get 
off the treadmill. We should let them use the marketable skills 
that they have often picked up in decades of employment in the 
private sector, to become self-employed in the private sector, 
where they're going to be paying taxes and often putting others 
to work.
    Now, I want colleagues to know that I don't think this is 
for everybody. I am not suggesting you can be unemployed and 
just walk into the UI office and say, ``I am going to go set up 
a biotech company,'' or something of that nature. But if you 
look around the country at what we've done in the last 15 years 
with these programs on a small scale--and I authored federal 
SEA law in the 1980s--we see people setting up welding shops, 
we see folks doing innovative work in wood products, in 
technology in a variety of areas.
    Recently, two unemployed fellows in my home town of 
Portland started a technology company, ``Urban Airship,'' and 
they are doing pioneering work with new mobile apps. And they 
have got people all over the country interested in their mobile 
applications. So, these jobs can pay good wages, and turn folks 
into entrepreneurs.
    And I will close with this, Mr. Chairman. A study by the 
Department of Labor found that self-employment participants 
were 19 times more likely than eligible non-participants to be 
self-employed at some point after being unemployed. And even 
more importantly, they were four times more likely to obtain 
employment of any kind, any kind whatsoever. And the average 
cost of these jobs was $3,350.
    So, we can continue to go back and forth, Democrats and 
Republicans, punching on each other about the idea of job 
creation that costs many, many times that level, or we can find 
a way, in a bipartisan fashion, to do it. What we have done in 
this legislation is put in what I think are realistic limits. A 
state can only give about one percent of its UI recipients the 
opportunity to take part in self-employment assistance with a 
limitation of the number of weeks of benefits.
    And I just appreciate the tone that you are setting, Mr. 
Chairman and Congressman Doggett has worked, through your joint 
bipartisan work on the child welfare bill that was signed 
recently.
    And let me break the speechifying off here, and just know 
that I would be very much interested in being part of this 
bipartisan approach you all are trying to cultivate.
    [The prepared statement of Senator Wyden follows:]

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    Chairman DAVIS. Thank you, Senator Wyden. Much of what you 
mentioned fits the spirit of legislation that we worked on back 
in the spring regarding issues like this. And we will look 
forward to continuing that dialogue. Thank you very much.
    Congressmen Renacci and Clarke.

 STATEMENT OF THE HONORABLE JAMES B. RENACCI, A REPRESENTATIVE 
               IN CONGRESS FROM THE STATE OF OHIO

    Mr. RENACCI. Good morning, Mr. Chairman, Mr. Doggett, and 
Members of the Subcommittee. I would like to thank you for 
hosting today's hearing on moving from unemployment checks to 
paychecks, and for inviting me to testify. It is my hope that 
today's hearing will provide the subcommittee with actionable 
information for getting our nations' unemployed back to work.
    The dire unemployment situation currently gripping the 
United States has been an inescapable reality for several 
years. Unemployment data for the month of August showed zero 
jobs added and a sustained unemployment rate of over nine 
percent. The next report on job creation--or, unfortunately, 
the lack thereof--is due on October 7th. But there is little 
reason for optimism.
    However, the tools we need to overcome the economic 
downturn are already at our disposal, the most valuable of 
which is unemployment insurance. Significant employment 
opportunities can be created by allowing the states to leverage 
unemployment insurance into job creation. There is no silver 
bullet to returning America back to work. But creating an 
incentive for both employers and job seekers through 
unemployment insurance is an important first step.
    I have introduced a bill with bipartisan support entitled, 
``Employ Act,'' H.R. 2137, that would create this dual 
incentive. The unemployment benefit to the business--the Employ 
Act would allow states to develop an optional program for 
providing a percentage of the unemployment benefit to a 
business willing to hire an individual at a rate higher than 
the normal benefit amount.
    The purpose of this program is simple: provide businesses 
with an incentive to hire through reduced risk, provide 
individuals with an incentive to work through increased pay, 
and reduce cost to the government by paying only a percentage 
of the unemployment benefit to the eligible businesses. As 
stated, the Employ Act is not a panacea for the joblessness 
crisis the United States is currently facing. But it is a 
crucial step in the right direction.
    I again thank the subcommittee for inviting me to testify 
here today, and I look forward to answering any questions you 
may have. I also look forward to hearing the ideas presented by 
my colleagues here today.
    [The prepared statement of Mr. Renacci follows:]

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    Chairman DAVIS. Congressman Clarke.

  STATEMENT OF THE HONORABLE HANSEN CLARKE, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF MICHIGAN

    Mr. CLARKE. Chairman Davis, Ranking Member Doggett, 
subcommittee members, my name is Hansen Clarke. I represent the 
metropolitan region in this country that has lost more jobs 
than any region over the last years: metropolitan Detroit.
    People in metro Detroit, they need work. They are desperate 
for work. This Employ Act would provide the people that I 
represent a chance to get on-the-job training, but also an 
opportunity to get a job long-term. This is important, and I am 
going to be brief. When you put folks in metro Detroit back to 
work, even though our area has been so hard hit, economically, 
we have the best manufacturing know-how still. We have got a 
great trained workforce. When you put our folks in Detroit back 
to work, you put this country back to work. We can create more 
new advanced manufacturing jobs.
    But I am not here just talking to you today as a Member of 
Congress representing Michigan's 13th District. I also want to 
share with you my experience during the last great recession 
that we had here in this country, during the 1980s. I was a 
young man in my early twenties. I had already lost my family, 
they had died by the time I was 19. I had no brothers and 
sisters. I had dropped out of college, I had been out for 
years. And I lost my income. I lost my food stamps, and then I 
gave up completely. I knew that there was no way I was going to 
be able to make it in life.
    This is the tremendous tragedy right now with folks who are 
unemployed. I know that feeling. I can see it in their eyes. 
People in Detroit are tough, but they have given up. They don't 
think that they have a chance any more. This Employ Act gives 
people some confidence in themselves by putting them back to 
work, putting them in a work situation where they can work with 
a team, they can see that--the value that they have to a 
company, to themselves, and to this country.
    The other reason why I wanted to be here today, I wanted to 
show this Congress and to show this country that a Republican 
like Jim, a Democrat like me, that we can work together, and we 
are committed to put our people back to work. This bill is not 
perfect, but nothing in this country is. But it is a clear 
statement: Here is a way that we can provide an incentive for 
employers to hire people who need money, but also need faith, 
faith in themselves and faith in what this country is all 
about, giving everyone an equal chance--not a guarantee, but a 
chance to pursue happiness, to actually live your life as fully 
as you can.
    So, I really appreciate you giving us this opportunity. I 
want to let, again, this country know Democrats and Republicans 
are willing to work together to put you back to work. That is 
why Jim and I are here today. Thank you so much.
    Chairman DAVIS. Thank you very much, Congressman Clarke. We 
appreciate your sentiments.
    Does anybody have any questions for our colleagues on the 
panel?
    [No response.]
    Chairman DAVIS. I would like to thank Senator Wyden and 
Congressmen Renacci and Clarke for joining us today, sharing 
your insights. The one thing I also would like to do is extend 
the invitation to continue to work with all of you. We look 
forward to this dialogue as we move forward, and thank you very 
much.
    That concludes our first panel. And for our second panel we 
will be hearing from the Honorable Jane Oates, Assistant 
Secretary of the Employment and Training Administration, U.S. 
Department of Labor.
    Welcome, Secretary Oates, for another appearance before the 
subcommittee. You can go ahead and proceed with your testimony.

 STATEMENT OF JANE OATES, ASSISTANT SECRETARY, EMPLOYMENT AND 
       TRAINING ADMINISTRATION, U.S. DEPARTMENT OF LABOR

    Ms. OATES. Good morning, Chairman Davis, Ranking Member 
Doggett, other Members of the Committee. Thanks for this 
opportunity to begin the discussion on the President's American 
Jobs Act.
    The act draws on bipartisan ideas and proposes innovative 
changes to the unemployment insurance, the UI program. It gives 
states flexibility to implement innovative voluntary approaches 
to get long-term unemployed workers back to work and boost job 
creation, while also providing UI benefits to the long-term 
unemployed who continue to face challenges finding jobs.
    I know you all agree that getting people back to work is 
essential to our sustained recovery and our nation's economic 
strength. The UI reforms in the American Jobs Act are packaged 
to ensure unemployed workers have the benefits they need while 
searching for work, but also ensures that they have the 
necessary services and opportunities to get re-employed.
    The proposal couples a further extension of emergency 
unemployment compensation with full federal funding of the 
extended benefit program for one year, with mandatory re-
employment services and eligibility assessments for EUC 
claimants, and state flexibility to implement a menu of 
innovative re-employment strategies that would provide 
claimants with additional options, if they chose to pursue 
them.
    The President's proposal will, by the end of 2012, prevent 
6 million Americans from losing access to the benefits they 
need to sustain their families while they look for work. We 
know that without these life-sustaining benefits this past 
year, 3.2 million people would have slipped into poverty.
    At the same time, an extension of emergency unemployment 
benefits for a year bolsters consumer spending, which, in turn, 
fuels local economies by returning $2 in economic growth for 
every $1 in benefits paid. We know that the longer an 
individual is unemployed, the less likely that individual is to 
successfully return to work, because their skills get rusty and 
they face the stigma of being long-term unemployed.
    The President is asking Congress to extend EUC and full 
federal funding for EB through the end of 2012. At the same 
time, the act promotes rapid re-employment by requiring states 
to provide re-employment services, and UI eligibility 
assessments similar to the re-employment and eligibility 
assessment initiative that 40 states currently operate. They 
would now provide this to all EUC recipients.
    States will provide these services in tandem, and we know 
this strategy works. Research shows that a combination of RES 
and REA activities reduces UI duration and saves trust fund 
dollars, because claimants find jobs faster and ineligible 
claimants are identified, thus reducing improper payments.
    In addition to these important re-employment services, the 
American Jobs Act proposes the Re-Employment Now initiative, 
which provides $4 billion to states through a formula, and 
gives states the flexibility to implement something from the 
menu of optional re-employment services, including state-
developed models, while joining DoL in an evaluation of the 
models to inform future UI reforms.
    All of these options directly benefit long-term unemployed 
workers. The Bridge to Work program builds on and improves on 
programs such as Georgia Works, and will permit EUC recipients 
to voluntarily engage in temporary work for up to 38 hours a 
week for up to 8 weeks, while continuing to receive their EUC 
benefits. Total benefits in every state must be at least equal 
to the minimum wage in that state.
    Key worker protections are mandatory for both the EUC 
recipient and for employees at the participating employer. 
Bridge to Work is a win-win for both the EUC recipient and the 
employer, and we think it promotes job creation and hiring.
    Wage insurance will provide an incentive for older EUC 
recipients 50 and above to return to the labor market by taking 
a job that pays less than what they were making in their last 
job. Participants could be paid up to 50 percent of the 
difference in wages between the two jobs during a period of 
time determined by the state.
    Other initiatives in my oral testimony, as my time is 
running out, we can discuss during questioning. But I do want 
to end by saying that we think the American Jobs Act is a 
comprehensive package and the President is urging Congress to 
enact it in its entirety, including, for example, the 
additional re-employment strategies that are pathways back to 
work that will be considered by other committees.
    I really hope this is the beginning of our discussion. I 
hope we can reach some common ground on this, and really hope 
we can get to something quickly.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Oates follows:]

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    Chairman DAVIS. Thank you very much, Ms. Oates. I will go 
ahead with the first question.
    According to the Administration's most recent projections 
in the fiscal year 2012 mid-session review released in 
September, to quote, ``The unemployment rate is projected to 
fall, but it is not projected to fall below 6.0 percent until 
2016.'' For reference, in 2008, our national unemployment rate 
hit a low of 4.9 percent.
    Now, the Administration also projects that at this time 
next year the national unemployment rate will still be at 8.2 
percent, which is, I think we would agree, unacceptably high. 
Yet, when we look at the proposals before us from the 
President, they generally propose help for the long-term 
unemployed through the end of 2012.
    Now the question. Does this mean that if we pass the 
proposed tenth extension of UI benefits now, that a year from 
now will you be back asking for an eleventh extension of 
federal UI benefits, and another infusion of one-time short-
term stimulus funds to ``create jobs''?
    Ms. OATES. Mr. Chairman, I think that is a fair question, 
but I don't have a crystal ball, with great respect. I think 
our hopes are that the proposals that we are putting forward 
here will reduce the number of people continuing into long-term 
unemployment, will accelerate people getting back to work, 
particularly when you look at the re-employment services that 
we are asking for, and the assessments.
    We think that a number of people in your state and in every 
state across the country have been put out of work in a sector 
where there are no longer jobs for them. So we are hoping that 
these initiatives that we are proposing--and we will work with 
you on trying to enact many, all, or some of them--we think it 
will change the direction of people.
    We certainly think that something like the Recovery Act, 
while some people say it wasn't effective--I mean we can 
certainly look at things like the state sustainability funds, 
which eliminated the need to lay off workers in 2009 and 2010 
from states and municipal areas, and the resurgence of the auto 
industry. Likewise, I think this proposal will have real 
benefits. Do I think it is perfect? No, sir. I wouldn't say 
that to you. But I think together we can make it even better 
than it is now, and I look forward to working with you on that.
    Chairman DAVIS. Okay. Well, we have a mutual concern. There 
are a couple of generations of statistical data that would 
suggest that when people pass that two-year mark being 
unemployed, that it is very rare that they re-employ. And the 
question that we have tried to deal with over the course of 
this year is looking at ways to encourage working--especially 
with states, empowering front-line service providers--to get 
them to work as quickly as possible, so there is not a lag time 
that moves them away from the workforce.
    Regardless of the issues surrounding that and the unique 
issues that Senator Wyden commented on--I certainly think he 
brought up some very creative ideas. We had a discussion on 
creative ideas that was very well received by the states that 
were a little bit different from this.
    But I guess a final question would be why doesn't your 
proposal include permanent reforms to the UI program, so that 
we always do a better job helping the recipients to work from 
the first week of collecting benefits, instead of engaging 
largely after they have been unemployed for six months?
    Ms. OATES. Well, I think, Mr. Chairman, you and I have had 
discussions about the fact that there is a real need to work 
with this Committee and the other chamber to look at long-term 
UI reform. Some of the things that we would like to do, in 
terms of solvency and improper payments, we are initiating as 
much as we can without statutory change.
    But I think that what we are hoping is----
    Chairman DAVIS. Just to intercede, had we gotten our JOBS 
Act passed, you would have had the statutory authority to deal 
with the data exchange and issues there. Go ahead.
    Ms. OATES. We appreciate that. But we want you to know that 
we are hoping that some of the ideas that we are proposing in 
this act, they contain an element that has been missing when 
states try to do this ad hoc on their own, and that is a strong 
evaluation piece. We are committed to you--to evaluating 
anything that you give us the permission to do, so that a year 
from now, if you are choosing to look at long-term underlying 
UI reform, we will have real data, not anecdotal, not guesses, 
not political spin. We will have data to share with you about 
what the promising ideas were that really did make a difference 
in getting people back to work.
    Chairman DAVIS. Okay, thank you very much. I yield now five 
minutes to the gentleman from Texas, the distinguished ranking 
member, Mr. Doggett.
    Mr. DOGGETT. I thank the gentleman and the Secretary for 
her service.
    With reference to the JOBS Act, my recollection is that the 
bill, though strongly urged in Committee and strongly opposed 
by me and others in Committee, was never brought by the House 
leadership to the House floor so that anything could be done on 
it. I am thankful that it wasn't, because I think the 
unemployed need the assistance more in my state than Governor 
Perry needs their money to pay off state bonds.
    But to focus, Madam Secretary, on your testimony, what do 
you believe the economic impact will be if we allow two million 
people to begin losing their Federal unemployment insurance 
benefits in February, and a total of six million to lose their 
benefits, as you have testified, over the course of the next 
year?
    Ms. OATES. Congressman, I think one word would sum it up. 
It would be ``catastrophic.'' We would not only be pushing 
people into much more expensive safety net programs, but many 
of them would be entering programs like long-term disability 
that would be a mortgage that our country would have for 
decades to come.
    I think that the American people want to go to work. But 
when pushed to the wall, they are going to do what they have to 
do to support themselves, to keep a roof over their head and 
their families'.
    So I think that we have already seen a disturbing growth in 
long-term unemployment numbers. And I think that unless we give 
people real options, real job options so that they can support 
themselves, they are going to find another way to do it. I mean 
I do believe that we can reform our programs, but job creation 
is what we have to be about. There are 16 million unemployed 
people today, almost another 7 million working part-time that 
would like to work full-time. And by the best estimates, there 
is a little bit over three million jobs. That math doesn't add 
up.
    So, I really hope that, you know, we don't look at that--we 
don't deny 6 million people in 2012 their benefits.
    Mr. DOGGETT. And, really, if you look back over the decades 
through Republican administrations and Democratic 
administrations, when we have hit unemployment levels that are 
as high as they are today, have there usually been bipartisan 
efforts to extend unemployment benefits under that 
circumstance?
    Ms. OATES. Yes, sir. Looking at the history, the last time 
unemployment--long-term federally-supported unemployment 
benefits were eliminated [sic], the unemployment rate was about 
7.2 percent. There has never been a time in history when 
Congress has not included extensions when the unemployment rate 
was at nine percent.
    Mr. DOGGETT. And I know, as I said in my opening statement, 
there are those who want to blame the unemployed for 
unemployment. But aren't we in a circumstance today where there 
are more than four unemployed Americans available for every job 
opening?
    Ms. OATES. Yes, sir. And that is the national average. In 
some areas, even those areas represented on this committee, 
that number has doubled.
    Mr. DOGGETT. And in that circumstance, what will be the 
effect if the effort last week by Republicans on the House 
Appropriations Committee to slash the Workforce Investment Act 
by 75 percent--almost eliminate it--what will the effect be on 
employment services, on job training, and opportunities for 
those unemployed individuals to find the work that they want?
    Ms. OATES. Well, I would love to give you a direct answer 
to that, sir. But clearly, the way the bill is written with 
changing program year to fiscal year in some parts of the bill 
and not others, make it almost impossible to give you an 
accurate answer. But at the minimum, it would cut our services 
at least by 50 percent, and perhaps up to 90 percent in some 
programs.
    What would that mean in Texas? It would probably mean that 
Larry Temple, your director of workforce programs, would 
probably have to close 80 percent of the one-stops.
    Mr. DOGGETT. That----
    Ms. OATES. Eighty percent.
    Mr. DOGGETT. That doesn't seem to me to be a very creative 
way to address this problem.
    I do have some concerns about the Bridge to Work model that 
copies Georgia Works. I like the sound and theory of the 
program. But at least one analysis I have seen shows that after 
a couple of months of providing employers free work, only about 
10 percent of those workers find permanent employment. Is that 
the record?
    And is there anything you do in the Bridge to Work proposal 
to try to ensure that we get better worker placement after 
providing weeks of free labor?
    Ms. OATES. First of all, the Georgia Works program and the 
other programs in Missouri and North Carolina, in New 
Hampshire, don't use UI money. So therefore, we don't have a 
lot of accurate data on them. What we can tell you in studies 
that we have done, that people who do active work search 
actually have done twice as well in getting placed in jobs.
    So, when we proposed this as an option--because we fully 
recognize that some people are sending out hundreds of resumes 
and not getting one interview--we hear that desperation 
whenever Secretary Solis and I travel individually or 
together--we think that some people really would like a chance 
to show what they have, what their worth is to an employer.
    So, in addition to giving them this opportunity, we would 
first exhaust the resources of the Wagner-Peyser system and the 
employment service system by making sure they get an accurate 
assessment, they get face-to-face attention from someone so 
that they know that they are doing--they are getting the best, 
in terms of workforce--work search information.
    I think that by beefing up the basics, the work search, the 
job counseling, the labor market information, and adding other 
options, we are responding to good ideas from around the 
country. So I think the pairing of them may give us the best 
options.
    Mr. DOGGETT. Thank you.
    Chairman DAVIS. Great. Thank you very much. The gentleman's 
time has expired. The chair recognizes Mr. Paulsen from 
Minnesota for five minutes.
    Mr. PAULSEN. Thank you.
    Ms. OATES. Good morning.
    Mr. PAULSEN. And, Madam Secretary, thanks for being here 
this morning. And, first of all, thanks for your comments at 
the end of your testimony, just saying that this is, from your 
view, the beginning of a discussion and wanting to work to find 
common ground on some significant challenges before us. And I 
think, as the chairman had mentioned, some proposals had 
already passed out of this subcommittee or out of the Ways and 
Means Committee.
    So my understanding now is that the President's latest plan 
now that is before us--and some of the folks in the 
administration, by the way, are saying, ``Look, you need to 
vote on this plan as it is, there is not room for 
modifications,'' that is why I really appreciate your comments 
here today--but this is the latest plan now that essentially 
will extend UI benefits for the tenth time for up to 99 weeks, 
for 1 more year, it will cost about $44 billion, and there is 
another $10 billion or so in some other sort of one-time 
stimulus-like programs that would also go into the deficit.
    But I want to go back to some of the testimony that was 
received back in March from the inspector general at the 
Department of Labor. And at that time the testimony was 
centered around reporting an 11.2 percent improper payment rate 
for unemployment insurance benefits. And that represents about 
$16.5 billion in overpayments, about $936 million in 
underpayments. And I think one of the issues that the inspector 
general rose was that the unemployment improper payment 
reduction plan did not include specific targets for preventing 
these improper payments, or details on how to meet certain 
targets, both for the Department of Labor and for the states.
    And they also mentioned, ``As we previously recommended, 
the Department and states must identify these strategies to 
maximize opportunities here, especially maximizing the use of 
the national directory.''
    And I guess just in summary, so knowing that $17 billion in 
overpayments or improper payments have been made, which is a 
record high, and the inspector general has essentially come out 
and said, ``Look, the Department of Labor and the states have 
not identified the strategies that are necessary to target 
these improper payments,'' and now we are being asked to sort 
of move forward another $50 billion or so on unemployment 
benefits and services, at this 11.2 percent error rate, does 
that mean we're going to have another $5 billion that is going 
to be spent improperly? I mean is the math correct?
    Ms. OATES. Well, all your numbers are correct, Congressman. 
Let me tell you that we have a very aggressive plan with the 
states to try to work on this number quickly.
    It is very difficult to do anything quickly in the UI 
system because of the data lag time. But I think we have given 
you some materials, and we are happy to give you more about 
what we are doing.
    Number one, we have set targets now with the states. Each 
state has an inter-agency team, because in the variety of 
states there are a variety of people who touch UI, whether 
through re-employment or direct benefit services. We have 
brought the 11 largest states together to work in a cohort, not 
because their rates are the worst, but because their numbers 
are so large that they can help us drive the number down.
    We have put a new website up so that there is complete 
transparency about both the number and the dollar amount that 
each state is paying in improper payments. We have given states 
$191 million in money that we have cobbled together, so that 
they can advance their use of the program or their use of the 
national database of new hires.
    We have identified for each state in a pie chart that I 
think we provided to each of you what their root causes were, 
so that they could work with us on getting down the root 
causes, whether it is separation issues, where employers aren't 
timely in their--getting back to the state about the reason for 
separation, or whether it is someone continuing to collect 
after they have gotten a job.
    I think we have put together--and lastly, we have actually 
identified 6 states that have rates over 10 percent, and are 
giving them targeted technical assistance to get their rates 
down.
    This is a partnership program with the states, and in--you 
are going to hear from a state director on the next panel, and 
I know she will be able to make this case much more accurately 
than I.
    But I don't think any of us really understand what the 
unemployment numbers have done to state workforce people. I 
mean they have been inundated with requests. And I would 
venture that every state has shifted people from the kinds of 
integrity issues that we all care about and they care about 
into making sure people get their check in a timely manner. I 
hope that, as the rates come down a little bit in states, they 
will be able to shift those employees back to integrity issues.
    Mr. PAULSEN. Yes. Well, and thank you for that. And I know 
Congress, obviously, is looking to save and make sure that 
every amount of waste, fraud, and abuse is not there.
    And what suggestion would you have to make sure that we, as 
Congress, is making sure the Department and the administration 
and the states are held accountable for making sure we are not 
going to have an 11 percent improper payment rate? Because that 
is a huge amount of money that is going out the door.
    Ms. OATES. Absolutely. It is unacceptable, Congressman. And 
I would say to you for the length of my time that I have in the 
future in this office, hold my feet to the fire. You know, call 
me up to your office, get your staff on the phone. We will have 
quarterly results. And if we are not showing progress, you need 
to help me and give me more ideas.
    We have put together a plan that has literally taxed my UI 
staff in the national office and the regional offices, and they 
are enthusiastically embracing the extra workload. But I am 
open to new ideas, ideas that you might have. You may have 
things from your state and your state administrator--you know 
we work very closely with the states, there is not an 
administrator that I don't know personally--and we work closely 
with NASWA. We have no pride of authorship on what we have 
done. We are willing to try these out. If this doesn't get us 
where we are, if we need to add new measures, please be open 
and tell us.
    So we look forward to working with you on this. I do not 
want to leave this position with the improper payment rate 
where it is now. I would like it well below 10 percent.
    Chairman DAVIS. Thank you. The gentleman's time has 
expired. Mr. Berg is recognized for five minutes.
    Mr. BERG. Thank you, Mr. Chairman. Thank you, Secretary.
    Ms. OATES. Good morning.
    Mr. BERG. I--you know, maybe I am looking at this very 
simply, but one of my frustrations is this is the tenth time we 
have extended this, all right? And since the major stimulus 
package, nothing has changed.
    I mean you talk about this money going in the economy and 
stimulating spending, but we really haven't seen that happen. 
We are still at nine percent. The economy is bleak. I mean I 
agree that it is about jobs. But I also am concerned that we 
don't have anything innovative, anything that is changing. We 
are just doing the same thing.
    And so, you mentioned earlier that there is 16 million 
unemployed people.
    Ms. OATES. Yes, sir.
    Mr. BERG. And there is about three million jobs. I guess my 
first question is it seems to me that we ought to be doing 
everything we can in this program to fill those three million 
jobs with the people that are unemployed. That should be our 
number one focus.
    My other frustration--and this is just kind of the big 
picture--is everything is temporary. This temporary nature does 
not provide the security and the stability that people need, 
either those that are unemployed, or that our economy needs.
    And, you know, obviously I have said this several times in 
our state is, you know, we are at 3.5 percent in North Dakota. 
We didn't have a jobs bill in North Dakota, and we understand 
there that government doesn't create jobs, the private sector 
creates jobs. And so we need to create an environment that 
encourages that to happen. And we need to create a system here 
that recognizes that and works with that private sector to 
encourage hiring and to fill those jobs and fill that capacity.
    I mean there is a couple stories today in the press back 
home that are really disheartening, people that have lost their 
businesses in other states that have come to North Dakota, 
living in trailers, trying to pull things together, and there 
is a lot of optimism in those people. But the sad thing is this 
dead economy, they are never going to be able to recover from 
that. They have lost their businesses, they have lost their 
homes, and they are starting over at 60 years old.
    And so, again, this whole thing--I think we need to get 
back to the focus of trying to create those jobs. And I am a 
strong believer that these solutions are not going to come from 
us in Washington. These solutions are going to come from the 
states.
    And so, one of the core things that I want to talk to you 
about is we have a federal waiver, if I understand it 
correctly, at the federal point. But we don't have the waiver 
at the state. And so the--you know, I guess maybe if you could, 
just explain to me the federal waiver process that we have.
    Ms. OATES. Well, under the unemployment insurance program 
we have no waiver authority. Under the Workforce Investment 
Act, which is the subject of another committee, we have more 
liberal waiver authority in many areas, and North Dakota is a 
recipient of many of those waivers under the Workforce 
Investment Act program.
    But you know, we do not--you haven't given us statutory 
authority to waive anything in the unemployment insurance 
program.
    Mr. BERG. Is that something that has been asked for in the 
President's bill?
    Ms. OATES. No.
    Mr. BERG. Would that----
    Ms. OATES. We haven't done, really, anything to the 
underlying Unemployment Insurance laws in this bill. As you 
say, these are temporary programs.
    But I think while your state has the blessing of great 
natural resources, it has done, really, a lot of things right. 
I mean you were able to come back from Mother Nature's natural 
disasters and floods this year in a much stronger way than 
anybody--than many of your other neighboring states were able 
to do so quickly. So, you are doing a lot of things right.
    But one of the things the President's bill does, sir, is 
recognize the fact that we don't know everything in Washington, 
and it gives states a menu of options so that they can figure 
out whether wage insurance is right for them, whether, you 
know, self-employment assistance, that program is right for 
them, or whether they just want to build up their REA and RES 
programs.
    So, I think we are on the same page there. We may have 
differences in other areas, but I think we definitely agree 
with you that states know better about how to build their own 
local economy, how to respond to their employers, and we give 
them a menu of options.
    Mr. BERG. I understand the rhetoric, but I don't see the 
action. And so I guess I would just challenge you to, as we are 
looking at this, and as we are debating this, that we look for 
those areas of waivers and flexibility within UI, both at the 
federal level and the state, to kind of move that forward.
    Ms. OATES. Happy to work with you on that, sir. I am not a 
rhetoric person, I am an action person. Thank you.
    Mr. BERG. Thank you. I yield back.
    Chairman DAVIS. Thank you. The chair recognizes Mr. Crowley 
for five minutes.
    Mr. CROWLEY. Thank you, Madam. Thank you Mr. Chair----
    Ms. OATES. Good morning.
    Mr. CROWLEY [continuing]. And thank you, Madam Secretary. 
Rhetoric has its place, so----
    Ms. OATES. You must have been a preacher in a former life.
    Mr. CROWLEY. Boy, I wish we all were North Dakota, I wish 
we all had a 3.5 percent unemployment rate. And unfortunately, 
in New York, it is, as Mr. Reed knows, it is at eight percent, 
if not higher. And so I appreciate my colleague's remarks, but 
also note that other states are even at higher levels than New 
York, in terms of unemployment. In fact, we feel kind of lucky 
that we are only at eight percent when we look at other states.
    The--what I would remind my colleagues is that this 
portion, the UI benefit extension, is part of--part and parcel 
of--the President's overall jobs creator, jobs bill creating 
jobs. And I say it is a part of it. It is not a small part, and 
not an insignificant part.
    People who receive unemployment, Madam Secretary, they have 
to be engaged in trying to find employment. Is that not 
correct?
    Ms. OATES. That is correct, sir. That is the work search 
piece of every state law.
    Mr. CROWLEY. So these folks aren't sitting home and just 
collecting a check. They have to be out looking for work, 
looking for a job. Right?
    Ms. OATES. That is correct.
    Mr. CROWLEY. The most a person in New York State can 
receive is $405 per week. Now, just a little calculating, that 
is $1,620 per month.
    Now, we have gotten, I think, past the folks who were 
steered into improper mortgages. Most of those mortgages have 
been worked out. But now you are really delving into folks who 
have been, unfortunately, at--not due to their own malfeasance, 
but now find themselves chronically out of work. For many 
people half a year, for others a full year, a year-and-a-half. 
Is that not true?
    Ms. OATES. Actually, 46 percent of all the unemployed have 
been unemployed more than 26 weeks.
    Mr. CROWLEY. Now, I am just going to look at a mortgage not 
that one would have today, I'm just going--a homeowner. Someone 
who may have, a number of years ago, had a 5.8 percent mortgage 
rate, which was reasonable not even 10 years ago, 30-year fixed 
mortgage, it comes to about $2,100 per month, just to pay the 
mortgage. Now, at $1,620 per month in New York--and that is for 
a $350,000 home, which, just to clarify for folks, when my 
father was a New York City detective in 1964, the home that he 
purchased in Woodside, Queens, was for $24,250, 3 bedroom, 1 
bath. Today the City of New York says that house, for tax 
purposes, is worth over a half-a-million dollars. That's on a 
detective salary, New York City police officer's salary.
    Now, I am even coming down from that. $350,000, they are 
already into this house now for about 10 years. They have been 
paying $2,100 a month for 10 years. Now they don't have a job, 
they are out of work. These are hard-working folks who were 
working all their lives, continue--they want to be--they want 
to play by the rules. They have played by the rules. They are 
continually looking for work, and they can't find it. And they 
are barely holding on to their home if they are getting that 
$1,620, not to mention food, not to mention gas, not to mention 
possibly tuition, not to mention any extra-curricular 
activities for their children, utilities. Is that not correct?
    Ms. OATES. Absolutely, sir.
    Mr. CROWLEY. So, the giveaway of $1,620 per month barely, 
if they are lucky, can keep them in their home. Is that not 
correct?
    Ms. OATES. That is correct. And don't forget, sir, they pay 
taxes on that $1,600.
    Mr. CROWLEY. Pay taxes on that. So----
    Ms. OATES. So they don't get the whole thing.
    Mr. CROWLEY [continuing]. One more last point. These folks 
are actively out looking for work. Is that--as we said before, 
correct?
    Ms. OATES. In order to be eligible, yes, sir. They have 
to----
    Mr. CROWLEY. They are not really--they can't be down on 
Wall Street protesting, can they?
    Ms. OATES. I don't think so, sir.
    Mr. CROWLEY. No. So----
    Ms. OATES. I don't think they have the money to take the 
Metro.
    Mr. CROWLEY. So what I would suggest to all my colleagues, 
they are not down on Wall Street, protesting, or anywhere in 
this country protesting, because they are too busy out looking 
for work.
    Deny them unemployment insurance, deny them that, maybe 
deny their ability to keep their home and pay for their kids to 
grow up properly, you are going to find them--these are not 
just a rabble who are down at Wall Street, these are not just 
professional protestors. You take unemployment away, and see 
what happens. That is not a threat, it is just a reality, that 
people lose all hope. And I would just suggest that.
    The Hoover Dam, the Triborough--now the Robert F. Kennedy 
Bridge, the interstate highway system was built, not by private 
industry--they may have built it, but contracted out with the 
assistance of government.
    And a great portion of what the President is talking about 
is not just unemployment--this is part of it--but he is talking 
about investment in infrastructure, he is talking about helping 
create employment so that we can help people help themselves 
and keep their homes. And I would just remind all my colleagues 
of that point, and I yield back. Thank you.
    Chairman DAVIS. The gentleman's time has expired. Mr. Reed 
from New York is recognized for five minutes.
    Mr. REED. Thank you, Chairman. Madam Secretary, I 
appreciate you being here today.
    I just wanted to follow up on a piece of your testimony 
that you gave to Mr. Doggett. You said that cutting off 
unemployment insurance would lead to catastrophic situation.
    Ms. OATES. Yes, sir.
    Mr. REED. And in that response you said that the people 
that would be denied benefits would move to long-term 
disability status. What do you mean? Why would they be going to 
long-term disability status?
    Ms. OATES. Well, sir, if you look--and I would be happy to 
get the numbers for your staff--if you look at the increase to 
people who are considered long-term disabled, permanently 
disabled, the number has almost doubled during the recession. 
And I think----
    Mr. REED. Is that because there is more disability out 
there, or they are just applying for whatever benefits, even 
though they may not be entitled to them?
    I don't see a growing populous of disabled Americans in my 
district or around the country. And yet you are telling me, 
from your perspective, what people are going to do is move to 
disability status.
    Ms. OATES. Well, it is----
    Mr. REED. Has their disability status changed, physically?
    Ms. OATES. If I might, sir----
    Mr. REED. Yes.
    Ms. OATES [continuing]. I would propose--and I would 
certainly be open to what you have seen in your population--I 
think many people work 40 hours a week who could be claimed as 
long-term disabled because of long-term illnesses, because of 
permanent disabilities that they have, but they are able to 
work. But if they can't find a job, and they can't feed 
themselves and their families, what other option do they have?
    Mr. REED. Well, and that--see, and that is what I am trying 
to get to, your mind set. Because when I go back to my district 
and I talk to my farmers and I talk to folks, they say, ``We 
can't find people to come work.'' Yet in some of these counties 
we are at 9 percent, 10 percent unemployment.
    Why do you believe that people will choose to do 
inappropriate things in order to put a roof over their heads, 
as opposed to, in my opinion, do what is right, and maybe go to 
work on a farm or in an under-employed status in order to get 
off the unemployment roll? Why do you automatically assume that 
they are going to move to long-term disability, when they are 
not disabled, as your testimony suggests to me? Why do you 
assume that, from the administrative----
    Ms. OATES. I didn't--I don't think I am assuming that they 
are doing anything inappropriate. I said that there are people 
who have disabilities, but have chosen to work. And in a place 
where they can't find work, what other option do they have?
    In terms of farm work and temporary seasonal work, I think 
we have done a much better job working with states to advertise 
those jobs. Quite frankly, I don't think people knew that those 
jobs existed. They didn't know what they were----
    Mr. REED. We would love to work with you to publicize that, 
so we definitely will reach out to you.
    Ms. OATES. Absolutely.
    Mr. REED. I really want to focus--my heart of my 
questioning this morning is I am greatly concerned how we are 
paying for all this. Because when I went back--and this is a 
whole new area for me, okay, so bear with me, maybe I am 
misunderstanding the program, but in New York State the loans 
that were advanced to the state came due, and the governor had 
no choice but to put a surcharge on the employees. And as I 
went back to my district in August, I think it was $27 per 
employee. And a lot of my small business owners were saying, 
``Tom, I am in dire straits.''
    I ran four small businesses. When you impact a business on 
an unforseen bill that impacts cash flow to the extent that 
some of these small business owners were receiving because they 
got a letter from the state saying that they owed this 
surcharge on their employee to pay back the loans that were 
advanced to the state, that is crippling them. They literally 
told me to my face that they were choosing between paying this 
bill for their unemployment surcharge or investing and hiring 
new people.
    So how do you reconcile--how are we going to pay for this 
without having the negative impact of the costs that come with 
it? Because it has to be paid for. I mean this is real money. 
And so how do you say we are helping job creation by extending 
unemployment benefits, when at the same time the bill for that 
is hurting the small business owners that are ultimately going 
to have to pick up the tab that hopefully will put the people 
back to work? Do you understand my concern?
    Ms. OATES. I have to apologize, Congressman. I don't really 
understand what the surcharge is that the state is--and I will 
go back and learn more about----
    Mr. REED. It is the interest-free loans that came due after 
two years that was advanced to the state because of the 
extended unemployment period of time.
    Ms. OATES. Actually, you know, 36 states borrowed.
    Mr. REED. Yes. We are one of them.
    Ms. OATES. You are one of them. That is right. In fact, 
over the course of the time that we have been doing the loans, 
16 states are continuing to borrow as of September.
    So, what they--the reason they have to pay the interest 
back is so that they don't have to raise their FUTA tax.
    Mr. REED. Yes.
    Ms. OATES. They don't lose the credit on that. So it could 
be that what New York did is put on a surcharge so they didn't 
raise the tax.
    Mr. REED. That is exactly what they did. That is exactly my 
understanding. But the small business owners are the ones that 
have to pay that, because--just can't print the money. They 
have to go back to the business owners that are creating--that 
have to pay the bill, that are trying to create the jobs to get 
people off the unemployment rolls. It just doesn't make sense 
to me, why we are doing this.
    Chairman DAVIS. Thank you, the----
    Ms. OATES. Well, the other option would be a permanent 
increase to their FUTA tax, and I think, you know, we could 
work with your staff to figure out what the numbers were, and 
work with Albany to figure it out so I understand it better. I 
apologize that I am not as clear with what--why they are doing 
a surtax----
    Mr. REED. So you would agree raising the FUTA tax would not 
be conducive to job creation.
    Ms. OATES. Oh, absolutely.
    Chairman DAVIS. The gentleman's time has expired.
    Mr. REED. Thank you, Chairman.
    Chairman DAVIS. But perhaps you could answer his question 
in writing and I will submit it----
    Ms. OATES. Absolutely, through the chair. Yes, sir.
    Chairman DAVIS. Thank you. The chair recognizes Mr. 
McDermott for five minutes.
    Mr. McDERMOTT. Thank you, Mr. Chairman. Reading the history 
of unemployment creation in 1935 and the Unemployment Act--or 
the Social Security Act in 1935, the last issue that was argued 
on the last day in the Senate was, ``Is there some kind of 
moral degenerative element to giving people unemployment 
insurance? They will somehow get a weak soul, and they will 
stay in their chair and wait for their unemployment check.'' 
The Republican Party has never believed unemployment insurance 
was good.
    Now, I would like you to explain--my colleague can't seem 
to get the picture--I want you to explain----
    Mr. REED. Would the gentleman yield for just one second?
    Mr. McDERMOTT. Yes.
    Mr. REED. I would just like to remind the gentleman that he 
and I sponsored two of the extensions together for 
unemployment, based on your last remark. I yield back.
    Mr. McDERMOTT. I understand. I would like you to explain to 
the committee the term counter-cyclical, the idea that you put 
money into the fund when things are good, so that when things 
are bad you have money to draw out. And what happens to states 
who, when things are good, say, ``Well, let's drop the tax 
because we don't need the money, look, we've got all this money 
in the pot,'' and then they wind up having to borrow.
    Ms. OATES. Congressman, you are exactly right. I mean the--
some states were just hit extraordinarily hard. And no matter 
what they would have done, states like Michigan probably would 
have been hit, no matter what. But the vast majority of the 
states, unlike your home state of Washington, did lower 
business taxes, you know, without thinking about what would 
happen, and let their trust funds get disproportionately low.
    I think that is the concern that the Department of Labor 
has with funding any of these innovations with trust fund 
money. We think trust fund money should be sacrosanct. It 
should be held there for the future, and not used to fund novel 
ideas. That is why we think the President is right in asking 
for additional money to fund these innovations that we would do 
as voluntary options under UI.
    Mr. McDERMOTT. The thing that I would like you to also talk 
about is the National Bureau of Economic Research has recently 
done a study on this question about the moral degeneracy that 
comes from unemployment insurance. What is their conclusions of 
that report that were just released?
    Ms. OATES. Yes. They basically find it is completely 
unfounded in research. There is nothing to say that there is 
anything about unemployment insurance that depresses people's 
desire to work, or anxiousness to work.
    Mr. McDERMOTT. And the plan--the Georgia Works plan, how 
did that work? Did it--was it successful?
    Ms. OATES. Well, actually, Congressman, as I said before 
you got here, they didn't use our money, so we don't have a lot 
of good data on it. They used other state money. And quite 
frankly, right now they are running out of money, and the 
program is kind of dissolving.
    In terms of successful, looking at their outcomes in 
Georgia against regular outcomes using just regular Wagner-
Peyser services, they did get about--a third of their people 
did find jobs. But if you just used Wagner-Peyser services, 
twice as many people got jobs.
    Mr. McDERMOTT. And today what is the number of people 
looking for jobs, as compared to the number of jobs available?
    Ms. OATES. Sixteen million full-time unemployed, and 
another six to seven million who are working part-time who are 
looking for full employment, and about three million jobs 
available.
    Mr. McDERMOTT. So you are talking 22 million people looking 
for 3 million jobs?
    Ms. OATES. That is correct.
    Mr. McDERMOTT. So, even in the best of circumstances, there 
are going to be a lot of people who are going to be in the 
situation that Mr. Crowley was describing.
    Ms. OATES. Especially if they are in urban areas or rural 
areas, they are mostly high-impact areas.
    Mr. McDERMOTT. Now, this is a little out of your 
neighborhood, but if you are an unemployed worker, and you have 
reached 99 weeks, you have got nothing left.
    Ms. OATES. That is correct.
    Mr. McDERMOTT. And you have lost your health care benefits. 
What are you entitled to, as an American in this society, 
besides food stamps?
    Ms. OATES. Food stamps, possibly you could go to the 
housing authority and get a housing voucher, but there is a 
long line in most areas for that. And the charity of your 
faith-based or community-based organization.
    Mr. McDERMOTT. So we are basically saying to the middle 
class that have been unemployed for how many weeks, you said? 
What is the percentage?
    Ms. OATES. Forty-four percent have been unemployed more 
than twenty-six weeks.
    Mr. McDERMOTT. So you now have no more unemployment 
benefits, and you are middle class yesterday, and today you are 
with food stamps.
    Ms. OATES. Correct. And kids in college with student debt, 
and kids going to K-12 school that need books and supplies. 
Absolutely, sir.
    Chairman DAVIS. Thank you. The gentleman's time has 
expired. The chair would like to recognize Mr. Boustany from 
Louisiana for five minutes.
    Mr. BOUSTANY. Thank you, Mr. Chairman. Welcome. Good to see 
you.
    I have some concerns about the static nature of the 
statistics that the gentleman from Washington laid out. And I 
think the job market is much more dynamic than what the 
statistics would lay out.
    But, you know, in thinking about the purpose of 
unemployment benefits, clearly they are designed to provide 
financial support while an individual looks for another job. 
That is really the purpose. And none of us on this side of the 
aisle will deny the importance of the program for those who 
find themselves stuck in a situation--I mean we have all 
supported the extension of this program, I know we have worked 
with our chairman to do this.
    But consistent with the purpose of the benefit, should 
there be a requirement that UI recipients must search for work 
every week, with only very few limited exceptions, perhaps for 
those expected to return to a former job? I mean is that----
    Ms. OATES. Congressman, each state law is slightly 
different. But every state law has a requirement for work 
search.
    Mr. BOUSTANY. Well, I know there is a requirement in the 
federal extended benefits program. That is correct, right?
    Ms. OATES. We follow state law with that. Yes, sir.
    Mr. BOUSTANY. Right, right, right. And--but with regard to 
the state UI program which pays benefits when people first 
become employed, I mean is there a requirement?
    Ms. OATES. Yes, sir. Every state law has a requirement on 
their initial benefits, as well.
    Mr. BOUSTANY. Could you provide us where in statutes that--
--
    Ms. OATES. In each state law, sir?
    Mr. BOUSTANY [continuing]. Is the case? Because I am--I 
don't think that is the case.
    Ms. OATES. Well, we work closely with Louisiana and 
Commissioner Isen. We know what the work search is in 
Louisiana. So we can provide you that state law. I am happy to 
provide whatever it is to other committee members.
    But it is a requirement for active beneficiaries to work--
to search for work. In some states the requirement has a 
numerical, so you have to have at least three evidences of 
looking for work. In some states it is as small as one 
evidence. In many of them you do it electronically. In some 
states you do it by returning a card. And in some states, you 
still, at certain points, have to come in and, face to face, 
meet with a----
    Mr. BOUSTANY. Because bottom line is we need to make sure 
the program is working. I know someone earlier asked the 
question about overpayments. And, you know, being chairman of 
the Oversight Subcommittee on Ways and Means, I am concerned 
about making sure these programs are working to the best that 
we can assure, you know, within the law that they are.
    And I am very concerned that the work requirement issue is 
something we need to probably take a closer look at to make 
sure that, you know, this is really the case. Because I mean I 
have heard a lot of anecdotal evidence back home, talking to 
employers, where someone will call and ask, ``Do you have any 
job openings?'' And they will say, ``Well, yes, why don't you 
come in, send a resume, come visit with us,'' and they will 
say, ``Oh, no, I just had to do this because it meets the 
requirement under the unemployment insurance benefit.''
    And I want to make sure that we are doing what we can to 
make sure that this program is working, that the intent of 
providing a bridge to getting people back into the workforce is 
what is really happening. And, I mean, shouldn't the work 
requirement be at least as strong in week 1 as it is in, you 
know, week 99?
    I mean there should be an incentive all the way through 
this process to get people to really do the job of getting out 
there and looking for work. Because there are jobs. I mean I 
think we have got a dynamic labor market, even with high 
unemployment and all the problems. I talk to employers all the 
time who are struggling to find workers.
    In my state, in Louisiana, we have got a lot of folks, a 
lot of businesses related to agriculture, farmers. Mr. Reed was 
mentioning this earlier. We have got seafood processing plants. 
They are looking for jobs [sic]. They are coming to me and 
saying, ``Can you do something about the H2B visa program? We 
need more workers.'' And yet we have got, you know, high 
unemployment of Americans here in this country.
    There is a disconnect, and somehow we have got to get to 
the bottom of it. And I think at the heart of this could be 
understanding what steps we need to take to do the best we can 
with this work requirement. And I would like your comments.
    Ms. OATES. Well, you know, this is a balance. As I said, we 
do this program in collaboration with the states. And I think 
all of us have a great respect for the states' critical role in 
this program.
    So, rather than going in and saying, you know, we are going 
to overrule state law on work search, what this proposal has 
done is mandated for anybody getting EUC, when you decide to 
extend it, what--we will mandate both the re-employment 
assessment and the re-employment services. That gets to the 
same thing as work search. It means that, face to face, 
somebody has got to come in, not just handing in a card, not 
just mailing something in. They have got to talk to somebody, 
they have got to understand why it is important to take a job 
when it is offered, because we don't know what the future is 
going to deliver.
    So, I think if we talked about this, Congressman, we would 
probably agree that, right now, the best role we could take is 
to make sure that we are really mandating the RES and the REA. 
And, in the future, in terms of what this committee and the 
Senate would choose to do in underlying UI law, if you wanted 
to look at creating some kind of national standard for a work 
search requirement, I think we would be willing to provide you 
technical assistance on that, and work with NASWA.
    Chairman DAVIS. Great, thank you very much. The----
    Mr. BOUSTANY. We may need to look at that. Thank you.
    Chairman DAVIS. Thank you. The gentleman's time has 
expired. Secretary Oates, thank you very much for joining us 
today.
    Ms. OATES. Thank you. Thank you so much, Chairman.
    Chairman DAVIS. We look forward to a continued dialogue. 
And that will conclude our second panel. If Members have 
additional questions, they will submit them to you in writing, 
and we would appreciate your responses for the record. This 
concludes the second panel. Thank you.
    [Pause.]
    Chairman DAVIS. For our third panel we are going to be 
hearing from Maren Daley, Executive Director of Job Service 
North Dakota; Dawn Deane, an unemployed person from 
Philadelphia; Don Peitersen, Director of Unemployment 
Insurance/Workforce Project at the American Institute for Full 
Employment; and Chris McConnell, workforce consultant with 
AlliedBarton Security Services.
    Before we go to--one special introduction. I would like to 
make a statement. We have been informed from the whip's office 
there is going to be a very long series of votes that is going 
to go in the next 15 to 20 minutes. I think we are going to 
have about 20 to 25 minutes before we go. I would rather not 
having you all standing in limbo for 90 minutes, while the 
floor process works itself out.
    Because of this, if we have time for questions we will 
begin questions. But what I would like to ask your indulgence 
is if our Members--and I know several will have questions, 
including me--if we could submit those to you in writing, and 
those could be responded to in writing, and we will make sure 
that they are part of the permanent record on this. And I 
appreciate very much your time coming in to deal with this very 
critical issue. So thank you.
    With that, before we proceed with testimony, I would like 
to recognize Mr. Berg to introduce his colleague from his home 
state.
    Mr. BERG. Well, thank you, Mr. Chairman. I would like to 
introduce Maren Daley, who is our first witness here on this 
panel. And she is executive director of Job Service for 
unemployment in North Dakota. It is a cabinet-level department. 
She administers these programs. In fact, we worked together a 
long time--for the last 20 years--and so I am just excited to 
have her here.
    And kind of again, my hope is that we will pull some of 
these ideas at the state level that are working at the state 
level, and try and create a federal program that creates 
incentives for the right kind of things to get people back to 
long-term work. So thank you, Mr. Chairman.
    Chairman DAVIS. Thank you very much. Ms. Daley, you can 
proceed with your testimony.

 STATEMENT OF MAREN L. DALEY, EXECUTIVE DIRECTOR, JOB SERVICE 
                          NORTH DAKOTA

    Ms. DALEY. Thank you. Chairman Davis and Ranking Member 
Doggett and Members of the Subcommittee on Human Resources, 
thank you for the opportunity to testify on the President's 
proposals to help the long-term unemployed.
    As Congressman Berg introduced me, I am Maren Daley with 
Job Service North Dakota, the state workforce agency that 
administers the unemployment insurance, labor exchange, and 
labor market information services.
    The Workforce Investment Act, Wagner-Peyser, and 
unemployment insurance programs are fully integrated within Job 
Service's one-step career centers. This seamless delivery 
system improves the transition of UI claimants to re-
employment.
    A basic principle embraced by all states is rapid, 
effective re-employment of unemployed workers is critical to 
the economic well-being of individuals, families, and employers 
which, in turn, support the local and national economies.
    I am encouraged to see a variety of options included in the 
President's proposal, but I encourage even more flexibility in 
this realm. By allowing maximum flexibility, states are able to 
implement strategy specific to the needs of their state, 
ultimately providing for faster economic progress with a more 
efficient use of tight resources.
    North Dakota's low unemployment continued job and wage 
growth among many other factors make North Dakota unique. 
However, they do not shield us completely from re-employment 
struggles. While we have thousands of good jobs available, the 
skill sets of the worker base and, in many cases, the location 
of these individuals, do not always correspond with the 
available jobs.
    Examples of our re-employment successes are readily 
available, and I would like to outline one of the more 
successful cost-effective approaches we have taken. I should 
note that this program could not have been undertaken without 
federal funding resources. And this is the type of situation in 
which the President's proposal and each state's intimate 
knowledge of the workforce needs of their own state can 
converge.
    There is strong competition for jobs available in North 
Dakota. And one of our primary goals is to help UI claimants be 
competitive contenders for these jobs. To this end, we have had 
excellent results in the past with our re-employment 
eligibility assessment program. REA focuses on individual case 
management services, and creates an environment of coaching and 
support for discouraged unemployed workers.
    Springboarding off the success of the REA program, we 
developed a series of workshops focused on intensive re-
employment activities and focused individual activities. These 
workshops were funded by Wagner-Peyser RES dollars through the 
American Recovery and Reinvestment Act. The workshops were four 
days long, and required a major time commitment from UI 
claimants.
    The workshops consisted of one day devoted to basic 
computer skills training and three days addressing skills 
identification, exploration of jobs to which the claimant's 
skills would be transferrable, effective job searches, writing 
good resumes and cover letters, and interviewing. All 
participants completed the workshop with an updated resume, a 
new understanding of how their skills could be transferred to 
another position, and with the confidence gained through a 
practice interview exercise.
    We have solid statistics proving the success of the 
workshops. The statistics showed a significant reduction in the 
time that the workshop participants spent on unemployment, 
compared to the overall UI claimant duration in North Dakota. 
During the same period, the average claimant duration was 11.28 
weeks. While this number is good compared to the rest of the 
country, the individuals that attended the workshops returned 
to work, full-time work, in 7.32 weeks, on average. This is an 
improvement of almost four weeks, and this represents 
significant savings to the UI trust fund.
    Many things have been tried on a national basis. Some of 
them have been successful, and some of them not. In North 
Dakota, our UI claimants have greatly appreciated the 
availability of EUC benefits. These benefits have been a game-
changer for some. However, it could be argued a large portion 
of the EUC benefits paid in North Dakota could have been more 
effectively spent on focused re-employment efforts.
    Typically, under federally-funded extended benefit 
programs, a minimum work search requirement exists. However, 
the 2008 EUC program does not require this, and instead 
provides that state law and policy regarding work search 
requirements be followed.
    In North Dakota we have a large seasonal workforce that 
faces temporary lay-offs over the winter, particularly in the 
construction industry. Because of this, our UI laws and 
policies are different than that would be seen in many other 
states. What this has led to is 24.75 million, or 43 percent of 
the extended benefits paid in North Dakota have gone to 
eligible UI claimants who will be returning to employment after 
a temporary lay-off. In essence, these individuals have not 
faced a change in their normal employment status.
    I have submitted my written testimony. Mr. Chairman, I see 
my time is up. And I would invite you to check out the written 
testimony----
    Chairman DAVIS. Yes.
    Ms. DALEY [continuing]. For a unique cost-effective, 
simplified work-share program that North Dakota has used. Thank 
you.
    [The prepared statement of Ms. Daley follows:]

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    Chairman DAVIS. We appreciate your insights, especially the 
written testimony. It was quite illuminating. And thanks for 
your hard work up there.
    Now the chair recognizes Ms. Deane for her remarks.

 STATEMENT OF DAWN DEANE, UNEMPLOYED WORKER FROM PHILADELPHIA, 
                          PENNSYLVANIA

    Ms. DEANE. Chairman Davis, Ranking Member Doggett, and 
distinguished Members of the Subcommittee, thank you for 
inviting me here today. My name is Dawn Deane, I am a resident 
of Philadelphia, Pennsylvania.
    Since June of this year, and like so many others these 
days, I am unemployed through no fault of my own, and 
supporting myself and my nine-year-old daughter on unemployment 
insurance. Too often these days, unemployed Americans like me 
are reduced to either statistics or stereotypes. We don't have 
names and faces. We are either 1 of 14 million who are out of 
work, or we are lazy people, happy to sit home collecting 
unemployment, rather than actively looking for jobs.
    But I am not just a statistic, and I am not lazy. For the 
past 20 years, I have worked in the field of human resources, 
and I have held my 3 previous jobs for 7, 8, and 3\1/2\ years. 
In spite of all my hard work, right now I am unemployed. 
Thankfully, I am able to receive unemployment insurance 
benefits, which are what is sustaining me and my daughter, 
while I diligently look for new work.
    As a human resources professional, I am very aware of how 
to diligently and strategically search for a new job. And I am 
doing just that. Like tens of millions of other Americans each 
day, I engage in a thorough and multi-faceted search for 
employment. And I have been doing so since I lost my job in 
June.
    I have registered my resume with all of the major websites, 
and I have applied for approximately 40 jobs so far. In 
addition, I have attended four different career fairs since 
being laid off. And through them I have applied for about 50 
additional jobs. I have yet to hear from a single employer from 
any of these applications.
    I also understand the importance of networking, so I have 
reached out to all of my friends and former colleagues, asking 
for their assistance in finding a new job. I have gone to my 
local one-stop career center to look for open jobs. I have 
visited and/or contacted the offices of city council and state 
representatives to see if they have any resources for their 
constituents who are searching for jobs.
    I am not only applying for jobs in my field, I am looking 
more widely for all sorts of administrative jobs, just because 
I want to work and support my daughter and myself.
    Because I know that I am not the only one in this 
situation, and because I have skills to offer others who are 
struggling with unemployment, I also volunteer at a local 
community center and church, helping others with their job 
searches.
    Finally, I am auditing a course at Villanova University 
that will prepare me to take an exam to receive a professional 
human resources certification, hopefully enhancing my value to 
the jobmarket.
    Right now I thank God for unemployment insurance, because 
it is allowing me to keep up with my mortgage and provide the 
bare necessities of food and transportation. I lived well 
within my means when I was working. But even our modest 
lifestyle is a challenge now. I could not afford to keep up 
with health insurance right now. My daughter and I have no 
coverage, which is very frightening.
    I am working with a housing counselor to see if I can 
restructure my mortgage and lower the monthly payments. I have 
applied for a subsidy to pay my monthly gas bill and electric 
bills. I have had to stop my daughter's extra-curricular 
activities, like dance class, which she loved, and was not able 
to buy many back-to-school supplies or clothes for her. And I 
am looking for other ways to continue to scale back on our 
expenses, even though I have already eliminated everything that 
isn't strictly necessary already.
    Until I find new work, unemployment insurance is our 
necessary source of income. My state benefits began in June, 
and will end in December. And while I hope that I have a new 
job before the end of the year, the absolute lack of any 
success I have had so far really worries me.
    Thus, while I do not want to have to receive federal 
unemployment insurance benefits, with the unemployment rate so 
high right now I just don't see how Congress can even think 
about letting these important programs expire. If they do, my 
daughter and I and millions of other families like us might 
have no safety net, no life line in the new year. Quite simply, 
reauthorizing these important federal unemployment insurance 
programs is simply the single most important thing for this 
Congress to do right now, along with making some real efforts 
to create good jobs for millions like me, who just want to 
work.
    Thank you for your time today.
    [The prepared statement of Ms. Deane follows:]

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    Chairman DAVIS. Thank you very much, Ms. Deane.
    Mr. Peitersen.

STATEMENT OF DON PEITERSEN, DIRECTOR OF UNEMPLOYMENT/WORKFORCE 
        PROJECT, AMERICAN INSTITUTE FOR FULL EMPLOYMENT

    Mr. PEITERSEN. Chairman Davis, Ranking Member Doggett, and 
Members of the Committee, thank you for this opportunity to 
testify. The American Institute for Full Employment is a non-
profit think tank. We consult with states and specialize in 
wage subsidy designs similar to the Bridge to Work program. We 
applaud the Obama Administration and the Republican leadership 
for their bipartisan interest in turning an unemployment 
support into an employment support.
    This testimony addresses two pieces of the legislation, the 
Bridge to Work and state flexibility. Briefly, we think Bridge 
to Work has great promise, but should be modified as follows: 
eliminate the employer mandate; simplify it by letting 
employers pay the full wage; increase the subsidy from 8 to 13 
weeks; let states help claimants earlier than 6 months; give 
states flexibility, but require return on investment; extend 
Bridge to Work to the regular UI program.
    Half of our regular UI claimants go jobless for nearly 6 
months, and three quarters of our emergency benefits claimants 
went jobless for another 10 months, even though we spent $50 
billion in emergency benefits alone in the last year trying to 
help them get back on their feet.
    EUC wages claims averaged over $9,000, a wage subsidy costs 
under $4,000. The math is both obvious and compelling. We have 
studied UI's specific wage subsidy programs, plus Georgia 
Works.
    First was Oregon's Jobs Plus program, operated for more 
than a decade. The program helped over 10,000 claimants. Over 
80 percent of the participants landed jobs and saw an average 
wage gain of over 15 percent. Georgia Works is an employer-
based training program that has been replicated in a handful of 
states. Claimants keep their benefit check while volunteering 
with an employer for up to 8 weeks, for a minimum of 24 hours 
per week. Over 10,000 job seekers have participated.
    Texas Back to Work, launched in 2010, has received the U.S. 
DoL's innovation award for its program design. It is a subsidy 
of $2,000 over 16 weeks. It has served over 20,000 claimants 
and over 3,000 employers. Sixty-three percent of the job 
seekers have been successfully placed. Earnings retention was 
99.4 percent. And the program has been replicated in Utah and 
Nevada. These wage subsidy programs succeed because they 
provide real training in a real job, allow job seekers to gain 
a foot in the door. They are cost neutral or cost savers, and 
are economic development programs. Over 80 percent of the 
employers said it helped with cost capacity and/or expansion.
    Based on our research in these programs, we offer four 
recommendations for Bridge to Work.
    One, employers have repeatedly told us that simplicity 
makes or breaks a program. Bridge to Work has an employer 
mandate that none of the four state UI initiatives includes. It 
requires employers to hire claimants within 24 weeks of program 
participation. But the core of any wage subsidy program is to 
encourage employers to take a chance on a job seeker that they 
would not otherwise hire. Our experience suggests that abuse is 
rare. We recommend eliminate the employer mandate to hire, and 
give states the flexibility to design program safeguards based 
on their own state needs.
    Two, increase state flexibility to allow the wage subsidy 
to be up to 13 weeks, to match the 90-day probationary period 
used by many employers. This allows participants to learn 
higher-skilled jobs, and it gives state staff more flexibility 
to match workers with opportunities.
    Three, eliminate the complication of two payers for the 
worker by paying the subsidy directly to the employer, and 
requiring the employer to give the worker a paycheck like any 
other new worker.
    Four, the net cost of a wage subsidy program can determine 
whether it becomes a legacy or a loser. Timing of placement 
with the employer is key. The earlier the placement, the more 
weeks of benefits that can be saved. Unfortunately, the 
earliest Bridge to Work would start is about six months after a 
claimant lost their job, because that's when EUC begins. Early 
placement also helps claimants avoid costly unemployment spells 
that drain their savings. We recommend you allow states to 
offer Bridge to Work to claimants earlier than six months.
    The Jobs Act includes two other provisions allowing states 
innovative program authority. We support state program 
flexibility, and recommend that when proposals are vetted, that 
return on investment is a requirement.
    We also would allow--ask you to allow states to use regular 
benefits to fund a Bridge to Work program for their regular UI 
claimants with the improvements noted here.
    We estimate that a modified Bridge to Work initiative can 
provide opportunities to 300,000 to 400,000 long-term UI 
claimants each year and, in doing so, save the Federal 
Government over $1.5 billion and states $270 million a year. It 
is important not to miss the enormity of the opportunity we 
have here. Thank you.
    [The prepared statement of Mr. Peitersen follows:]

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    Chairman DAVIS. Thank you very much, Mr. Peitersen.
    Mr. McConnell.

      STATEMENT OF CHRIS McCONNELL, WORKFORCE CONSULTANT, 
                 ALLIEDBARTON SECURITY SERVICES

    Mr. MCCONNELL. Thank you for the opportunity to testify 
today. I would like to offer some observations from a private 
sector employer's experience working with many local workforce 
agencies to recruit folks on UI and other federal benefits.
    I provide general consulting services and project 
management to public, private, and non-profit clients in the 
area of housing, human services, and workforce development. For 
the past four years, AlliedBarton Security Services has been 
one of my clients. AlliedBarton has over 50,000 employees, and 
100 offices located across the United States. As such, 
AlliedBarton is a significant entry level employer in scores of 
local labor markets.
    We recruit almost exclusively for security officers. These 
are full-time jobs with benefits, including health care after 
90 days. We also promote from within, and can provide a clear 
career ladder from security officer to supervisory and 
management positions. My role with AlliedBarton is to help them 
make links with local workforce agencies, and identify policies 
and programs that help us recruit good staff and, whenever 
possible, defray the costs of recruitment, staff training, and 
wages.
    In light of our experience in this realm, I would like to 
share just a couple of thoughts on our interaction at the local 
level over the past four years.
    Short-term funding windows can be very problematic to 
administer down on the ground. And in this respect, I would ask 
you to be mindful of how difficult the process can be for 
getting funds from here through the state capitals and down to 
the counties and cities.
    Two weeks ago I was in a meeting just outside of Detroit, 
and they wanted us to hire 20 people in 10 days, because one of 
their on-the-job training budgets for displaced workers on UI 
would be up at the end of the month. We would have loved to, 
and we will eventually hire those folks. But it might take us a 
couple of months or more, depending upon what our recruitment 
flow is like.
    Another issue is how certain funding streams are only 
allowed to be applied to certain groups of people, like those 
with a longer duration on UI. As an employer, we need to see 
the people that best fit our job opportunities, regardless of 
when they might have lost a job, or what their benefit status 
might be. So it is frustrating for all of us down on the ground 
when a local job developer has to tell my recruiter that, ``No, 
we can't get some help with the training costs on these folks, 
because they have only been out of work for X number of months, 
as opposed to this other group of folks who have been out of 
work Y number of months.''
    Of all the programs we have worked with across the 
country--and we have worked in New York, Pennsylvania, Ohio, 
Michigan, Texas, Illinois, and many, many others, wage subsidy 
is the best one that we found. Incentives like wage subsidy do 
exactly what they are meant to do. They give an employer a 
reason to look a little harder at a particular individual. Let 
me be clear. Like most employers, we have plenty of applicants 
these days, in some districts as many as 30 for each job 
opening. So if the federal or local government wants us to 
focus on particular folks, well, these incentives are a good 
place to start.
    Plus, when we generate revenue from an area of our business 
where we had never expected to generate revenue, this improves 
our bottom line, makes us more competitive, which, in turn, 
makes it easier for us to grow our business and hire more 
people. Hopefully, via these same programs.
    Wage subsidy programs tend to be cleaner. We hire, we pay 
our employees the rate and duration of the subsidy, as 
previously established. There is nothing that gets in the way 
of the employer-employee relationship. And this is key for us, 
as I would imagine it is for many employers. We like hiring 
people. We want to pay them a prevailing wage, train them 
effectively, and hold them accountable for their work. This is 
what we do, and we are good at it. Wage subsidy respects that 
relationship like no other program available.
    And from a less self-interested perspective, I would 
maintain that another strength of wage subsidy is that it is a 
post-employment program. The government funding comes through 
in direct relation to the money that the former UI recipient is 
earning.
    Lastly, I would comment on any program models that you're 
looking at that keep folks on benefits and also try to put them 
in the workplace. For my client, AlliedBarton, any program like 
this is a no-go proposition. Because, from a legal standpoint, 
we can't have anybody working or performing job functions that 
isn't a direct employee. And I would imagine that we are 
probably not the only employer that would say something like 
that.
    Thank you very much.
    [The prepared statement of Mr. McConnell follows:]

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    Chairman DAVIS. Thank you very much, Mr. McConnell. You may 
have heard the buzzer several minutes ago during Mr. 
Peitersen's testimony. That signals the beginning of this very 
long vote series. Rather than hold you hostage for about 90 
minutes, I think what we are going to do--as I mentioned, the 
possibility at the beginning of your testimony--we will be 
submitting questions to you for the record. We would appreciate 
a response back in writing.
    I look forward to a continued dialogue on this critical 
issue. Ranking Member Doggett and I are both personally 
committed to finding creative ways to address both the 
inefficiencies and the process problems within the government 
space, and ways to help folks find a path back to work very 
quickly.
    And I appreciate your testimony today, your time invested 
in this. This will be an ongoing dialogue. And again, thank you 
very much.
    This concludes the hearing today.
    [Whereupon, at 10:35 a.m., the subcommittee was adjourned.]
    [Questions for the Record follow:]

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    [Submissions for the Record follow:]

                       Aaron Benjamin, Statement

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                    American 99ers Union, Statement

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                          TrueBlue, Statement

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