[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
IMPLEMENTATION OF 2012 UNEMPLOYMENT INSURANCE REFORMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 16, 2013
__________
Serial No 113-HR03
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON HUMAN RESOURCES
DAVID G. REICHERT, Washington, Chairman
TODD YOUNG, Indiana LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania JOHN LEWIS, Georgia
TIM GRIFFIN, Arkansas JOSEPH CROWLEY, New York
JIM RENACCI, Ohio DANNY DAVIS, Illinois
TOM REED, New York
CHARLES W. BOUSTANY, JR., Louisiana
C O N T E N T S
__________
Page
Advisory of April 16, 2013 announcing the hearing................ 2
WITNESSES
Bill Starks, Director, Unemployment Insurance Division, Utah
Department of Workforce Services, Testimony.................... 7
The Honorable Tommy Williams, Texas State Senator, District 4,
Testimony...................................................... 17
Rich Hobbie, Executive Director, National Association of State
Workforce Agencies, Testimony.................................. 25
Larry Kidd, Principal/Chief Executive Officer of Reliable
Staffing Services and RSS Professional, LLC, Testimony......... 39
Judy Conti, Federal Advocacy Coordinator, National Employment Law
Project, Testimony............................................. 49
IMPLEMENTATION OF 2012 UNEMPLOYMENT INSURANCE REFORMS
----------
TUESDAY, APRIL 16, 2013
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.
The subcommittee met, pursuant to call, at 2:25 p.m., in
room 1100, Longworth House Office Building, the Honorable Dave
Reichert [Chairman of the Subcommittee] presiding.
[The advisory of the hearing follows:]
HEARING ADVISORY
Chairman Reichert Announces Hearing on the Implementation of 2012
Unemployment Insurance Reforms
1100 Longworth House Office Building at 2:00 PM
Washington, April 9, 2013
Congressman Dave Reichert (R-WA), Chairman of the Subcommittee on
Human Resources of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing reviewing the implementation
of reforms to the unemployment insurance system contained in Public Law
112-96, The Middle Class Tax Relief and Job Creation Act of 2012. The
hearing will take place at 2:00 P.M. on Tuesday, April 16, 2013, in
room 1100 of the Longworth House Office Building.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include public and private sector experts on
unemployment benefits and 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 March 2013 (the most recent official data), the U.S.
unemployment rate was 7.6 percent, with 11.7 million individuals
unemployed, of whom 4.6 million were long-term unemployed--defined as
unemployed for 27 weeks or longer. As of the week ending March 16,
2013, approximately 5.2 million individuals were collecting State or
Federal unemployment benefits.
The Federal-State Unemployment Insurance (UI) program, created by
the Social Security Act 1935, assists unemployed individuals by
offering weekly unemployment benefit checks while they search for work.
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 laws enacted since 2008 to provide
Federal extended benefits on a temporary basis, the maximum number of
weeks of total unemployment benefits payable per person grew by late
2009 to a record 99 weeks, including up to 73 weeks of federally-funded
benefits. Today, long-term unemployed individuals in most States are
eligible for a maximum of 63 weeks of total benefits. From July 2008
through December 2012, a total of $208 billion was spent on Federal
extended unemployment benefits, with most of that cost supported by
general revenues.
On February 22, 2012, the President signed P.L. 112-96, The Middle
Class Tax Relief and Job Creation Act. This legislation extended and
reformed the Federal Emergency Unemployment Compensation (EUC) program
for the remainder of 2012, which was subsequently extended through
December 2013. This legislation also included landmark reforms to the
permanent unemployment program, such as creating new job search
requirements for Federal benefits, permitting States to have new
flexibility to seek ``waivers'' to promote pro-work reforms, allowing
States to screen and test certain UI applicants for illegal drugs,
requiring ``reemployment eligibility assessments'' (REAs) for the long-
term unemployed, and requiring States to recover more prior
overpayments of UI benefits. The initial implementation of these 2012
reforms was previously explored during a Human Resources Subcommittee
hearing in April 2012.
In announcing the hearing, Chairman Reichert said, ``Fourteen
months ago, Republicans and Democrats in the House and the Senate
agreed on commonsense reforms to the unemployment insurance system
designed to help more Americans return to work sooner. The President
signed those policies into law, but the administration has since been
selective in implementing some policies and has created barriers to
successfully helping states take action on other policies. This hearing
will help us evaluate how the administration has implemented the 2012
reforms and determine what we can do to help more Americans collect
paychecks instead of unemployment checks.
FOCUS OF THE HEARING:
The hearing will focus on the implementation of reforms to
unemployment benefits enacted in P.L. 112-96, The Middle Class Tax
Relief and Job Creation Act.
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Chairman REICHERT. Welcome. This hearing is now in order. I
want to welcome you to today's hearing on the progress of
reforms enacted last year designed to help more unemployed
individuals, especially the long-term unemployed, get back to
work.
Reforms enacted in 2012 were aimed at connecting those in
need with the resources necessary to succeed. Today we will
take a look at what the administration and States are doing to
implement these reforms. As we saw in the most recent
disappointing jobs report, there is much more that needs to be
done to help the unemployed get back to work. Overall, we are
still 2.5 million jobs short of where the President predicted
we would be at the end of 2010 under his trillion-dollar 2009
stimulus plan.
Too many people are out of work. Currently, 4.6 million
people, or 40 percent of the unemployed, are without a job for
6 months or longer, an unprecedented level prior to this
administration. Sadly, many Americans who have fallen on hard
times find themselves without the guidance or resources needed
to identify work opportunities.
When you take into account the unaccounted millions who
have lost hope and given up on looking for work altogether, the
official unemployment rates skyrockets to over 11 percent. This
is unacceptable. We cannot sit idly by when people need help
finding jobs. We must do more to lift people up and instill
hope in those who need it most, so no one falls through the
cracks.
Solutions exist and we can make changes that lead to more
hope, opportunity, and employment. That is why, 14 months ago,
Republicans and Democrats agreed on commonsense reforms, which
President Obama signed into law, to help more Americans get
back to work and provide for their families. Under those
reforms, for the first time States can apply for waivers to pay
people for working or getting training to go to work instead of
simply receiving an unemployment check. However, instead of
helping States test innovative ways to help people get back to
work, the Department of Labor issued 24 pages of grueling
application requirements, and actually a longer application
process than applying for health care under the new health care
law. These requirements have completely discouraged States from
applying altogether.
Even though a senior Department of Labor official testified
before this Subcommittee last April indicating that DOL would
consider revising their requirements if no States applied, the
Department has yet to make any changes to simplify things for
States trying to help people find work. The 2012 reforms also
now allow States to screen and test unemployment insurance
recipients for illegal drugs, starting with those who lost
their job due to drugs or who need to pass a drug test to land
a new job. Such reforms ensure that those who break the law
through substance abuse are not receiving benefits over law-
abiding citizens truly in need of help.
It is interesting that while DOL was able to issue 24 pages
of lengthy, demanding regulations for waiver applicants, the
Department has yet to issue a single page of guidance to States
that would allow them to screen for drug tests. In addition to
helping people find work, the 2012 reforms also ensure that all
long-term unemployment benefit recipients are actively engaged
with the States to find work, and that States must check on
recipients to determine what services and activities they need
to get back to work.
As we will learn in today's hearing, this type of
meaningful interaction between States and recipients helps
struggling individuals discover opportunities for success. A
year ago, this subcommittee met to discuss the early
implementation of these commonsense reforms, but we are left
with more questions than answers, many of which are still
outstanding.
Today, we are checking back in. We are hearing from the
State and local officials and employers who have been directly
involved in the implementation of these reforms. But mostly we
are looking for guidance on what we can do to help more
Americans collect paychecks instead of unemployment checks. All
Americans deserve answers about how these policies are working
and what else we can do to help.
And, Mr. Doggett, we recognize you for 5 minutes to make
your opening statement.
Mr. DOGGETT. Thank you so much, Mr. Chairman. You will
recall that the last time this Subcommittee got together, it
was because of criticism that the administration was just
offering too much leniency and flexibility to the States, and
today's hearing seems to focus on the administration offering
too little flexibility for waivers from another program.
Sometimes I get the feeling that for our Republican colleagues
the porridge is either too hot or too cold but never just right
so long as it is President Obama's administration that is doing
the serving.
Rather than refight all of our past battles, I believe that
we should be focused on what policies we have adopted in the
past that have been effectively implemented to help unemployed
Americans and what else can we do to advance that goal in the
future.
Unfortunately, as we meet today, there are about 90,000
Texans who are among about 2 million Americans who have had or
will have their unemployment insurance check cut by about 10
percent, which is a pretty good hit for someone who is out
looking for a job and trying to survive with their family in
the meantime. And really those who are unemployed today in
America have faced a bit of a triple whammy. They get their
unemployment check cut, they are subject to cuts in job
training and in employment services, which are being reduced at
the very time they need help finding work, and according to the
Congressional Budget Office, the overall effect of
sequestration will be a reduction in the number of jobs that
are out there and a reduction in economic growth for those
seeking to enter the job market.
We all talk about wanting to get people back to work, but
if we fail to provide folks with the tools to do it, it is just
so much talk. I look forward to hearing today from Judy Conti
about at least one area that is part of the need to strengthen
our Nation's employment service system to provide early and
intensive personal assistance to those who are unemployed.
Last year Congress did enact a series of changes in our
unemployment insurance law that I think were overall a step in
the right direction. Senator Ron Wyden came to this
Subcommittee and I joined with him in working on a provision
that is helpful to a few people who are unemployed in special
situations where the focus can be on opening their own business
rather than continuing to search for a job. There is some
indication that these programs have resulted in more people
being employed than those who are traditional unemployment
insurance recipients.
The same is true concerning a reform that we adopted
concerning work sharing. Though not many new States have signed
onto the program, the 26 that have these programs seem to have
had some success. There was a provision relating to providing
waivers under the UI program, and a provision that dealt with
drug testing for a limited group of applicants. While I think
the evidence is still lacking as to whether the savings from
such testing exceed the cost of the testing, I am pleased that
Senator Williams is here from Texas because if we are to
effectively implement this program, it would appear to me that
he has done an effective job of doing it in a bipartisan way
with some good, reasonable safeguards in the legislation.
I thank you, Senator, for your leadership on that issue.
Again, as we sit here today, we just need to realize that
when it comes to helping the unemployed, our first and most
immediate goal should be to find a sensible and balanced
alternative to the budget cuts encompassed in the sequestration
that is now in effect and to recognize that the best remedy for
unemployment is a strong economy and that when things are done
that blunt economic growth, they hurt the unemployed first and
foremost.
Mr. Chairman, I look forward to hearing from all of our
witnesses and to working with you on the objectives that you
have laid out. Thank you very much.
Chairman REICHERT. Thank you, Mr. Doggett.
Chairman REICHERT. And without objection, each Member will
have the opportunity to submit a written statement and have it
included in the record.
I want to remind our witnesses to please limit your oral
testimony to five minutes; however, without objection, all of
the written testimony will be made a part of the permanent
record. While Mr. Doggett and I get to make our political
statements at the beginning, as you can tell, everyone on this
panel joins with you in trying to make a real concerted effort
to get people back to work. That is the bottom line that you
heard from both of us today. And we are fortunate to have you
here as our panelists. We hope to learn from you and find ways
that we can accomplish that.
So, Mr. Starks, Bill Starks, is the director, Unemployment
Insurance Division, Utah Department of Workforce Services.
Welcome.
The Hon. Tommy Williams, Texas State Senator from District
4. Welcome.
Rich Hobbie, executive director, National Association of
State Workforce Agencies. Thank you for being here.
Larry Kidd, principal/chief executive officer of Reliable
Staffing Services and RSS Professional Services. And Judy
Conti, Federal advocacy coordinator, National Employment Law
Project. Welcome to you also.
Mr. Starks, please proceed with your testimony.
STATEMENT OF BILL STARKS, DIRECTOR, UNEMPLOYMENT INSURANCE
DIVISION, UTAH DEPARTMENT OF WORKFORCE SERVICES
Mr. STARKS. Thank you, Mr. Chairman and Members of the
House Human Resource Subcommittee. I appreciate the opportunity
to provide you with our observation on last year's UI reforms,
reemployment opportunities, and share some of our discoveries
that have shown some promising results.
We had four significant discoveries through a pilot program
that have some important implications and suggest we are now in
an era where we can cost-effectively better serve and engage
our UI claimants and achieve improved employment outcomes.
First, we found there is a large job search readiness gap.
Utah performed a control group study of about 505 claimants in
our REA program. They initially rated their job search
readiness at about a D-plus average. Through online workshops,
we were able to improve that to a B-plus average. We learned
that job search readiness gaps were larger than what we thought
and present a bigger opportunity than we knew.
Second, we found that many claimants who are not engaged
can become engaged. We implemented an online work search
readiness training program that involves about a 1- to 3-hour
commitment for 2 weeks. About 31 percent of our claimants
refused to participate. However, once their benefits were
suspended, 25 percent of them completed it.
Third, we found that the claimants returned to work sooner
by engaging in meaningful work search activities. Claimants
that participated decreased their duration on unemployment by a
full week, producing significant savings to our trust fund.
Lastly, our claimants not only responded well, they liked
the tools. They voluntarily completed about a third more of the
online workshops than they were required.
Utah has designed a triaged approach to reemployment. We
use online engagement immediately and graduate to staff-
assisted engagement over time. We invested some of our ARRA
funds to upgrade our job exchange system. We implemented a
statewide online overview, evaluation and workshop system. We
developed a Reemployment Support Services system that allows
employment center staff to select claimants to engage in staff-
assisted workshops, employment counseling, and job fairs.
We implemented the REA program, and it is producing about
$2 in savings for every dollar invested. We implemented REAs on
EUC claimants; however, we discovered engaging the claimants in
the early stages of the process would provide far greater trust
fund savings.
Utah's average UI duration went from a high of 18.2 weeks
in 2009 to 13.5 weeks at the end of 2012 as a result of some of
these initiatives, and Utah has had a fairly strong economy.
Last year's act also required EUC claimants to register for
work and engage and document an active work search. Utah
requires this for all claimants and believes these requirements
are good public policy and supports their enactment.
Last year's act also provided that DOL could enter into
agreements with up to 10 States to provide demonstration
projects that expedite reemployment and save unemployment
dollars. The act limits the projects to subsidies for employers
providing training, such as wage subsidies and direct
disbursements to employers who hire claimants. However, the
second provision requires that the disbursements are only
permissible if the individual's new wages exceed their prior
weekly benefit amount and they only be used to pay the
difference between the new weekly wage and the prior weekly
benefit amount. In our opinion, this provision is a flaw and
Congress should consider eliminating it.
We implemented our own employer hiring incentive program in
2010 called the Utah Back to Work program providing a $2,000
hiring incentive to employers. Initially this appeared to be an
ideal demonstration project; however, under the provisions
within the law, it would be extremely difficult to market, as
well as administer that program.
In summary, virtually all data suggests that the sooner a
State becomes actively involved in engaging UI claimants in
reemployment activities, the sooner the claimants return to the
workforce. We feel they need to establish clear and meaningful
expectations for the claimants, that reemployment is a priority
that requires a full-time commitment. Claimants need to be held
accountable when directed to reemployment activities and
understand that there are consequences if they choose not to
participate.
We would also like you to consider allowing States to use a
small percentage, for example, 5 to 10 percent of any net trust
fund savings generated from any enhanced reemployment or
integrity efforts. And then finally, understand that all
claimants are not committed to getting back to work. If we
encourage them with meaningful tools and support, the vast
majority of the claimants can become engaged and improve their
job readiness.
Thank you.
Chairman REICHERT. Thank you, Mr. Starks.
[The prepared statement of Mr. Starks follows:]
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Chairman REICHERT. Senator, you are recognized for 5
minutes.
STATEMENT OF HON. TOMMY WILLIAMS, TEXAS STATE SENATOR, DISTRICT
4
Mr. WILLIAMS. Thank you, Mr. Chairman, Members. I am State
Senator Tommy Williams. I represent the southeast portion of
Texas, the southeast corner of the State, and the suburban
areas on the northern and eastern parts of the greater Houston
area. My Senate district overlaps Congressman Brady. He is my
neighbor and my Congressman. I serve, as well as the 800,000
constituents I represent, I serve as chairman of the Senate
Finance Committee, and we have jurisdiction over the State's
$196 billion biennial budget and all State tax policy.
I am pleased to have an opportunity to appear before the
Committee today and to testify about the Middle Class Tax
Relief and Job Creation Act, Public Law 112-96. The bill
contained major provisions, as you know, related to
unemployment insurance and TANF benefits. There have been two
bills that have been filed in the 83rd legislature in Texas
that would enact drug testing provisions for certain
unemployment insurance claimants authorized by House Resolution
3630. I am the author of Senate Bill 21, which relates to drug
screening and testing as a condition for receiving unemployment
compensation benefits by certain individuals. Its House
companion is carried by Representative Brandon Creighton.
Senate Bill 21 passed out of the State Senate 31 to nothing on
Thursday, April the 11th. The bill had broad bipartisan
support. It would require applicants for unemployment insurance
benefits to submit to drug screening if their only suitable
work is for an occupation identified by the U.S. Secretary of
Labor as one that regularly requires drug testing.
If the applicant's drug screening indicates that person has
used illegal drugs, they can and would be required to submit to
and pass a drug test before being eligible to receive
unemployment insurance benefits. If the individual is required
to take a drug test and tests positive, they would be
ineligible for benefits and they must retake and pass the drug
test no sooner than 4 weeks after the failed test in order to
become eligible for unemployment insurance.
There are also provisions that would allow people who had a
false positive to challenge the test. The bill also allows
those who test positive to continue receiving unemployment
benefits if they enroll and attend a drug treatment program. I
expect this bill will receive broad bipartisan support in the
Texas House as it did in the Senate and for it to be on the
Governor's desk in a few weeks.
The Texas Senate also passed Senate Bill 11, which subjects
high-risk TANF applicants to drug testing, and those who fail
the drug test would be disqualified from TANF benefits for 1
year. However, applicants who fail the drug test could reapply
for benefits if they enter a drug treatment program. Applicants
who tested positive for drugs three times would be permanently
disqualified from receiving any TANF benefits.
Senator Jane Nelson, author of Senate Bill 11, modified her
original bill to address concerns that children would be hurt
if TANF applicants flunked the drug test. The Senate version
allows TANF benefits to continue helping dependents through is
a third party known as a protective payee, if an adult
applicant tested positive for drugs. This legislation also
received broad bipartisan support and passed the Senate 31 to
nothing on Wednesday, April the 10th.
The bill would also remove all sanctions if an adult
recipient who tested positive for drugs passes a new drug test
after 6 months. The bill requires the Health and Human Services
Commission to use the most efficient and cost-effective drug
screening assessment tool that is developed jointly with the
Department of State Health Services based on validated
controlled substance use and assessment tools.
It is my understanding that the Labor Department has not
yet written regulations for the drug testing program. It is our
hope that these regulations would be issued soon so that the
State of Texas can implement the program when these two bills
become State law on September 1st.
Public Law 112-96 also creates a new cost-neutral waiver
authority providing States with unprecedented flexibility on
how they use their unemployment benefits to promote the type of
pro-work reforms that led to successful welfare program reform
in the nineties. Our State submitted a request on February the
24th of 2012. It was denied on March 16th of that same year.
And on April 19th, the DOL issued another statement providing
guidance on unemployment insurance demonstration products.
Representative Burkett has introduced House Bill 3005 in
the Texas House which would amend the labor code to allow the
Workforce Commission to use money in the Unemployment
Compensation Fund for reemployment demonstration projects
pursuant to an agreement or waiver. We already have a very
highly successful program in Texas called Back to Work that has
been championed but our Lieutenant Governor, and under that
program more than 5,000 employers have made nearly 31,000 hires
as of October 29th, 2012.
Overall, 57.6 percent of the Texas Back to Work claimants
were still employed in the quarter after the incentive period
ended. The percentage jumps to 83.8 percent when you look at
those placements which were successful. The Texas Back to Work
placement program is $595 cheaper on average than the total
benefit cost for a similar claimant who is not placed.
Thank you, Mr. Chairman, and thank you, committee Members,
for allowing me to update you on this, and I will be glad to
take any questions.
Chairman REICHERT. Thank you.
[The prepared statement of Mr. Williams follows:]
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Chairman REICHERT. Mr. Hobbie, you are recognized.
STATEMENT OF RICH HOBBIE, EXECUTIVE DIRECTOR, NATIONAL
ASSOCIATION OF STATE WORKFORCE AGENCIES
Mr. HOBBIE. Good afternoon, Chairman Reichert and Ranking
Member Doggett and Members of the Subcommittee. I am Rich
Hobbie, executive director of the National Association of State
Workforce Agencies, known as NASWA. Our organization was
founded in 1937, and since 1973 it has been a private nonprofit
corporation financed by annual dues from Member States and
other revenue. On behalf of NASWA, I am pleased to comment on
implementation of the Middle Class Tax Relief and Job Creation
Act of 2012.
First, State workforce agencies have done an extraordinary
job reacting to unprecedented challenges of the great
recession, processing record numbers of claims and programming
numerous law changes. The unemployment insurance system has
paid claimants nearly a half trillion dollars from 2008 to
2012. But chronic Federal underfunding of UI program
administration has left States with legacy computer systems
averaging 25 years old. Upgrading a typical State UI benefit
and tax system has been estimated to cost between $45 million
and $100 million.
NASWA urges Congress to enact the NASWA UI administrative
financing reform proposal that guarantees States at least 50
percent of the Federal Unemployment Tax Act revenue for
administrative purposes.
Second, States applaud Congress for funding reemployment
services and reemployment eligibility assessments, known as RES
and REA. States have moved aggressively to meet with over 9
million emergency unemployment compensation or EUC claimants
since the enactment of the Job Creation Act to comply with the
in-person eligibility assessment requirement. States reported
several startup problems, a short time period to plan and
implement the program, the need for extensive cross training of
staff, initially high claimant no show rates, and a lack of
meeting space. However, most of these issues have been
resolved.
Based in part on this experience, NASWA strongly supports a
permanent REA/RES program to assist jobless workers return to
work. Recent evaluations demonstrate these programs increase
employment and reduce unemployment insurance duration and are
cost effective.
NASWA recommends the Federal Government create a capped
mandatory spending grant to States for REA and RES to ensure
steady and sustainable funding. We know this might be hard in
the current budget environment, but this would be a positive
reform for workers, employers, and the government.
Three, sequestration, which began on March 1st, applies to
some mandatory programs. The EUC sequestration amount
represents a significant portion of nondefense spending
reductions, perhaps as much as 10 percent. But what seemed to
be a simple percentage change of benefit amounts is complex for
many States. A recent NASWA survey asked when States could
implement sequestration of EUC. A third of States said they
could implement quickly, but many States said that changes
could not be implemented timely or with minimal cost. There
still are as many as 10 States that do not know how they will
make the changes.
Four, on the nonreduction rule applied to weekly benefit
amounts, NASWA recommends elimination. States should have the
flexibility to determine unemployment benefit amounts.
Five, NASWA does not have a position on drug testing, but
State administrative funds are already constrained and funding
might have to come from other UI administrative activities or
other sources.
Six, on the demonstration projects, USDOL guidance seems to
be a mirror of Federal law. Federal law and guidance do raise
concerns for States, however. States would have to shift scarce
administrative resources to plan, build, manage, evaluate, and
regularly report on the approved projects. Projects could not
result in any increased cost to the State UI trust fund, and
calculating a wage subsidy based on different weekly benefit
amounts for each claimant also could be a challenge for States
and employers.
Seven, before the Act, 22 States had short-time
compensation programs. Since then, three additional States have
implemented the program.
Eight, on self-employment assistance, NASWA partnered with
the USDOL for a national webinar to promote SEA programs.
Fourteen States participated in that webinar, but only four
States have active programs as of now.
Nine, on data exchange standardization, NASWA agrees that
data in various publicly funded programs could be collected,
stored, and exchanged more efficiently.
NASWA and its Members are currently engaged in two
successful standardized data exchange systems, the State
Information Data Exchange System between employers and States
and the Interstate Connection Network among States.
Mr. Chairman, thank you for the opportunity to testify. I
look forward to answering questions.
Chairman REICHERT. And thank you.
[The prepared statement of Mr. Hobbie follows:]
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Chairman REICHERT. And now the chair will recognize Mr.
Renacci to introduce our next witness.
Mr. RENACCI. Thank you, Mr. Chairman.
Today I have the privilege of welcoming a fellow Buckeye to
the Committee.
Welcome, Larry, and thank you for being here.
Mr. Kidd has a unique perspective. Not only is he a
business owner himself, but Larry's business is putting Ohioans
back to work and helping employers locate talent. Larry was
recently appointed by Governor Kasich to the board of JobsOhio,
a nonprofit corporation that helps create jobs in Ohio. He has
firsthand knowledge about the difficulties facing the
unemployed, as well as the difficulties employers face during
periods of long-term unemployment.
Larry, I appreciate you taking the time away from your
business to give us your perspective. I hope we hear from you
and the other witnesses about how we can help make State
unemployment programs more efficient and effective for job
seekers, job creators, and the taxpayer.
I yield back.
Chairman REICHERT. Thank you, Mr. Renacci.
Chairman REICHERT. Mr. Kidd, please continue with the
testimony. You have 5 minutes.
STATEMENT OF LARRY KIDD, PRINCIPAL/CHIEF EXECUTIVE OFFICER OF
RELIABLE STAFFING SERVICES AND RSS PROFESSIONAL, LLC
Mr. KIDD. Good afternoon, Chairman Reichert, Ranking Member
Doggett, and other Members of the subcommittee. Thank you for
the opportunity to testify before the Ways and Means
Subcommittee on Human Resources. I am honored to be able to
speak to you today. Again, my name is Larry Kidd, president and
chief executive officer of Reliable Staffing Services of
Jackson, Ohio. I graduated from Miami University in 1986 and
earned an MBA from National University in 1989.
From 1986 to 2003, I worked in various positions with three
large corporations. During that period of time, I was promoted
from an entry level employee to a director of a department. In
2003, I left my director's position and became a partner in a
small business, a third-party warehousing company. In 2 years,
I was able to increase the business by two times. Consistently
our team faced struggles in finding the right people for the
right positions. I engaged the services of temporary staffing
firms but found staffing firms could not meet our employment
needs either.
Having experienced the importance of finding and keeping
key employees, my management staff and I formed a temporary
staffing service, Reliable Staffing Services, or RSS. Our role
was to recruit, screen, interview, hire, and place employees in
client workplaces. As stated in our client agreements, RSS was
the employer of record. This means that RSS was responsible for
the FUTA, SUTA, worker's compensation, and all other employee
costs.
Our company's goal was to service our employment needs, but
also to creatively supply a market that was underserved. As a
former user of the temporary staffing service, my team was very
familiar with the importance of finding the right people. In a
short period of time, Reliable Staffing Service became one of
the leading staffing suppliers in the region. In 2010, when the
local economy experienced a downward shift, our clients'
customer orders were abruptly cut back. This resulted in
layoffs of our employees. Our team worked diligently and soon
we were able to secure additional clients that needed our
workers. We tried to call back many of the laid-off workers,
but found that they were happy receiving unemployment benefits
and chose not to accept our offers for employment.
We contacted the unemployment offices to explain our
dilemma and were told by the unemployment staff that they were
just simply too many claims to process and they couldn't follow
up on all the employees. This attitude made it very challenging
to get former employees back to work.
There were several reasons employees chose not to return to
work. Number one was they claimed it was too far to drive;
number two, they claimed that they were making too much money
on unemployment to return to work; number three, they were
uncertain of the length of the assignment; number four, they
admittedly could not pass a drug test; or number five, they
could not afford to take a pay cut.
As a small business owner, I found regulation, cost of
compliance, and taxes to be extraordinary. Often I found my
biggest hindrance to my company's growth was not competition or
the economy but burdensome government policy. In my staffing
company, our cost structure is the cost of wages, cost of
burden, plus our margin. We charge our clients based on these
three items. If the cost of unemployment insurance increases,
our company may or may not be able to pass these costs along to
our client. If we cannot pass the cost along to the client, we
must absorb the cost in our margins or simply lose the
customer. This situation occurs more often than one may
realize.
Unemployment benefits should be short term and truly for
the needy. Those unwilling to search for work or do not want to
return to the workforce should not be eligible for unemployment
benefits. Recipients of illegal drugs should be evaluated for
treatment because they are likely unemployable.
Unemployment should not be up to 99 weeks. Other programs
should be implemented to keep recipients in the right frame of
mind. Programs such as Ohio's Learn to Earn or on-the-job
training programs are much better for the employee, the
employer, and society. These programs help keep employees fresh
and motivated.
I have the utmost respect for the small business owner. In
some ways the small business owner is our country's most at-
risk employee. They carry the burden of growing a business,
managing employees, properly applying government regulation,
meeting customer demands, and creating that next best idea.
Many times there is little or no return on investment for the
small business owner. When increases in taxes, unemployment
burden, or other governmental demands occur, the small business
person must scramble to find a way to make it work.
Please consider the impact increases have in unemployment
burdens or other taxes have on them, the small business owner.
Some reports State that 50 percent all employees work for the
small business. If the risk does not equal the reward, small
business people will not continue to take the risk with their
new ventures.
Chairman Reichert, Ranking Member Doggett and other Members
of the Subcommittee, thank you for your time and allowing me to
present my views today.
Chairman REICHERT. Thank you for your testimony.
[The prepared statement of Mr. Kidd follows:]
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Chairman REICHERT. Ms. Conti, you are recognized for 5
minutes.
STATEMENT OF JUDY CONTI, FEDERAL ADVOCACY COORDINATOR, NATIONAL
EMPLOYMENT LAW PROJECT
Ms. CONTI. Thank you, sir. Chairman Reichert, Ranking
Member Doggett and Members of the Subcommittee, thank you for
the opportunity to testify here today. My name is Judy Conti,
and I am the Federal advocacy coordinator at the National
Employment Law Project. We are a nonprofit organization that
advocates on behalf of low income and unemployed workers.
I would like to briefly summarize the four main points in
my written testimony.
First, nearly 4 years after the end of the great recession,
4.6 million people have been out of work for 27 weeks or
longer, and the average duration of unemployment stands at
nearly 9 months. The Middle Class Tax Relief and Job Creation
Act scaled back the Federally funded UI programs in a manner
that resulted in a 43 percent reduction in benefits during a
time in which nobody would argue that we have seen anything
close to a 43 percent improvement in the jobs picture. And
currently the average EUC payment is a mere $294 per week,
which is hardly sufficient to cover even housing costs in most
States for a family.
But that, too, will face reduction as the sequester sets
in. States that have already implemented the sequester have
reduced benefits by an average of $31 per week, but the longer
States take to implement the cuts, the steeper they will be
from workers who are often barely scraping by.
Simultaneous with the sequester, many States are making
unprecedented reductions to State UI programs, further
weakening the safety net at a time when too many families and
communities still need it desperately. These cuts are
counterproductive and cruel at a time when so many are still
struggling so badly to get a foothold back on the economic
ladder.
Second, Congress carefully defined appropriate
circumstances in which States could enact legislation requiring
UI claimants to pass a drug test as a condition of eligibility
for UI. And the Department of Labor, though it hasn't issued
regulations, as I understand it, has been diligently advising
States that have pending drug testing laws to make sure that
their proposals are in conformity with Federal law, as Texas'
is.
It is worth noting, however, that drug testing UI
applicants is a solution in search of a problem. As detailed in
Mr. Hobbie's written testimony, drug testing is extremely
costly, and in the few States that have enacted some sort of
testing scheme for recipients of public benefits, in every
instance the rate at which applicants tested positive was truly
negligible. Workers aren't unable to find work because of drug
use on some widespread basis, but rather because there is still
only about one open job for every three unemployed workers.
This is a waste of taxpayer money and an insidious stereotype
of the unemployed that Congress sought to narrowly circumscribe
and with good cause.
The bill also authorized up to 10 States to experiment with
reemployment programs that for the first time would apply UI
trust fund accounts to wages and wage subsidies designed to
return the long-term unemployed to jobs. Congress crafted this
provision to protect the integrity of UI funding--that is the
money that employers pay in, in the form of taxes--and to
ensure that workers are guaranteed their fundamental rights
under Federal, labor and employment laws.
Though no State has sought such a waiver pursuant to the UI
program letter released by the Department of Labor, we are
confident that once States can demonstrate that programs will
not compromise their UI trust funds, many of which are still in
trouble, and will have the desired effect of finding workers
good and permanent jobs, they will seek the waivers and the
Department of Labor will grant them in appropriate
circumstances.
Third, as has been discussed, one silver lining of the
great recession is that it sparked renewed interest in work
sharing programs, a form of UI that gives employers the option
of reducing employers' hours instead of firing people. The
February 2012 legislation provided $500 million in incentive
funding to enact and amend work sharing, and DOL has produced
clear and timely guidance for States.
In the current and coming legislative sessions, NELP will
continue to work to raise the profile of this win-win option
for workers and employers, and we hope to see many more States
take it up next year.
Finally, like our colleagues at Utah and in NASWA, NELP
believes that many workers need more and more rigorous
reemployment services at the onset of periods of unemployment,
not just when they have reach the 27th week of unemployment. We
recently published a paper on this issue called ``Getting Real:
Time to Reinvest in the Public Employment Service,'' and we
propose that Congress appropriate an additional $1.6 billion in
annual funding for the Employment Service to serve workers and
employers alike, and though this costs money, the savings seen
in increased income taxes, reductions in UI, and the salary
that workers will start receiving more than pays for itself.
We live in troubling economic times, and if we are serious
about an economic recovery that works for all Americans, we
can't be penny-wise and pound foolish when it comes to
supporting our Nation's unemployed workers.
Thank you again for inviting me to testify, and I welcome
questions from Members of the Subcommittee.
Chairman REICHERT. Thank you.
[The prepared statement of Ms. Conti follows:]
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Chairman REICHERT. And thank you all for your testimony,
and thank you also now as we move into the question phase for
your patience as we ask you a few questions. So my first
question is for--actually all my questions will be directed to
Mr. Starks and Mr. Hobbie.
Mr. Starks, your State, as we heard in your testimony, has
a very aggressive approach to work research and early
engagement of UI recipients. Can you walk us through how Utah
helps people search for work and how that differs from other
States? And what does everyone have to do, what do you have to
do to offer help and assistance for people who are sincerely
trying to find work but are having trouble quickly working
their way through the maze of trying to find the right job that
fits them?
Mr. STARKS. In Utah, our work search standard was to do two
work search contacts per week. We doubled that a couple of
years ago. Claimants were able to file over the telephone or
over the Internet for their weekly claims. In August of this
year, we made Internet the only option, and that way we could
document their four work searches.
We felt it was reasonable for the claimants to do four. On
average, that would only take a couple of hours per week.
Internet is kind of the future for job applications, and we
require them to register for work, too, as a condition for
unemployment. So asking them to take another step doing online
filing we didn't think, was unreasonable.
One of the problems that we have had associated with that
is verifying those work searches, too. It is one thing to, you
know, require a claimant to document those work searches and it
is another thing to verify those. It is often not a record that
employers are required to document. And so when we are trying
to verify those work searches, it can prove difficult
sometimes.
Chairman REICHERT. Well, how cost effective is this
approach, compared to what you did in the past and maybe what
some States are even still doing today?
Mr. STARKS. You know, I don't have any numbers as far as
the work search requirements. I can tell you that we think it
is good public policy in that it helps screen out the claimants
that don't want to engage in active reemployment activities. If
they are serious about getting back to work, requiring four
work searches we don't feel is unreasonable. However, we think
that it should be left to the State to determine that.
Chairman REICHERT. So what would be your advice to the rest
of the country? Any lessons learned that you want to share
today?
Mr. STARKS. Asking claimants to do work search activities,
I think it goes back to our whole program at Workforce
Services, and that is getting jobs should be your full-time
job, and everything that we are trying to do in Utah is around
jobs. So, my recommendation is, is to engage the claimants
early and often and you will see some positive results.
Chairman REICHERT. Mr. Hobbie, do you have any response to
those questions?
Mr. HOBBIE. Yes, Mr. Chairman. There was a four-State study
of reemployment services and reemployment eligibility
assessments recently produced by IMPAQ International, and
particularly promising there were the results in Nevada where
provision of these services led to a reduction in 3 weeks of
duration on unemployment insurance, at an average cost of about
$300 per week. That is a gross savings of $900, and at a cost
probably approaching $200 to no more that be $300. So there is
an indication that the net savings there probably was at least
$600 per claimant helping them go back to work sooner than they
would otherwise and at jobs comparable to what they would have
found if they had waited those 3 weeks.
So the evidence we see indicates that these programs are
effective at lowering unemployment, increasing employment, and
they are highly cost effective. And they help employers, too,
in the sense employers are finding workers that they are
looking for sooner than they would otherwise.
Chairman REICHERT. Thank you.
Mr. Doggett, you are recognized.
Mr. DOGGETT. Thank you very much.
Senator Williams, on your proposal that is likely soon to
become law in Texas, do you believe that it provides a model
that other States could follow and that the Department of Labor
should consider as it sets its guidelines?
Mr. WILLIAMS. I do believe that, and I think that the
sooner they set their guidelines, the more likely it will be
that other States follow suit. We have a number of programs
that have been successful that we are going back and trying to
bring them into compliance with DOL requirements. So I think it
would be very helpful for them to go ahead and get that
guidance out there.
Mr. DOGGETT. And you focused your requirement in accordance
with the statute so that you were focused only on individuals
that have been terminated because of unlawful use of a
controlled substance and individuals for whom there is not
suitable work in an occupation that does not regularly require
a drug test.
Mr. WILLIAMS. Well, I think what we focused on is that it
would be an occupation that would require drug testing as a
routine part of--as a condition of employment, and then we have
directed the Workforce Commission to develop a set of screening
questions that would help identify those people who need to be
tested. So it is not limited only to people who were terminated
for that reason. There could be other reasons that might show
up in that screening assessment and it is yet to be drafted or
implemented.
Mr. DOGGETT. You also mentioned the denial by the
Department of Labor of a Texas waiver application, and it is
true that Texas was the early bird trying to secure the grant.
In fact, they were so early, I believe they were within about
48 hours of the signing of the law that Governor Perry sent a
letter up, and back in March, shortly after that, last year,
Secretary Oates replied that she regretted denying the
application but that the guidance, so that all States would be
on a level playingfield for applying, had not been completed
and expressed the hope that Texas would resubmit its
application and welcome States' ideas for demonstration
projects. I believe that Texas has not resubmitted its
application since receiving that letter.
I would also want to note with reference to the effect of
these cuts on our job training programs that Texas is projected
to lose approximately $38 million in job training programs
during this year under sequestration, and if it stays in effect
it will be about $500 million over the course of sequestration
over the next decade, which seems to me to be a real setback to
trying to get folks to work.
I want to ask Ms. Conti, with reference to your comments
that an investment in these programs, in these reemployment
services generates about $3.40 in lower government spending and
higher revenue from more employment, if you could elaborate on
specific programs and services that have proven successful in
getting people reemployed.
Ms. CONTI. Absolutely. Thank you for if question. In our
paper ``Getting Real,'' we detailed four different things that
for a relatively speaking modest of investment, $1.6 billion,
we believe could really help return a lot of people to work.
Expand job placement services, including increasing job
listings on the public exchange and improved matching
technology, basically having job counselors do what Mr. Kidd
does, help set people, unemployed workers up with employers in
the area that have open jobs and they have skills to fill those
jobs. We believe that that could help an additional 700,000 job
seekers, for example, for less than $500 million.
We recommend that you interview an additional 1.5 million
unemployment insurance applicants after they file the initial
claim to create a job search plan. You know, we are in
different times now. There are many people that have had either
the same job for their whole work life or they have easily
transitioned from one job to another, but we are in different
economic times now, not just because people are applying for
jobs more using technology as opposed to resumes or networking,
but also because we just don't have a robust economy. And if
people are looking for a job now like they were 5 or 6 years
ago they are not likely to be successful. So we know that there
are plenty of people out there that have good marketable skills
to compete but don't know how to market themselves.
There is a Worker Profiling and Reemployment Service that
we recommend allocating an additional $540 million for, and
this again is something that gets workers early and determines
who are those that are likely to become the long-term
unemployed and from the beginning gives them more intense
services, including training where necessary.
And finally, provide pretraining counseling for an
additional 1 million people for about $540 million. This would
be to help people pick the right training programs so that they
get skills that are marketable in their local economies instead
of studying for a certification that may not help them.
Mr. DOGGETT. Thank you.
Thank you, Mr. Chairman.
Chairman REICHERT. Mr. Young.
Mr. YOUNG. Thank you, Mr. Chairman.
Thank you to all of our panelists for being here today. I
really appreciate your testimony.
Under the 2012 unemployment insurance reform, States are
now required to establish job search requirements for everyone
collecting State and Federal unemployment insurance benefits,
from the first through the last week of benefits. Currently, in
my home State of Indiana, our State legislators are working in
a bipartisan way to implement a law that would be consistent
with these new requirements. This would effectively require all
Hoosiers to visit the same Work-One Centers that they would
have to visit to receive Federal benefits, and extends it to
State unemployment insurance benefits.
With only the Federal unemployment insurance job search
requirements already implemented, we have seen in the State of
Indiana around a 70 percent statewide compliance rate with the
job search requirements.
My question to Mr. Starks and Mr. Hobbie is this: What
additional efforts might our State adopt, might you recommend
to them or might we, at the Federal level, in our conversations
with State legislators indicate to them would be helpful in
increasing this compliance rate? And can you conceive of
incentives at the Federal level that might assist in increasing
that compliance rate?
And I know, Mr. Starks, you have already spoken to the
important role that verification in the job search plays.
Perhaps there are other things that come to mind.
Mr. STARKS. Again, as far as work search goes, I don't know
how much more I can add than I indicated earlier. We think it
is reasonable for States to require that. However, we are a
strong advocate also of State rights, and I think what is maybe
good for Utah may necessarily not be good for another State. It
works for Utah. It has created some unintended consequences
that create some workload for us. If somebody doesn't complete
their work search, then we have to send out a denial letter,
then they have an opportunity to come and complete those work
searches. But, you know, we still think it is good public
policy. We are not going to not do it because it is going to
create some work for ourselves.
Mr. YOUNG. By way of follow-up, there is, of course, an
incentive as a matter of good public policy to get more people
to work and improving their own circumstances. It grows your
own economy. It could save you, at the State level, a certain
amount of money. Are there any additional incentives that you
currently receive for a higher compliance rate with the work
search requirements from the Feds?
Mr. STARKS. No.
Mr. YOUNG. Mr. Hobbie.
Mr. HOBBIE. Thank you, Mr. Young.
Mr. YOUNG. Yes, sir.
Mr. HOBBIE. I have several ideas with respect to the
additional efforts. One is NASWA, in partnership with all
States, and in partnership with DirectEmployers Association, an
association of over 600 major corporations, operates the
National Labor Exchange, which is a job bank that is available
nationally and in each State. It contains over 1 million job
openings on any given day and they are updated every day. So I
would urge all States to take advantage of the National Labor
Exchange and work with employers who are not entering jobs into
the State job bank to enter their jobs in there so that they
become immediately available to workers seeking jobs in their
States.
Second, the work search amendments in the Job Creation Act,
I think, could serve as a model for the regular State programs,
too. And of course I respect what Mr. Starks said about States
designing their own programs, but greater emphasis on looking
for work, expecting claimants to seek work, and then providing
some assistance through reemployment and eligibility
assessments and reemployment services funded by the Federal
Government. We do need additional funding to provide these
additional services, but if we did, I think it would be far
more cost effective. And then I would just like to add, in
terms of incentives, the act also provided for demonstration
projects, which we can get into later.
Mr. YOUNG. Yes, sir.
Mr. HOBBIE. I think there are some incentives that could be
built into the current law that would improve the possibilities
for those demonstrations at the State level, and I could get
into detail on that later.
Mr. YOUNG. Absolutely. And I would like to go on record as
supporting the flexibility that I know is so important at the
State level as well.
I yield back. Thank you so much.
Chairman REICHERT. Thank you, Mr. Young.
Mr. Renacci, you are recognized for 5 minutes.
Mr. RENACCI. Thank you, Mr. Chairman. I want to thank the
witnesses for being here.
Last Congress I introduced the EMPLOY Act, a bill that
would have allowed participating employers to receive a subsidy
from the State for the wages paid to an individual eligible for
unemployment compensation. This concept of my bill is similar
to the one in the 2012 UI reforms included in the Middle Class
Tax Relief and Job Creation Act. This act allowed States to
apply for waivers in order to use unemployment funds to pay for
reemployment programs.
In April 2012, the Department of Labor issued 24 pages of
burdensome application requirements. To the best of my
knowledge, Texas has been the only State to apply for a waiver.
This is concerning, as many States have been working diligently
to expedite the reemployment of individuals receiving
unemployment benefits.
Mr. Hobbie, you have experience with regards to
reemployment services and the impact these waivers would have
on States. What changes could be made to improve the UI policy?
Mr. KIDD. In our written testimony we indicate two changes
that we think would be helpful that my association supports.
One is to add a provision for reemployment bonuses for UI
claimants to provide incentives for the individuals to go back
to work sooner than they otherwise would with a bonus. And
there have been evaluations of that approach that indicate that
would be cost effective. Second, of course, I also mentioned
additional Federal funding would be helpful.
Third, the way the Job Creation Act is drafted, it embeds
training with the wage subsidy in that particular paragraph.
And what I would suggest there is you separate out the training
and have two provisions. One would be for wage subsidies only
and the other would be for wage subsidies with the training for
a kind of on-the-job training program so that States could also
run just a straight, simple wage subsidy program in addition to
the on-the-job training program.
And then also I think there is a problem with paying the
subsidies off of the weekly benefit amount. Each individual has
a different weekly benefit amount. That can be hard for States
to administer. I would suggest following something similar to
what Utah has done, or Texas, with just a flat amount that
would be provided for a subsidy to an employer to employ an
individual for a certain amount of time and then maybe an
additional subsidy if that employee is retained an additional
amount of time beyond that.
And then, finally, I would also suggest the subcommittee
take a look at Sections 1115 and 1110 of the Social Security
Act, which provides permanent demonstration authority for other
programs in your jurisdictions, such as Supplemental Security
Income. There may be some provisions in there that you could
use to set up a permanent demonstration authority for
unemployment insurance, too, which is excluded from those
provisions.
Mr. RENACCI. Thank you. I am going to come to Mr. Williams
before I do that.
Mr. Kidd, earlier, in regards to drug testing, one of the
witnesses testified that the number of individuals who test
positive were negligible. In your business, do you do drug
testing?
Mr. KIDD. We do do drug testing.
Mr. RENACCI. What is the percentage of people who test
positive?
Mr. KIDD. Between 15 and 20 percent.
Mr. RENACCI. Would you consider that negligible?
Mr. KIDD. I would not consider that negligible. And 80 of
our clients require drug testing.
Mr. RENACCI. And the biggest concern, of course, with
someone who tests positive, is if they go out into the
workforce and are working and they injure somebody, that is a
problem not only for you, but for the business.
Mr. KIDD. It absolutely is a problem. Many people forget
that many of our employment clients are factory workers. And if
you were to send somebody that is on an opiate or cocaine or
something like that, and they are on a production line, it is
very possible they could cut their hand off or drive a forklift
into somebody and hurt somebody else, or even kill somebody. We
are not going to take that risk, and neither will our client.
Mr. RENACCI. Thank you. Thank you, Mr. Kidd.
Senator Williams, it is clear that the waiver process has
really been a deterrent for most States. I know Texas appears
to be the only State that has applied. Ohio is not applying
because of the waiver process and its complexities. As the only
State that applied, do you believe it is time for the
Department of Labor to go back to the drawing board and make
the waiver application process more attractive to the States?
And please explain what the waiver process has been like for
your State of Texas.
Mr. WILLIAMS. Well, I don't know that I can speak directly
to the waiver process. I know it has been a lengthy thing. And
it is my impression that once the DOL issued their guidelines
that more of the States seemed to become discouraged about
that.
One thing I would encourage, though, is more flexibility.
And I say that because what we have done with our job search
requirements, for example, is that we allow our local workforce
boards to set the number of job interviews that an applicant
has to have on a monthly basis. And, you know, we have found
that that has worked better, to allow them to set those. And
our average is approaching five now. And so it has worked
really well, and people are out looking for a job. I think it
would work a lot better if they would just allow the States a
lot more flexibility and allow us to move forward and, you
know, get those impediments out of the way, is the key.
Mr. RENACCI. Thank you, Senator.
I yield back.
Chairman REICHERT. Thank you.
Mr. Davis, you are recognized.
Mr. DAVIS. Thank you very much, Mr. Chairman. And I want to
thank the witnesses for appearing.
Ms. Conti, let me ask you, even with the most successful
reemployment programs in place, do you agree that the most
important factor in people returning to work is a strong
economy that creates jobs for the unemployed? Do you believe
that past threats of default on our Nation's debt, as well as
the implementation of the sequester, has negatively affected
our economic recovery and thereby hurt the ability of the
unemployed to find work?
Ms. CONTI. Absolutely, Congressman. Look, we all know that
these demonstration projects, reemployment services, these are
all things that can help around the margins, and we should do
them because all of the workers that are unemployed in this
country deserve every effort we can muster. But there is no
replacement for a robust economy and one that works for
everybody, where employers are creating jobs, where governments
are making appropriate investments, not threatening default,
not enacting or allowing to happen a sequester that was put
into place in the first instance because it was so odious that
nobody thought it would ever actually happen.
So we find ourselves in interesting political times. We
obviously have concerns about our debt and deficit that we
can't ignore. But the biggest debt and deficit we have right
now is the jobs deficit and the deficit that workers are
feeling in terms of their ability to provide for themselves and
their families. And there is nothing that is going to do any
better for unemployed workers than a robust economy and one
where we are making appropriate investments in public service
employees, in infrastructure in this country, and making sure
that we have our fiscal house in order.
Mr. DAVIS. Thank you very much.
Mr. Kidd, I noticed in your testimony you suggest that some
Americans aren't going back to work because they were making
too much money with unemployment benefits to return to work. Is
there any indication of what ``some'' really means? Is that a
lot of people? Or is that maybe two or three? Or half a dozen?
I mean, it seems to me that the average weekly unemployment
benefit is $300, and that only reaches about 70 percent of the
poverty level for a family of four. So I am trying to
understand how much is the many.
Mr. KIDD. I appreciate the question. I cannot give you a
percentage, but I can tell you that we are working in an area
that at one time had an unemployment, one of the counties we
serve, of over 17 percent unemployment. It was significant.
There was a large plant closure. And I would argue that if we
had an employee that was willing, flexible, and willing to work
for the amount of money that our client offers, we could employ
about anybody. We have over 90,000 open positions in Ohio, with
an unemployment rate of about 7 percent.
So there are jobs out there available. And even in our
small community we could get them jobs if they applied and they
were willing to be flexible with that. As a percentage, I don't
know. I know it is less now than it was when we had 99 weeks on
unemployment. They were very free to tell us that there is no
way we are going to go back to work when we receive this
unemployment benefit. First off, they were concerned how long
the assignment lasts. At that time, gas prices were very
expensive, and quite frankly some of them just didn't want to
go back to work, so they chose not to accept our offers.
Mr. DAVIS. I find that to be a very interesting
observation. And I guess maybe what works in some economies or
some locations. I can tell you that $300 wouldn't influence
many people in the communities where I live to not take a job
if they could actually find one. So chances are there are
differences based upon cost of living and what takes place.
Certainly would not happen in the community where I live.
Ms. Conti, let me ask you, is it fair to say that the last
year or so there has been a dramatic reduction in assistance to
the unemployed? Last year, the duration of Federal UI benefits
was significantly scaled back. And this year the sequester has
cut the amount of the weekly Federal unemployment benefit.
Also, you mentioned that each eight States have cut back on
basic unemployment benefits, reducing them below 6 months for
the first time in over 50 years. Do you think that these
dramatic reductions in unemployment benefits are reflective of
an equal improvement in the labor market?
Chairman REICHERT. Ms. Conti, if you could answer briefly,
please. The gentleman's time has expired.
Ms. CONTI. Sure.
Absolutely not. We all know that we are still struggling
with unemployment that is far too high. We understand that our
unemployment numbers are coming down not just because we are
creating jobs, but also because too many people are leaving the
workforce. They are discouraged. So we have not seen the kind
of improvements that justify the kind of cuts that we have see
in unemployment.
Mr. DAVIS. Thank you very much.
And thank you, Mr. Chairman.
Chairman REICHERT. Thank you, Mr. Davis.
Mr. Kelly, you are recognized.
Mr. KELLY. Thank you, Chairman.
And I thank all of you to being here.
Actually, coming from the private sector--and, Mr. Kidd, I
can appreciate what you are saying--it is very difficult to
hire people today. You know, I worry the reason people are not
employed is because some of them are unemployable. When I am
back in Pennsylvania, in District 3, and I am going to these
different places and talking to employers, and I say, what is
the number one thing, because I see a sign up there that says
now hiring, why are you not able to hire? And inevitably they
come back to saying, the people who are applying can't pass a
drug test.
Now, I want you all to understand this. This is from being
in the real world. When I talk to my insurance carrier, they
suggest under loss control you should drug test people, but be
very careful when you do that because alcoholism and drug
addiction are considered diseases, and it could be
discriminatory, what you are doing. So when you talk to people,
Mr. Kidd, because you talk to them, and I got tell you, there
are a lot of people right now willing, looking for people to
employ. They can't do it because these people are unemployable.
Now, is that what you are seeing? I mean, this isn't a
myth. This is what actually happens on the ground when you are
out talking to people, looking for folks to fill jobs, and
understanding that there is a tremendous liability on that
person who hires somebody and brings them in if something
happens. Mr. Renacci talked about a safety issue. You brought
somebody in and you knew of their condition, instead allowed
them to go on the floor, and they are somehow involved in an
accident, you are liable for that.
Mr. KIDD. I absolutely agree with you. We do see a real
issue with the whole drug situation. As part of the JobsOhio
board of directors, I had a small roundtable of business people
in our local community, and we had two employers that were
1,200 and 1,500 each, two of the largest employers in the
community. And we asked them, what is the biggest problem that
you face? I thought it might be worker's compensation or even
unemployment, but it wasn't. It was drugs. We can't get people
to work. And we can't keep them once they are here because they
will continue to fail a drug test.
It is a big risk for employers to put somebody knowingly on
drugs in a factory or any other kind of setting. And, you know,
it is a dangerous situation. And it is not something that an
employer is willing to take that risk. It just simply isn't.
If I may make one quick statement about the drug situation.
Jackson County is the largest prescription opiate problem in
the whole State of Ohio. Jackson County is only a county of
30,000 people. We have 131 per capita prescriptions per person
a year, which is extraordinary. So I developed a drug task
force to help solve this problem. And we continued, as you pull
the onion back, you see more and more and more of it. And it is
a huge problem for employers.
Mr. KELLY. Let me ask, Mr. Hobbie and Senator Williams,
now, in 2012, we did the unemployment insurance reforms. It is
14 months later. You are still waiting for the regs. A lot of
the States have gone out of session right now. So 14 months for
the Federal Government. Nobody is alarmed by that because
that's kind of the way these folks work. How do you proceed
when you don't have the regs in place? How in the world do you
begin to build a model when you don't know what the regs are
going to be? And is this what you have experienced in the past.
Mr. WILLIAMS. Well, it is a problem for us in Texas. We
have a legislature that is in session for about 4\1/2\ months
every other year. And so when the Federal Government takes so
long to issue guidance, it makes it very difficult for us to
make any adjustments to things so that we can comply with
Federal law. So it is a huge impediment.
Mr. KELLY. Okay.
Mr. Hobbie.
Mr. HOBBIE. I agree. And this happens repeatedly where
there is an expectation that States implement a new law
quickly, but there is a lag between the time the law goes into
effect and States are expected to implement and the regulations
come forth. The recent amendments to trade adjustment
assistance were a good example of that. So States would very
much like to have the regulations sooner, but they often don't
get them. So they do what they can and they cope when the
regulations finally come out.
Mr. KELLY. And I would like to see the direction of the
conversation go to talk about the benefits of being employed as
to worrying about unemployment benefits. There is something
wrong. We have the model upside down. And Mr. Davis hit on it.
Until we have a dynamic and robust economy, we are not going to
get people back to work. We can have this conversation and
continue to have this conversation, but until you get some
certainty for the job creators to look into the future and say,
oh, you know what, I am going to make that move now, I am going
to hire these folks, I am going to bring them in, I am going to
train, I am going to pay them, and I am going to look to a
brighter future.
But that is the problem. I am so tired of hearing about
unemployment benefits and not about the benefits of being fully
employed. That is the key and that is what we should be
concentrating on. Thank you all for being here.
Thank you, Mr. Chairman.
Chairman REICHERT. Thank you.
Mr. Griffin.
Mr. GRIFFIN. Thank you, Mr. Chairman.
Thank you all for being here today.
In my home State of Arkansas, the issue of drug testing for
unemployment benefits has been a hot one in the State
Legislature. And I want to ask you, Senator Williams, not in
your testimony, but on your Web site you talked about, I think
the term you used was drug testing as a reemployment strategy.
Does that sound familiar? Basically, it is something that helps
prepare people, the drug testing does, it prepares them for
employment.
I would ask if you could comment and elaborate on that and
any other benefits that you are finding to drug testing for
unemployment benefits.
Mr. WILLIAMS. Well, in Texas we have long required that
someone be ready and willing to go back to work and that they
actively be seeking employment in order to be able to receive
unemployment benefits in Texas. And so this has been a standard
that we have held our applicants to for many, many years.
I would say that if you are abusing illegal drugs or if you
are abusing prescription drugs--and I would point out that that
is a huge problem all over the country--you are not ready and
able to go back to work, so you are not employable. And it is
important for those people and for their families and really
for the future of our country that we identify those folks and
that they get in a program where they can get straightened out.
The largest refinery in the Western Hemisphere was recently
built in my senate district, in Port Arthur, Texas. And when I
visited there 4 years ago, when that plant was under
construction, I heard over and over again, we want to hire
local folks but we can't find people that can pass the drug
test. And we have that all over the State. We have a booming
economy, and the biggest problem we hear, to hire truckdrivers
in the State of Texas, is to find people who can pass the drug
test. And so I would submit to you that it is a big problem,
and this is something that we need a national policy to address
this.
Mr. GRIFFIN. I want to echo my friend, Mr. Kelly. I spoke
with a major, major employer in my district. And I have central
Arkansas, Little Rock and surrounding counties. And this
particular employer is an industrial employer. And they told
me, actually in a public hearing at the Clinton School, we had
a jobs conference a couple years ago, and they said openly
there that routinely they try to hire people, but those people
fail the drug test. And this is an industrial context, so they
can't take the risk of having people operate dangerous--
potentially dangerous machinery, et cetera, when they can't
pass a drug test. And so, that is a real problem in my
district, I can tell you that.
Let me ask you quickly, separate from the drug testing,
pursuant to the act that we have been discussing here today,
States can apply for waivers to design programs, pay people for
working or training, et cetera. Now, my understanding from this
hearing is that no State has yet applied. Do you know if Texas
plans to apply, if there is some innovative program that they
plan to seek approval for?
Mr. WILLIAMS. Well, as I mentioned in my previous
testimony, we do have a program that is our Back to Work
program that has been successful, and we are trying to bring
that in compliance with DOL guidelines in lieu of regulations
being issued. But our State has long resisted, for instance,
people who are self-employed. If they choose to go and start
their own business, we don't feel like it is appropriate for
those folks to be able to collect unemployment benefits from
their former employer while they are trying to start their own
business. So I would say that, beyond our Back to Work program
and the Shared Work program, there is very little beyond that
that we are involved in right now.
Mr. GRIFFIN. Got you.
Mr. Kidd, real quickly, the law specifically mentions one
category open for testing people who need to pass a drug test
to get a particular job, or to perform that job. In your
experience, what share of employers require drug tests for that
job, for a particular job?
Mr. KIDD. I can think of very few jobs that shouldn't
require it. Eighty percent of all our clients require it.
Mr. GRIFFIN. Eighty percent, okay.
Mr. KIDD. Eighty percent of ours do. And I would argue that
the others should be doing it, too. And, quite frankly, we test
them anyway because we want to make sure that they are going to
be clean. First, it is a reflection on us. But second, we
cannot afford the cost of the worker's compensation case if
somebody gets hurt or somebody else dies. We just can't afford
to do that, and we couldn't live with that with our conscience.
Mr. GRIFFIN. Thank you.
And thank you, Mr. Chairman.
Chairman REICHERT. Thank you.
Mr. Reed.
Mr. REED. Thank you, Mr. Chairman. And not to belabor a
point, but I did want to reference, Ms. Conti, in your
testimony--and I am not asking you a question--you have come to
the conclusion that drug use in the workplace is a negligible
number. And, obviously, you have heard testimony from your
colleagues or peers on this panel who disagree with you. I can
also tell you that as co-chair of the Manufacturing Caucus, we
have had people testify before us as employers repeatedly say
it is a significant issue, not a negligible issue.
And when I look at the citations within your testimony,
where you refer to the support of your ``negligible''
conclusion, you reference a welfare test for welfare
recipients. We are talking about unemployment. Welfare and
unemployment are completely different programs. So to use that
as the basis for your conclusion that it is negligible I think
is misleading. I don't take and give much weight to it, to be
perfectly honest with you, because they are two different
issues.
Also, you cite a Huffington Post article that I note was
written on June 6, 2012, just a few months after the law
passed. So to come to a conclusion that somehow this reform is
not producing in regards to unemployment and the issue of drug
use in the workplace in a short 2- to 3-month window, to come
to a conclusion that a negligible drug issue is the reality of
the situation, I question that conclusion.
Ms. CONTI. May I respond, sir?
Mr. REED. It is my time. I appreciate it. But to make such
a bold conclusion I find very troublesome. Because, you know
what? I care about the people who are on unemployment. And if
someone has a drug problem, I look at drug addiction as a
medical condition, an illness, a mental health-related issue in
certain circumstances. What we are talking about is trying to
empower people to get back to work. That is what has made
America great, is that work ethic, that pride.
And so a lot of times I think we on this side of the aisle,
people try to portray us as somehow trying to target people on
unemployment. That is the farthest thing from the truth, ladies
and gentlemen. We are talking about empowering people to
overcome an obstacle that we believe is a significant problem
and that many employers who have testified before me and other
Members of this panel have indicated is a significant panel.
And that is what we are talking about, is how can you in the
unemployment program identify areas where those issues of drug
use and abuse are there and make sure those employers and those
employees get the help so that the people can get back to work.
The question I wanted to focus on to the panel is on the
physically requiring to show up reforms that were in the
reemployment eligibility assessment policies back in the 2012
reforms. And coming from a rural district of western New York,
I see the benefits of using technology, allowing people to
access the program that way because of transportation issues
and things like that.
But one thing I am also concerned about, I harken back to
some memories I have when I was a law guardian, when I first
started out my law practice, and I was assigned to represent
kids. And I remember vividly an 8-year-old young man in the
western portion of my home county, Steuben County in western
New York. And we were sitting in his living room, and I am
trying to have a conversation with him, just, you know, who are
you, you know, I am who I am, and that type of thing. And I
said, what do you want to be when you get older? And the
response from an 8-year-old young man was, what are you talking
about? I mean, it was the sum and substance, what are you
talking about? We live here, check comes in the mail, and that
is what we do.
Now, I was expecting astronaut, firefighter, police
officer. And then it struck me, as I sat in that living room
with that 8-year-old young man, I said, why would I expect when
that 8-year old man becomes 20, 21, that he has learned about
adults working.
And so when I look at that in-person requirement, it
resonates with me that maybe what we are trying to do is to
send a message to the people in the home so somehow we can
break the cycle of dependency that we are seeing in America.
And so, you know, I am running out of time, and I will get
off my bully pulpit. But I am very interested in knowing how
you deal--Mr. Starks, you are from Utah--how you deal with
those rural issues and those competing issues that I just
articulated there? How does it work? And has anyone studied or
looked at the impact on the children in the households in
regards to the life lessons that are being taught by not having
that in-person requirement?
Mr. STARK. The staff-assisted requirement that is included
in the provision for the EUC REAs, even though we are a fairly
rural state, about 80 percent of our population is within 50
miles of Salt Lake City, and over 90 percent of our EUC
claimants were actually within 50 miles of an employment
center. So in Utah we covered the vast majority. We sent REA
requirements to every claimant, every EUC claimant. However, if
they did call up and indicate that they were more than 50 miles
away, we would issue them a waiver for that REA. But they were
few and far between.
So it really didn't become too much of an issue in Utah.
However, we support technology wherever it can be, you know,
substituted. We typically find excellent results with
technology, too.
Mr. REED. Appreciate it. Time has expired. Thank you very
much.
Yield back, Mr. Chairman.
Chairman REICHERT. Thank you.
I would like to welcome the gentlelady from Tennessee, who
is a fellow Member of the Ways and Means Committee, Ms. Black.
Ms. Black, thanks for joining us today. Do you have a
question for the panel?
Mrs. BLACK. Yes, I do. Thank you so much, Mr. Reichert, for
allowing me to be here with you today. I want to go just a
little bit different direction, but still tying in with the
conversation that has been had so far.
According to the President's budget, which was released
last week, in the last 5 years, counting both the State and the
Federal unemployment benefits, the UI system has paid out
almost $550 billion in benefits. That is an annual average of
more than $100 billion in benefits through the system that
previously paid out only about $35 billion in those same
benefits. This I think is not only having a negative impact on
some recipients, as we have heard today, but also on the system
that administers these benefits.
I want to go to my own home State of Tennessee. A recent
audit that just occurred in the last couple weeks in
Tennessee's unemployment insurance program revealed that the
Department of Labor and Workforce in my home State had provided
about $73 million in unemployment benefits to ineligible
claimants over the last 3 years. And the audit went on to say
that these overpayments had, and I quote, ``increased
significantly over the past 3 years,'' close quote.
Now, Congress has tried to address these issues. And in
2011 we enacted bipartisan reforms to impose a 15 percent
penalty for fraud cases. And then in 2012 we came back and we
passed further reform so that States would recover more
overpayments by reducing the current benefit checks. But,
clearly, there is still more work that needs to be done here.
I want you to begin answering this question for me, Mr.
Hobbie, and then, Mr. Starks, if you will follow up. Now that
benefit recipient is coming down and the receipts are coming,
are States shifting workers away from getting benefits out the
door and back to program integrity? And are error rates
improving as a result? Mr. Hobbie, would you address that?
Mr. HOBBIE. Yes. Thank you, Ms. Black.
The system is still overwhelmed. Now, initial claims have
come down. But because we have a continuing long-term
unemployment problem, continued claims remain very high. So the
workload in States is still high, but it is coming down. Some
of the increases in overpayments in the system were due to the
great recession. But, of course, that started the end of 2007
and was ended in the summer of 2009. And you point out that the
overpayments in Tennessee increased in the last 3 years.
Mrs. BLACK. Last 3 years.
Mr. HOBBIE. So that is a bit puzzling, that pattern there.
I don't have enough knowledge about Tennessee to know what is
going on there.
I can say that as the claimant workload goes down, we do
expect, and what has happened before, is States do shift
workers back away from processing claims timely to some of the
integrity activities.
I should also note that the system used to estimate
overpayments, called the Benefit Accuracy Measurement System,
has some problems with it. And we at NASWA in individual States
are working with the U.S. Department of Labor to try to improve
that system. It wasn't originally designed to estimate
overpayments. The sample sizes are somewhat small. It is not
focused so much on overpayments. And as a result, the estimates
are somewhat inaccurate, the confidence interval around them is
really quite wide.
So we are trying to work with the Department of Labor to
improve that methodology, improve the accuracy, the estimates.
Originally, when that so-called BAM System, B-A-M System was
designed, it was designed as a system more to help States
improve the integrity of their programs by providing them
management information to improve their programs rather than
calculating overpayment rates. But it subsequently has been
used for the publishing of overpayment rates which, frankly,
can't be compared from one State to the other, they can only be
looked at within a State. But the overpayment rates have been
high; they are coming down, to some extent. And we are trying
to make some progress on it.
Mrs. BLACK. If we would give the rest of the time to Mr.
Starks.
Mr. STARKS. Thank you. I would echo what Mr. Hobbie
indicated. It is really difficult to compare one State against
the other. For instance, if one State is more stringent on work
search requirements, they are going to have, usually, a higher
improper payment rate.
I think with unemployment settling down, talking to my
fellow directors, there is a much bigger effort on integrity. I
think over 20 States now have implemented a treasury offset
program where they are now intercepting Federal income tax
refunds for overpayments. We have the SIDES initiative. In
Utah, we are actually piloting two projects right now where we
are actually looking at incarceration records for the prisons
and county jails. We are also working with a large vendor that
has data on about a third of the payrolls.
Mrs. BLACK. I think my time has expired.
But thank you again, Mr. Chairman, for allowing me to ask
my question.
Chairman REICHERT. Thank you.
I would also like to welcome the gentleman from Texas, who
is the chairman of the Health Subcommittee on the Ways and
Means Committee.
Mr. Brady, do you have a question?
Mr. BRADY. Yes. Chairman Reichert, thanks very much for
letting me join you today. And I want to applaud the leadership
of Senator Williams, my state senator, for his leadership not
only in chairing the Senate Finance Committee in Texas, but
leadership on finding innovative ways to get people back to
work.
Today there are literally tens of millions of Americans who
can't find a full-time job. There are millions more who have
simply given up looking for work altogether. Yet we have jobs
going unfilled in energy, in building trades, in
transportation, simply because the applicants cannot pass a
drug test. Last year at this time, Republicans, Democrats, and
the White House came together and agreed it was time to find
some solutions to get people job-ready, those who are on
unemployment today. And we, together, in a bipartisan way,
created a process where States could raise their hand and show
us in demonstration projects and pilot programs exactly how we
connect those who don't have a job with good-paying jobs that
are available today. Yet here we are, more than a year later,
no waivers have been granted because no applications have been
submitted under a round that has created a very burdensome,
very complex process that, in fact, won't work.
So my question to Senator Williams and then to Mr. Hobbie
is, if we can convince the Department of Labor to do their job,
to follow the law as written, and the intent, to go back to the
drawing board, coming up with the process that encourages
States to step forward, Senator Williams, in your view, for
Texas, which has already been recognized has having innovative
programs to connecting local people to local jobs, if
Department of Labor can get it right, is Texas still willing to
raise their hand and implement a pilot program to help show us
the way?
Mr. WILLIAMS. Yes, sir, we are. And I would point out that
when we rolled out this Back to Work program, our Lieutenant
Governor traveled to 18 cities around the State promoting our
Back to Work program. And so this is something that all of us
in the legislature, from our leadership to the Membership, take
very seriously. And removing those impediments and hurdles that
we have would make a big difference in what we were able to do.
I would also point out that I think there are some
technical changes that need to be made. I think one thing that
hasn't been touched on here about your program integrity is the
sample size that you are using to test unemployment benefits
for overpayment is set by the Department of Labor at 480. Now,
what does that mean? In Rhode Island, they sample 480 people;
in South Dakota, who doesn't have as many people as live in my
senate district, they sample 480 people; and, in Texas, with 25
million people, they sample 480 people.
And so there are others, Mr. Temple and others, who could
go into a lot of the details about what the Labor Department
considers best practices that are also just a way to scratch
the list off and check the box and say, we don't have
overpayments by looking the other way. And so I think there is
not only a need for waivers, but there is a need for the
Department to recognize that States are the best ones to
implement these programs and to give us the flexibility to
monitor them and make sure that they are working appropriately.
Mr. BRADY. Senator, thank you very much.
Mr. Hobbie, we are sort of given the impression up here
that States weren't interested in stepping forward to help us
solve this problem, connect these workers with jobs, and that
today, you know, a year later, States generally aren't all that
interested. Do you think that is the case? Or do you think
States need the right application process so that they can
indicate their interest? Is the interest still there?
Mr. HOBBIE. Mr. Brady, yes, the interest is there. States
generally would like more flexibility from the Federal
Government in implementing these demonstration programs, not
only from the Department of Labor, but also under the law. And
earlier I mentioned some changes that could be made, I think,
to the current law which would make it more flexible for States
such as Texas to operate the kind of demonstration programs
they have had in the past.
So, in general, I would say our Members are interested.
They want more flexibility. But they also recognize the Federal
Government wants accountability. With respect to
accountability, the law requires sophisticated evaluation of
the demonstration programs. It would be very helpful if the
Federal Government would provide funding for those evaluations
rather than having it come out of the Unemployment Trust Fund
or from state administrative costs.
Mr. BRADY. Well, I appreciate all the witnesses.
Again, Chairman, you are holding this hearing because we
want those who are unemployed to be job-ready on day one. And
key to that is the growing number of jobs that require drug
screening and drug testing, good-paying jobs. So thank you for
continuing to shine a light on this problem.
Chairman REICHERT. Thank you for joining us today, Mr.
Brady.
Well, thanks to all of you for your testimony. Your
information is very helpful. Sometimes these hearings seem so
sterile and formal, and you probably walk away and wonder if it
was worth it. You can see there was a lot of interest here
today, a lot of questions asked. We want to get this right. And
what is worth it is getting, as everyone here has said, on both
sides, getting people back to work. I mean, that really is what
we all are here for.
And accountability, Senator, you mentioned that, the
Federal Government has an issue with performance measures,
accountability, and, you know, on a program that spends
billions of dollars every year, there are a lot of complicated
processes involved in this issue. But that doesn't mean we
should not proceed forward and find solutions to the problems
that we are all facing and try to get people back to work.
I will just mention this rather quickly. There are a lot of
us on this Committee, on the Full Committee and some of us here
today, who have had experience working with local government.
Having been a part of the local government, my job was the
sheriff in Seattle. And in dealing at local level, you know
what is best for your community, you know what works in your
community. And that has been a common theme today. I think that
the Federal Government needs to understand even more so than
some of us do that the Federal Government would be best letting
you have that flexibility administering programs. Yes, with
accountability and responsibility, but the ability to
administer those programs tailored to your community so you can
help the people that you know best get back to work and support
their families.
So, again, I appreciate all of your hard work. Continue to
do that. And we will look to you for answers. And hopefully we
can find solutions.
If Members have additional questions for the witnesses,
they will submit them to you in writing. And we would
appreciate receiving your responses for the record within 2
weeks.
Chairman REICHERT. Thank you. This Committee stands
adjourned.
[Whereupon, at 4:03 p.m., the subcommittee was adjourned.]