[Senate Hearing 114-680]
[From the U.S. Government Publishing Office]



 
  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2017

                              ----------                              


                        THURSDAY, MARCH 17, 2016

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:01 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Roy Blunt (chairman) presiding.
    Present: Senators Blunt, Cochran, Alexander, Cassidy, 
Capito, Lankford, Murray, and Schatz.

                          DEPARTMENT OF LABOR

                        Office of the Secretary

STATEMENT OF HON. THOMAS E. PEREZ, SECRETARY


                 opening statement of senator roy blunt


    Senator Blunt. The Appropriations Subcommittee on Labor, 
Health and Human Services, Education and Related Agencies will 
come to order.
    Good morning, Secretary Perez. Thank you for taking your 
time to be here with us today to discuss the department's 
fiscal year 2017 budget request. We look forward to hearing 
your testimony and having the chance to talk about it.
    Certainly, fostering an environment and regulatory agenda 
where everyone can move forward in a positive way, where jobs 
can flourish, where workers are protected, where Americans can 
establish and grow businesses, and keep the country's economic 
engine driving forward, are shared priorities.
    This is a budget that reflects many of those bipartisan and 
widespread supported programs, like workforce training, 
ensuring safe workplaces, helping Americans who lose their jobs 
return to the workforce, that make up really the bedrock of the 
department's responsibilities.
    At the same time, the devil is always in the details. I was 
disappointed with the proposed increase just simply because it 
is an anticipated increase of $627 million for the department 
when our total nondiscretionary defense spending is increasing 
by $40 million.
    My advice would be do not make big plans to spend that 
money yet, but we will talk about that, I am sure, as the 
hearing goes on. I think the increase is only possible because 
of some attempts in other parts of this big budget for Labor 
and Education and Health and Human Services to believe that 
lots of things are going to happen on the mandatory side that I 
have reason to believe cannot happen in this Congress this year 
on the mandatory side.
    That does not mean we are any less committed to the real 
priorities we need to have on the discretionary side. I hope we 
can work together to find those priorities.
    As the country continues to recover from recession, it is 
really time, I think, for the administration to admit that 
government regulation and overreach are an obstacle to the kind 
of job creation we would like to see. I continue to have 
serious concerns about the aggressive regulatory agenda and the 
use of other methods to short-circuit the way that regulations 
should be out there for people to see and think about and 
understand before they go into effect.
    I hear in our State and from people all over the country 
about the adverse effects that the department's regulations 
have had on them. I believe I can come up with a regulation 
that any group you want to name is concerned about.
    I think in many cases, Mr. Secretary, they are less 
concerned about the regulations themselves than they are about 
the letters of interpretation, the things that seem to be 
moving toward more and new regulations without even going 
through the regulatory process.
    The growth in the agency, the 779 new employees that this 
budget requests, is highly unlikely to happen. But we will be 
looking at the budget, and we will be really trying hard to 
find the areas that we can agree on, too, because we do want to 
have an agenda that moves forward for a better trained work 
force, a safer workplace, an America that has better jobs, that 
creates stronger families.
    Your department has an awful lot to do to help create that 
atmosphere of growth and better jobs rather than a regulatory 
atmosphere where the kinds of things that would normally happen 
otherwise cannot get around the obstacles that some regulations 
create.
    But we are glad you are here.
    [The statement follows:]
                Prepared Statement of Senator Roy Blunt
    Good morning. Thank you, Secretary Perez, for appearing before the 
Subcommittee today to discuss the Department of Labor's fiscal year 
2017 budget request. We look forward to hearing your testimony.
    Fostering an environment and regulatory agenda where everyone can 
flourish, where workers are protected, and where Americans can 
establish and grow businesses keeps the country's economic engine 
driving forward. We have many shared priorities in the budget that 
reflect bipartisan and widespread support. Workforce training, ensuring 
safe workplaces, and helping Americans who lose their jobs return to 
the workforce make up the bedrock of the Department's responsibilities.
    At the same time, the devil is in details and I am disappointed 
that the $627 million increase for the Department of Labor dwarfs the 
total increase for all non-defense discretionary spending--which is $40 
million. Further, this increase was only possible with untenable budget 
gimmicks within the Department of Health and Human Services' budget 
request. Finally, the Administration is attempting to evade the agreed-
upon spending caps by designating large portions of the budget request 
as ``mandatory,'' or off-budget, spending.
    It is my hope we can work together to identify priorities and find 
common ground while adhering to budget caps agreed to a little more 
than 4 months ago.
    As the country continues to recover from the recession, it is time 
for the Administration to admit that government regulations and 
overreach do not create job growth. I continue to have serious concerns 
about the Department's aggressive regulatory agenda and methods used to 
short-circuit the fair and open regulatory process.
    I hear from Missourians and Americans across the country about the 
adverse effects the Department's regulations has on them and job 
creation in their community. Yet the Department continues to move 
forward with increasing burdens that deter job creators from hiring.
    Even more concerning, the Department pushes many of these 
controversial policy changes outside the regulatory process altogether 
and without public comment or input. They are being implemented through 
administrative memos, sweeping new ``interpretation'' publications, and 
changes in definitions that alter the scope of the law. Many small 
businesses feel almost overrun by aggressive regulation and by policy 
changes that do not result from the legal, full, and open regulatory 
process.
    Finally, I have concerns about bureaucratic growth. The Department 
has again requested large increases in departmental personnel, 779 new 
employees in fiscal year 2017 alone. This request is both unaffordable 
and primarily used to drive a partisan regulatory agenda.
    Mr. Secretary, I look forward to hearing your testimony today and 
appreciate your dialogue with us about these important issues. While 
there are clearly matters on which we disagree, I know we share a 
strong desire to protect and support the American workforce and a 
stronger economy.
    Thank you.
    Senator Blunt. I am certainly glad that Senator Murray and 
I get to continue to work together on this committee, and I 
turn to her for her opening remarks.

                   STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. Thank you very much, Mr. Chairman.
    Secretary Perez, thank you for being here today and for all 
that you do and your department does to help support our 
Nation's work force.
    This is a really critical moment in the American economy. 
While we have seen 72 straight months of job growth, and 
unemployment has fallen 5 percent, wages have only risen 
slightly in the past year, and 8 million jobseekers cannot find 
work.
    Back in my home State of Washington, I have seen clearly 
that when workers succeed, business succeeds and the economy 
succeeds. So I believe the only way to create sustainable 
economic growth is from the middle out, not from the top down.
    Secretary Perez, I know you agree and this is central to 
the mission of the Department of Labor. I look forward to your 
testimony and the discussion about the department's funding 
needs for fiscal year 2017.
    Expanding economic security for more Americans will require 
investments in the department's mission. The department's 
budget proposal for programs within this subcommittee's 
jurisdiction total almost $12.8 billion, which is an increase 
of $627 million over last year. The department needs these 
investments to help ensure workers have the resources and 
support they need to improve their skills and move into 21st-
century careers and strengthen government policies that support 
our working families.
    I want to start by talking about the administration's 
vision for investing in training today's work force and 
preparing for the jobs of the future.
    Working with Chairman Blunt, I was very pleased we were 
able to invest $90 million in an apprenticeship grant program 
in the 2016 omnibus. Expanding access to apprenticeships has 
been a top priority for me because it sets workers on a clear 
career pathway and ladders into the middle class. And research 
actually shows that for every taxpayer dollar we spend on these 
programs, the return on investment is $27.
    So I was pleased to see the President's proposal continue 
this important investment to develop comprehensive programs 
that expand apprenticeships across multiple sectors.
    The proposal also includes investments in programs that 
provide comprehensive, in-person support for veterans and 
unemployed workers. Those programs have proven to be effective 
at helping connect workers with good jobs.
    But building our economy from the middle out requires more 
than making these training investments. It also calls for 
protecting workers' basic rights, and that starts with the 
department updating overtime standards and Congress increasing 
the minimum wage and passing legislation to combat wage theft.
    I understand that we in Congress may not agree on all of 
these issues. However, everyone should agree that every 
employer should comply with the law as it exists today. That is 
why I was pleased to see the $49 million increase proposed in 
the budget for the Wage and Hour Division.
    The Wage and Hour Division within the Department of Labor 
protects workers' paychecks by cracking down on Federal minimum 
wage violations. The division also helps make sure that workers 
get the overtime pay they have earned.
    With no increase in its budget since 2012, the number of 
people investigating these violations has declined. If the 
funding level is frozen again in 2017, the department will be 
unable to conduct an estimated 1,600 investigations, which will 
leave workers in our country with few options for collecting 
millions of dollars in wages that are owed to them. And 
diminished oversight means that some unethical employers will 
be able to get away with denying workers the pay that they have 
learned.
    Updating workers' rights also means expanding paid leave, 
eliminating gender pay disparity, and strengthening retirement 
security.
    I appreciate the budget's focus on these issues as well as 
the Secretary's leadership in those areas. It is important to 
remember that the 2-year budget agreement rolled back the 
automatic cuts and allowed us to restore key investments, but 
it, of course, did not go as far as many of us had hoped. That 
means, as it often does, that difficult choices will be 
unavoidable in 2017. They will be tougher than last year.
    Even so, I believe our subcommittee can find a way to write 
a bipartisan bill once again, if we have an allocation that 
allows us to make the investments needed in worker training and 
other vital areas.
    I know Chairman Blunt would like to work on this bill in a 
bipartisan manner as well. I appreciate it. And I appreciate 
the progress we have made.
    So I look forward to continuing to work with you, Secretary 
Perez, and all of our colleagues here today in the coming weeks 
and months.
    With that, let me turn it back over to the chairman. Thank 
you.
    Senator Blunt. Thank you, Senator Murray.
    We will probably have time for more than one round of 
questions, and we will do that on a 5-minute basis in the order 
now that members arrive.
    Mr. Secretary, I mentioned my continued concerns that the 
impacts of regulations from the department often do not seem to 
be--I am sorry. Let's listen to you first.
    [Laughter.]

               SUMMARY STATEMENT OF HON. THOMAS E. PEREZ

    Secretary Perez. It is your committee, Mr. Chairman.
    Good morning. It is a pleasure to be here with all of you. 
Mr. Chairman, Ranking Member Murray, Chairman Alexander, 
Senator Schatz, it is an honor to be here with all of you. I 
appreciate all of your attention to these critical issues.
    As you correctly said, Mr. Chairman, there is a lot of 
common ground in the work that we do together. I want to thank 
you for your leadership on the passage of the Workforce 
Innovation and Opportunity Act, which is a game-changer for 
businesses and jobseekers alike.
    I want to thank you for your continued commitment to 
apprenticeship and a career in technical education, veterans' 
employment. There is so much that we have in common, and I look 
forward to continuing that work together.
    As we prepare for the final 10 months of the 
administration, it is worth reflecting on where we have been, 
where we are, where we need to go.
    As you know, President Obama inherited an economy in 
freefall. In the 3 months before he took office, the economy 
hemorrhaged roughly 2.3 million jobs. Seven years later, we 
have made tremendous progress climbing out of the worst 
economic crisis in a generation.
    We are now in the middle of the longest streak of private 
sector job growth on record--6 straight years, to the tune of 
14.3 million new jobs. Unemployment is down from 10 percent to 
4.9 percent. Auto sales reached a record high last year.
    So while we have undeniable unfinished business, including 
lifting real wages, ensuring shared prosperity, we have made 
undeniable progress.
    I am proud of the department's important role in this 
progress. Our work is critical to fortifying the basic pillars 
of the middle class: education and training that allows you to 
move up the ladder of success, affordable and accessible 
healthcare, a fair day's pay for a hard day's work, a roof over 
your head and a mortgage that will not go underwater, and the 
opportunity for a secure and dignified retirement.

             PLANS FOR THE FISCAL YEAR 2017 BUDGET REQUEST

    These pillars took a beating during the Great Recession, 
but I have never felt more confident in the resilience of our 
economy, our workers, and our employers. I believe our fiscal 
year 2017 budget request will help us continue our efforts to 
sustain the recovery.
    So, for example, despite a major decline in the number of 
long-term unemployed, there are still 2.2 million people who 
have been out of work 27 weeks or more. To get them the help 
they need, we want to continue to strengthen the Reemployment 
Services and Eligibility Assessment program, which has a proven 
return on investment.
    Our budget builds on the increased investments made by 
Congress last year, adding $70.9 million for a total of $185.9 
million. These dollars will expand services to all veterans 
receiving benefits through the Unemployment Compensation for 
Ex-Servicemembers, as well as one-third of the UI (Unemployment 
Insurance) claimants most likely to exhaust their benefits and 
become long-term unemployed.
    I am grateful for the Congress' overwhelming bipartisan 
support in passing the Workforce Innovation and Opportunity Act 
and providing the resources to make the promise of that new law 
a reality. Our 2017 budget builds on this foundation by 
bringing the WIOA (Workforce Innovation and Opportunity Act) 
formula programs to their fully authorized amount while 
continuing the 15 percent Governor set-aside for statewide 
activities that I made great use of as a State Labor Secretary.
    Apprenticeship has been one of the cornerstones of our work 
force development efforts, because, as Senator Murray correctly 
points out, studies have shown that a $1 Federal investment has 
a $27 return. So the $90 million that you added to the budget 
for apprenticeship has the potential for almost a $2 billion 
return.
    We want to make sure apprenticeship is available in every 
ZIP Code. To that end, we paid the largest ever Federal 
investment in apprenticeship last year, and we are not only 
expanding it in the traditional areas, we are diversifying it, 
places like Zurich Insurance Company now leading the charge to 
make claims adjuster apprenticeship programs and building that 
model out, making sure it is available in IT, so much momentum.
    Apprenticeship is the other college, except without the 
debt, and we want to continue those efforts. We look forward to 
working with you on the reauthorization of Perkins, because 
there is so much relationship between the apprenticeship 
conversation and the CTE conversation, Mr. Chairman. So I am 
very excited about those potentials for synergy.
    The mission of the department is not to just help people 
find good jobs, but to ensure strong labor standards to give 
them the best possible quality-of-life. So as a result, for 
instance, our Wage and Hour Division has been able to secure 
back wages totaling nearly $1.6 billion for 1.7 million 
workers, and we are requesting a total for all of the 
enforcement offices of $1.9 billion to continue to safeguard 
the health, safety, wages, working conditions, and retirement 
security of our workers.

        PURSUING AN ACTIVE REGULATORY AGENDA TO PROTECT WORKERS

    We continue to pursue an active regulatory agenda in this 
space, in consultation with all stakeholders, including Members 
of Congress. We are working, for instance, on the overtime 
rule, which we submitted to OMB for final review earlier this 
week. It stands for the simple proposition that if you work 
extra, you should be paid extra.
    We also strongly support the Murray-Scott minimum wage bill 
and appreciate, Senator Murray, your leadership in that area.
    I believe it is a false choice to suggest that we either 
have economic growth or workplace safety. We must have both. 
That is why our Occupational Safety and Health Administration 
is close to issuing an updated rule that will save lives by 
significantly reducing worker exposure to silica.
    In the retirement context, we know that the Ozzie and 
Harriet era of defined benefit plans has been largely evolving 
into a world of defined contributions and IRAs. We need to make 
sure that when people are making decisions, that they are 
getting the advice they need. As Jeff Bogle, the founder of 
Vanguard said, when you put your customer's interest first, it 
is great for your customers and it is great for business.
    So those are areas that we are working on, and I have had 
the privilege of making a lot of housecalls in this job, Mr. 
Chairman. Last summer, I met a man named Bruce Ives in Missouri 
who had lost his job, having been laid off. He was 60 years 
old. He was not sure he was going to get another job. But I 
often refer to the Department of Labor as Match.com. We help 
connect jobseekers who want to punch their ticket to the middle 
class with employers who want to grow their business.
    So we were able to enroll him in a program called ReBootU, 
which helped him get computer programming skills that led to a 
job making $36 an hour as an IT analyst at a hospital.
    So I have seen those inspiring stories, but I have also 
seen folks who are still struggling: the fast food worker in 
Detroit who had slept in her car with her three kids the night 
before I met her, the school bus driver in Connecticut who had 
to take her newborn onto her bus route because she did not have 
paid leave, the foundry worker in Buffalo I met with last week 
who has silicosis.
    These are the challenges that keep me up at night. In the 
309 days that remain, and I do count the days, but I want to 
make sure I make every day count.
    I look forward to working with all of you to make sure that 
we build an America that works for everybody. Thank you, and I 
look forward to your questions.
    [The statement follows:]
               Prepared Statement of Hon. Thomas E. Perez
    Chairman Blunt, Ranking Member Murray and members of the 
Subcommittee, thank you for the invitation to testify today. I appear 
before you with a great sense of optimism and pride--not just about 
what has been achieved in these past 7 years, but about the direction 
we are headed in the future. I am especially proud of the Department's 
role in helping shape this future--a future of opportunity and shared 
prosperity, a future of robust job growth and a thriving middle class, 
a future where workers nationwide get the skills and training they need 
to receive a fair wage without risking their health or safety.
    The 2017 President's Budget reflects this sense of optimism and 
provides the resources necessary to address the unfinished business of 
this recovery. It builds on 7 years of investments that have helped us 
climb out of the worst economic crisis in generations. The Budget 
supports the President's vision of an economy that works for everyone--
one where your zip code doesn't determine your destiny; one where a 
full-time job pays a living wage; one where a lifetime of work leads to 
a dignified retirement; one where America's businesses are on a level 
playing field with their international counterparts; and one where job 
security also means that the workers are safe from unlawful 
discrimination, retaliation, and workplace hazards.
    We've come a long way since the darkest days of the Great 
Recession. We've now experienced 72 months of private sector job 
growth, with the unemployment rate down to 4.9 percent, the lowest 
level since February 2008. Yet this recovery is not reaching every 
community and every household. Too many people are finding opportunity 
beyond their reach. Too many people, no matter how hard they work, 
can't get by, let alone get ahead. Some people have given up hope, 
leaving the job market completely. Others have settled for part-time 
employment when they want and need a full-time job. Many youth--
especially those who grew up in poverty--do not see hope for the 
future. We have accomplished a lot together, but there is still more 
work ahead. The Department's fiscal year 2017 Budget will allow us to 
do that work, supporting bipartisan investments made to date and 
proposing new investments that meet important needs.
               training americans for jobs of the future
    In my two and a half years as Secretary of Labor, we have made 
significant progress in building a training system that invests in the 
workforce of today and tomorrow. The Department worked in 2014 with the 
Vice President and other agencies to conduct a thorough review of 
America's training programs, to make them more job-driven and more 
responsive to employers' needs. I'm grateful for the bipartisan 
leadership in Congress that led to passage of the Workforce Innovation 
and Opportunity Act (WIOA), which we are hard at work implementing. We 
have lifted up apprenticeship as never before, making the largest-ever 
Federal investment in this learn-while-you-earn model and appreciate 
Congress appropriating resources that will allow us to continue 
expanding apprenticeships. We know more now than ever about what works 
in job training--we need to foster partnerships between the workforce 
system, employers, workers, intermediaries and others so that we are 
preparing workers for in-demand jobs. We need to be data driven and 
meet the diverse needs of our workforce. The Department of Labor, with 
our partners throughout the Administration and the States, is leading 
the process of making these important strategic changes.
    Our employment and training programs served over fifteen million 
people in the Program Year ending June 30, 2015. The reforms supported 
by WIOA--like accountability for business engagement and new 
requirements to measure and report additional program outcomes--are 
tools that help us identify what is working, fix or end programs that 
aren't effective, and provide good information to workers so they can 
select training programs that are effective. The Department's staff has 
been working tirelessly, and in strong partnership with colleagues at 
Education, HHS, and elsewhere, to support and implement WIOA's 
alignment of employment and training programs, so we can provide more 
effective services with maximum impact. In fiscal year 2016, Congress 
appropriated additional resources for a number of WIOA programs. The 
fiscal year 2017 Budget builds on this foundation by bringing the WIOA 
formula programs to their fully authorized amount while continuing the 
15 percent Governor's set aside for statewide activities. The Budget 
also includes resources for additional staff to help all States and 
localities implement WIOA, as well as technical assistance to States to 
improve the quality of services provided to participants. An investment 
of $40 million will help States track longitudinal educational and 
employment outcomes of WIOA participants, so we can know what services 
are most effective. In fiscal year 2017, we are also proposing modest 
increases specifically to assist dislocated coal industry workers and 
to pilot ways to better serve Native American youth who do not live on 
reservations.
    Apprenticeship is one model where we have evidence of substantial 
success. Apprenticeships offer a path to the middle class, as well as 
the opportunity for trainees to earn while they learn. Much of 
apprenticeship's success is attributable to the strong connection 
between the trainee and the employer and, in many cases, the strong 
partnership between management and labor. Those who finish their 
program secure an average starting salary of $50,000, and over the 
course of their careers they earn $300,000 more than their peers who 
did not participate in an apprenticeship program. Since the President 
launched the American Apprenticeship Initiative in 2014, we have 75,000 
more apprentices in training, a step towards the President's goal of 
doubling the number of apprentices. Over 165 employers and other 
organizations have joined the Department's LEADERs program to be 
champions of the apprenticeship model. The Department's Registered 
Apprenticeship College Consortium, now 239 colleges and 976 training 
programs strong, make it easier for apprentices to earn college credit. 
I am appreciative of Congress appropriating $90 million in fiscal year 
2016 for apprenticeship grants, and the fiscal year 2017 Budget 
continues this investment. The Budget also proposes $2 billion in 
mandatory funds for an Apprenticeship Training Fund that will provide 
grants to States and regions to bring more employers to the table in 
providing high-quality apprenticeships.
    Apprenticeship, like most successful workforce programs, depends on 
partnerships. To scale successful partnerships, we are requesting $3.0 
billion in mandatory funding to create an American Talent Compact. This 
mandatory competitive funding would create regional partnerships 
between workforce boards, economic development organizations, 
employers, and educational institutions to train workers for in-demand 
jobs. It would give employers better forums to communicate their skill 
needs and help educators better understand the job market, so they can 
tailor their courses, certificates, and degrees accordingly. We 
anticipate being able to train and place 90,000 people per year through 
this program.
    The Job Corps program has trained nearly 2.7 million people since 
its inception more than half a century ago. The program was created to 
open doors of opportunity for at-risk young people from diverse 
backgrounds, giving them the tools to change course and reach higher 
rungs on the ladder of opportunity. We now have Job Corps centers in 
every State, the District of Columbia and Puerto Rico. In recent years, 
the centers have been collaborating more closely with businesses and 
community colleges. The credentials students earn are industry-
recognized, increasing the value to both the students and employers. 
Nearly 80 percent of Job Corps graduates successfully start careers, 
including in the armed forces, or enroll in higher education or 
advanced skills training. But we are also looking to improve the 
program in the coming years. The Department is committed to producing 
innovation and continuous improvement within the Job Corps program. We 
recently released a solicitation to pilot an innovative approach to the 
Job Corps model at the Cascades center in Washington, and we are 
preparing for additional pilots in the future. The Department will also 
launch a major external review of the program beginning in 2016, with 
the goal of positioning the program for continued success.
    Strengthening student safety and security is a top priority. We 
have initiated a National Safety Campaign--Standup for Safety--that 
includes increased staff training, more intensive center oversight and 
a requirement that all centers review and strengthen their security 
procedures. Job Corps has also worked with our students and contractor 
community to support a student-led Youth 2 Youth: Partners for Peace 
initiative, designed to address youth-on-youth violence, aggression and 
bullying. We also know we need to make additional investments in mental 
health counselors and other personnel, as well as structural upgrades 
to better provide safer, more secure and stable learning environments 
at Job Corps centers nationwide--the Budget invests in both of these 
areas.
    Since around one in seven Americans between the ages of 16 and 24 
are out of both school and work, the Administration is proposing a 
comprehensive approach to put these individuals on the path to getting 
a diploma and connecting to postsecondary education and jobs. WIOA also 
takes an important step forward in addressing this problem by directing 
that at least 75 percent of Youth formula funds be used for out-of-
school youth, while also calling for additional investments for this 
disconnected and vulnerable population. The Budget proposes $5.5 
billion in mandatory funding to help engage young people in the 
workforce and set them on a path to a better future. Of this, $3.5 
billion will be used to provide paid work opportunities--bolstering 
young people's resumes and giving them the opportunity to gain useful 
work experience. These youth will also be given the means and support 
necessary to complete a high school degree or its equivalent, as well 
as assistance with financial literacy. In addition, $2 billion will go 
to local governments in communities struggling with high rates of youth 
disengagement, high school dropouts and youth unemployment. These 
resources will help communities locate and reengage youth, providing 
them with counseling, support services, education and employment 
opportunities.
    As we build a more integrated, demand-driven job training system, 
we must use data to understand the labor market. The Bureau of Labor 
Statistics (BLS) is the principal Federal statistical agency 
responsible for measuring labor market activity, working conditions and 
price changes in the economy. These data are invaluable to decision-
makers. To better understand what is happening in the workplace, the 
Budget includes, among other resources, funding for the first year of 
activities for a Survey of Employer-Provided Training, which will fill 
a key gap in knowledge about the workforce system. The Budget also 
covers inflationary costs to ensure no diminution in the quality of the 
Bureau's core surveys.
    Data on training, careers and jobs should also be more easily 
accessible. Every year, millions of people begin a post-secondary 
education. While we know that this can be a crucial investment in one's 
future, many people choose a school or education track with little 
information about job placement rates, sometimes leading to thousands 
of dollars of debt without meaningful job opportunities. We want to 
empower workers to make smart time and money investments. Thus, we 
propose $500 million in mandatory funds for a Workforce Data Science 
and Innovation Fund that will invest in state data systems so they are 
able to create easy-to-understand scorecards about outcomes, like job 
placement, earnings, job tenure and other indicators of success. That 
way, workers can better compare one program to another and make 
informed choices about which program is best for them. The Department 
will also work with the Departments of Commerce and Education to 
develop new standards, analytical data sets, and open source data 
products on jobs and skills, so that researchers can do deeper 
analysis. This type of information will give consumers of education and 
training the best chance to build a successful career.
            supporting our veterans and long-term unemployed
    Despite giving years of their lives to our country, far too many 
veterans struggle with unemployment and even homelessness. The 
Veterans' Employment and Training Service (VETS) helps veterans and 
separating servicemembers transition to a good civilian career, 
starting with a robust and revitalized 3-day Employment Workshop that 
is required for every separating servicemember. These workshops are 
part of a comprehensive veterans' employment support program, which is 
anchored in our American Job Centers across the country.
    The Homeless Veterans Reintegration Program (HVRP) helps transition 
homeless veterans into meaningful employment. The Department's fiscal 
year 2017 request includes an increase of $12 million to fully fund 
this program at the authorized level, allowing us to serve more 
veterans who have struggled mightily in making the transition to post-
military life. Our most recent data show that over 68 percent of HVRP 
participants who completed the program obtained jobs making an average 
of nearly $12 an hour. We are eager to expand on this success.
    We know the number of long-term unemployed--among both veterans and 
civilians--remains too high. We can and should be doing more to reach 
those left on the sidelines during the economic recovery. The data show 
that people who are out of work for longer periods of time have more 
trouble finding jobs. The Department seeks to reduce long-term 
unemployment by continuing to invest in the evidence-based Reemployment 
Services and Eligibility Assessments (RESEA) program. In fiscal year 
2017, the Budget builds on the increased investments made by Congress 
last year, including an additional $70.9 million for a total of $185.9 
million. These dollars will expand services to all veterans receiving 
benefits through the Unemployment Compensation for Ex-Servicemembers, 
as well as the one-third of Unemployment Insurance (UI) claimants who 
are most likely to exhaust their benefits and become long-term 
unemployed. Research shows that each dollar invested in these services 
yields approximately $2.60 in benefits savings, thanks to shorter 
unemployment duration.
    Unemployment is sometimes caused by unnecessary barriers that a 
worker faces when he or she has to move. The Department's efforts at 
developing industry-recognized and portable credentials have helped 
increase labor mobility, but different States often have a wide variety 
of licensing rules for the same occupation. By simply moving across a 
State border, trained professionals with years of experience sometimes 
have to pay high licensing fees or spend months redoing coursework to 
obtain a job for which they already have the skills. The Budget 
proposes to build on the resources provided by Congress in fiscal year 
2016, investing $10 million in fiscal year 2017 to identify and address 
areas where occupational licensing requirements are creating an 
unnecessary barrier to labor market entry or labor mobility. This 
investment will be particularly useful to transitioning service 
members, military spouses, formerly incarcerated individuals and 
dislocated workers.
                      supporting working families
    As some people struggle with retraining or recertification, others 
working full-time, minimum wage jobs are still unable to make ends 
meet. No matter how hard they work, they fall further behind. Many of 
these people need public assistance and visit food banks just to 
sustain their families. Often, they are one setback away from financial 
devastation. The current Federal minimum wage of $7.25 per hour is 
insufficient to support a family.
    The value of the minimum wage, which has not increased in almost 7 
years, has failed to keep pace with increasing costs of basic 
necessities. Raising the minimum wage is good for workers, their 
families and the economy. When minimum wage workers have more money in 
their pockets, it spurs consumer demand, with that money pumped back 
into the economy. Congress hasn't taken action, but 18 States and the 
District of Columbia have raised their minimum wage since President 
Obama called for an increase in his 2013 State of the Union address. 
Workers on many Federal contracts also now receive higher wages, thanks 
to an Executive Order signed by the President. Yet there are millions 
more who continue to struggle. In one of the richest countries in the 
world, no one working full time should live in poverty.
    American workers also struggle with the difficult choice between 
caring for a new baby or sick family member and a paycheck that the 
family desperately needs. While the Family and Medical Leave Act allows 
workers to take unpaid leave without losing their jobs, many families 
simply cannot afford to take the time off. The United States is the 
only industrialized Nation that fails to offer workers paid maternity 
leave. Paid parental leave empowers families and produces better 
outcomes for children. The Department has given out grants to States to 
research the feasibility of paid leave, and the fiscal year 2017 Budget 
proposes a $1 million increase to expand these efforts. But we can do 
more. To encourage more States to enact paid leave legislation, the 
Budget includes $2 billion in mandatory funding for a Paid Leave 
Partnership Initiative. Under this initiative, the Department would 
provide funding for up to five States to launch paid leave programs. 
States that choose to participate in the Initiative would be eligible 
to receive funds for the initial set up and 3 years of benefits. The 
Budget also proposes legislation that would allow Federal employees six 
weeks of paid administrative leave for the birth, adoption, or foster 
placement of a child. An investment in healthy families is an 
investment in our Nation's future.
           protecting workers, wages, and retirement security
    At the Labor Department, we reject the false choice between 
economic growth on the one hand and worker protections on the other. 
While most employers play by the rules, there are too many cases where 
workers are cheated out of their hard-earned wages or forced to endure 
an unsafe workplace. At the Labor Department, we are more strategic 
than ever before about cracking down on wage violations, enforcing 
workplace safety, and protecting the retirement savings of your 
constituents who have worked their whole lives to build a nest egg. In 
doing so, we both protect workers and create a level playing field for 
law-abiding employers.
    Our worker protection agencies have helped recover $1.6 billion in 
back wages owed to over 1.7 million workers since 2009. We have 
prevented catastrophic falls (which lead to days of lost productivity 
and large workers' compensation payments), reduced workers' exposure to 
harmful and cancer-causing agents, and awarded over $150 million to 
whistleblower complainants. We have made progress in addressing unequal 
pay for equal work; helped workers with disabilities receive reasonable 
accommodations; and helped applicants who were denied jobs because of 
racial discrimination. We have trained small businesses and thousands 
of workers on mitigating high-risk safety and health hazards. In 2015, 
we helped mine operators achieve the lowest number of fatalities ever, 
with underground respirable dust levels in coal mines falling to an 
all-time low. We have recovered more than $1.7 billion affecting nearly 
700,000 benefit plans and 190 million plan participants.
    I am proud of this work. The Budget includes $1.9 billion so we can 
continue meeting our responsibilities to safeguard the health, safety, 
wages, working conditions and retirement security of American workers.
    To protect America's workers, we need to make sure their employers 
compete on a level playing field in the global economy. As part of the 
Administration's trade agenda, the Bureau of International Labor 
Affairs (ILAB) is on the front lines helping to ensure that our global 
trading partners adhere to agreed-upon labor standards, preventing 
foreign businesses from gaining an unfair advantage on the backs of 
workers. The Budget includes a $15 million funding increase for ILAB to 
promote consistent, effective enforcement of the labor provisions of 
free trade agreements. And we also seek the restoration of $5 million 
in grants, which were reduced in fiscal year 2016 appropriations, to 
continue (among other activities) preventing the worst forms of child 
labor.
    Protecting workers' retirement plans is a cornerstone of our work, 
especially given an aging population and the decline of defined benefit 
pensions. Planning for retirement used to be simple, but today one out 
of three workers do not have access to a retirement savings plan 
through their employers. Contractors and temporary employees are 
ineligible to participate in employer-based plans. And many workers who 
move to a new job are forced to manage a number of retirement accounts 
from previous jobs. Careers may be mobile, but some retirement accounts 
and savings plans are not.
    The Budget includes $100 million for a mandatory funding proposal 
to provide grants to States and nonprofits to test innovative, more 
portable approaches to providing retirement and other employment-based 
benefits. The goal is to encourage the development of a new model that 
workers can take from job to job and that can accommodate contributions 
from multiple employers for an individual worker. The Budget proposes 
legislation that will allow multiple unrelated employers to come 
together and form pooled retirement plans, lowering the cost and burden 
for each employer. In addition, small employers who auto-enroll 
employees in a retirement plan would receive a tax credit to offset 
administrative expenses. Until legislation is enacted, we have also 
taken administrative steps to promote savings. The Department has 
proposed regulations and issued guidance to facilitate States' efforts 
to create their own retirement plans for private sector employees. The 
budget request for the Employee Benefits Security Administration (EBSA) 
also includes an increase of $6.5 million to pilot different approaches 
to increasing retirement plan coverage in States.
    The Pension Benefit Guaranty Corporation (PBGC) acts as a backstop 
to insure pension payments for workers whose companies or plans have 
failed. Both PBGC's single-employer program and multiemployer program 
are underfunded, with combined liabilities exceeding assets by $76 
billion at the end of 2015. Premium rates remain much lower than what a 
private financial institution would charge for insuring the same risk 
and are well below what is needed to ensure the solvency of PBGC. To 
address these concerns, the Budget proposes giving the PBGC Board the 
authority to adjust premiums and directs the Board to raise $15 billion 
in premiums in the budget window only from the multiemployer program, 
given the single-employer program's improving financial projections. 
This level of premium revenue would nearly eliminate the risk of the 
multiemployer program becoming insolvent over the next 20 years.
    The budget request for the Wage and Hour Division provides 
resources to enforce laws that establish the minimum standards for 
wages and working conditions in workplaces across the United States, 
particularly in industries where workers are most at risk and are least 
likely to assert their rights. The Budget also expands funding for 
efforts aimed at ensuring that workers receive back wages they are 
owed, as well as funding to crack down on the illegal misclassification 
of some employees as independent contractors. Misclassification 
deprives workers of basic protections like unemployment insurance, 
workers' compensation, and overtime pay, and it undercuts employers who 
play by the rules while their competitors skirt their obligation to 
provide wages, benefits, and social insurance.
    The Occupational Safety and Health and Mine Safety and Health 
Administrations (OSHA and MSHA) enforce safe and healthful working 
conditions for America's workers. Across the two agencies, the Budget 
provides more than $992 million for these activities. That includes 
funds for OSHA to bolster the agency's ability to enforce safety and 
health standards; provide compliance assistance to employers and 
vulnerable workers; and administer more than 20 whistleblower laws that 
protect workers from discrimination and retaliation when reporting 
unsafe and unscrupulous practices. The Budget will also allow OSHA to 
enhance safety and security at chemical facilities, and it will provide 
MSHA with the resources it needs to conduct statutorily required mine 
inspections and enforce laws that protect miners who report safety or 
health problems.
    Finally, the Office of Federal Contract Compliance Programs (OFCCP) 
enforces equal opportunity and affirmative action requirements covering 
Federal contractors and subcontractors. OFCCP ensures that their job 
applicants and workers do not face discrimination because of their 
race, color, religion, sex, sexual orientation, gender identity, 
national origin, disability, or veteran status; or because they inquire 
about, discuss, or disclose their compensation or the compensation of 
other employees or applicants. The fiscal year 2017 Budget request for 
OFCCP would allow the agency to continue its current work, while also 
creating two Skilled Resource Centers and continuing modernization of 
the core Case Management System. The implementation of the targeted 
Skilled Resource Centers will allow OFCCP to better align its 
investigative skills trainings for existing and new compliance officers 
with geographically concentrated business sector industries. The 
dedicated funding for the Case Management System would support the 
continued improvement of OFCCP's enforcement efforts. It will assist in 
the standardization of the Department's Digital Government Integrated 
Platform, which is designed to modernize legacy systems within the 
Department; to support enterprise data analytics and mobile data 
applications; and to enhance staff productivity and efficiency.
   improving data-driven decision-making, creating efficiencies, and 
                             program reform
    In recent years, the Department has been striving to increase the 
productivity and efficiency of its own workforce. We believe our 
mission-driven focus and data-driven performance work have borne fruit. 
The Department's staff is becoming more effective at their jobs, and 
this has led to significant improvements in the Department's rankings 
of best places to work. The Budget includes a number of investments to 
continue improving the Department's ability to serve the public, 
increase DOL employee effectiveness, streamline processes and enhance 
agencies' ability to target enforcement efforts.
    The Department continues to work to improve its IT management. Over 
the past few years, we have consolidated nine separate IT 
infrastructure components into one consolidated system. Within this 
system, the Department is implementing a consolidated platform, which 
will support information-sharing and improve the efficiency and 
effectiveness of the Department's workforce. The Department's IT 
Modernization budget includes an increase of $33 million to further 
these efforts and to address the security of our systems.
    Also, several agencies' budgets--including the Office of Labor-
Management Standards (OLMS), the Office of Federal Contract Compliance 
Programs (OFCCP), and the Office of Workers' Compensation Programs 
(OWCP)--include proposals to upgrade case management or claims 
processing systems. The goal is to improve the agencies' enforcement 
targeting, enabling them to better identify those employers who are 
violating the law. OWCP's 20-year old Longshore and Black Lung claims 
processing systems are out of date, and the FECA claims system is 
approaching the end of its life. OWCP is looking to move toward a 
unified claims-based system that would facilitate more effective 
delivery of benefits to claimants across the four programs OWCP 
administers, while also yielding savings in future years. The OWCP 
Interactive Voice Response proposal will bolster these efforts by 
providing a more seamless experience for callers, including improved 
response from a mobile workforce, leading to shortened processing 
times. Similarly, OLMS' 15-year-old, obsolete IT system jeopardizes 
mission critical functions. Modernization would ensure continuity of 
operations; enable sharing of enforcement data; expand online 
reporting; improve transparency of union, employer, and labor 
consultant finances and activities; and dramatically enhance web search 
and navigation.
    Thanks in large measure to the work of our Chief Evaluation Office, 
the Department has been held up as a leader in data-driven 
decisionmaking. The Budget includes an increase for the office, while 
also continuing to allow for the transfer of resources from agencies 
for evaluations of their programs.
    The Budget also proposes several program reforms. Unemployment 
Insurance provides critical income support to unemployed workers. After 
cutbacks in coverage by States and due to broader changes in the 
economy, about one out of every three unemployed workers receives UI 
benefits. The Budget includes cost-neutral reforms to both strengthen 
and modernize the UI program. These reforms will provide additional 
benefit access to part-time workers, low-wage workers and workers who 
must leave a job for a compelling family reason. The Budget also helps 
unemployed workers return to work more quickly; reforms UI to help 
prevent layoffs; makes the UI program more responsive to economic 
downturns; and shores up the solvency of State UI programs. Lastly, it 
proposes to establish a wage insurance program to help workers make 
ends meet if a new job pays less than the old one.
    We are also once again proposing changes to the permanent labor 
certification program. This is the process we use to certify that an 
employer seeking to obtain employment-based permanent residency for a 
foreign worker--also called a Green Card--has adequately tested the 
U.S. labor market, demonstrating that there are insufficient U.S. 
workers available and qualified for the job, and that no adverse effect 
on wages and working conditions of U.S. workers will occur. These 
conditions must be met under the Immigration and Nationality Act before 
a Green Card is issued. One of our most critical budget proposals would 
authorize legislation allowing the Department of Labor to establish and 
retain fees to cover the costs of operating the foreign labor 
certification programs, helping us improve the speed and quality of 
certification processing. The Department has heard from businesses 
across the country that support a filing fee to expedite the process. 
There is precedent for such authority: under the H-1B visa program for 
temporary employment in specialty occupations, we use a portion of the 
proceeds from employer fees to process labor certifications. There are 
no backlogs in processing applications under that program, despite a 76 
percent increase in applications over the last 5 years. The inability 
to charge a fee to support more efficient application processing and 
program administration hurts businesses, workers and our economy.
                               conclusion
    During the time that I have served as Secretary, and throughout the 
7 years of this Administration, the Labor Department has done important 
work to expand opportunity to more workers, families and communities. 
Our efforts have played an indispensable role in the Nation's economic 
recovery. Continuing and strengthening those efforts requires a strong 
but responsible budget, which makes smart investments in our Nation's 
workers, job-seekers and retirees. America has no greater economic 
asset than our people, our human capital. This President's Budget 
empowers our people, giving them the tools they need to thrive in 2017, 
and for years and decades to come.
    Mr. Chairman, thank you again for this opportunity. I look forward 
to discussing our budget request with you and all members of the 
committee, and I'm happy to respond to any questions you may have.

    Senator Blunt. Thank you, Mr. Secretary. Obviously, I look 
forward to asking my questions. I was ready to do it even 
before we let you make your opening statement.
    Job preparation, the opportunity for families to move 
forward to better jobs and stronger families is something we 
are all for, something we need to work for. And there are times 
when we are not going to agree, but I think we do agree on the 
importance of that goal.

                          NEW REGULATORY PLANS

    Right now, back to my comments about regulation, there are 
more than 70 new regulations on the department's to-do list for 
the last few months of the administration, regulations that, 
frankly, this administration will not have to live with the 
results of. Somebody else is going to have to live with the 
results of those regulations.
    As we are talking today, there are three new regulations 
pending at the Office of Management and Budget that, 
conservatively, according to the agency's own estimate, would 
cost the economy about $3 billion. I think at least one of 
these, the one on silica, has not been subjected to a full 
small business impact process in over a decade, and even that 
was associated with a different version of the rule.
    Mr. Secretary, can you talk to me a little bit about your 
process of developing the cost, and I may come back to that 
topic a little later, but also developing the cost-benefit 
analysis of a rule that might add a little bit to the 
workplace, but the benefit not equal to the cost of 
implementing that rule? How do you all evaluate that at a time 
when the economy is struggling to move forward?
    Secretary Perez. Whether it is silica, conflict of 
interest, or the Section 503, which is related to the 
employment of people with disabilities and veterans, we have 
the same approach, which is you build a big table, an inclusive 
table, and you take the time necessary to listen and to learn 
from people, and you make sure you bring a healthy dose of 
humility to the process.
    So look at the silica rule, for instance, 2 weeks ago 80 
years ago, Frances Perkins held a conference at the Department 
of Labor on the dangers of silica. We have the grainy video of 
her opening remarks. So we have known about silica as a killer 
for literally 8 decades or more.

           SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT

    So what we did in this process was not only to follow the 
SBREFA (Small Business Regulatory Enforcement Fairness Act) 
requirements, but we had an extensive pre-notice comment 
process of interactions with NIOSH (National Institute for 
Occupational Safety and Health) and others, because we wanted 
to understand the science. Then we had the formal rulemaking, 
which included lengthy hearings at the Department of Labor. And 
it has been a very, very extensive and inclusive process.

                          CONFLICT OF INTEREST

    The same thing in the conflict of interest process. I pride 
myself on the fact that it is really important to listen to 
people and to conduct and subject our rules to very vigorous 
analysis.
    I would note this is an op-ed that Secretary Tom Ridge 
wrote in the Wall Street Journal. ``Business and Government 
Working Together. Really.'' It was in the aftermath of our 503 
regulation where there was a lot of concern that we were 
imposing quotas on employers to employ veterans and people with 
disabilities. What he said was that Labor Department's 
rulemaking process should be a model for how government can 
work with stakeholders in crafting regulations that are 
practical and effective. That is, Secretary/Governor Tom Ridge. 
That is what we aspire to do.
    Senator Blunt. I think we are for practical and effective, 
and we work with you hard to do things that create new pathways 
for veterans to get their skills recognized in the workplace 
and get to the workplace in new ways, and to have that 
recognized.

                          OVERTIME REGULATION

    But on one of the rules, the overtime rule, for instance, I 
hear a lot from higher education about that rule, the not-for-
profit sector, more than I do from the for-profit sector.
    The Missouri Baptist Children's Home was in and they said 
almost none of their counselors are at the $50,000 level, but 
they are available all the time. They are not called all the 
time, but they are available all the time. We do not see how 
they are going to be able to comply with the overtime rule.
    I had the people from Southeast Missouri State University 
in this week who believe that the rule will cost them 
approximately $2.7 million, $2.5 million of that is the impact 
on nearly 31 percent of their faculty and staff, people in the 
residence hall, the RAs in the residence halls.
    We do not seem to see the kind of exemptions for an RA in 
the residence hall or a counselor at the Missouri Baptist 
Children's Home. Are you looking at those problems and how 
particularly not-for-profits and educational institutions will 
deal with this rule?
    Secretary Perez. The short answer is yes, we received 
comments there. Before we went to the formal rulemaking, we did 
about a year of informal outreach. I personally participated in 
that.
    We met with retailers. We met with folks in the nonprofit 
world. We met with folks in higher education. We met with SHRM, 
the Society for Human Resource Management, and many other 
people, because we wanted to learn about what their experiences 
were.
    We wanted to learn how they adjusted to the 2004 changes 
that were significant that the Bush administration made, so we 
could go to school on that.
    We have gotten comments from nonprofits supporting the 
rule. There have been comments from nonprofits expressing 
concerns about the rule. We are taking all the comments, 
roughly 300,000 in total, into careful account as we craft a 
final proposal. I would be glad at the conclusion of the 
process to come and brief anyone and everyone who is 
interested, so that you understand the decisions we made, the 
changes we made, and the various ways in which compliance can 
be obtained.
    Senator Blunt. We may very well ask you to do that. I am 
glad you are willing to. I will not ask now, but the question I 
have is, jumping one step from $23,660 as the amount of money 
that if you were below that, you were subject to overtime and 
you were not an exempt employee, in one step to $50,440. I do 
not want to take other people's time for you to answer that 
now, but I may come back to why that kind of increase is 
necessary in one regulatory jump.
    Senator Murray.
    Senator Murray. Thank you, Mr. Chairman.
    Secretary Perez, I was really pleased that Chairman Blunt 
and I were able to fund the new apprenticeship grant program in 
the 2016 appropriation bill. As we both talked about, that is 
going to put tens of thousands of workers on a proven path to 
middle class, and it will also address employers' needs, and I 
hear that all the time, for skilled workers.
    We know that registered apprenticeships are effective. They 
are business-driven programs in predominately high-growth 
industries. You mentioned several--IT, healthcare, advanced 
manufacturing--all of which face critical worker shortages 
today.

                   UPCOMING PLANS FOR GRANT PROGRAMS

    I really appreciate that you have sought some really wide 
input from Congress and from stakeholders as you put the final 
touches on the grant solicitation. I wanted to ask you today if 
you could talk a little bit about your plan for these grants, 
how many States, how many employers do you anticipate will be 
involved? And how long will it be before we can actually see 
this put slots created on the ground?
    Secretary Perez. First of all, thank you for your 
leadership on a bipartisan basis. This money is going to be 
well-spent. Apprenticeship, as I said before, really is the 
other college except without the debt. We are transforming 
apprenticeship in this country. I think as a Nation, to our 
detriment, we devalued career and technical education and 
apprenticeship over a period of decades. Now that is turning 
around in a bipartisan fashion.
    With the $90 million, we really have four basic aims in 
mind. Number one, we want to build up the State apprenticeship 
system, so we are going to be sending out grants to States. 
There is wide variability in the State apprenticeship 
infrastructures across the country. Some are very-well 
developed, South Carolina, being an example. I have been down 
there, and they have been going gangbusters for a while.
    Others literally have one or two people. That is their 
apprenticeship office. They want to do more, but these 
resources are going to help them build that capacity.
    Secondly, we want to diversify apprenticeship. We want to 
make sure it is available to women. We want to make sure it is 
available to a greater extent to veterans, to people in 
underserved communities.
    I did an event with former Mayor Nutter of Philadelphia 
introducing IT apprenticeship to kids graduating from the 
Philadelphia Public School System. When my iPhone goes on the 
fritz, I go to my 13-year-old. I do not call Apple. So we are 
taking that fluency that young people have and translating it 
into a middle-class career.
    Then finally, we need to fortify the Federal infrastructure 
in apprenticeship because as we expand the State 
infrastructure, and I am excited that that is happening, we 
need to make sure that we keep up, because we are an important 
stakeholder in that as well.
    So that is the $90 million.
    We also had $175 million in the H-1B----
    Senator Murray. When will we start to see some of those 
grants actually being announced?
    Secretary Perez. Imminently. We did outreach to 
appropriators, to States. We had really constructive 
conversations with your staff, because we wanted to know what 
you thought would be the best use of that money.
    We are acutely aware that time is of the essence. We want 
to synergize these investments with the $175 million that has 
already been awarded and on the street. So we are moving with 
great alacrity.
    Senator Murray. Good. Okay. I appreciate that. I want to 
keep working with you on that.

         ILAB'S ROLE IN ENFORCING RULES UNDER TRADE AGREEMENTS

    There has been a lot of talk about trade. Over the last 
year, we had to fight to get the ExIm Bank reauthorized and the 
Trans-Pacific Partnership agreement is still pending. As you 
know, my home State of Washington is the most trade-dependent 
State in the Nation.
    So we not only want to have a seat at the table to make 
sure that trade deals are fair and strong when they get 
negotiated, we also want to make sure they actually get 
implemented in a way that works for workers and businesses, 
because it is one thing for a trade deal to include strong 
protections when it comes to labor and the environment, for 
example, it is another for those protections to actually be 
enforced.
    Your Bureau of International Labor Affairs (ILAB) has an 
important role in enforcement and supporting clients with the 
rules that exist for these trade agreements. I wanted you to 
explain to us today how the bureau promotes compliance with 
labor provisions of existing trade agreements, and what kind of 
outcomes are you achieving?
    Secretary Perez. ILAB is a critically important part of our 
trade enforcement. I spend a lot of time with them.
    So for instance, the Colombia Free Trade Agreement (CFTA), 
we have an ILAB employee who is literally working in the State 
Department in Bogota right now helping to implement the labor 
provisions of CFTA because it is really important not only for 
them to get the laws right, and we help them actually write 
those laws in Colombia, now we are helping them implement those 
laws and build the infrastructure necessary to ensure 
compliance, because it is one thing, as you correctly point 
out, to have the words on a sheet of paper in the trade 
agreements. It is another thing to make sure we give them full 
force. The ILAB office does this.
    We do a lot of work in the context of child labor, for 
instance. So we have worked very collaboratively with Nestle 
and other major multinationals to eliminate child labor in 
Ghana and Cote d'Ivoire, and other places where cocoa is being 
grown with the assistance of child labor.
    So ILAB punches above its weight, and it is a critically 
important part of our trade enforcement. I appreciate your 
support for it.
    Senator Murray. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Blunt. The chairman of the full committee, Chairman 
Cochran.
    Secretary Perez. Good morning, Mr. Chairman. It is nice to 
see you again.
    Senator Cochran. Mr. Secretary, welcome. We appreciate your 
being here and cooperating with our committee as we review the 
budget request from the administration for the Department of 
Labor.

                           NEW OVERTIME RULE

    We have some people back home calling me and writing me, 
telling me about how a new rule being considered by the 
administration will affect their businesses in severe ways.
    The Department of Health, for example, let us know that 
their employee threshold would drop from 69 percent to 11 
percent exempt status. Those are words of art, I know, and I am 
reading them, so I will not misrepresent this.
    But this regulation, my folks down home are saying that it 
took into account no regional differences in cost-of-living or 
other expenses that relate to jobs in our State. It did not 
consider the adverse effect that it would have on charity 
organizations or religious establishments or public 
universities and colleges.
    What is your reaction to that?
    Secretary Perez. Mr. Chairman, I assume you are referring 
to the overtime rule, and both during our informal outreach and 
during the formal notice and comment process, we have heard a 
lot about the issue of regional disparities, how you craft a 
rule that can apply to the entire country, which the current 
overtime rule is a rule of general application, so that is not 
a new issue. The minimum wage at the Federal level, that is an 
issue of general application. We have heard from nonprofits, 
and we have heard from higher education.
    We reached out to them before we actually did notice and 
comment, because we knew that those are going to be areas of 
concern. So we wanted to proactively reach out, and we got a 
lot of feedback before the notice and comment. We got a lot of 
feedback during the formal process. I can assure you that we 
are taking careful account of that.
    When we reach the conclusion of our rulemaking process, I 
look forward to briefing you and anyone else on decisions that 
were made and the roadmap for compliance, and how we took into 
account these concerns.
    Senator Cochran. Thank you very much.
    Thanks, Mr. Chairman.
    Senator Blunt. Senator Schatz.
    Senator Schatz. Thank you, Mr. Chairman.
    Mr. Secretary, thanks for all your good work.
    Secretary Perez. Good morning.
    Senator Schatz. Good morning.

                          FIDUCIARY RULEMAKING

    You have taken a lot of heat for your proposal to end 
conflicts of interest in the retirement investment space. Can 
you tell me, under the current system where the 1975 fiduciary 
rules are in place, what happens when someone walks into a 
brokerage firm to get financial advice, what kinds of 
protections they have, and how would that interaction 
potentially change when your rule is finalized?
    Secretary Perez. Sure. The rule that most folks who provide 
advice--by the way, I have great respect for people who provide 
this advice. This is not a case about people with malice in 
their heart. This is a case about the malalignment of the 
incentives.
    What I mean by that is someone providing advice has a duty 
to make sure that what they are telling you is suitable for 
you. You can have four different options that are ``suitable'' 
and one option of those four increases the commission at the 
expense of the consumer, and that is still suitable. In my 
opinion, that is not in your best interest. That is the 
problem.
    The CEA (Council of Economic Advisers) has quantified in a 
portion of the industry that this is a $17 billion problem. If 
you get 1 percent less, if you invested $10,000 and it was 
there for 35 years, and you had 1 percent less return because 
of conflicted advice, you would have $27,500 at the end of that 
35-year instead of $35,000. So your nest egg diminishes by 25 
percent. Compounding compounds the problem of conflicted 
advice. That is what we are getting at.
    Our times have changed. The Ozzie and Harriet world of 
defined benefit plans are increasingly becoming rare. When 
people have to make decisions, I think that we should treat 
this context no differently than lawyers and doctors where they 
have a duty to look out for your best interests. That is the 
North Star of this rule.
    Senator Schatz. Thank you for that. I heard from some in 
the banking community about whether or not this would actually 
accidentally include bank tellers, individuals in the customer 
service space. Someone walks into a bank and says I am 
interested in establishing an IRA or savings account.
    My sense of the rule, having read it, is that there is not 
a strong basis in the language of the rule, but I know through 
the public comment period that you have made modifications. I 
just want to be assured that this is narrowly tailored to the 
problem that you are talking about.
    Secretary Perez. We received a lot of comments regarding 
the rule, including comments such as the one that you have 
received. We have received a lot of comments about the best 
interest contract that is in the proposed rule.
    As I said to folks, our North Star in this enterprise is an 
enforceable best interest standard. We have heard from a lot of 
folks in the industry who say I agree with that North Star. I 
think there is a more linear path. Our response to them is show 
us that path, give us your ideas in specificity.
    We have gotten a lot of those ideas. I look forward, at the 
end of this process, to sitting down again with any and all of 
you to show you, here were the proposals, here is the feedback 
we have gotten, here are the changes that we made. That is what 
notice-and-comment rulemaking is all about, listening, learning 
and improving. I am confident that I will be able to sit down 
with you at the end of this process and explain the changes 
that we made that we think will produce an even better final 
product.
    Senator Schatz. Thank you.

              NATIONAL DISLOCATED WORKER GRANTS FOR HAWAII

    Mr. Secretary, as you know, the last sugar plantation in 
the State of Hawaii is shutting down in central Maui at the end 
of this year. They are doing their last harvest. It is about 
700 jobs.
    We have been working with the department on a number of 
avenues to try to provide some help in the very difficult 
transition. I know the ILW has a pending application for TAA 
(Trade Adjustment Assistance). I would not ask you to comment 
specifically on that. But what I would like you to do is offer 
your continued commitment to work with the people of Maui, the 
County of Maui, the State Government, and the delegation, to 
make sure that we do whatever we can for these dislocated 
workers.
    Secretary Perez. The short answer is absolutely. I want to 
thank you. You were dogged. You contacted me literally the 
moment that this news started to break, and we have been 
working very closely with your office and with the workers and 
the employers.
    We have discussed a National Dislocated Worker Grant and 
other tools in our toolbox that we can use to help mitigate the 
impacts.
    So thank you for your dogged leadership, and I assure you 
that we look forward to continuing to work with you and all the 
affected folks and businesses.
    Senator Schatz. Thank you.
    Senator Blunt. Senator Alexander.
    Senator Alexander. Thanks, Mr. Chairman.
    Welcome, Mr. Secretary.
    Secretary Perez. Good morning, Senator. It is good to see 
you.

                IMPACT OF OVERTIME RULE ON UNIVERSITIES

    Senator Alexander. We hear a lot of talk from all of us, 
including the administration, about keeping tuition down and 
lowering college costs. Yet I have a letter here, which I ask 
consent to put in the record, from all of the Tennessee 
independent colleges and universities. This is what Senator 
Blunt mentioned.
    These are the private nonprofit institutions in our State, 
most of them church schools, smaller schools. The nonprofit 
colleges and universities across our country attract about 15 
percent of all of our students. This is what they wrote about 
the new overtime rule.
    One of our members, the letter says, calculated the first 
year impact would translate to a $1,000 per student increase in 
tuition, a $1,000 increase in tuition from a rule from the 
Department of Labor. It says it is expected the change will 
cost each 4-year campus a minimum of $1.3 million.
    Another rural campus noted the change would impact 133 
employees for a total of $3.2 million. If they choose, however, 
to reclassify those employees to an hourly schedule from salary 
status, a mere 5 hours of annual collective overtime would cost 
$1.1 million and 10 hours would cost $2.3 million.
    Mr. Secretary, we cannot keep imposing new good-sounding 
regulation costs on any segment of American society, but if the 
President is going to go around and I am going to go around and 
all of us are going to go around saying we want to keep college 
costs down, how can you justify an overtime rule that might 
raise the cost of college by $1,000 per student?
    This organization, of all the independent and private 
nonprofit colleges in Tennessee, says they do not oppose 
increasing the current minimum salary threshold. They think 
that might even help make sure that white-collar exemptions are 
not abused. But the proposed salary threshold is simply too 
high, too fast, and the increased threshold would result in the 
inappropriate classification of many employees.
    So my question is, why would you impose on independent 
colleges and universities a rule that the colleges say could 
raise tuition by $1,000 per student? And while you are 
answering that question, maybe you could tell me when you think 
this rule will become final.
    Secretary Perez. Let me answer your second question first. 
We sent this over to OMB earlier this week, Monday or Tuesday, 
so their review has commenced. So I do not know exactly when 
that will be completed, but we expect it to be completed within 
the next 45 to 90 days, something like that.
    On the issue of higher education, again, before we put the 
rule out, we had outreach with higher education to hear them. 
We had outreach with nonprofits to hear how this rule would 
impact them and what they do.
    In 2004, when a new rule was put into place, there was 
impact on retail, on higher education, on nonprofits----
    Senator Alexander. Mr. Secretary, this is a $1,000 per 
student. This is a prestigious group of every single college in 
Tennessee that is a private nonprofit college. That is an 
outrageous number.
    Secretary Perez. Well, again, we have received a lot from 
higher education.
    When we have discussed minimum wage, we have heard a lot of 
feedback about the impacts of minimum wage.
    When we did the coal dust rule, we also heard a lot of 
impact. What we have learned in the implementation of the coal 
dust rule is that we now have had 99 percent of our new tests 
in the coal dust rule that have been under the new----
    Senator Alexander. You just think they are wrong. You think 
they are wrong?
    Secretary Perez. Well, I do not know whether they are right 
or wrong. I am simply saying that in the coal context, concerns 
were raised that we would never be able to meet this new 
standard. The good news is that they have been able to meet 
that new standard. We take very seriously----
    Senator Alexander. I do not mean to be rude. I have another 
40 seconds. I just want ask one more question about rules.
    Secretary Perez. Sure.

             EEOC PROPOSED RULE ON EMPLOYEE DATA-COLLECTION

    Senator Alexander. Yesterday, the Equal Employment 
Opportunity Commission held a public hearing on a proposed rule 
that would increase by 20 times the employment data it collects 
from 61,000 employers on their 63 million employees, increase 
by 20 times the employment data it collects from 61,000 private 
employers on 63 million employees.
    I introduced a bill to suggest that before the EEOC 
collects this massive amount of data from private employees 
that it first collected from all the Federal employees and see 
how much time it takes.
    Now, this is a rule that in one form your department 
planned to issue at one point. You were going to do it through 
the Office of Federal Contract Compliance Programs.
    Since the EEOC is proposing to collect this kind of data 
from all private employers, will you now withdraw your similar 
rule to collect that same kind of data from Federal 
contractors?
    Secretary Perez. Yes. We are working with EEOC on that 
initiative, because we got feedback that given the EEOC's work, 
it is more efficient to work through the EEOC and the EEO-1 
form. So the answer to your question is yes.
    Senator Alexander. If I had more time, Mr. Chairman, I 
would ask, don't you think it would be a good idea to give the 
Federal Government a dose of its own medicine by collecting all 
this information from all the Federal employers before we 
impose it on the private employers, but I do not have time for 
that question.
    Senator Blunt. Senator Cassidy.
    Secretary Perez. Good morning, sir.
    Senator Blunt. Senator Cassidy, then Senator Capito, then 
Senator Lankford.
    Senator Cassidy. Yes, I was thinking I was after those two, 
so I was caught off guard.

          ADVICE GAP CREATED BY UNITED KINGDOM FIDUCIARY RULE

    The follow-up to the fiduciary rule that you and I 
discussed I think a while ago, at the time, when I asked 
whether or not the experience in England and Great Britain had 
been that when those restrictions placed upon advice for those 
with lower incomes, you mentioned a study which showed that not 
to be the case. Now, subsequent to that, I have been given more 
information, and apparently you have, too.
    So subsequent of being given more information, and the 
information I have been given is that in the study you cited, 
there was still evidence that smaller investors no longer had 
access to advice.
    For example, from the report that you mentioned, it says 
that steps need to be taken to make the provision of the advice 
and guidance to the mass-market more cost-effective. This is 
after they say that those who are upper income continue to get 
advice. Elsewhere, it speaks about the number of firms which 
have ceased to give advice requiring assets of an equivalent of 
$142,000, 70 percent of advisers turned away low-income 
customers, et cetera.
    You mentioned at the time, in your response to my question, 
that there had been a net increase of 500,000 advisers, or 
something such as that.
    But the retort I have heard is that, yes, there are that 
many more advisers, but they are not advising those who are 
lower income.
    There has been a subsequent report, which I have here, 
which again verifies this. This is by Her Majesty's Treasury, 
so the regulator himself, again along this line, that the lower 
income no longer have access to the advice and increasingly it 
is restricted.
    Now that said, what are your thoughts on how I have posed 
this so far?
    Secretary Perez. Senator, as you know, the U.K. proposal 
banned commissions. It imposed new licensing requirements.
    The evidence that I have seen, and I personally traveled to 
the U.K., because I heard this question with sufficient 
frequency that I thought I am going to stop listening to 
lobbyists and go see it for myself. So I went to the U.K., and 
I met with the regulators in the U.K.
    What they told me is that one of the most remarkable 
impacts of this has been a movement of funds away from complex 
instruments into more simple instruments, like index funds.

  DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES FIDUCIARY RULES

    Here is the nub of this issue. For most people in America, 
they have a pretty simple portfolio. They have saved a couple 
hundred thousand dollars through their hard work and grit. They 
do not need a complex instrument like a variable annuity. They 
need something simple, and that is what has happened in 
England. More people are getting the simple, low-cost, good-
reward funds like----
    Senator Cassidy. Let me ask, because you have moved beyond, 
if you will, whether or not they are getting advice into 
whether or not they need advice. So that is actually a 
different question.
    So the fundamental question we are told, not by lobbyists 
but by people who--put it this way, they work in the business, 
so you could say they are lobbying, but they are presenting 
their perspective. And the perspective is that they are no 
longer, under this rule, going to give advice to people who are 
lower income, period.
    So, of course they move into index funds, because that will 
be all that is available, if you have no--so, in a sense, I am 
getting that you are conceding the argument that there will be 
fewer people giving advice, but you are saying that does not 
matter because they should not be in complex instruments 
requiring advice anyway.
    Secretary Perez. I could not disagree more with your 
characterization, with all due respect.
    I have made this offer to every Senator and every Member of 
Congress. I would love to bring in folks who are in the 
industry now. They are already operating by a fiduciary 
standard. They work with small investors, large investors 
alike. The thing they tell me is, to those who say they are 
going to leave the market if this rule is passed, please give 
them my email, please give them my phone number, because I have 
a business model that is enabling me to do good and do well.
    I would love to have these folks come in, and I will get 
out of the way, because these are folks who are doing it right 
now. We have already a controlled experiment in America 
because, again, there are a subset of folks in this space who 
are our already fiduciaries. They are doing it, and they are 
doing well by it, so I would love to have them come in and----
    Senator Cassidy. I am out of time, but I will submit for 
the record a report from Her Majesty's Treasury that shows that 
an effort that is already being implemented there, which is 
similar in effect to that which is proposed here, has resulted 
in fewer people giving advice to this market and, therefore, 
less access to them for more sophisticated advice.
    Senator Blunt. Without objection.
    [The report link follows:]

    Https://www.fca.org.uk/publication/corporate/famr-final-
report.pdf.

    Senator Blunt. Senator Capito.
    Senator Capito. Thank you, Mr. Chairman.
    Secretary Perez. Good morning.
    Senator Capito. Thank you, Mr. Secretary. Good morning.
    I wanted to talk about the item that was in the omnibus on 
the displaced worker training funds. There was an initiative 
that was placed in the omnibus that would give $19 million 
specifically to assist dislocated workers in the coal industry.

                       DISPLACED WORKER PROGRAMS

    I cannot begin to tell you how bad the situation is, 
particularly in the Appalachian region. We have lost since 2011 
10,000 mining jobs. Along with that, it is estimated that for 
every mining job, there are another four jobs that go along 
with that. It is resulting in our State having the highest 
unemployment, if not the highest unemployment, the second 
highest unemployment and rising.
    Our State budget is now over $400 million in the hole. 
Boone County is laying off 70 teachers. It is just a desperate 
situation where we are.
    So I would like to know specifically what you have done 
with these funds, what you are planning to do with these funds, 
where you are focusing. And I hope that I do not hear that we 
are going to have committees that are going down to have town 
meetings and talk about the problem.
    Secretary Perez. No, I am a huge believer and supporter of 
the POWER Initiative. It has really helped to make sure that we 
help people transition.
    Senator Capito. I would dispute that, but go ahead.
    Secretary Perez. Well, there was $19 million included in 
the fiscal year 2016 appropriation that has been used toward 
the POWER Initiative.
    Senator Capito. How has that been used? That is my 
question. In what form?
    Secretary Perez. Sure. You worked in the coal industry, you 
are laid off, we are now training you for the jobs of tomorrow.
    Senator Capito. But where are you doing that? Do you know? 
Do you have a listing?
    Secretary Perez. I will give you a listing of all the work 
that we are doing. I will provide that to you.
    [The information follows:]
                          the power initiative
    The $19 million included in the fiscal year 2016 appropriation for 
the POWER+ Plan are Program Year (PY) 2016 resources that will become 
available on July 1, 2016, so that amount has not yet been awarded. But 
in 2015, the Department committed $20 million from its Dislocated 
Worker National Reserve to support the POWER Initiative, an 
intergovernmental effort to address the displacement of workers and 
communities that have relied on the coal industry. Investments made 
under the POWER Initiative are designed to support affected coal 
communities. Part of that support is ensuring that workforce 
development strategies are coordinated and integrated with economic 
development strategies to prepare affected workers for jobs with the 
area's high-growth and high-wage employers.
    DOL funds committed to the POWER Initiative are awarded to impacted 
States as POWER Dislocated Worker Grants (POWER DWGs). These grants 
provide States and their local workforce area partners with necessary 
resources to temporarily expand their capacity to serve workers 
dislocated by changes in the coal industry. By the end of September 
2016, the Department will have awarded a total of $39 million in POWER 
DWG grants ($20 million in PY 2015 grants and $19 million in PY 2016 
grants). Specifically, the $19 million will be used to expand, where 
needed, previously awarded POWER DWGs and award additional grants the 
Department wasn't able to fund with its previously committed funds; it 
will also allow ETA to increase the maximum available grant amount for 
POWER DWGs to $5 million from the current $2 million, for both new 
grant applications as well as for previously awarded POWER DWGs. This 
larger grant amount will enable the grantees to conduct more 
comprehensive strategic planning efforts and provide reemployment 
services and training for more workers in the affected communities.
    POWER DWG funds are available for award between July 1, 2015 and 
September 30, 2018. DOL's current investments under POWER include:

------------------------------------------------------------------------
                                                              Funding
                                              Funding         Awarded
            POWER DWG Grantee                Requested       (Initial
                                                             Amount)*
------------------------------------------------------------------------
Kentucky................................      $2,000,000      $1,098,800
Ohio....................................       2,000,000         916,250
Virginia................................       1,965,730       1,965,730
Pennsylvania............................       2,000,000       2,000,000
    Total...............................      $7,965,730      $5,980,780
------------------------------------------------------------------------
* DWG awards may be funded on an incremental basis, with an approved
  initial increment and an overall up-to award amount.

    However, it is important to note that the POWER initiative is a 
subset of Dislocated Worker Grants, and other grants were also made to 
States to help address the needs of workers dislocated from the coal 
industry. Through our regular Dislocated Worker Grants, West Virginia 
has received $10,728,278 to serve dislocated coal workers (subject to 
the same note that additional increases could be added incrementally 
upon this amount). The Department provided a briefing for Senator 
Capito on April 19, 2016, on this issue. Our discussion covered the 
interaction of the NDWG and POWER grants, and included discussion of 
some of the specific grants in the States. ETA is preparing follow-up 
documentation for the Senator on outcomes from a number of ETA grants 
and the formula funds that West Virginia receives, as requested.
    The Department is requesting $20 million for the POWER+ program in 
the fiscal year 2017 Budget.

    Senator Capito. How many people have actually attended?
    Secretary Perez. I would be glad to provide you with that 
specificity. I traveled with Chairman Rogers, who is obviously 
going through a similar thing, and I went to a company named 
BitSource that was in Pikeville. It was a training program that 
we were funding.

                      RETAINING DISLOCATED WORKERS

    It is a company that is doing coding, computer coding. 
Everybody in the room was a displaced coal miner and they 
inspired me, Senator, because they were making a remarkable 
transition.
    One guy told me that he had gotten a call the previous 
Friday from his old employer at the mine offering his job back, 
and he told them no because of this investment.
    We were able to help basically start this up through 
investments like the ones we are doing in West Virginia as 
well. I would be happy to give you a briefing on this.
    I grew up in Buffalo, New York. I watched jobs in the 
middle class get hollowed out. So for me, this is very 
personal. When I travel to Eastern Kentucky or West Virginia, 
for me, that brings back memories of Buffalo and my parents' 
generation.
    So I am very committed to working with you. If there are 
areas where you think we are falling short in how we are 
delivering those services, I want to hear that, too, because 
everybody who has been displaced, I want to make sure we can 
get them the skills to do tomorrow's job.
    Senator Capito. I appreciate that. My concern is that it is 
more of a pat on the head. Your industry is being destroyed. 
You are being displaced from your community, your job. There is 
a sense of deep pessimism.
    You know, $19 million sounds like a lot of money but to 
recover from something like this, not only will it take a long 
time, I would like to see specifically where this money is 
being spent, through what initiatives, through what training 
programs, how many people are being trained, how much 
assistance is being given.
    Secretary Perez. We will be glad to come in and brief you.
    Senator Capito. You are asking for another $20 million for 
the next year.
    Secretary Perez. I would be happy to. It was inspiring to 
be at BitSource. I walked away from there with an incredible 
amount of optimism, because folks were getting kicked in the 
gut and they were getting up, and they had a lot of grit and 
determination, and I want to make sure that we help them.
    Senator Capito. Thank you.
    Senator Blunt. Senator Lankford.
    Senator Lankford. Thank you.
    Secretary, good to see you again.
    Secretary Perez. Good morning, Senator. Good to see you.

                      RETROSPECTIVE REVIEW PROCESS

    Senator Lankford. We talked before about retrospective 
review. It is one of the areas that the Department of Labor has 
focused in on, and we have had hearings. In the committee that 
I chair dealing with regulatory affairs, we have had some 
Department of Labor folks in to talk about the process.
    If my memory serves correctly, about 2011, there were 29 
retrospective reviews that were going to be in process. 
Fourteen of those had been completed by the time of our 
hearing. I believe one more had been done, but only one has 
been done in the last 6 months.
    What I am trying to figure out is, there are over 600 
different rules that are out there. Not all of them rise to the 
level of needing retrospective review. I am trying to figure 
out, where is the process going on retrospective review on 
regulations within the Department of Labor? Are you looking 
back at some of these old rules and trying to evaluate them? 
And with only one done in the last 6 months, what is the 
progress in the coming days?
    Secretary Perez. Let me give you a couple examples of what 
we are doing in this context. In our dust rule that we released 
last year, we built in a retrospective review of some of the 
new technology that we are requiring.
    Senator Lankford. When you say you built in a retrospective 
review, you set the date when that will occur?
    Secretary Perez. That begins on February 1, 2017. I think 
that was built into the rule.
    The PERM rule, which is one of our immigration rules, one 
of the things when we were conducting our retrospective 
review--I think I may have talked to you about this when we 
were at the White House at that event.
    Under the current rule, when you are trying to hire 
workers, you have to advertise in the Sunday newspapers. It is 
a very sort of 1970s kind of paradigm. So we have sent a 
proposed PERM rule to OMB----
    Senator Lankford. I am going to run out of time. I have 
several questions. But those are all good. We have talked about 
that, but that was a year ago. What I am trying to figure out 
is some of the progress on these.
    The targets seem to be slipping, as far as when they will 
be completed and when they will be done, and I want to try to 
see the progress of how we can keep the target dates from 
slipping again. With only one of these complete in the last 6 
months, it looks like only one coming this year, I want to try 
to help the department continue to press on this.
    If there is something that is missing on it, let us know, 
because going back and reviewing as you just mentioned with 
that rule, it is extremely important that we get things up-to-
date and stay consistent with the original statute as well.

                             FRANCHISE RULE

    I also want to get a chance to chat with you. You and I 
have swapped letters back and forth on a series of questions 
that we have and that Chairman Johnson and I have for the 
Homeland Security and Governmental Affairs. That is on this 
issue of Department of Labor and NLRB (National Labor Relations 
Board) cooperating together on the Franchise Rule and the 
communications ahead of time.
    When we asked for initial documents on that, we had been 
told, hey, there are not initial documents. Then we find out 
later, well, there may be a few documents. I sent a letter to 
you asking for all those documents. No documents were sent to 
me.
    Then a FOIA (Freedom of Information Act) request from an 
outside group separate from me, they get a big dump of 
documents that looked to be very consistent with what we had 
asked for and were told there were not any documents.
    So we get those same documents then from an outside group 
that had a FOIA request. Those reference other documents and 
other conversations that seem to be pertinent.
    All we are trying to do is provide basic oversight between 
the Department of Labor and some of the communications they had 
on the Franchise Rule before it ever came out with NLRB.
    All I want to know is, will you assure me we will get all 
the documents that we have asked for. It has not been a big 
giant laundry list. It is a very specific group of documents. 
We want to get all the responsive documents.
    Can you assure me that we will get that?
    Secretary Perez. Yes.
    Senator Lankford. And not have to have an outside group do 
a FOIA request and then we get it after they do a FOIA on it.
    Secretary Perez. I said yes, sir.
    Senator Lankford. Terrific. Thank you. Do you have a time 
period on that, that you think that would come?
    Secretary Perez. I believe we have sent hundreds of pages 
to date.
    Senator Lankford. Wait. Nonresponsive hundreds of pages. 
The pages that came to us initially were that there was not 
anything. Then a FOIA request was sent, so we got the FOIA 
request information. What we are trying to follow up is to just 
make sure we really do have everything.
    Secretary Perez. I will make sure you have everything.
    Senator Lankford. Thank you. I would appreciate that very 
much. We just want to be able to do the task on it.

                        IMPACTS OF OVERTIME RULE

    When we get into the overtime rule, let me just read a 
couple things to you, and this is the reason so many of us on 
this panel have the question about this and why this is so 
concerning.
    Let me just give you a couple things, the concern that is 
happening in my State.
    From one of the battered women shelters in my State, this 
is what the H.R. director said. She is a committee member of 
the YWCA battered women shelter and is concerned about the 
impact of changes the overtime regulations will have on their 
nonprofit organization and employees. All employees make less 
than $50,000, except for top management. The impact of this new 
legislation could be catastrophic for payroll as employees will 
have to be moved from exempt to nonexempt status simply due to 
the salary base being proposed. That is from one of the 
battered women's shelters.
    From the Counseling and Recovery Services of Oklahoma, they 
said about 80 percent of our work force will be impacted. The 
cost to meet the proposed regulations is expected to be in the 
hundreds of thousands and will have a devastating impact to the 
community mental health industry overall.
    From tribal governments, to hear from tribal governments 
who are concerned about this and the use of a single national 
salary threshold would adversely affect already limited 
revenues, especially for tribes in rural areas. They are very 
concerned about their people and about the Nation.
    I can go on and on, from small-business owners, from those 
who work for senior adults.
    The standard of the economy in Oklahoma and the standard of 
living there is very different than San Francisco and New York. 
And there are a lot of agencies, entities, and businesses in my 
State that are very concerned about this overtime rule. And 
they are watching it and understanding the devastating impact 
it will have.
    We will follow up with questions for the record on that.
    Secretary Perez. Thank you.
    Senator Blunt. We have time for a second round, and Senator 
Murray is going to start the second round.
    Senator Murray. Mr. Secretary, I am really pleased that 
there has been a part of good progress on improving employment 
rates for our veterans. Thank you very much to your department 
for your efforts in that area.

                HOMELESS VETERANS' REINTEGRATION PROGRAM

    However, there is a lot more that needs to be done to help 
the men and women who served our country. At the heart of these 
efforts is our commitment to end veteran homelessness, which 
has declined sharply over the past 5 years, but it also 
includes helping these men and women find employment.
    So I was actually really pleased that your budget includes 
a significant increase for the Homeless Veterans' Reintegration 
Program. Can you talk a little bit about how these services 
help to transition homeless veterans into jobs and what impact 
that will have?
    Secretary Perez. Thank you for your question.
    The budget request takes the Homeless Veterans' 
Reintegration Program to its authorized level.
    I have had the privilege until recently of chairing the 
Interagency Council on Homelessness. I am very proud of the 
progress that we have been able to make to reduce homelessness 
generally, and reduce veteran homelessness, in particular.
    These funds go exactly toward that end. We have been able 
to really forge partnerships with people like your wonderful 
work force system in Seattle with whom I have spent a lot of 
time. Homeless veterans receive customized employment and 
training services.
    My wife works with homeless people here in the district, 
including many veterans. They have many different challenges, 
so it is not simply they need to brush up on a resume. They may 
have a substance abuse issue. They need to get housed because 
housing first will lead to good things after that.
    So this program has been a linchpin, and we know that it 
works. We have had it studied, so we know there is a good 
return on investment. We want to scale it up, so that we can 
really reach our goal of zero veteran homelessness.

                              THE 503 RULE

    Senator Murray. Okay. The department's Office of Federal 
Contract Compliance has a role as well in making sure that the 
rights of veterans in hiring and employment by Federal 
contractors are respected. Can you tell me about the progress 
being made there to protect veterans, particularly on the new 
rule, which some have suggested establishes employment quotas?
    Secretary Perez. The 503 rule, I mentioned the piece by 
Governor Ridge, Secretary Ridge.
    I never know whether to call him Governor or Secretary, Mr. 
Chairman. You have been both. You can give me some guidance 
someday.
    But that rule has been indispensable in helping us help 
veterans get into the workplace. I am very proud of the fact 
that 34 percent of DOL's new hires are veterans and over 20 
percent of our work force is now veterans.
    Under the leadership of Pat Shiu, we have had a very 
collaborative approach to problem-solving.
    One of the people that I met who led the charge in the 
litigation, which was unsuccessful, against us is now one of 
our strongest advocates and understands that, ``You know what? 
As I look in my company''--and this person is a senior 
executive in a Fortune 500 company--``when I started looking 
behind the numbers, I realized that we had a lot of work to do, 
and I also realized that we are leaving talent on the 
sidelines.''
    So the veteran rules that OFCCP (Office of Federal Contract 
Compliance Programs) has been enforcing have really helped us 
move the needle on veteran employment. I want to thank you for 
your unwavering support on that issue.
    Senator Murray. Thank you.

                      IMPORTANCE OF OVERTIME RULE

    You have been asked a lot about the overtime rule here. I 
know everybody is anxious to see what it is and make sure that 
some of these stories could be real, may not be, whatever the 
rule is.
    But I just want to ask you, talk to me about why you think 
it is important that we implement this rule and what you have 
seen out there that brought you to this.
    Secretary Perez. I have met a number of people who are 
working 70 hours a week. They are the most important people in 
their organizations. I am not going to name names, but they are 
working at a lot of places that you go to, to get food or 
coffee or whatever. They have missed their kids' graduations. 
They have missed dinners. They have missed PTA meetings. They 
have done so because they are really dedicated to these jobs.
    As a result of the 2004 rule, frankly, leverage was taken 
from workers and given to employers. ``When was the last time 
you had a vacation?'' And one of these managers said, 
``Vacation? For me, a vacation is a 40-hour week.'' Those were 
not my words. Those were his words, and they really stuck with 
me.
    The overtime rule is, I think, an illustration of what 
happens when Congress does not index things, because you know 
what? When we have these conversations about the minimum wage 
and you hear about concerns about disruption, your proposal 
with Congressman Scott will eliminate that issue by indexing.
    If we had simply indexed the 1975 threshold, today's 
threshold would be something like $58,000.
    Senator Murray. So your proposal is actually less than what 
it would have been.
    Secretary Perez. If we had simply indexed, the proposed 
rule would be less.
    So I think when you look at these issues, people are 
concerned about wages. We had a conversation about wages. When 
I grew up in Buffalo, New York, when my friends' parents were 
managers, they were in the middle class. There are a lot of 
folks who are managers doing responsible things, and they are 
no longer in the middle class. They are donating 20 to 30 hours 
of their time. I do not think that is fair.
    Senator Murray. Thank you very much. I really appreciate 
that.

            INDEXING EXEMPTIONS SALARY FOR THE OVERTIME RULE

    Senator Blunt. On the overtime rule, since we are spending 
some time on that, particularly in the not-for-profit sector, 
there appear to be real concerns, if you had indexed that 
$23,660 in 2004 to any reasonable index I am aware of, you 
certainly would not go to $50,440 today. Your belief would be I 
guess the $23,660 was the wrong number, but these same jobs 
with same responsibilities, Mr. Secretary, have not more than 
doubled in their compensation in the economy we have seen.
    Your contention is that the number you started with, the 
$23,660, was the wrong number in 2004?
    Secretary Perez. I do not want to get too specific right 
now, because we are in the middle of the rulemaking process, 
but I would simply note that indexing is not a new concept. 
Indexing Social Security benefits, if people did not have their 
benefits indexed----
    Senator Blunt. What do you think it would be if you had 
indexed $23,660 over the last 12 years?
    Secretary Perez. I do not have that exact answer. It would 
certainly be less than this. But we had if we had indexed--back 
in 1975 was when the rule was changed and there was a short 
test and a long test. That was $250 a week, if my memory serves 
me. If you index that now, you would be at that $57,000 or 
$58,000 figure that I am talking to.
    Again, I hope when Congress passes a minimum wage, they 
have an indexing provision, so we do not have to have this 
conversation, because it has an impact when you suppress wages 
for that long and then you have to catch up.
    Senator Blunt. When you set this number this high this 
quickly and suggest that one national standard makes sense, one 
national standard may have made some sense at the lower number. 
I think it just does not make sense here. And you have heard 
from Oklahoma and Tennessee and Mississippi and Missouri that 
these jobs, particularly in the not-for-profit sector, with 
responsibilities that have people committed to a job maybe not 
onsite, but committed to be available, are out-of-touch with 
this number.
    I am sure you are now anticipating that when the rule does 
come out, we will have a lot of discussions.
    Secretary Perez. We have certainly heard that. We have 
heard your sentiment in the comment process. We have also heard 
Senator Murray's sentiment and others.
    Senator Blunt. Speaking of the direction of the committee, 
here is another example of a change in department policy that 
has a lot of impact that does not really have a rules change. 
This does not follow the Administrative Procedures Act.

                            RETAIL EXEMPTION

    There was an OSHA (Occupational Safety and Health 
Administration) memo last year, July 22, altering the retail 
exemption application that had been in place for over 20 years 
for anhydrous ammonia, which is a farm fertilizer. In fact, in 
the current appropriations language, the language prohibited 
OSHA from enforcing that July 22, 2015, retail exemption memo 
unless they carried out a full rulemaking process.
    Six days later, after the bill went into effect, the one 
that said you should not do this, OSHA issued a notice that it 
would start enforcing the memo on the first day of 2017. No 
rulemaking, no other language, nothing happening there.
    Why would OSHA ignore the clear congressional intent here 
that you would have to go through a rulemaking process to make 
this change? The small retailers, your estimate is it would 
cost them about $2,000 to comply. Their estimate is it would 
cost them about $20,000 to comply.
    But I think my first question is, why wouldn't you follow 
the specific intent of the appropriating language that you not 
do this without going through the rulemaking process?
    Secretary Perez. With all due respect, Mr. Chairman, I 
think we did. What our announcement was was that we were 
extending the enforcement date to the end of this fiscal year 
to comply with the rider. That is exactly what the rider said, 
and that is exactly----
    Senator Blunt. So your memo would become the rule?
    Secretary Perez. Pardon me?
    Senator Blunt. Your memo would become the rule?
    Secretary Perez. No, what our memo said--you instructed us 
in the appropriations rider not to enforce this in this fiscal 
year. Our memo said that we will not enforce this in this 
fiscal year.
    This issue is an outgrowth of the horrible catastrophe in 
West Texas where 15 people, mostly first responders, died in a 
horrific incident and----
    Senator Blunt. Anhydrous ammonia was not involved in that 
accident.
    Secretary Perez. But the President's directive to us 
afterward was to make sure that we improve safety in chemical 
facilities.
    There was an elementary school that got leveled, and thank 
God this occurred in the middle of the night or else we would 
have had hundreds of people--so we actually did do what we call 
a request for information. We did not simply come out with 
guidance.
    We solicited feedback. We got feedback. We issued a 
guidance document, which we think is within our rights. That is 
subject to litigation. Whatever happens at the end of 
litigation, we will comply with.
    Senator Blunt. And it certainly is within our rights to put 
the same language in the bill again this time then that says do 
not do this beginning January 1, 2017, without going through a 
rule. I just do not understand why you want to continually 
resist the administrative rulemaking process with these memos 
and letters that have the impact of rules without having gone 
through the process of what it takes to make a rule.

                      CHEMICAL SAFETY BOARD RULES

    The U.S. Chemical Safety Board says that there is no 
evidence that there has ever been an ammonia nitrate problem if 
the current rules were being followed.
    Secretary Perez. Again, Mr. Chairman, we all have a shared 
interest in preventing another West Texas from occurring. I 
recognize that we both have that interest. We were in a 
situation where we got feedback, we solicited that feedback, 
and the cost of taking 2 years to solicit additional feedback 
or however long that process would take, I was frankly 
concerned that if we did that and during that period another, 
God forbid, incident occurred, then I would be at oversight 
hearings where I would be asked, why didn't you move faster? So 
I am a little bit damned if I do and damned if I don't on this 
one.
    I appreciate that, and again----
    Senator Blunt. I appreciate your feeling that that might be 
where you are, but if the United States Chemical Safety Board 
says when the current rules are followed, there is no evidence 
there has ever been a problem, and when anhydrous ammonia was 
clearly not the problem that you are concerned about in that 
horrific accident. Nobody wants to see those accidents happen. 
My belief is that the current rules were not being followed 
there, based on what I read about this and understand.
    But what you really do is add a substantial cost penalty to 
small retailers who have never had an accident, who follow the 
current rules, the current rules thought to be sufficient, and 
without going through the rulemaking process.
    And while it technically does not violate the direction of 
the appropriations bill, the way we would I guess continue to 
express the will of Congress is every year prohibit you from 
doing something that you could have done properly by proposing 
a rule. The legislative bill did not say do not go through the 
rulemaking process. It said, in fact, you should go through the 
rulemaking process rather than not do that.
    Chairman Cochran, do you have another question?

                 GULFPORT, MISSISSIPPI JOB CORPS CENTER

    Senator Cochran. Yes, Mr. Chairman. I have a sore subject 
that I hate to bring up, because it has been hanging out here 
for 10 years, but I am going to bring it up again until I wear 
it out or I retire or run off or get run off.
    Two years ago, we had a commitment from the Department of 
Labor, Secretary Solis, who was involved in this, in helping 
draft suggestions to resolve issues about a $18 million 
Gulfport, Mississippi, Job Corps Center that was destroyed or 
labeled destroyed by somebody.
    We submitted language to authorize funding to restore, 
rebuild this historic structure. There was a feasibility study 
done, a report estimating costs. There was a Mississippi 
Department of Archives and History report that was done. They 
awarded an environmental effects study.
    Anyway, several steps have been taken to try to get back 
this department asset, which is a Federal investment sitting 
around for several years now.
    Anyway, I would like for you to look into the situation, 
see what you can recommend about the restoration and rebuilding 
of the Gulfport Center in Gulfport, Mississippi.
    Secretary Perez. Absolutely. I believe that we submitted 
last week a report required by you, and I think we briefed your 
staff or spoke to your staff about this. Then I think we are in 
the process of doing two separate procurements. One is for the 
NEPA study, the National Environmental Protection Act study, 
and then the structural engineering analysis.
    Whenever there are issues of historic preservation, I used 
to be a local government elected official, whenever we had 
those historic preservation issues, one thing I learned from 
that was that the process took seemingly forever, and it was an 
undeniable source of frustration for everyone.
    I certainly appreciate the amount of time that has been 
spent, and your dogged persistence on this is something that we 
very much appreciate. So I can assure you that we are doing 
everything in our power to move forward, and we will continue 
to work with you and your staff. Your staff has been, as usual, 
superb on this issue, Mr. Chairman.
    If there are things that you think we should be doing that 
we have not done, I hope you or your staff will bring it to our 
attention, because, again, this should not take this long, I 
know. But when we are talking about local processes and 
compliance with a bunch of different State, Federal, local 
provisions, and then listening to the community, which is 
obviously very important, it takes the amount of time that it 
has.
    So I look forward to continuing to work with you.
    Senator Cochran. Thank you very much for your seriousness 
of purpose. I look forward to helping celebrate the completion 
of the center.
    Secretary Perez. I would like to go to that grand opening--
reopening.
    Senator Cochran. Thank you.
    Senator Blunt. Before I go to Senator Cassidy, I think you 
mentioned earlier that I had been Governor and Secretary. I was 
Secretary of State. I was not Governor. My son Matt was.
    Secretary Perez. I am sorry.
    Senator Blunt. I did not want somebody to suggest that I 
allowed my resume to be inflated.
    Secretary Perez. My bad, Mr. Chairman. I apologize.
    Senator Blunt. I am of the view that maybe being Governor 
is the best job in politics, and I think they all put on their 
stationery from then on Governor. So Governor Ridge is where I 
would go, if I was going to talk of Governor Ridge or Secretary 
Ridge.
    Senator Cassidy.
    Senator Cassidy. Mr. Chair, you asked my questions, so I 
yield back.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Blunt. Any other questions?
    Well, thank you, Mr. Secretary. The record will stay open 
for 1 week for additional questions. I am sure there will be 
some.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                Questions Submitted by Senator Roy Blunt
                 department of labor rulemaking process
    Question. Each year, I hear from small businesses owners, large 
businesses, and anyone who is trying to recover from the recession 
about the onerous regulations being implemented by the Department.
    Can you please speak to the Department's process for developing a 
cost-benefit-analysis and how it is justified to move forward with 
rules that will be extremely onerous to the U.S. economy?
    Answer. Each of the Department's rulemaking efforts is conducted in 
line with governing laws and executive orders, including Executive 
Order 12866, which requires the use of regulatory impact analysis in 
certain circumstances. Costs and benefits are quantified, monetized, or 
analyzed qualitatively consistent with OMB's guidance in Circular A-4.
    Over the course of this Administration, the benefits of the 
regulations that the Department has implemented far outweigh the costs. 
Like you, I also talk to business owners in my travels, and many thank 
us for helping to level the playing field so that they are not forced 
to compete with other businesses who take the low road in dealing with 
their workforce. When we level the playing field for business owners 
that want to comply with the law, that is good for the economy.
                        fiduciary expansion rule
    Question. Mr. Secretary, it is important for the Department to have 
a full understanding of the adverse economic effects on businesses and 
employers that these rules have. For example, regarding the proposed 
fiduciary expansion rule, Morningstar (a highly-respected financial 
information firm) said that while this rule officially has a high-end 
annual cost estimate of $1.1 billion, Morningstar believes the low-end 
estimate to be more than double that.
    What accounts for such a large discrepancy between government 
estimates and those of outside experts?
    Answer. While developing the final rule and the exemptions, the 
Department also reexamined its cost estimates, in light of public 
comments and other information available at the end of the comment 
period. The new cost estimates are published along with the final rule.
    While the Morningstar report in question was made public after the 
close of the comment period, the Department reviewed the report. The 
Department's cost estimates did not change as a result of its review of 
the Morningstar report.
    The Morningstar report considered the proposed rule, not the final 
rule and exemptions. The report exaggerated the negative impact the 
proposed rule would have had on commission-based product sales and the 
final rule and exemptions have been streamlined and clarified to better 
accommodate such sales. In addition, Morningstar focused more on the 
rule's effect on financial firms' revenue, not their compliance cost. 
Much of that revenue would translate directly into savings in 
investors' pockets who will pay less for financial products and 
services.
    Question. Does the Department of Labor, who has not previously 
regulated on this particular issue, fully understand the implications 
of the proposal?
    Answer. Since 1978, the Department has been charged by Congress 
with interpreting and issuing exemptions from the prohibited 
transactions provisions of both ERISA and the Internal Revenue Code 
(IRC). Since that time, the Department has issued a number of 
regulations related to the IRC prohibited transactions provisions, as 
well as a number of prohibited transaction exemptions. The Department's 
role regulating fiduciary investment advice to IRAs long predates the 
2010 Proposal--it was established 35 years prior and was recently 
explicitly recognized and expanded by the Pension Protection Act in 
2006. The new rule and exemptions fit within the Department's scope of 
responsibility to interpret the IRC's prohibited transactions 
provisions and issue prohibited transaction exemptions in connection 
with investment advice regarding IRAs.
    Under ERISA, the Department is responsible for creating rules and 
regulations that protect America's workers when they put their 
retirement savings in the hands of brokers and other financial 
advisers. ERISA gave retirement investments uniquely tax-favored status 
and special fiduciary protections from advisers' conflicts of interest. 
These tax benefits promote retirement savings and the fiduciary 
protections protect the workers who rely on these assets for their 
retirement security. In addition, there are many transactions involving 
retirement savings (such as advice to purchase some insurance annuity 
and bank products) to which Federal securities laws do not apply, but 
ERISA and the Internal Revenue Code (IRC) do. We want to make sure that 
people who provide fiduciary investment advice can comply with all the 
rules and their obligations and have therefore designed a rule that 
will neither undermine nor contradict the securities laws. Our aim is 
for consumers to receive the full protection of ERISA, the IRC and the 
securities laws.
    The Department undertook incredibly thorough and extensive public 
outreach over the past 6 years, culminating in an extended public 
comment process, four days of public hearings, and an additional public 
comment period that ended on September 24, 2015. We received feedback 
on the proposal from thousands of commenters. The Department took into 
consideration the full range of public comments received in finalizing 
the rule.
                  economic analysis of fiduciary rule
    Question. Will the Department provide a more rigorous economic 
analysis of the rule and any changes made in the final version, or does 
it plan to rest this rulemaking on the initial, potentially-fatally 
flawed, economic analysis?
    Answer. The economic analysis of the final rule and exceptions is a 
detailed evaluation of the impact of the final rule. The Department 
received feedback on our proposal, including our economic analysis, 
from thousands of commenters. Over the course of 6 years, we heard from 
hundreds of thousands of members of the public in the form of emails, 
petitions, hand-delivered comments and hearing testimony. The proposed 
rule and exemptions that we published in April 2015 were much more 
robust than the version we proposed in 2010. The final rule and 
exemptions published in April 2016, including a final regulatory impact 
analysis, is an even stronger and more comprehensive product than the 
2015 proposal due to the constructive feedback we have received in over 
5 months of comment period, four days of public hearings, and almost 
100 meetings.
    The Department's final economic analysis reflects careful 
consideration of the entire public record, and it refines and extends 
the analysis previously provided with the proposal. It confirms the 
conclusions of the initial analysis: that adviser conflicts cause 
avoidable, serious harm to retirement investors, and that the stronger 
consumer protections included in the final rule will benefit those 
investors at a reasonable cost.
            impact of expanding the definition of fiduciary
    Question. In 2011, the Department stated that its own rules that 
apply to fiduciaries are at least in part responsible for over $100 
billion of investment losses every year, a far greater number than the 
Administration's $17 billion figure that has been publicized. So by 
vastly expanding the definition of a fiduciary, the concern is that 
this number could be increased significantly under the proposal. But 
the official DOL (Department of Labor) economic analysis does not 
contain any discussion of this issue. It doesn't even mention the prior 
work by DOL.
    What work has been done on this issue and why wasn't it included in 
the official DOL economic analysis?
    Answer. Both the 2015 proposed and 2016 final regulatory impact 
analyses refer to the 2011 rule and analysis. In 2011, the Department 
estimated retirement investors make errors totaling more than $114 
billion annually, and the Department's 2011 rule would extend access to 
affordable fiduciary advice and reduce those errors by between $7 
billion and $18 billion annually. The Department stated in 2011 that 
the errors could be at least partially attributable to ERISA's 
prohibited transaction rules, which preclude various advice 
arrangements. The 2011 rule increased access to fiduciary advice by 
implementing an exemption that allowed fiduciary advisers to engage in 
otherwise prohibited transactions, subject to strong protective 
conditions that ensure their advice is impartial and in investors' best 
interest. As the Department stated in the 2016 analysis, if instead the 
investors affected by the 2011 regulation would have received 
conflicted investment advice, the benefits of the exemption forecasted 
in 2011 would be much lower and possibly negative.
    In contrast, the Department's analysis for the new rule and 
exemptions focuses on the cost of investor errors attributable to 
conflicts of interest in non-fiduciary advice, which are estimated to 
be as much as $17 billion annually for only one segment of the IRA 
market (broker-sold front load mutual funds). The 2011 analysis has no 
relevance to estimating such costs. In our regulatory analysis for the 
2016 rule and the exemptions, the Department also estimated the 
benefits to recipient investors of impartial advice rendered by persons 
subject to a stringent fiduciary standard.
    The Council of Economic Advisors estimated the cost of such errors 
related to conflicted investment advice total $17 billion annually in 
the IRA market. The Department's Best Interest Contract Exemption, 
which likewise permits fiduciary advisers to engage in certain types of 
otherwise prohibited self-dealing (subject to a different set of 
protective conditions), will further extend, beyond what was achieved 
with the 2011 rule, the availability of fiduciary advice in retirement 
investors' best interest.
  occupational safety and health administration retail exemption rule
    Question. I am concerned about a change in Departmental policy that 
will have the impacts of a rule change but side-steps the full checks 
and balances process required in the Administrative Procedure Act: the 
OSHA (Occupational Safety and Health Administration) memo of last July 
22nd altering the retail exemption applicable for over 20 years to 
anhydrous ammonia, a farm fertilizer. In fact, the fiscal year 2016 
Omnibus incorporated language that prohibited OSHA from enforcing the 
July 22, 2015, ``retail exemption'' memo unless OSHA carried out a full 
notice-and-comment rulemaking. Six days later, OSHA issued notice that 
it would start enforcing the memo on the first day of fiscal year 2017, 
ignoring the language's other requirements.
    Why has OSHA ignored the clear congressional intent to conduct a 
proper rulemaking on the ``retail exemption'' before increasing the 
scope of the Process Safety Management regulation?
    Answer. OSHA's announcement that it will not enforce the July 22, 
2015, ``retail exemption'' memo through September 30, 2016, is 
consistent with the language of the report accompanying the fiscal year 
2016 appropriations bill, which specifically prohibits enforcement of 
the retail exemption during fiscal year 2016 absent formal rulemaking 
and other steps. In addition, OSHA recently began the process for 
potential rulemaking. On May 5, 2016, OSHA issued a background document 
to small employer representatives as part of the Small Business 
Regulatory Enforcement Fairness Act (SBREFA) process. OSHA included a 
definition of ``retail'' in its Background Document to the SBREFA panel 
being convened to consider the impact on small businesses of possible 
amendments to the PSM (Process Safety Management) standard. This is the 
first step in a process that could potentially result in the inclusion 
of definition of ``retail'' in an NPRM.
    Question. OSHA has stated that it estimates it will cost 
agricultural retailers about $2,160 to comply with the rule, but I am 
hearing from many retailers that it will cost more than ten times that 
amount to comply--about $25,250 on average. How did OSHA come up with 
its estimate?
    Answer. OSHA assumed that most facilities affected by the retail 
memo are already compliant with EPA's Risk Management Program (RMP) 
Level 2. RMP Level 2 contains requirements nearly identical to eight of 
the requirements in PSM. Generally, compliance with RMP Level 2 
constitutes compliance with those eight overlapping PSM elements. To be 
fully compliant with PSM, facilities now in compliance with RMP 2 need 
only implement those additional elements of a PSM program not already 
part of their existing safety management system. OSHA's estimate 
reflects the additional incremental costs of those PSM elements not 
already required under RMP 2.
       proposed increases to department of labor staffing levels
    Question. The Department has proposed a very large increase in 
staffing. The budget request calls for 779 new Federal employees at the 
Department. 318 of those are for the Wage and Hour Division alone, 
increasing the number of employees by over 18 percent. Staffing at Wage 
and Hour has already increased by over 44 percent during the current 
administration. The staff in the Departmental Management account would 
increase by 149 people or 10 percent.
    Given the increasing pressure on the budget, how can you expect the 
Subcommittee to increase agency bureaucracy again at these levels?
    Answer. In formulating the budget, DOL carefully identified areas 
where increased staffing was needed to fulfill our mission. Among many 
critical investments, we are rebuilding our enforcement capacity, 
addressing the challenges of monitoring and enforcing international 
trade agreements, and otherwise ensuring we have the resources to 
fulfill the mission of the Department.
    The Budget includes additional funding to ensure that all of the 
Department of Labor's (DOL) worker protection agencies can meet their 
responsibilities to defend the health, safety, wages, working 
conditions, civil rights, and retirement security of American workers, 
and level the playing field for law-abiding employers. As you note, the 
Wage and Hour Division (WHD) is one area where we have added staff. The 
WHD's mandate is vast yet the resources are relatively small--even with 
the modest staffing increases since 2009. With less than 1,000 
investigators, it is charged with protecting over 135 million workers 
in more than 7.3 million establishments nationwide. Given limited 
resources to effectively achieve the mission, WHD has adopted a 
strategic enforcement approach to achieving compliance. WHD prioritizes 
efforts in industries where the problems are greatest, where workers 
are least likely to exercise their rights, and where WHD can have an 
impact on compliance. To make this approach most effective, WHD 
requires a workforce that can address compliance issues at the industry 
level through a combination of enforcement, stakeholder engagement and 
compliance assistance. Further investments are necessary to establish 
WHD as a modern, data-driven enforcement agency that is equipped with 
the necessary combination of personnel, technology, and equipment, and 
to effectively carry out its mission.
    In addition, the Departmental Management account includes several 
program agencies where staff increases are proposed. In one notable 
example, the Budget proposes 14 additional staff for the International 
Labor Affairs Bureau to make sure American businesses are on a level 
playing field with their international counterparts. Since 2012, the 
U.S. has signed free trade agreements with Panama, Colombia, and South 
Korea. New ILAB staff will continue to improve the monitoring and 
enforcement of labor provisions of free trade agreements and trade 
preference programs, investigate allegations of trade agreement labor 
violations, and protect the interests of American businesses to ensure 
that they are not being unfairly undercut by foreign businesses. These 
additional staff will also act as the principal liaison with other 
governments on labor issues, assist in the negotiation of new labor 
commitments, and provide the research and analysis necessary to address 
the labor rights concerns in beneficiaries of U.S. trade preference 
programs.
    The Department of Labor appreciates the support that it has 
received from the Committee and looks forward to working with you on 
these additional requests. With these investments, the Department will 
be able to enhance our ability to protect the wages and working 
conditions of workers across the U.S., monitor international trade 
agreements, and fulfill the critical mission of the Department. While 
your support has allowed the Department of Labor to grow and improve 
upon its outcomes, there is still more that we can accomplish together.
          frameworks for reciprocity for occupational licenses
    Question. The Omnibus included a new $7.5 million program requested 
by the Administration to establish a consortium (or multiple consortia) 
of States to begin the analysis and development of frameworks for 
reciprocity or other forms of portability for certain occupational 
licenses. This will help reduce unnecessary barriers to mobility and 
re-employment for thousands of dislocated workers, transitioning 
servicemembers, military spouses, and others. An additional $10 million 
is requested for fiscal year 2017. It is my understanding that the 
Department plans to quickly implement the initiative. I appreciate the 
Department's work in this area and look forward to hearing about the 
first stages of this effort once implemented.
    Mr. Secretary, can you tell the Subcommittee about your 
expectations for this initiative and what might be accomplished?
    Answer. We envision that one or more national or regional 
organizations will work with one or more consortia of States to review 
and analyze occupational licensing requirements and development 
recommendations to make progress toward two main objectives designed to 
achieve greater labor mobility and access to employment opportunities 
for qualified jobseekers:
  --Identify unnecessary licensing criteria to ensure that existing and 
        new licensing requirements are not overly broad or burdensome 
        and that they do not create unnecessary barriers to labor 
        market entry; and
  --Improve portability and reciprocity provisions for selected 
        occupational licenses across State lines.
    Question. I am hopeful that the Department will also foster 
discussion and agreements about recognition of some categories of 
military training. Separating servicemembers face similar barriers that 
inhibit civilian recognition of their military training. Do you think 
progress is possible in that area as well?
    Answer. Transitioning Servicemembers (TSM), as well as military 
spouses, are both populations where there is a particular opportunity 
to streamline pathways to licensure through recognition of prior 
learning, as well as reduction of administrative barriers, and we 
envision both of these activities being part of this project. The soon-
to-be-released report required by Section 237 of the VOW Act of 2011 
lays out a military to civilian training gap analysis framework that 
can be used as a blueprint for other States to follow. The report 
summarizes the results of a demonstration project conducted with six 
States that was specifically designed to identify civilian occupational 
skills for licenses or certification requirements that could be 
satisfied (in whole, or in part) by military training and experience; 
and to accelerate the attainment of civilian credentials by veterans 
with appropriate skills and experience. The report on the pilot lays 
out a strategy that State stakeholders can undertake and adapt on their 
own. The report is highlighted as a potential technical assistance 
resource for awarded organizations and State consortium participants.
    Question. How much time do you anticipate being necessary until 
participating States can achieve something?
    Answer. We anticipate that the project period will provide a full 3 
years to expend the funds. We anticipate that it could take at least 18 
months after award for appreciable results to be realized at the State 
level.
    Question. How many States do you expect to participate initially?
    Answer. While we cannot be certain of the level of response, we 
hope to see a few strong consortia of three or more States that would 
each bring cross-agency teams and unite around shared interests and 
shared challenges to work together to improve portability and access to 
employment for all qualified individuals. The additional investment of 
$10 million requested for fiscal year 2017 will allow for extending 
this initial effort.
            worker programs gold standard evaluation results
    Question. I understand that early results of a major departmental 
evaluation--the Worker Programs Gold Standard Evaluation (WGSE)--will 
be available shortly. This is one of the Department's most rigorous 
studies of the effectiveness of the Department's job training programs 
in recent years.
    Please describe any preliminary results you may have received about 
effectiveness, cost versus benefit, and the general training approach.
    Answer. The Workforce Investment Act (WIA) Gold Standard Evaluation 
is a rigorous evaluation to assess the effectiveness of intensive 
services and training offered to customers through the WIA Adult and 
Dislocated Worker formula-funded programs. (Twenty-eight randomly 
selected Local Workforce Investment Areas [LWIAs] participated in the 
evaluation so the study findings are representative of the national 
programs.) The evaluation is ongoing, but to date, the Department has 
issued two reports:
      1)  Evaluating National Ongoing Programs: Implementing the WIA 
        Adult and Dislocated Worker Programs Gold Standard Evaluation 
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      2)  Providing Services to Veterans Through the Public Workforce 
        System: Descriptive Findings from WIA Gold Standard Evaluation: 
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    The first report discusses the challenges and issues when 
implementing a nationwide evaluation of an ongoing program and is 
primarily intended for policy makers and researchers contemplating a 
large-scale evaluation of this type. The second report discusses the 
results of the Veterans Supplemental Study (VSS), a component of the 
evaluation.
    The VSS report describes the characteristics of veterans served by 
the public workforce system during the time the WGSE was in process as 
well as the services provided and the outcomes experienced by 
participating veterans. Among other things the report reveals:
  --Veterans were not always aware of the services to which they were 
        entitled or their right to priority of services when they 
        entered an American Job Center (AJC).
  --AJC staff, including WIA staff and veterans' representatives funded 
        by Jobs for Veterans State Grants (JVSG), reported that a key 
        activity was translating veterans' military experience to 
        civilian job opportunities.
  --The report also includes an in-depth analysis of administrative 
        data from two States which allowed the evaluation team to 
        correlate service receipt with veterans' average post-program 
        quarterly earnings.
    The Department plans to release in Summer 2016 a report describing 
program operations at the 28 LWIAs participating in the study as well 
as a series of implementation briefs. In combination, the briefs and 
report will provide information about the general approach for offering 
services and training. Two impact reports are scheduled for release in 
2017 and 2018; they will provide information about the effectiveness of 
workforce services at 15 months and 30 months, respectively, after 
participants were randomly assigned into the study. The final report 
also will provide the results of the cost-benefit analysis. While this 
evaluation is of WIA, there are significant parallels to the service-
delivery structure under the Workforce Innovation and Opportunity Act, 
which superseded WIA, and will be relevant under WIOA.
    Question. Are there useful insights coming out of it?
    Answer. The qualitative data described in that report will provide 
insights about various practices or approaches that will help States 
and local areas improve service quality. The forthcoming implementation 
report will be available in early summer 2016 and will provide a 
snapshot of how the WIA Adult and Dislocated Worker programs were 
operating nationwide in the early 2010s. Early findings from the 
evaluation substantiate a number of the changes instituted under 
Workforce Innovation and Opportunity Act (WIOA) that provide more 
flexibility to local areas to better serve their clients based on their 
immediate needs, existing strengths and skills.
    Question. It appears that much of the data upon which the study was 
based comes from the program before implementation of the new 
authorization act of 2014. Does that change the way the results should 
be received?
    Answer. Although WIOA made some important changes to the public 
workforce system, it leaves intact important elements of the service-
delivery structure of the adult and dislocated worker programs. For 
example, services will continue to be accessed at AJCs, a similar set 
of services will be offered, and customers will continue to choose the 
service mix they view as most appropriate, with some restrictions. 
Thus, the evaluation findings can guide workforce decision-makers and 
practitioners as they continue to improve workforce system operations 
and services under WIOA.
    One example of this is the finding noted above that AJC staff, 
including Adult and Dislocated Worker program staff and veterans' 
representatives funded by JVSGs, reported that a key activity was 
translating veterans' military experience to civilian job 
opportunities. In the fiscal year 2016 appropriation the Department 
received $7,500,000 for an Occupational Licensing Grant program that 
includes the opportunity for States to work on the translation of 
veterans' military experience to civilian occupations where licensure 
is required. The 2017 Budget requests $10,000,000 for this work.
    Question. Will the results come in time to help shape a more 
effective implementation of the new WIOA act to help fix deficiencies 
it may reveal?
    Answer. While the impact results from the WGSE are scheduled for 
release in early 2017 and in 2018, the series of implementation study 
briefs and qualitative findings will help States and localities as they 
continue to implement WIOA. During the next several years, State and 
local officials and workforce development boards will have many 
opportunities to use the results from the WGSE to improve practices and 
the quality and types of services offered through AJCs.
         updated interpretation of the fair labor standards act
    Question. On January 20th, the Wage and Hour Division Administrator 
issued an ``Administrator's Interpretation'' changing the 
interpretation of the Fair Labor Standards Act (FLSA) and its related 
regulations in place since the early 1960's with respect to joint 
employer relationships. The interpretation changes the agency's 
enforcement posture and seems to expand upon the NLRB's recent decision 
in Browning Ferris in August.
    What is your view of the effect of the new interpretation 
statement?
    Answer. The Wage and Hour Division (WHD) published Administrator's 
Interpretation (AI) No. 2016-1, Joint employment under the Fair Labor 
Standards Act and Migrant and Seasonal Agricultural Worker Protection 
Act to provide additional, detailed guidance concerning joint 
employment in order to assist the regulated community.
    This AI reflects existing WHD policy. From their enactment, the 
FLSA and MSPA allowed for the possibility that a worker may have 
multiple employers, and the statutes' joint employment regulations were 
promulgated decades ago. The guidance provided in this AI is consistent 
with those regulations, WHD's investigative and enforcement efforts, 
and its previous guidance, including fact sheets, Opinion Letters, and 
AI 2014-2 on joint employment of home care workers in consumer-
directed, Medicaid-funded programs by public entities under the FLSA.
    The joint employment analysis applicable in FLSA and MSPA cases is 
not the same as the analysis applied by the NLRB. The NLRB is an 
independent agency and its decisions are based on a different statute 
(the National Labor Relations Act) with a different standard for 
determining joint employment.
    Question. Since it cannot be construed to carry the weight of law 
or regulation, is it simply intended as helpful guidance or compliance 
assistance to stakeholders? Or do view it as more than that?
    Answer. WHD constantly seeks opportunities to provide helpful 
guidance and compliance assistance, such as AIs, to the regulated 
community.
    The Administrator published this AI to provide additional, detailed 
guidance concerning joint employment under the FLSA and MSPA in order 
to assist the regulated community.
    The AI identifies common scenarios in which two or more employers 
jointly employ an employee and are thus jointly liable for compliance, 
and common scenarios in which no joint employment relationship exists. 
It pulls together all the relevant authorities: statutory provisions, 
regulations, and case law to provide comprehensive guidance on joint 
employment under FLSA and MSPA so that potential joint employment 
scenarios can be properly analyzed.
    Question. Is the interpretation intended to fundamentally change 
the scope of the Fair Labor Standards Act and its existing regulations 
and expand the liabilities and compliance costs placed upon the 
stakeholders, including employers that have no direct or exercised 
control over employment matters in the given situation?
    Answer. No, the AI does not change the scope of the FLSA or MSPA. 
It reflects the FLSA and MSPA as written, as well as existing WHD 
policy. The AI does not impose any new obligations on employers or 
represent a change in the Department's statutory interpretation or 
policy.
    Question. The Administrative Interpretation seems to have the 
expressed purpose of changing the scope and long-standing 
interpretation of law and regulation. In fact, the statement says 
explicitly that the Wage and Hour Division may ``consider joint 
employment to `achieve' statutory coverage.'' This seems to be a direct 
acknowledgement that the interpretation seeks to extend the scope of 
the law beyond what it was written to do. Why would the agency not use 
a full Administrative Procedures Act process (including steps like 
public notice and comment, cost-benefit analysis, and small business 
impact evaluations) to formally change the regulations or 
interpretations--especially given how controversial and impactful this 
matter is?
    Answer. As discussed in response to the question above, the AI does 
not change the scope of the FLSA or MSPA. It reflects the FLSA and MSPA 
as written, as well as existing WHD policy. The AI does not impose any 
new obligations on employers or represent a change in the Department's 
statutory interpretation or policy. Therefore, the content of this AI 
does not require notice and comment rulemaking.
    Question. Why is the Department circumventing those processes for 
such major changes?
    Answer. The content of this AI does not require notice and comment 
rulemaking. WHD issues AIs when it determines that further clarity 
would be helpful on the proper application of existing law to 
particular situations or categories of workers. The AI provides 
additional detail and analysis of WHD's position concerning the 
identification of joint employment, and does not impose any new 
obligations on employers or represent a change in the Department's 
statutory interpretation or policy.
          addressing gao criticisms of vets' performance goals
    Question. In the past several years, the unemployment rate for 
veterans has been significantly higher than the national average. It is 
critical that veterans transition effectively out of military service 
into civilian life. The Government Accountability Office (GAO) has 
issued several reports on how to better target and coordinate 
employment and training programs focused on our Nation's veterans. One 
of the criticisms that GAO cites is the lack of transparency with 
regard to the extent to which veterans' employment training services 
are meeting performance goals. In particular, questions were raised 
regarding whether outcomes are attributable to program participation 
and challenges with coordinating veterans' employment programs within 
the Department and across other Federal agencies.
    Mr. Secretary, can you discuss what the Department has done and is 
doing to address these concerns?
    Answer. This Administration has made significant progress in 
improving employment outcomes for veterans, undertaking efforts to 
conduct formal evaluations of our programs that link program 
participation to long term outcomes, and addressing GAO's concern 
regarding increased transparency in program performance information.
    The Administration's efforts to address unemployment for all 
American workers, and its specific programs targeted at veterans, have 
contributed to a significant decrease in the unemployment rate at a 
time of economic recovery. These include strategies to work with 
private sector employers and to build partnerships among Federal 
agencies that have a stake in veteran employment.
    Perhaps the most prominent effort with respect to veterans in 
particular is the White House's Joining Forces initiative. Currently in 
its fifth year, this initiative mobilizes private sector employers to 
hire an increased number of veterans and transitioning servicemembers. 
Building on this model, the Department of Labor's Veterans' Employment 
and Training Service (VETS) has established the Office of Strategic 
Outreach, with Regional Veteran Employment Coordinators (RVECs) 
stationed throughout the country linking private employers to job-ready 
veterans. Additionally, within government, there has been an incredible 
interagency effort (with partners from DOL, Veterans Affairs, the 
Department of Defense, the Department of Education, and the Small 
Business Administration), prompted by the VOW Act, to modernize support 
to servicemembers as they transition to civilian life.
    In part, as a result of these and similar efforts, the veteran 
unemployment rate has consistently been lower than the national 
average. In fact, in the 87 months since January 2009, the veteran 
unemployment rate has been lower than or equal to the national average 
in all but 2 months, January 2011 and November 2013. Included below is 
a line graph displaying the Bureau of Labor Statistics' national 
unemployment rates (Table 1) for these months, and the veteran 
unemployment rate (Table 2). Note: The national unemployment rate is 
for all persons 16 years and over while the veteran unemployment rate 
is for veterans ages 18 and over.
    [The graph follows:]

    
    

    [The tables follow:]

    
    
    
    

    It is correct that in some demographic cohorts, such as veterans 
ages 18-24, veteran unemployment had been consistently higher than 
nonveterans of the same age. In response, the Administration has 
pursued policies to address this disparity, significantly decreasing 
the gap between these cohorts' unemployment rates. The unemployment 
rate for veterans aged 18-24 has dipped below their nonveteran peers in 
several months over the last year.\3,4\
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    \3\ National Unemployment Rates: DOL, BLS, Labor Force Statistics 
from the Current Population Survey (CPS), Table A-1 Employment status 
of the civilian population by sex and age, seasonally adjusted, found 
at: http://www.bls.gov/webapps/legacy/cpsatab1.htm.
    \4\ Veterans Unemployment Rates: DOL, BLS, Labor Force Statistics 
from the CPS, Employment status of persons 18 years and over by veteran 
status, age, and sex, not seasonally adjusted, found at: http://
www.bls.gov/webapps/legacy/veterans_by_age_and_sex.htm.
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    The Department attributes this improvement in part to targeted 
efforts to reach this population and provide them with the employment 
supports necessary to facilitate their transition into the civilian 
workforce. Some examples of these efforts include:
  --Classifying veterans, ages 18-24, as a special population eligible 
        to receive intensive services from a Disabled Veterans' 
        Outreach Program (DVOP) specialist in American Job Centers 
        (AJCs);
  --Reengineering the Transition Assistance Program's Department of 
        Labor Employment Workshop (TAP DOLEW) to better meet the needs 
        of transitioning service members, especially those with the 
        most barriers to employment, such as 18-24 year olds (the 
        largest demographic participating in TAP) who lack labor force 
        attachment, education, and/or career credentials; and
  --Establishing a program to provide in-person reemployment services 
        to recently-separated servicemembers drawing Unemployment 
        Compensation for Ex-Servicemembers (UCX), including veterans 
        ages 18-24 that have significant barriers to employment for 
        reasons stated above.
    The Department has taken additional steps to serve veterans that 
are in most need of employment services through policy changes. Perhaps 
the most significant policy change occurred in April 2014, when VETS 
and ETA released joint guidance providing that only veterans with 
significant barriers to employment or other select populations were 
referred to the Jobs for Veterans State Grants (JVSG) program. Prior to 
this change, many States were referring all veterans in AJCs to the 
JVSG program.
    This policy was designed to target veterans with significant 
barriers to receive increasing levels of intensive services, and it has 
largely succeeded. These intensive services include formal skills 
assessment, the development of an individual employment plan, group and 
career counseling, interview skills, etc. VETS has worked 
collaboratively with States to provide technical assistance in 
implementing this policy, and it has resulted in significant changes to 
the services provided to participants and their eventual employment 
outcomes.
    The percent of JVSG participants receiving intensive services has 
increased from 22 percent in PY 2009 to 81 percent in PY 2015 as of 
December 31, 2015 half-way through the program year. During that same 
time period, the entered employment rate for JVSG participants 
increased from 48 percent to 59 percent. Further, the employment 
retention rate of JVSG participants, or those who retained employment 6 
months after program exit, has increased from 74 percent in PY 2009 to 
83 percent today, and the average six-month earnings of these 
participants rose from $14,751 to $16,903.
    Another key Departmental objective in improving veteran employment 
outcomes is eliminating veteran homelessness. Over the last year, I 
have been honored to have served as the Chairperson of the United 
States Interagency Council on Homelessness (USICH), a collaborative 
effort among Federal agencies to end homelessness once and for all. 
VETS' Homeless Veterans' Reintegration Program (HVRP), a vital 
component of this endeavor, is singularly focused on attaching homeless 
veterans to the labor force.
    Similarly to the JVSG program, HVRP participant outcomes have 
improved over the course of this Administration. The placement rate of 
HVRP participants was 59 percent in PY 2009 compared to 69 percent at 
the end of PY 2014 (the most recently completed program year). This was 
the highest placement rate since the program began. During that same 
time period, average hourly wage of placed participants rose from 
$10.16 to $11.84. The 2017 Budget seeks an increase of nearly $12 
million to bring HVRP to its authorized level of $50 million.
    I would like to point out some of the important evaluation efforts 
related to veteran employment outcomes conducted by the Department's 
Chief Evaluation Office. The first is an exploratory analysis of 
participant services and employment outcomes of participants in the AJC 
system, which demonstrated the following positive outcomes for JVSG 
participants compared to participants of other programs:
  --On average, JVSG veterans receive their first staff-assisted 
        services more quickly (8 days) than non-JVSG veterans (10 days) 
        and non-veterans (10 days).
  --JVSG veterans have smaller gender earnings gaps and smaller 
        military-separation-time earnings gaps.
  --In the first 9 months after exit, male-female gender earnings gaps 
        for JVSG veterans ($2,386) are 19 percent smaller than gender 
        earnings gaps for non-JVSG veterans ($2,942) and 34 percent 
        smaller than gender earnings gaps for non-veterans ($3,638).
  --In the first 9 months after exit, the earnings gap between Pre-9/11 
        and Recently Separated JVSG veterans is roughly $825; this 
        earnings gap is $2,711 for Pre-9/11 and Recently Separated non-
        JVSG veterans.
    More information on this study can be found here: http://
www.dol.gov/asp/evaluation/completed-studies/VeteranNon-
VeteranJobSeekers.pdf.
    With respect to GAO's suggestion regarding ``transparency with 
regard to the extent to which veterans' employment training services 
are meeting performance goals.'' The Department initially raised a 
concern about statements in the GAO draft report that incorrectly 
asserted VETS does not report on the number of veterans receiving 
intensive services. As we stated in our original response to GAO, this 
measure is one of three Agency Priority Goals, each of which are 
reported quarterly on the Administration's performance.gov website. For 
your reference, I have included the link here: https://
www.performance.gov/node/37072?view=public#apg.
    Further, to address a concern related to the transparency of 
performance information, 2 years ago, VETS began publishing the 
following annual performance targets and outcomes on the Agency's 
website:
  --JVSG state-by-state negotiated targets and outcomes for: Entered 
        Employment Rate (EER), Employment Retention Rate (ERR), and 
        six-month Average Earnings (AE), which can be found here: 
        http://www.dol.gov/vets/vetoutcomes/index.htm; and
  --HVRP national targets and outcomes for: All HVRP Participant 
        Placement Rate, Homeless Female Veteran Placement Rate, and 
        Cost per Participant, which can be found here: http://
        www.dol.gov/vets/programs/hvrp/main2013.htm.
    On the next page, for your reference, is a copy of our written 
comments to the GAO report, which were reproduced in the letter to Mr. 
Mihm from Mr. Kerr, dated August 26, 2015.


                  new job training initiatives in eta
    Question. The President's request includes $12.5 billion of new job 
training initiatives using mandatory rather than discretionary funds. 
Most of these initiatives are duplicative of existing programs, but 
represent a massive increase in spending not subject to the caps. One 
component of this initiative, the American Talent Compact, provides for 
$3 billion for training ``featuring strong industry partnerships and 
focus on in-demand sectors.''
    Why do you propose creating a separate mandatory program focused on 
achieving this specific goal?
    Answer. The President's 2017 Budget provides discretionary funding 
coupled with complementary mandatory investments to ensure that 
American workers have the knowledge and skills to succeed in middle-
class jobs, and that employers have the skilled workforce they need to 
compete.
    While the Bipartisan Budget Act of 2015 (BBA) provided a critical 
increase in discretionary funding for 2016 and 2017, not fully 
replacing sequestration in 2017 limits our ability to make needed 
investments. For that reason, the Budget includes a series of 
investments using mandatory funding, including investments in job 
training.
    The Administration's proposed Job Driven Training investments will 
advance State capacity to expand proven training pathways to the middle 
class; improve the effectiveness of workforce programs through enhanced 
and expanded access to data; set 1 million young Americans on a pathway 
to successful careers; and support targeted economic growth and job 
creation in regions across the country.
    One of the main assets a business considers when deciding where to 
locate and grow is the availability of talent. Specifically, the 
American Talent Compact would fund 50-60 regions (``Talent Hotspots'') 
a year, to train and employ 500,000 people. The Talent Compact would 
create regional partnerships of employers, educators, training 
providers, and workforce and economic development leaders that 
prioritize a high-growth sector and make a commitment to recruit and 
train the workforce to help local businesses grow and thrive, attract 
more jobs from overseas, and fuel the talent needs of entrepreneurs.
    The 21st century American worker faces an increasingly complex and 
dynamic job market. Globalization, automation, and technological 
innovation are driving rapid changes in available jobs and demanded 
skills. The President is proposing a plan to ensure that our education 
and training systems do more to help workers succeed as the labor 
market evolves.
    All of these plans hold the promise of economic growth and job 
creation. Growing evidence shows that firms engaged in regional 
clusters supported by institutions providing education, training, 
finance, and marketing services experience higher rates of job and wage 
growth than comparable firms not engaged in these regional 
partnerships.\5\
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    \5\ Https://hbr.org/2012/03/a-jobs-compact-for-americas-future.
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    Question. Why not maintain the focused effort through the existing 
primary programs, which are already funded at the highest levels in the 
last several years amid slowing demand and participation?
    Answer. Although overall participation in workforce programs has 
declined since the peak of the recession, overall demand for services 
remains high. In PY 2014 (7/1/2014--6/30/2015), Workforce Investment 
Act and Wagner-Peyser programs provided services to over 15 million 
individuals.
    Formula funding under the Workforce Investment Act and the 
successor Workforce Innovation and Opportunity Act has not kept up with 
inflation. The 2017 Budget funds the core DOL WIOA formula grants--
Adult, Youth and Dislocated Workers--at their full authorized level--an 
$138 million increase over fiscal year 2016, for a total of $2.8 
billion. Put in historical context, this is a modest investment--even 
with this increase, funding for these programs would still be 25 
percent below where it was 10 years ago.
    The $3 billion funding request for the American Talent Compact 
builds on these investments in the base WIOA programs, targeting 
regional partnerships to train workers to meet local employers' demand 
while also fostering economic growth.
    Funds will be provided on a competitive (versus formula) basis, 
which will allow funding to be targeted on particular economic regions 
to catalyze and accelerate job growth and advancement opportunities. 
Competitive funding opportunities, such as the American Talent Compact, 
ensure scarce Federal resources are directed to the highest quality 
applicants.
    mine safety and health administration equipment approval process
    Question. On many occasions we have heard that MSHA (Mine Safety 
and Health Administration) has difficulty with the process to analyze 
and approve mine equipment. Approval is required before the equipment 
is permitted to be used in certain mines. One particular such concern 
is that MSHA does not recognize equipment approvals issued by 
internationally-recognized standard setting and approval authorities.
    Has MSHA evaluated the cost and time burdens that U.S. equipment 
manufacturers face related to the approval process for equipment that 
has already received international approval?
    Answer. MSHA's primary goal is protecting the safety and health of 
miners. To this end, MSHA approves and certifies new mining equipment 
and technology to ensure it does not introduce an explosion or fire 
hazard in an underground mine. MSHA has not evaluated the cost that 
equipment manufacturers incur from securing MSHA approval of equipment 
that has already received international approval.
    MSHA will accept tests and evaluations performed by any laboratory, 
provided that MSHA product approval requirements are followed. This 
third-party testing provides equipment manufacturers with an 
alternative to MSHA testing, which may reduce waiting times. Under 30 
CFR Part 7, MSHA will accept tests and evaluations performed by an 
independent laboratory, provided that MSHA product approval 
requirements are followed. This third-party testing provides equipment 
manufacturers with an alternative to MSHA testing, which reduces 
waiting times. MSHA will also accept product approvals based on 
international standards under 30 CFR Part 6 (effective in 2003), if 
MSHA has determined the international standards are equivalent to MSHA 
standards. MSHA has evaluated one product (explosion-proof enclosure) 
based on international standards after determining that the 
international standards were equivalent to MSHA's. MSHA will continue 
to apply international standards to future approvals, as appropriate.
    Question. Are there appropriate means to alleviate unnecessary or 
redundant procedural burdens?
    Answer. For products that are tested using non-MSHA standards, MSHA 
has a process that allows the Agency to approve these products so long 
as the testing provides for the necessary margin of safety. This allows 
MSHA to approve products without additional testing, thereby 
eliminating redundancies. Recently, MSHA has asked NIOSH (National 
Institute for Occupational Safety and Health) to assess the overall 
safety of the MSHA requirements as compared to an international 
standard for intrinsically safe portable battery operated equipment. 
This approach would permit MSHA to accept the international standard as 
equivalent to the MSHA requirements without any modification, and would 
alleviate the burden of modifying existing products to obtain MSHA 
approval. We expect a final report to be issued to allow acceptance of 
the standard in 2017.
             proposed rule for proximity detection systems
    Question. Last year MSHA published a proposed rule for proximity 
detection systems for mobile machines in underground mines. The comment 
period has closed and presumably the agency is working to complete the 
final rule before the end of the year. At the same time NIOSH, the 
government's preeminent mine safety research agency, has an aggressive 
and vigorous research program underway to make sure the technology that 
is ultimately required is functional and will protect miners as 
intended.
    Will the Department allow NIOSH to complete its research before 
MSHA finalizes the rule?
    Answer. MSHA published a Notice of Proposed Rulemaking (NPRM) on 
Proximity Detection Systems for Mobile Machines in Underground Mines on 
September 2, 2015. After holding a series of public hearings, MSHA 
received a request to extend the comment period. In response to this 
request, the end of the comment period for the NPRM was extended from 
December 1, 2015 to December 15, 2015. MSHA received considerable 
comments on the proposal for the development of a final rule, and is 
currently analyzing these comments. MSHA will continue to work closely 
with NIOSH in the development of design parameters and performance 
guidelines for proximity detection systems in underground mines. MSHA 
will also apply lessons learned from the performance of these systems 
on continuous mining machines in underground coal mines as we develop 
the final rule for mobile machines.
                                 ______
                                 
              Questions Submitted by Senator Thad Cochran
                  addressing visa application backlog
    Question. I have heard from constituents that the Department is 
experiencing significant delays in processing visa applications for 
agricultural and non-agricultural workers.
    What steps has your Department taken to address the backlog of 
applications to ensure an on time start date for workers?
    Answer. The Office of Foreign Labor Certification (OFLC) is 
experiencing significant H-2B program delays as a result of an 
unprecedented combination of external and internal challenges that 
impacted processing of prevailing wage requests and certification 
requests from mid-December 2015 until early February 2016. The Office, 
as of May 12, completed its recovery from these challenges, which are 
briefly described below.
    The Consolidated Appropriations Act, fiscal year 2016 (Omnibus) was 
enacted on December 18, 2015, and contains provisions significantly 
affecting the H-2B program requirements that were established in the 
2015 H-2B Interim Final Rule and Final Wage Rule that were implemented 
at the end of April 2015. Among other things, the Omnibus H-2B 
provisions broaden the use of employer-provided surveys to set the 
prevailing wage; prohibit the Department from enforcing its regulations 
requiring employers to offer minimum hours of work for three-fourths of 
the work contract period and requiring that similarly employed U.S. 
workers receive at least the same wages and benefits as H-2B workers; 
and prohibit the Department from using funds to conduct audit 
examinations and supervised recruitment to ensure program compliance.
    The Omnibus requirements took effect immediately, without any 
transition period. In order to implement changes to program 
requirements, OFLC had to pause its processing to ensure that the new 
requirements were fully implemented. OFLC requested and received Office 
of Management and Budget authorization for emergency processing of 
changes to application forms so that they complied with the new program 
requirements, and the agency issued emergency guidance to the 
stakeholder community so program users were aware of the changes. OFLC 
immediately resumed processing on January 5, 2016, and continues to 
implement all new program requirements contained in the Omnibus.
    Coinciding with the processing pause to implement new program 
requirements contained in the Omnibus, OFLC experienced more than a 
two-fold increase in new H-2B application filings during a three-week 
period from December 26, 2016 to January 15, 2016, as compared to the 
same period last year.
    In January 2016, OFLC also experienced intermittent technical 
problems with the iCERT electronic filing system, resulting from the 
implementation of required IT security specifications. These technical 
problems impacted the timely processing of pending H-2A and H-2B 
applications for several weeks. DOL has taken steps to address this 
backlog in the H-2B program. We increased staff resources prior to our 
typical seasonal filing increase, but the unexpected and unprecedented 
high volume of new H-2B applications in late December to mid-January 
far exceeded processing capacity. Therefore, we again reallocated staff 
and increased staff overtime hours, while attempting to maintain 
program integrity and minimize delays in processing labor certification 
applications in other visa programs administered by the Department.
    In addition, on February 19, 2016, we implemented an emergency 
procedures processing plan. Employers experiencing significant delays 
could request emergency processing via email through April 30th. 
Employers that are granted emergency processing may conduct recruitment 
of U.S. workers on an expedited basis without filing a new application, 
which will save eight to 10 days of processing time. Because OFLC has 
now recovered from these challenges, it has not extended these 
emergency procedures.
    Finally, we have implemented changes in work processes to increase 
efficiencies after recruitment has taken place. A dedicated team of 
employees has been established to conduct final reviews of employer 
recruitment reports once they are submitted to the Department. A prompt 
review of the employer's recruitment report is a critically important 
step before issuing a final determination. This new business process 
has reduced processing times from approximately two weeks to within 
three business days of receiving the report.
    The Department is also reviewing the H-2B program and determining 
what, if any, additional steps it can take to improve efficiency in the 
program. Because the H-2A filing season overlaps with the H-2B filing 
season, the resources available for processing both H-2B and H-2A 
applications were insufficient to meet the demand. Therefore, we also 
have been experiencing longer processing times for some H-2A 
applications. OFLC has also taken prompt action to try to restore 
normal processing times and reduce the number of pending H-2A cases as 
quickly as possible. We are reallocating resources to hire seasonal 
contract staff and increased staff overtime hours, while attempting to 
maintain program integrity and minimize delays in processing. We have 
already reduced the number of pending H-2A applications by almost 57 
percent between February 6 and April 30 (from (1,594 pending to 683 
pending). Additionally, although the percentage of complete H-2A 
applications processed on time (i.e., no later than 30 days before the 
start date of need) dropped to 85 percent for the month of February 
2016, we recovered quickly to 99.1 percent on time for the second week 
of May 2016.
    Question. What changes is your Department making to ensure that the 
visa backlog does not become an annual problem?
    Answer. The Department is monitoring processing times to ensure all 
requests and cases are processed as expeditiously as possible, and will 
reallocate resources by reassigning staff and increasing available work 
hours as necessary. We continue to assess our processes and procedures 
and conduct extensive stakeholder outreach and provide employer 
assistance in order to ensure that the programs are effective for 
employers with a legitimate need for temporary foreign workers. 
However, the continuing substantial increase in the volume of 
applications could contribute to longer processing times and potential 
backlogs in the future absent additional resources. Annual OFLC 
application volumes have risen by 84 percent when compared to fiscal 
year 2010, while the appropriations used to process these applications 
decreased by 9 percent. Even before the H-2B challenges that arose 
earlier this year, overall H-2B application volumes had grown by 59.6 
percent, while H-2A volumes had increased by 38.5 percent from fiscal 
year 2012 to fiscal year 2015. The President's 2017 Budget seeks 
authorization for the Department to expand the current H-1B fee-based 
funding authority to foreign labor certification applications filed 
under the Permanent and H-2B programs, including possible expedited 
processing fees. The Department also seeks authority to adjust the 
amount and retain the fees currently deposited in the U.S. Treasury for 
applications filed under the H-2A temporary labor certification 
program. This market-based legislation will help ensure that the 
Department has sufficient resources to efficiently process applications 
and effectively respond to employer demand by aligning the program's 
resources with the level of demand for its services.
    Question. What can our Committee can do to help address this issue?
    Answer. We expect the demand for temporary worker programs to 
continue to increase, particularly in light of Congressional enactment 
of the returning worker exemption to the statutory cap on H-2B visas. 
Annual OFLC application volumes have risen by 84 percent when compared 
to fiscal year 2010, while the appropriations used to process these 
applications decreased by 9 percent. While we continue to implement 
efficiencies, we believe this situation will worsen without a more 
comprehensive solution. Therefore, we urge you and your colleagues to 
support the President's fiscal year 2017 Budget Request for a fee-based 
funding structure similar to that used by the DHS for foreign labor 
certification programs. This market-based approach would provide the 
necessary resources to ensure the program can provide timely case-
processing services and respond effectively to employer demand by 
aligning the program's resources with the level of demand for its 
services. If enacted, the proposal would reduce processing times and 
provide better customer service to employer applicants. We have heard 
particularly from users of the permanent certification program that 
employers are willing to pay program fees in order to receive 
certifications more quickly. The fee proposal would offset Federal 
costs for the OFLC program and, once implemented, could eliminate the 
need for appropriations. We will continue to work with the Committee to 
address this question through the appropriations process.
                    disability employment initiative
    Question. The Disability Employment Initiative (DEI) grant program 
is intended to assist disability providers and State governments to 
implement services that benefit individuals with disabilities in 
gaining employment opportunities.
    In awarding DEI grants, does the Department give consideration to 
States that have not won in recent years?
    Answer. In the 2015 Funding Opportunity Announcement for DEI 
grants, only States that had not won in the previous DEI round were 
eligible for funding. DOL is considering whether to include a similar 
provision in the upcoming Funding Opportunity Announcement for 2016, 
which is due to be published in late spring.
    Question. What is the Department doing to ensure this program 
reaches rural communities and addresses the unique challenges facing 
individuals with disabilities living in rural communities?
    Answer. The Department has taken steps to ensure the DEI grants 
strengthen the capacity of American Job Centers (AJCs) to serve 
underserved populations in rural communities. Specifically, in making 
DEI awards, the Department's Grant Officer may take into consideration 
factors such as geographic distribution of funds and other relevant 
factors. Currently, the entire States of Alaska and South Dakota are 
pilots in DEI. In addition, for other States where there are pockets of 
rural representation receiving DEI funds, we have identified the 
following communities benefiting from DEI grants:
  --Illinois--Peoria area;
  --Kansas--Southeast local workforce investment area (LWIA);
  --New Jersey--Cumberland/Salem areas;
  --New York--Several rural areas such as Chenango-Delaware-Otsego 
        Counties and Broome-Tioga Counties;
  --California--Golden Sierra area, Madera County and Merced County;
  --Tennessee--LWIA 1 and 8; and
  --Wisconsin--West Central and Southwest are all rural communities.
    including the retail exemption in the process safety management 
                            standards update
    Question. Last year, Congress included language in the joint 
explanatory statement accompanying the fiscal year 2016 Omnibus 
appropriations bill that prohibited the Occupational Safety and Health 
Administration (OSHA) from using funds to enforce a July 22, 2015 
``retail exemption'' memo regarding anhydrous ammonia chemicals. The 
report language specifically stated OSHA should go through the formal 
rulemaking process to change the retail exemption. However shortly 
thereafter, OSHA issued a memo delaying enforcement until the beginning 
of fiscal year 2017. It is my understanding that OSHA is already in the 
early stages of rulemaking to update Process Safety Management (PSM) 
regulations.
    Why did OSHA not include ``retail exemption'' in the list of issues 
to be covered in the updated PSM regulations?
    Answer. OSHA's announcement that it will not enforce the July 22, 
2015, ``retail exemption'' memo through September 30, 2016, is 
consistent with the language of the report accompanying the fiscal year 
2016 appropriations bill, which specifically prohibits enforcement of 
the retail exemption during fiscal year 2016 absent formal rulemaking 
and other steps. In addition, OSHA recently began the process for 
potential rulemaking. OSHA included a definition of ``retail'' in its 
Background Document to the Small Business Regulatory Enforcement 
Fairness Act (SBREFA) panel being convened to consider the impact on 
small businesses of possible amendments to the PSM standard. This is 
the first step in a process that could potentially result in the 
inclusion of definition of ``retail'' in an NPRM.
    Question. Is OSHA aware of any accidental releases of anhydrous 
ammonia chemicals by an agricultural retailer in compliance with 
current regulations?
    Answer. Data released to OSHA by the EPA shows that between 2004 
and 2013, farm supply merchant wholesalers, some of whom were formerly 
exempted from the PSM standard as ``retail,'' experienced 128 
reportable anhydrous ammonia releases. These incidents injured 84 
workers, 9 emergency responders, and 66 members of the public. However, 
the data is not sufficiently detailed to enable OSHA to determine which 
of the facilities experiencing releases qualified for the retail 
exemption under the prior interpretation or the compliance status of 
those facilities.
    On April 5, 2016, an agricultural distribution facility in 
Stewardson, Illinois, experienced a release of nearly 20 tons of 
anhydrous ammonia causing evacuation of 200 residents and 
hospitalization of 20. No employees were involved or injured. OSHA is 
gathering information on the incident and at this time the agency is 
uncertain whether the facility is in compliance with current standards.
    Question. If so, why is OSHA not updating those current standards 
as opposed to adding retail facilities to current PSM standards?
    Answer. No current standards, other than PSM, directly address the 
hazards associated with the handling and use of large quantities of 
anhydrous ammonia in processes. Changing the interpretation of 
``retail'' to ensure that farm supply merchant wholesalers who handle 
large quantities of anhydrous ammonia are not exempted from coverage 
under the PSM standard will help protect against catastrophic releases 
of this highly hazardous chemical.
    Question. If not, then why are agricultural retailers being added 
to the PSM standards when compliance efforts should be focused on 
manufacturing facilities?
    Answer. While most of OSHA's PSM compliance efforts are directed 
toward chemical manufacturers, which are covered under the North 
American Industrial Classification System 325, processes involving bulk 
use of highly hazardous chemicals also occur in a variety of other 
industry sectors. Farm supply merchant wholesalers, that may store and 
handle tens or hundreds of thousands of pounds of anhydrous ammonia, 
have an increased risk of catastrophic release because of the large 
quantities of this highly hazardous chemical they handle.
                                 ______
                                 
             Questions Submitted by Senator Lamar Alexander
            proposed overtime rule's impact on tuition costs
    Question. At the hearing I asked about the impact of the overtime 
proposed rule on independent, non-profit colleges and universities--
specifically regarding how the rule may lead to increased tuition for 
students. When I asked if you thought the schools were wrong when they 
said the rule could increase tuition by $1,000 per student, you stated, 
``I don't know if they're right or wrong.''
    Without discussing the coal dust rule, or any rule other than the 
overtime rule, please explain why you would impose on independent 
colleges and universities a rule that they say could raise tuition by 
$1,000 per student?
    Answer. In 2014, President Obama directed the Department of Labor 
to update and modernize the regulations governing the exemption of 
executive, administrative, and professional employees from the minimum 
wage and overtime pay protections of the Fair Labor Standards Act 
(FLSA). The Department last updated these regulations in 2004. On May 
18, 2016, the Department announced the publication of the final rule, 
which was published in the Federal Register on May 23. The rule updates 
the salary level required for exemption to ensure that the FLSA's 
intended overtime protections are fully implemented, and to simplify 
the identification of overtime-protected employees, thus making the 
exemption easier for employers and workers to understand and apply.
    Consistent with the statute and current regulations, neither the 
proposed rule nor the final rule included a general exemption for 
higher education institutions. Employees at these institutions are 
generally covered by the FLSA's minimum wage and overtime provisions. 
However, there are several provisions of existing law that would limit 
the impact of the rule on higher education. First, the rule does not 
alter an existing exemption for all employees whose ``primary duty'' is 
``teaching, tutoring, instructing or lecturing in the activity of 
imparting knowledge and who is employed and engaged in this activity as 
a teacher in an educational establishment,'' regardless of salary 
level. 29 CFR 541.303(a). In addition to professors, a coach, for 
example, may qualify as an exempt teacher if teaching is his or her 
primary duty. In addition, the rule does not alter an existing rule 
that exempts academic administrative personnel whose ``primary duty is 
performing administrative functions directly related to academic 
instruction or training in an educational establishment or a department 
or subdivision thereof,'' even if paid on a salary basis less than the 
standard salary level if the employee is paid ``on a salary basis which 
is at least equal to the entrance salary for teachers in the 
educational establishment by which employed.'' 29 CFR 541.204 (a) and 
(b). Finally, the Department generally views graduate and undergraduate 
students engaged in research under a faculty member's supervision, in 
the course of obtaining a degree as being in an educational 
relationship with the school. As such, the Department would not assert 
an employment relationship with the school and will not assert that 
such workers are entitled to overtime. Nothing in the rule alters this 
view of student research assistants.
    The letter from the Tennessee Independent Colleges and Universities 
Association (TICUA) to Senator Alexander does not provide sufficient 
information for the Department to assess the accuracy of the estimate 
provided by one university that the proposed increase to the standard 
salary level would result in a tuition increase of $1,000 per student. 
Moreover, employers have a variety of options for responding to the 
revised regulations. The Department does not dictate what options 
employers should use to comply. Employers may increase employees' 
salaries to the proposed salary level to maintain their exemption from 
overtime, pay overtime for extra hours to salaried employees (newly 
non-exempt employees do not have to be converted from salaried to 
hourly), evaluate and realign employee workload to minimize overtime 
hours without changing workers' pay, and/or they could hire additional 
employees to cover the workload previously handled by one employee to 
eliminate the need for overtime pay. Public universities, if they are a 
public agency under the Fair Labor Standards Act, may even be able to 
provide comp time rather than overtime payments in certain 
circumstances. There is more detailed information on all of these and 
other options available in our comprehensive guidance for higher 
education employers.\6\
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    \6\ Https://www.dol.gov/whd/overtime/final2016/highered-
guidance.pdf.
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    Question. If you disagree with the colleges' and universities' 
assessment, please explain why you believe their comments and 
calculations are incorrect?
    Answer. The letter from TICUA states that one unnamed university 
estimated that it would raise tuition $1,000 per student if the 
Department adopted the salary level as proposed in the NPRM of $970 per 
week (or $50,440 for a full-year worker). No methodology is provided 
for this estimate or any other estimate of costs in the TICUA letter, 
and so I am not able to specifically respond to those estimates. As 
noted in response to the previous question, the rule maintains existing 
provisions for teachers and for certain academic administrative 
personnel, and allows for employers to determine the compliance option 
that works best for them and their workforce. It is also important to 
note that the final rule also sets the salary level at the 40th 
percentile of weekly earnings of full-time salaried workers in the 
lowest-wage Census Region (currently the South) or $913 per week (or 
$47,476 for a full-year worker). This was partially in response to some 
commenters' concerns that setting the salary level based on national 
data, as in the proposed rule, would unduly impact certain regions of 
the country.
    Many of the cost estimates we have seen from some higher education 
institutions may be based on unrealistic assumptions about the number 
of people who will be affected and how the institution must respond. We 
do not believe that higher education institutions should have to 
increase tuition in order to cover the costs of the rule. The rule's 
economic analysis shows that the total costs and transfers to the 
``Education and health services'' sector are estimated to be just .03 
percent of payroll and .01 percent of revenue. (See Table 30 in the 
rule, page 32498.)
  new energy employees occupational illness compensation program act 
                                 rules
    Question. I've heard from almost 1,500 constituents regarding their 
concerns with the changes the Department proposed in November 2015 
regarding the Energy Employees Occupational Illness Compensation 
Program Act (EEOICPA). My constituents are concerned that the changes 
may adversely impact claims adjudication, prevent them from seeing the 
doctor of their choice, and result in loss of access to the program due 
to illness or minor paperwork errors. The National Defense 
Authorization Act of 2015 created an advisory board tasked with 
advising the Department on technical issues regarding the program. The 
members of this board have not yet been seated. Earlier this month, the 
Government Accountability Office (GAO) released a report on the 
effectiveness of claims adjudication at the Department.
    Why didn't the Department wait to propose the new EEOICPA rules 
until after the Department adopts the recommendations of the GAO report 
and until after fully seating the congressionally-mandated advisory 
board and allowing it the chance to review the program and make 
recommendations as well?
    Answer. The GAO found that the Office of Workers' Compensation 
Programs (OWCP) generally followed its policies and procedures in 
adjudicating claims under Part E of EEOICPA. The GAO made two 
recommendations: 1) to require supervisory review of all decision 
letters prior to issuance and 2) to require documenting final review of 
the Site Exposure Matrices for updates prior to issuing a recommended 
or final decision denying a claim. OWCP is in the process of 
implementing both of these recommendations. Neither of these 
recommendations requires regulatory changes, nor do the recommendations 
relate to the proposed regulatory changes in the EEOICPA Notice of 
Proposed Rulemaking (NPRM) published on November 18, 2015.
    The members of the Advisory Board on Toxic Substances and Worker 
Health have been fully seated since March 21st, and, in consideration 
of your feedback and others, on April 5th, we reopened the comment 
period for the NPRM until May 9, 2016. The reopening of the comment 
period allowed the Advisory Board the opportunity to review the NPRM 
and at their first meeting on April 26-28, 2016 to discuss and agree to 
any recommendations regarding the proposed changes to the regulations 
that fall within the four areas set out in the Act creating the Board. 
The Department provided members of the Board with an overview of the 
NPRM in advance of the Board's first meeting. We alerted your staff of 
the extension, and a Federal Register Notice was posted to inform the 
public. Additionally, stakeholders are welcome to provide formal 
feedback as part of the EO 12866 process.
                      safety at job corps centers
    Question. In September 2015, Senator Isakson and I wrote a letter 
to you asking about safety at Job Corps Centers after two students were 
killed at two different Job Corps centers last summer. I understand the 
Department has made safety at Job Corps centers a priority after those 
incidents, but since then at least two more assaults have occurred--one 
just earlier this month involving the assault of a 16-year-old girl in 
Kentucky. The Department's efforts to date haven't stopped the assaults 
against students in the Department's care.
    Is the Department going to do something different than what it has 
done before to stop the violence?
    Answer. The Department continues to initiate new changes and takes 
seriously its responsibility to ensure the safety and security of 
students participating in the Job Corps program, which helps 
disadvantaged young people overcome obstacles and become successful 
participants in America's workforce. More specifically, the purpose of 
the Job Corps program is to ``assist eligible at-risk youth, which 
includes those who have been connected to the criminal justice system, 
to connect to the labor force by providing them with intensive social, 
academic, career and technical education, and service-learning 
opportunities.'' \7\ The Job Corps program is often the last chance 
that participating youth have to change the direction of their lives 
and become productive participants in the labor force. Job Corps 
strives to meet students' social and academic needs while also ensuring 
policies and procedures are in place so that students can learn and 
grow in a safe environment.
---------------------------------------------------------------------------
    \7\ WIOA Sec. 141(1)(A).
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    The Office of Job Corps has taken a number of steps over the last 
18 months to improve safety and security, and additional initiatives 
are currently underway. Job Corps now regularly conducts data-based 
center risk assessments to identify those centers with indications of 
safety and/or security concerns. This allows the program to target 
resources on prevention and assistance at the centers most at risk. As 
a result of these assessment, between August 2014 and August 2015, the 
Department conducted visits at 22 centers, 18 of which were unannounced 
and 4 of which were identified as having potential zero-tolerance 
policy enforcement issues but were already scheduled to receive 
Regional Office Center Assessments (ROCAs). Of the 22 visited, 13 
received more than one visit. Between September 2015 and February 2016, 
Job Corps conducted another 30 unannounced visits at Centers around the 
country to evaluate targeted safety and security areas. Team members 
utilized a newly developed risk assessment tool and evaluated areas 
such as standards of conduct, rules and sanctions, investigation of 
incidents, counseling services, center culture, personal safety and 
security, evening supervision in the dormitories and recreational 
areas, and campus access procedures, among others. As a result of these 
later visits, Job Corps took corrective action with 27 centers for a 
variety of reasons--from inconsistent campus access procedures to non-
compliance with counseling requirements, and required each center to 
submit a corrective action plan for remedying items found not to be in 
compliance.
    In addition, in February 2016, Job Corps revised the Policy and 
Requirements Handbook (PRH) which contains, among other things, the 
Student Conduct System to ensure that it supports a safe, secure 
learning and living environment for all students and staff. All center 
operators must comply with the new policy per the terms of their 
contract. The recent revision, reclassified numerous offenses from 
Level II infractions to Level I zero tolerance infractions that require 
student discharge for the infraction. These behaviors include: threat 
of assault; fighting; arrest for a violent misdemeanor; possession, 
consumption or distribution of alcohol while on center or under center 
supervision; robbery or extortion; and inciting a disturbance or 
creating disorder. Additionally, there is a limit to the number of 
Level III minor infractions, which is 4 in a 60-day period. When a 
fifth minor infraction occurs, it is elevated to a Level II ``Pattern 
of Minor Infractions'' and it is referred to the Fact-Finding Board for 
adjudication. Further, these changes will help facilitate consistent 
application across the Job Corps community by clarifying the definition 
of several of the infractions. The Department believes that these more 
rigorous and consistently applied student conduct standards will reduce 
the potential for violent incidents at the centers, and result in the 
immediate separation of any student who engages in violent behavior.
    Additionally, in the fall of 2015, the Department began requiring 
operators, as part of their proposal to operate a Job Corps Center, to 
describe their approach to student safety and behavior management. We 
recently issued solicitation for a new support contract to conduct 
national criminal background checks in order to provide a more 
comprehensive and uniform system for screening applicants' criminal 
background information. The Department anticipates the contract will be 
awarded June 2016. Further, ETA is in the process of contracting for a 
small number of operators who would be available to take over the 
operation of a center where serious incidents result in the termination 
of a contract or a decision not to exercise an option year. This will 
result in a more nimble contracting process should serious issues 
arise. Job Corps has also developed a service plan to provide a live, 
24-hour safety hotline for Job Corps students and staff to report 
safety and security related issues. A solicitation for provision of 
these services was issued on April 1, 2016. Finally, Job Corps is 
developing revised admissions procedures to ensure that Job Corps 
enrollees are a good fit for the Job Corps program and can participate 
successfully without interfering with other students' progress.
    The President's 2017 Budget includes additional resources to 
improve safety and security at Job Corps centers across the Nation. 
Specifically, the Budget includes $10 million in the Operations 
activity to upgrade Job Corps safety and security for students and 
staff. The requested increase will be used for mental health 
counselors; increased security personnel staffing; training for staff 
to help them to detect security risks; additional staff to conduct 
productive evening activities; and an integrated approach to behavior 
management. There is also a requested increase of $20 million in the 
Construction activity that will allow the Department to conduct 
vulnerability assessments and address the most urgent physical security 
needs, such as security cameras, perimeter fencing, site lighting, 
electronic badge security, and enhancements to emergency communications 
systems at Job Corps Centers.
    Any act of violence on a Job Corps center is unacceptable. As you 
can see, actions we have already taken have resulted in meaningful 
improvements. You can be assured that the Department will continue to 
work closely with center operators and other stakeholders to provide a 
safe and effective learning environment for all Job Corps students.
                       finalizing the lm-21 form
    Question. The Labor-Management Reporting and Disclosure Act (LMRDA) 
``advice exemption'' or ``persuader'' rule was recently finalized. 
However, the LM-21 form, the form on which employers have to report 
their persuader activities, is not scheduled to be proposed until this 
fall. I am concerned that the rule will infringe on employers' ability 
to access legal advice. I'm also concerned that the rule was finalized 
without a final LM-21 form, because the form will include the detail 
required to be reported.
    Why did the Department finalize the persuader rule prior to 
finalizing the LM-21 form?
    Answer. On March 24, 2016, after an extensive comment period, the 
Office of Labor-Management Standards (OLMS) published a final rule that 
revised the interpretation of the ``advice'' exemption of section 
203(c) of the LMRDA. The Persuader Rule will not infringe on employers' 
access to legal advice because none of the information required to be 
reported (e.g., the identity of the parties, terms and conditions of 
the agreement, and types of persuader activities undertaken) is covered 
by the attorney-client privilege. Privileged information is excluded 
from the reporting requirement by statute.
    The Persuader Rule did not necessitate changes to the LM-21 and, 
therefore, the LM-21 did not need to be completed at the same time as 
the rule. Nevertheless, in a separate action, the Department of Labor's 
spring 2016 Semi-Annual Regulatory Agenda reports that OLMS intends to 
pursue a rulemaking to revise the Form LM-21, Receipts and 
Disbursements Report, in September 2016. The rulemaking will propose 
mandatory electronic filing for Form LM-21 filers, and it will review 
the layout of the Form LM-21 and its instructions, including the detail 
required to be reported.
    In light of changes to the Form LM-20 and potential changes in Form 
LM-21 reporting obligations that may be proposed in the upcoming 
rulemaking, OLMS announced on April 13, 2016, that a special 
enforcement policy will apply. Those filers of Form LM-20 who must also 
file a Form LM-21 will not be required to complete two parts of the LM-
21. Specifically, OLMS will not take enforcement action based upon a 
failure to complete the following Parts of Form LM-21:
  --Part B (Statement of Receipts), which ordinarily requires the filer 
        to report all receipts from employers in connection with labor 
        relations advice or services regardless of the purposes of the 
        advice or services, and/or
  --Part C (Statement of Disbursements), which ordinarily requires the 
        filer to report all disbursements made by the reporting 
        organization in connection with labor relations advice or 
        services rendered to the employers listed in Part B.
     This special enforcement policy was effective immediately upon 
publication of the policy on April 13. It will remain in effect until 
further notice, and the Department will provide no less than 90 days' 
notice prior to any change in this policy.
                       road to retirement surveys
    Question. On February 29, the Department issued a proposed 
information collection request regarding the ``Road to Retirement'' 
surveys. The Department states the research study is being undertaken 
because, ``relatively little is known about how people make planning 
and financial decisions before and during retirement.'' I believe this 
request for information suggests the Department is blindly moving 
forward with the fiduciary rule, even though it has the potential to 
cut off access to affordable retirement advice for millions of 
Americans and their families. In response, a spokesperson at the 
Department stated that the request for information would ``build upon 
our already robust body of retirement research.'' The request for 
information about having relatively little information contradicts the 
Department's statement about having a robust amount of information.
    Why is the Department requesting this information if its knowledge 
is robust and, if it is not so robust, why move forward with the 
fiduciary rule before gathering additional information about how it may 
impact access to retirement education and advice for millions of 
Americans?
    Answer. The evidence already available is indeed robust that 
financial advisers' conflicts of interest are costly to retirement 
investors. That evidence is detailed in the regulatory impact analysis 
that the Department issued together with the new final fiduciary rule. 
A review of the evidence demonstrates that the rule itself is well 
grounded and has the potential to deliver gains for retirement 
investors.
    The study the Department is pursuing is a broad examination of how 
U.S. families prepare financially for retirement. The survey has an 
unprecedented level of detail about retirement preparation throughout 
adulthood. It looks at all major aspects of families' decisionmaking 
and planning relevant to this preparation. The scope of the study is 
far broader than the question of conflicts in investment advice, and 
broader even than investing generally, but encompasses how, when, and 
how much is saved, and how savings is translated into consumption in 
retirement. It will provide data on who has access to retirement plans, 
the types and features of those plans, and who chooses to participate 
in them. It will inform future research and policy toward a range of 
issues including, for example, effective disclosure, financial 
education and literacy, and plan design. Building upon our already 
robust body of retirement research does not diminish the validity of 
our efforts to reduce conflicts of interest in retirement advice that 
cost workers many billions of dollars each year.
          advice gap created by united kingdom fiduciary rule
    Question. At the hearing, you denied that the United Kingdom's (UK) 
similar fiduciary rule created an advice gap for low- and middle-income 
individuals. The Department's economic analysis denied that an advice 
gap existed in the UK and you also previously testified that there was 
no advice gap. However, on March 14, 2016, the British Government 
published a report finding that the similar fiduciary rule did create 
an advice gap, disproportionately harming lower-income individuals. The 
report further states that almost 70 percent of advisors rejected small 
customers in the past year, and it's becoming more common for advisors 
to require at least 100,000 [British Pounds] in assets before providing 
advice. Experts, including Kent Mason of Davis and Harman LLP, are 
saying the Department's fiduciary rule, if finalized similar to its 
proposal, will have the same effect as the UK's fiduciary rule.
    Are you worried about the impact the final fiduciary rule will have 
on lower- to middle-income individuals and do you believe the 
Department should study the impact the rule has on Americans' access to 
advice after it is implemented?
    Answer. While some advisers left the market soon after the passage 
of the UK's Retail Distribution Review and some have increased minimum 
asset requirements in the UK, overall the availability of advice does 
not appear to have been significantly reduced, and some of those that 
left have since returned to the market. The UK's experience lends 
support for the Department's conclusion that its reforms, which do not 
ban commissions or increase adviser qualifications like the UK reforms, 
are unlikely to result in a significant diminution of advice for small 
and middle-income investors. In fact, the FAMR report mentioned above 
also provides positive data on the supply-side of the financial advice 
market in stating that ``some larger firms have recently signaled a 
return to the advice market and in some cases this is being facilitated 
by effective and creative use of new technologies to increase the 
number of customers they serve.'' The Department does anticipate some 
changes in the industry as firms compete in a new environment and as 
the cost of advice becomes clearer to customers. The Department will 
continue to watch these changes carefully and will provide additional 
guidance and assistance as needed.
                                 ______
                                 
              Questions Submitted by Senator Patty Murray
         wage and hour division fiscal year 2017 budget request
    Question. Mr. Secretary, as I mentioned in my opening statement, 
there are a range of views in the Senate about whether we should raise 
the minimum wage or increase overtime protections. I believe we should 
do both, because they would benefit working families. The Department's 
Wage and Hour division enforces these protections as they exist today 
in an environment with increasingly complex business models that make 
it more challenging to ensure employer compliance. Despite these 
challenges and a flat budget, last year the division collected almost 
$250 million in back wages for more than 240,000 workers. That figure 
includes $74 million for low-wage workers. I see that your budget 
requests an increase for the Division so that it can do more on behalf 
of workers.
    Unfortunately, resources will almost certainly be constrained this 
year, so I'd like you to tell us what impact another year of flat 
funding would have on the Division and its ability to ensure workers, 
especially those making modest wages, are treated fairly.
    Answer. Flat funding would hinder the significant progress made in 
rebuilding and strengthening the agency's ability to carry out our 
mission. Since fiscal year 2010, those efforts have included restoring 
investigator ranks that had reached their lowest level since the 1970s; 
reviving the use of all available enforcement tools to achieve broad, 
sustained compliance, including enhanced compliance agreements as well 
as liquidated damages and civil money penalties; and developing an 
evidence-based, data-driven approach to enforcement that aims for 
compliance at the industry level. Flat funding risks eroding those 
gains, particularly as the agency continually confronts the limitations 
of our infrastructure in carrying out our work. In fiscal year 2015, 
WHD (Wage and Hour Division) directed investigations found $8,900 per 
investigation and over $800 per worker in directed investigations. Flat 
funding inhibits WHD from increasing its ability to conduct more 
directed investigations, which keeps those lawfully earned wages out of 
the hands of workers. Additional funding would allow WHD to increase 
the amount of back wages it recovers. At WHD's fiscal year 2017 request 
level, the increased FTE could boost back wage recovery by at least 
$50,000,000 for an additional 50,000 workers.
    WHD focuses on industries that employ significant numbers of low-
wage workers that are often the least likely to complain and the most 
likely to suffer workplace violations. In fiscal year 2008, WHD found 
back wages of $57.5 million in low-wage industries for 76,900 workers. 
In fiscal year 2015, WHD found $74.3 million in low wage industries for 
102,000 workers. That is more than a 29 percent increase in back wages 
and more than a 32 percent increase in the number of workers. Those 
gains were achieved through investments in the WHD workforce and 
infrastructure since fiscal year 2010. Also importantly, WHD aims for 
systemic compliance at the industry level, which requires new levels of 
coordination around enforcement, media, and stakeholder strategies; 
robust data analysis, research, and evaluation capabilities; and an 
infrastructure that fully supports the training, technology, planning, 
and communication needs of the organization. At the same time, a recent 
study on wage violations in New York and California demonstrates that 
rampant minimum wage violations account for an estimated $33-49 million 
total in lost weekly income in those States (estimates vary by the two 
data sources used).\8\ This study did not even account for overtime 
violations. Strategic enforcement is critical to ensure that DOL's 
limited resources have maximum impact, but flat funding for DOL means 
that thousands more families will be driven further into poverty due to 
DOL's limited resources to enforce the law.
---------------------------------------------------------------------------
    \8\ Available at https://www.dol.gov/asp/evaluation/completed-
studies/WageViolationsReport
December2014.pdf.
---------------------------------------------------------------------------
    The agency is confronting the limitations of working with 
technology, operations, and systems built for a different era. 
Notwithstanding its outdated information systems, through strategic use 
of resources WHD has been able to increase its recovery of back wages, 
including for low wage workers. To continue achieving system-wide 
impacts, however, WHD requires additional capacity, including more 
staff, to cover more of the 7.3 million workplaces in this country and 
conduct outreach, as well as updated information systems and data 
analytic capabilities, which will allow us to continue to focus on 
industries with the largest compliance problems and the most vulnerable 
workers. We will do this through a more in-depth understanding of 
industries, business models, and a more coordinated approach to 
conducting enforcement across networks of businesses, supply chains, or 
contracting relationships. Our Budget also includes $5.8 million to 
replace our aging case management system. A 2011 assessment estimated 
that moving WHD's applications to a cloud-based system would allow 
greater investigator productivity, enabling investigators to handle an 
additional case per quarter, or nearly 4,000 additional compliance 
actions a year.
    The agency must also update and modernize its approach to 
compliance assistance. Employers who are aware of their legal 
responsibilities (and the consequences of breaking the law) and workers 
who are aware of their rights are better positioned to identify and 
remedy violations, or to prevent them from occurring in the first 
place. While the agency continues to improve its public-facing website 
and enforcement database, WHD is also identifying ways to make its 
administrative data and information more accessible and usable to the 
public, employers, employees, journalists, developers, stakeholders, 
and the research community. These are the types of critical investments 
that will be adversely impacted by flat funding, significantly 
hindering WHD's ability to achieve greater compliance.
       effectively combating wage theft and labor law violations
    Question. As you know, I have introduced a bill to tackle wage 
theft. Do you believe that strengthening the Fair Labor Standards Act 
would help in combatting wage theft?
    Answer. Although the Administration has not taken a formal position 
on the Wage Theft Prevention and Wage Recovery Act, we are supportive 
of Congressional consideration of ways to provide that workers receive 
a fair day's pay for a fair day's work and to improve the provision of 
basic information to workers of how their pay was calculated. As a 
general matter, the Department believes that it is important for 
workers to have the information that they need to ensure that they are 
being paid all of the wages due and to assert their rights if they are 
not. As a normal part of doing business, most employers give their 
workers a pay stub with basic information about their hours and wages. 
As you know, President Obama took an important step forward in 
providing additional paycheck transparency to workers as part of the 
Fair Pay and Safe Workplaces Executive Order. Once implemented, this 
Executive Order will require covered Federal contractors and 
subcontractors to provide their workers on covered contracts with 
information each pay period regarding how their pay is calculated. The 
Order is an important step for workers and also for the Federal 
agencies, because it means that any pay-related problems on Federal 
contracts can be caught early before they become more costly to 
resolve.
    Question. Can you comment on the strategies being adopted by the 
Division to achieve the broadest possible compliance across industries?
    Answer. WHD focuses resources in industries where evidence shows a 
history of violations and where large numbers of vulnerable workers are 
found. WHD prioritizes enforcement in areas where issues can be 
addressed systemically. Data show that agency-initiated investigations 
and the strategic use of enforcement resources have particularly 
positive results for low-wage workers. In fiscal year 2015, WHD 
maintained increases in the percent of agency-initiated investigations, 
in contrast to investigations that are responsive to complaints, with 
42 percent directed investigations--a 25 percentage point increase from 
fiscal year 2010. The agency found violations in 79 percent of these 
agency-initiated investigations in fiscal year 2015, demonstrating that 
the agency is focusing on the right industries and the right workplaces 
within those industries. Even with the focus on low-wage workers, in 
fiscal year 2015, compliance actions in low-wage industries resulted in 
more than $1,000 in back wages per employee paid in violation.
    Question. How does the Division decide where to target it 
investigations to industries with the greatest likelihood and 
concentration of labor law violations so that it's not wasting its 
resources on law-abiding businesses?
    Answer. The laws enforced by WHD apply to over 7.3 million 
establishments and protect over 135 million workers. We will never have 
enough investigators to examine every business. Our strategies 
recognize the need to prioritize and direct resources based on where 
data and evidence show the problems are largest, where emerging 
business models lead to violations, and where workers are least likely 
to exercise their rights. WHD also seeks to impact compliance beyond 
the investigated employer, so that enforcement actions resonate 
throughout a particular sector and increase compliance across the 
entire industry, leveling the playing field for law-abiding businesses. 
A growing percentage of investigations are directed, i.e., agency-
initiated, which allows the agency to carry out strategies that aim for 
industry-level compliance.
    Since undertaking this strategic approach, WHD has increased its 
performance results. To start, the agency has increased the number and 
percent of directed investigations, that is, investigations based on 
objective evidence that indicates a likelihood of finding violations. 
In fiscal year 2015, WHD maintained increases in the percent of 
directed investigations with 42 percent a significant increase from 
fiscal year 2010. Evidence that WHD has improved its ability to 
identify violators is that the percentage of directed cases in which 
WHD finds no violations declined from 35 percent in fiscal year 2009 to 
21 percent in fiscal year 2015. In fact, in 2015 the ``no-violation 
rate'' for directed investigation was almost the same as for 
investigations triggered by a complaint: the no-violation rate for 
complaint cases was 18 percent versus 21 percent for directed cases, 
suggesting that directed investigations, despite the absence of on-the-
ground information from complainants, are nearly as accurate as a 
complaint in finding employers with violations.
    The benefit of directed investigations is that it allows WHD to 
protect workers in industries where workers are unlikely to file a 
complaint, either because of intimidation, fear of interacting with the 
government or a lack of knowledge of their rights. By using sound 
empirical evidence and robust data, WHD has been able to initiate 
investigations without information from complainants, without 
increasing the likelihood of wasting resources on investigating law-
abiding employers. Directed investigations also allow WHD to focus 
efforts, including stakeholder engagement, communication, and outreach 
to affect compliance more broadly within an industry.
                       paid leave analysis grant
    Question. Mr. Secretary, I was pleased that the Department's 
Women's Bureau awarded a Paid Leave Analysis grant last fall to my home 
State of Washington. These funds will help the State study options for 
implementing Washington's Family Leave Insurance Act of 2007. I see 
that the budget proposes additional funding for the Women's Bureau to 
help more States study options for paid leave programs. It also 
proposes $2 billion in mandatory funding to help up to 5 States cover 
the initial costs of their programs. I believe we need to strengthen 
family leave policies. Currently, more than 40 million workers do not 
have access to paid sick days, a problem that a bill I introduced with 
Congresswoman DeLauro--the Healthy Families Act--would help address. 
And Federal contractors will provide up to 7 days of paid sick days 
thanks to the executive order President Obama issued last fall. And, I 
have been pleased to see more States and communities, such as Seattle, 
adopt paid leave programs.
    Mr. Secretary, what impact are these policies having on local 
business where paid leave programs have been implemented?
    Answer. In the three States that have implemented paid leave 
programs (California, New Jersey, and Rhode Island), businesses have 
benefited from a more stable workforce without having to incur the 
costs of establishing a paid leave program by themselves. Businesses 
and workers can share the costs broadly, limiting the impact on any one 
person or company. In fact, research has shown that paid leave 
increases the probability that women continue in their job after 
childbirth, rather than quitting, saving employers the expense of 
recruiting and training new employees.\9\ After California and New 
Jersey enacted paid family leave benefits, most businesses in those 
States reported positive or neutral experiences and few negative 
effects.\10\ In California, a study funded by the Department of Labor 
on California's Paid Family Leave law concluded that the law had not 
caused major problems for California's employers.\11\ Approximately 90 
percent of employers surveyed reported positive effects or no 
noticeable effects in terms of productivity, profitability, retention, 
and morale. Small employers reported fewer problems than large firms. 
Another study of California's law determined that the business 
community's concerns that the law would impose extensive new costs and 
become a serious burden for employers proved unfounded; after more than 
5 years' experience with paid family leave, the vast majority of 
employers reported that the law had minimal impact on their business 
operations.\12\ Similarly, a study of Rhode Island's paid family leave 
law found little evidence of significant impacts to employers, and the 
results were suggestive of employer support for paid family leave 
laws.\13\
---------------------------------------------------------------------------
    \9\ Available at https://www.dol.gov/asp/evaluation/completed-
studies/WageViolationsReport
December2014.pdf.
    \10\ IMPAQ International. January 2012. Impact of the Reemployment 
and Eligibility Assessment (REA) Initiative in Nevada.
    \11\ The report is available at www.dol.gov/ilab/reports/pdf/
Public_Report_of_Review_of_
US_Submission_2015-01.pdf.
    \12\ Appelbaum, E. and Milkman, R. 2011. ``Leaves That Pay: 
Employer and Worker Experiences with Paid Family Leave in California.'' 
http://cepr.net/documents/publications/paid-family-leave-1-2011.pdf.
    \13\ Bartel, A. et al. 2016. ``Assessing Rhode Island''s Temporary 
Caregiver Insurance Act: Insights from a Survey of Employers.'' U.S. 
Department of Labor. Retrieved from http://www.dol.gov/asp/evaluation/
completed-studies/
AssessingRhodeIslandTemporaryCaregiverInsuranceAct_InsightsFromSurveyOfE
mployers.pdf.
---------------------------------------------------------------------------
    Question. Are they hurting businesses or reducing employment?
    Answer. No, in the three States that have implemented paid leave 
programs (California, New Jersey, and Rhode Island), businesses have 
benefited from a more stable workforce without having to incur the 
costs of establishing a paid leave program by themselves. Businesses 
and workers can share the costs broadly, limiting the impact on any one 
person or company. In fact, research has shown that paid family and 
medical leave increases worker retention and reduces turnover, saving 
businesses significant costs associated with replacing employees. In 
New York, more than one hundred business owners and business 
associations formally expressed support for the State's paid family 
leave insurance program, recognizing that such a program ``will help--
not hurt--their success.'' \14\
---------------------------------------------------------------------------
    \14\ Community Service Society, Press Release, ``New York 
Businesses Support Paid Family Leave'' (Mar. 23, 2016), http://
www.cssny.org/news/entry/new-york-businesses-support-paid-family-leave.
---------------------------------------------------------------------------
    Question. And, what have they meant for working families?
    Answer. The laws have had a positive effect on working families. 
Paid leave helps individuals deal with important life events, such as a 
serious personal or family illness or to care for a new child or an 
aging parent, without jeopardizing their economic security. When 
workers are forced to take unpaid leave, they manage the financial 
impact by cutting back spending, spending down savings, putting off 
paying bills, accumulating debt, and/or even going on public 
assistance. Paid leave reduces the chance of working families needing 
to make these tough decisions. Research on California's Paid Family 
Leave program shows that uptake of paid family leave increased among 
the less-educated, unmarried and minority mothers who took the shortest 
leaves before the law took effect.\15\ Paid parental leave can increase 
female labor force participation by making it easier for women to stay 
in the workforce after giving birth, which contributes to economic 
growth and can increase women's lifetime earnings. It also has a 
positive effect on the overall health and wellbeing of parent and 
child, substantially increasing breastfeeding rates and maternal time 
spent on child care.\16\ When parents are better supported at work 
through paid family and medical leave, they are also less likely to 
rely on public assistance benefits. Economists have found that with 
paid leave, more people take time off, particularly low-income parents 
who may have taken no leave or dropped out of the work force after the 
birth. Paid leave raises the probability that mothers return to 
employment later, and then work more hours and earn higher wages.\17\
---------------------------------------------------------------------------
    \15\ Bartel. A. et al. 2014. ``California's Paid Family Leave Law: 
Lessons from the First Decade.'' U.S. Department of Labor. Retrieved 
from: http://www.dol.gov/asp/evaluation/reports/
paidleavedeliverable.pdf.
    \16\ Michael Baker and Kevin Milligan. 2008. ``Maternal Employment, 
Breastfeeding and Health: Evidence from Maternity Leave Mandates.'' 
Journal of Health Economics 27:871-887.
    \17\ U.S. Department of Labor. 2015. ``The Cost of Doing Nothing: 
The Price We All Pay Without Paid Leave Policies to Support America's 
21st Century Working Families.'' Retrieved from http://www.dol.gov/
featured/paidleave/cost-of-doing-nothing-report.pdf.
---------------------------------------------------------------------------
    Although there is less research on the effects of paid leave on 
employment outside the context of parental leave, studies show these 
same positive impacts on employment and retention may extend to workers 
taking leave for other reasons. California's Paid Family Leave program 
notably increased job retention of workers in ``low-quality'' jobs 
(those with lower wages and fewer benefits). When they experienced a 
triggering event like a serious health problem or a family member 
needing care, they were more likely to return to work and to their same 
employer.\18\ Moreover, care for adult family members with significant 
health needs, including ill spouses and aging parents, is a key 
challenge that affects working families. When workers have access to 
paid leave for family members' long-term care, as well as acute medical 
needs, it can reduce work-family conflict and negative employment 
impacts.\19\ The Department's 2015 report titled ``The Cost of Doing 
Nothing'' outlines the myriad ways in which paid leave policies help 
working families, and how lack of access to such policies comes at 
significant cost.
---------------------------------------------------------------------------
    \18\ Appelbaum, E. and Milkman, R. 2011. ``Leaves That Pay: 
Employer and Worker Experiences with Paid Family Leave in California.'' 
http://cepr.net/documents/publications/paid-family-leave-1-2011.pdf.
    \19\ U.S. Department of Labor. 2015. ``The Cost of Doing Nothing: 
The Price We All Pay Without Paid Leave Policies to Support America's 
21st Century Working Families.'' Retrieved from http://www.dol.gov/
featured/paidleave/cost-of-doing-nothing-report.pdf.
---------------------------------------------------------------------------
        bureau of international labor affairs trade enforcement
    Question. I'd like to follow up on my question related to trade 
enforcement, particularly your comment that ILAB (Bureau of 
International Labor Affairs) punches above its weight.
    Would you please say more about the outcomes ILAB is achieving for 
our workers and its partnerships within the executive branch?
    Answer. ILAB's efforts, in coordination with the Office of the U.S. 
Trade Representative (USTR) and the Department of State, are designed 
to strengthen the monitoring and enforcement of labor provisions of 
free trade agreements (FTAs) and trade preference programs, and help to 
level the playing field for American workers and business. Labor 
exploitation in trading partner countries such as child labor, forced 
labor, unsafe working environments, or unfair working conditions 
undermines U.S. workers, U.S. businesses, and U.S. values.
    ILAB uses its leverage through trade agreements, trade preference 
programs, technical assistance grants, reporting, and diplomacy to 
improve working conditions around the world. ILAB uses its technical 
assistance grant funding to build government capacity to improve labor 
rights among trade partners and address the root causes of the worst 
forms of child labor. Through the Administration's trade agenda, ILAB 
played a key role in helping USTR negotiate successively stronger labor 
provisions of FTAs. Under the Trans-Pacific Partnership agreement, the 
U.S. government negotiated the strongest labor rights provisions of any 
FTA to date along with consistency plans that will require 
implementation of critical labor reforms in Vietnam, Malaysia, and 
Brunei prior to entry into force of the agreement.
    These successes are part of a broader interagency effort to make 
trade work better for workers at home and abroad through greater 
monitoring and enforcement. ILAB, USTR, and the Department of State's 
recent work with the Government of Honduras is a strong example of 
recent bilateral and interagency collaboration to effectively monitor 
labor commitments under an FTA. ILAB completed a public submission 
report concerning Honduras that found evidence of labor law violations 
in nearly all of the included cases and noted serious concerns 
regarding the Government of Honduras's enforcement of its labor 
laws.\20\ Maintaining a constructive working relationship with Honduras 
throughout the submission review process enabled the Department of 
Labor, USTR, and State to cooperatively develop and sign a Monitoring 
and Action Plan designed to address the concerns identified in the 
submission report.\21\ This was supported by an ILAB technical 
assistance grant of $7 million to build the capacity of the government 
to address the issues identified in the Plan, and will continue to be 
monitored by the labor attache, who is expected to be in country later 
this year.
---------------------------------------------------------------------------
    \20\ The report is available at www.dol.gov/ilab/reports/pdf/
Final_Report_of_Review-Honduras_Submission_022715_redacted.pdf.
    \21\ This plan is available at www.dol.gov/ilab/media/pdf/
Honduras_MAP.pdf.
---------------------------------------------------------------------------
    Likewise, with the Government of Guatemala, ILAB played a critical 
role in negotiating an enforcement plan to address labor enforcement 
concerns under the Dominican Republic-Central America Free Trade 
Agreement (CAFTA-DR). When Guatemala failed to fully implement the 
plan, ILAB assisted USTR in bringing the U.S. government's first ever 
dispute settlement case under an FTA, arguing that Guatemala has not 
complied with the labor provisions of the CAFTA-DR. With ILAB's 
assistance, the U.S. government also entered into consultations with 
the Government of Bahrain to address the targeting of union leaders in 
the 2011 Arab Spring. Since then, Bahrain has reinstated nearly all of 
the over 4,000 workers dismissed in the public and private sectors. In 
2016, ILAB, in close consultation with USTR and State, published a 
report in response to a labor submission under the Peru FTA that 
identified significant concerns regarding freedom of association in 
Peru, offered recommendations to address those concerns, and expressed 
the U.S. government's commitment to continued engagement with the 
Government of Peru.\22\ The report further committed to assess the 
progress in addressing those concerns within 9 months.
---------------------------------------------------------------------------
    \22\ The report is available at www.dol.gov/ilab/reports/pdf/
Public_Report_of_Review_of_
US_Submission_2015-01.pdf.
---------------------------------------------------------------------------
    ILAB is investing its resources in putting personnel on the ground 
in countries where there is a clear plan of action for improving labor 
rights and a commitment from the trading partner government to 
implement those reforms. This is critical to ensuring high-level 
attention and progress on these issues. For example, in 2013, the U.S. 
suspended Bangladesh's trade benefits under the Generalized System of 
Preferences (GSP) after an extensive interagency review of workers' 
rights and worker safety. In an effort to demonstrate ILAB's commitment 
to address the issue, ILAB established its first labor attache at the 
U.S. Embassy in Dhaka, Bangladesh in August 2014, where she plays a 
critical day-to-day role supporting the efforts of the U.S. government 
in working closely with the Government of Bangladesh, unions, and 
employers in promoting progress for Bangladesh workers on the Labor 
Action Plan.
    Similarly, along with grant funding for capacity building projects 
in Colombia, ILAB established a second labor attache in Bogota, 
Colombia in April 2015 to help coordinate U.S. government efforts with 
the government of Colombia in meeting its obligations under the free 
trade agreement and the associated Colombia Labor Action Plan, which 
ILAB also helped to negotiate. Likewise, ILAB will soon send labor 
attaches into the field at the Embassies in Hanoi, Vietnam, and 
Tegucigalpa, Honduras. In the fiscal year 2017 Budget, ILAB requests 
additional funds to expand the labor attache program into more trading 
partner countries, such as Peru, Mexico, Malaysia, Guatemala, and the 
Dominican Republic, to further their progress on labor rights.
                         green jobs act of 2007
    Question. Mr. Secretary, your Bureau of Labor Statistics conducted 
work earlier this decade on measuring green jobs in the economy. The 
Green Jobs Act of 2007 called on BLS to do this work and the American 
Recovery and Reinvestment Act provided resources to help get this work 
started. Unfortunately, across the board cuts in 2013 reduced the BLS 
budget by 5 percent, and the BLS made the decision to eliminate related 
programs and products.
    Would you please describe the key accomplishments achieved with 
this funding?
    Answer. The fiscal year 2010 Consolidated Appropriations Act 
included $8,000,000 in funding to expand several Bureau of Labor 
Statistics survey programs to collect new data on green-collar jobs in 
the economy.
    With the funding, the BLS produced four ``measuring green jobs'' 
products:
  --Green Goods and Services (GGS) Industry survey (http://www.bls.gov/
        ggs/): provided data on employment by industry for businesses 
        that produced green goods and services;
  --GGS Occupations survey (http://www.bls.gov/ggsocc/): provided 
        employment data by occupation;
  --Green Technologies and Practices (GTP) survey (http://www.bls.gov/
        gtp/): provided data on the occupations and wages of jobs 
        related to green technologies and practices;
  --Green Career Information (http://www.bls.gov/green/
        greencareers.htm): provided career information related to green 
        jobs.
    Initially, funding supported the development of the surveys, 
including collection instruments, systems development and other 
information technology needs. The first set of estimates from the new 
surveys were published in fiscal year 2012; the initial green career 
information product was published in September 2010.
    Question. And, what do you think policy makers at all levels lost 
with the elimination of this BLS data source?
    Answer. Anytime we lose funding, the Department and BLS have to 
make tough choices about how to do more with less. In this case, we 
made the choice to stop collecting data on green jobs. As a result, 
policymakers lost sources of information on the green goods and 
services sector of the economy when green jobs data products were 
eliminated in fiscal year 2013, including:
  --The Quarterly Census of Employment and Wages eliminated the 
        collection and publication of industry employment data on 
        120,000 establishments in select industries defined as green 
        for the Nation and States; and ceased production of 3,200 green 
        goods and services industry job series.
  --The Occupational Employment Statistics program eliminated 10,000 
        green series on occupational employment and wages data for 
        businesses that produce green goods and services; and ceased to 
        conduct special employer surveys to provide information on the 
        nature of the jobs held by green workers, such as the Green 
        Technologies and Practices survey.
  --The Employment Projections program stopped producing narratives on 
        green careers.
     preparing states for workforce innovation and opportunity act 
                             implementation
    Question. The passage of the Workforce Innovation and Opportunity 
Act (WIOA) in 2014 represented a bipartisan commitment to support 
training that prepares workers for the jobs that are available with the 
skills that businesses need to succeed. I am pleased that we were able 
to fund increases for training and employment services in 2016, but 
it's important to note that funding for these programs has remained 
static over the last three decades while the size of our economy and 
workforce has more than doubled. WIOA requirements take full effect 
this summer as States still await the Federal regulations and guidance 
they will need to comply with the law. Washington State is a national 
leader in WIOA implementation and I recognize that the Department has 
been working very hard to ensure that all States are prepared this 
summer.
    Do you still anticipate that the final regulation will be issued 
prior to the July 1st statutory deadline?
    Answer. Yes, the Departments of Labor and Education continue to 
work aggressively toward making the final regulations publicly 
available in June 2016.
    Question. How is the Department working with States to provide the 
technical assistance and flexibility they need to be ready to implement 
the new regulation due out this summer?
    Answer. The Department of Labor, in collaboration with our Federal 
partners, has taken many steps to guide the swift and effective 
implementation of the law. For example, the Department launched a WIOA 
resource page on July 21, 2014, to provide State and local leaders, 
practitioners, and stakeholders with information resources and 
technical assistance materials. This page had recorded 517,174 total 
views through March 2016. We also have hosted 28 WIOA technical 
assistance webinars; shared numerous assessment tools to help leaders 
at all levels of the public workforce system plan for WIOA 
implementation; and distributed podcasts and videos describing 
workforce system best practices and replicable models. In addition, we 
have shared over 40 pieces of operating guidance for States and local 
workforce areas on a range of topics, such as transition funding, grant 
management, youth programming, and governance.
    In January 2016, teams from 49 States attended a National Convening 
that the Department co-hosted with Federal partners and stakeholders. 
The leadership conversation focused on strengthening partnerships, 
learning from one another, and sharing best practices in WIOA 
implementation. We continue to be available as a resource to help 
States and local areas work through WIOA implementation challenges and 
take advantage of its opportunities.
    States and territories are working hard to bring the principles of 
WIOA to life, convening their partners to align strategy, service 
delivery, and performance reporting across programs. Most States and 
outlying areas already have WIOA-compliant State and local governing 
boards in place. All States and territories have submitted their WIOA 
State plans, and reviews of WIOA State plans are underway.
    With regard to specific regulatory training, the Department of 
Labor is working with its Federal partners to develop training on the 
new regulations, among other necessary technical assistance. We also 
are collaborating on a monitoring approach that recognizes the 
transition and transformation of the public workforce system that is 
currently underway. The Department has issued 19 different TEGLs as 
WIOA Operating Guidance and posted 31 subject-based FAQs specifically 
addressing expectations for certain provisions of WIOA during 
implementation. All public guidance and information related to WIOA 
implementation is available through a WIOA landing page at 
www.doleta.gov/wioa.
                                 ______
                                 
                Questions Submitted by Senator Jack Reed
 workforce innovation and opportunity act implementation and libraries
    Question. How is the Department working with the Institute of 
Museum and Library Services to engage public libraries in the 
implementation of WIOA?
    Answer. The Departments of Labor and Education continue to work 
with the American Library Association (ALA) and the Institute of Museum 
and Library Services (IMLS) to conduct outreach to libraries. This 
outreach is intended to help libraries understand the vital role that 
the workforce system plays in providing education, training, and career 
services to job seekers and provide information about how public 
libraries can partner with the workforce system, including as a 
recipient of WIOA funding. As part of this outreach, the Departments 
conducted a webinar with ALA and IMLS, and maintain regular 
communication regarding WIOA implementation.
    Question. What guidance and technical assistance will the 
Department provide to ensure that libraries providing workforce 
development services have access to resources under WIOA?
    Answer. WIOA explicitly identifies public libraries as potential 
partners of the American Job Center network, and acknowledges 
libraries' ability to provide an expansive array of job search 
services. The law also recognizes libraries as important providers of 
federally supported training and employment for adult education and 
literacy activities. Public libraries may enter into agreements with 
local workforce boards to provide services. The Departments of Labor 
and Education are developing additional guidance on how the workforce 
system can make better connections with libraries and will continue to 
engage with ALA and IMLS to identify areas where additional guidance 
and technical assistance is needed.
                              work sharing
    Question. How does the work-sharing or short-time compensation 
program help States, employers, and employees save money in their UI 
trust funds, keep workers on the job, and employees connected to the 
work force?
    Answer. Short-Time Compensation (STC) benefits both employers and 
employees by allowing employers to retain a skilled work force within 
the affected unit or units through a partial reduction of employees' 
hours of work rather than laying off some employees within the unit. 
STC preserves employees' jobs during times of lowered economic activity 
and cushions the negative impact of the reduced business activity 
within the unit by permitting employees to collect an STC payment to 
replace a portion of their lost wages.
    Participation in an STC plan allows the employer to retain its 
trained workers until demand for its products and services resumes, at 
which point employers have the opportunity to restore hours. Through 
the duration of the plan, the participating employer can maintain 
productivity and quality levels because it has the same experienced 
employees doing the same work. A participating STC employer avoids the 
costs of having to hire and train new workers when normal business 
activity levels resume. Also, by participating in an approved STC plan, 
an employer communicates to its employees (and the local community) 
that it values the well-being of its workers. In addition, the STC 
program helps employers keep businesses viable, provides important 
assistance to workers and their families, and benefits local economies.
    STC benefits workers in the affected unit or units by averting the 
loss of employment during declining business activity. Workers receive 
an STC payment to cushion the impact of the reduction in the usual 
hours of work while maintaining health and retirement benefits under 
the same terms and conditions as though the employee's workweek were 
not reduced during the duration of the STC plan. Individuals may be 
able to participate in training to enhance their work skills as part of 
the STC plan. By participating in the STC program, employees stay 
connected to their job, continue to apply their skills, and avoid the 
need to look for alternative employment. Retaining employment and 
income can be particularly important for a family, especially if other 
family members lose their jobs or face reduced work hours. Once the 
economic conditions for the employer improve, the employees can then 
resume their regular hours of work.
    Question. How would an extension of funding encourage additional 
States to adopt work sharing programs?
    Answer. The financial incentives provided under the Middle Class 
Tax Relief and Job Creation Act of 2012 (the Act) promoted additional 
State adoption of STC programs and improved administration and 
promotion of the program.
    A total of twenty-eight States amended their STC laws or enacted 
new STC provisions in their State UI laws to conform to the new 
definition of STC in the Act. The following seven States enacted new 
STC programs after enactment of the Act: Illinois, Michigan, Nebraska, 
New Jersey, Ohio, Virginia and Wisconsin.
    Twenty-two STC States received Federal STC benefit reimbursements 
totaling $266.7 million between 2012 and 2015. Federal reimbursement of 
STC benefit costs ended in August 2015. The Act provided for 100 
percent reimbursements of STC benefits paid. However, the reimbursement 
became subject to reductions as a result of sequestration for mandatory 
budget activities carried out under the Balanced Budget and Emergency 
Deficit Control Act.
    Sixteen States took advantage of available STC grant funds under 
the Act, totaling $46.1 million, and are using the grant funds to 
automate their systems or for other program improvement activities. 
States are using the promotion/enrollment grant funds to conduct 
outreach to employers and stakeholders, design and update STC 
promotional materials, improve STC websites, hire/train staff, and 
develop data warehouses to identify potential employers that may 
benefit from the STC program.
    The Department believes that an extension of these incentives would 
result in increased adoption of the STC program and improved 
administration and promotion of the program, thus saving more jobs in 
more States. As of February 2016, when the Department released its STC 
Report to Congress, 570,000 jobs had been saved as a result of STC 
since the beginning of the Great Recession. The full report can be 
found at: http://www.ows.doleta.gov/unemploy/docs/stc_report.pdf.
                               job corps
    Question. What is the process for determining what academic and 
career training programs are offered at Job Corps Centers?
    Answer. One hundred twenty-six Job Corps Centers are operated 
nationally, and training is provided by a variety of providers, 
including for-profit companies, community colleges, national labor 
organizations, industry organizations, and the U.S. Forest Service. 
Each center provides a fully supervised program of education, including 
academic and career training programs, which are selected based on 
requirements of the Workforce Innovation and Opportunity Act (WIOA), 
the Job Corps Policy Requirements Handbook (PRH), and through workforce 
council identification of in-demand industries. The PRH requires 
instruction in the following content areas:
  --Career Technical Training (CTT)
  --High School Diploma and/or High School Equivalency
  --Reading
  --Math
  --English as a Second Language
  --Information Technology
  --Wellness
  --Drivers Education
  --Financial Literacy
    In accordance with WIOA, each Job Corps center must establish a 
workforce council that includes representatives of private sector 
employers, labor organizations (where present), employees, and Job 
Corps enrollees and graduates. In the case of a single-State local 
area, the workforce council must also include a representative of the 
State Board. The workforce council must work with local boards and 
review Labor Market Information (LMI) to recommend in-demand industry 
sectors or occupations of focus, determine employment opportunities 
that students are well suited for, identify the skills and education 
necessary to obtain employment, and recommend career and technical 
training that should be implemented at the center.
    Job Corps has partnerships with local boards, American Job Centers, 
workforce councils, numerous business industry associations, 
credentialing agencies, and national labor organizations. These 
entities provide guidance consistent with WIOA requirements on current 
and projected in-demand industries and associated occupational skill 
requirements and industry-sponsored certifications needed to fill those 
jobs.
    Question. What steps is Job Corps taking to ensure that the 
academic and career training programs are meeting employer needs 
nationally as well as locally?
    Answer. In addition to the approach outlined above, on an annual 
basis, the Office of Job Corps conducts Career Technical Training (CTT) 
performance reviews that examine the overall grades, credential 
attainment rate, and placement ratings for all CTT programs. This 
national performance audit ensures strong alignment between employer 
needs and center offerings.
    At the national and regional level, Job Corps continually develops 
major industry partnerships with large, national employers as well as 
with national labor organizations and business and industry 
associations in order to provide both work-based learning and job 
placement opportunities. These partnerships allow students to 
participate in pre-apprenticeship and apprenticeship training programs 
and have access to job placement support from union apprenticeship 
programs, union contractors, and major employers.
    Job Corps' relationships with employers, unions, apprenticeship 
programs, local boards, American Job Centers, business associations, 
and workforce councils help to ensure that the academic and career 
training programs are meeting employer needs nationally as well as 
locally. The changing needs of academics and industries are being 
monitored and modifications are made to the Job Corps program to 
provide the best academic and career technical training for students 
and employees for employers. Centers that recently made changes to 
their offerings, based on relevant labor market information, include:
  --The Grafton Job Corps Center, which increased the size of its 
        Advanced Human Service Worker-Residential Advisor program and 
        its Clinical Medical Assistant program. Both residential 
        advisors and medical assistants are considered ``Bright Outlook 
        Occupations'' by O*NET, a DOL-sponsored database of 
        occupational information. In addition, the Bureau of Labor 
        Statistics (BLS) projects job openings for these two 
        occupations to outpace national and Massachusetts State 
        averages from 2012 to 2022.
  --The Miami Job Corps Center, which added a United Brotherhood of 
        Carpenters (UBC) Carpentry Pre-Apprentice program. The Bureau 
        of Labor Statistics (BLS) projects carpentry to be among the 
        fastest growing occupations from 2012 to 2022 in the State of 
        Florida, with an expected change of 34 percent. The State is 
        also currently ranked third in the country in terms of 
        employment levels for the occupation.
  --The Turner Job Corps Center, which added an International Masonry 
        Institute (IMI) Tile Setting Pre-Apprentice program. Regional 
        labor market information supported this request, with continued 
        high demand from employers and high Job Training Match 
        placements expected. In Southwest Georgia, where the center is 
        located, BLS projects the employment rate for tile and marble 
        setters to grow 25 percent between 2010 and 2020, faster than 
        regional and national averages.
    Job Corps also leverages employer partnerships to increase 
opportunities for graduates. A recent example is a new relationship 
with MasTech, a company based in Pittsburgh, PA. MasTech is the second 
largest Hispanic-owned company in America and a premier company for 
electric, natural gas, and fiber-optic infrastructure. The company 
partnered with the Overhead Lineman/Smart Grid Advanced Training 
program to offer jobs to 26 members of the Oneonta Job Corps Academy. 
Once they finish their training, the Lineman graduates will work on the 
FCC's Connecting America broadband project in North Carolina.
    The fiscal year 2017 budget includes two requests that we believe 
will help with this work. The first is an increase of $5,000,000 to 
introduce a suite of demonstration pilots to test a range of novel 
approaches that can be implemented over a multi-year period to improve 
student outcomes. In order to align with the Job-Driven Training vision 
strategy of promoting what works, Job Corps will use its demonstration 
authority to experiment with evidence-based innovative models to 
achieve improved results for students. More specifically, Job Corps is 
considering models that would create career pathways, engage employers, 
and manage behavior. Potential options include blended academic and 
occupational training combined with work experience in a high-demand 
field; a residential model for at-risk youth with a rigorous academic, 
college preparatory and career focus; dual enrollment in Job Corps and 
community college; or other innovative models that integrate cognitive 
and non-cognitive skills training. A second requested increase of 
$12,127,000 will be used to modernize curricula, upgrade equipment to 
meet industry standards, refine training to provide skills and 
credentials that are in high-demand by employers, and undertake actions 
required for the implementation of WIOA.
                         unemployment insurance
    Question. During the recovery, we had several disruptions in the 
availability of emergency benefits for job seekers. These disruptions 
hurt workers, slowed the recovery, and strained the States charged with 
administering the program.
    How does the Department's UI proposal reflect the lessons learned 
during that period?
    Answer. During the Great Recession, economists repeatedly pointed 
to Unemployment Insurance (UI) as one of the fastest ways to generate 
economic activity in communities and to stabilize the economy, as it 
reduced the potential decrease in the country's Gross Domestic Product 
by 18 percent.\23\ In addition, UI served as a safety net to millions 
of unemployed workers and their families, keeping them from falling 
into poverty. At the height of the recession and in the early days of 
the recovery in fiscal year 2010, an estimated 16.2 million unemployed 
workers received $156.4 billion in UI benefits.
---------------------------------------------------------------------------
    \23\ The GDP number is from an IMPAQ study entitled The Role of 
Unemployment Insurance as an Automatic Stabilizer During a Recession, 
published in July 2010, page 66.
---------------------------------------------------------------------------
    As the U.S. economy has continued to recover, however, we have seen 
the UI system struggle to keep pace, and it is in need of modernization 
to ensure it can continue to fulfill its important mission. The UI 
package included in the 2017 Budget is intended to provide the 
necessary systemic improvements. These proposals are founded on the 
critical economic lessons learned from the Great Recession and its 
aftermath, including:
  --We need reforms that will support UI trust fund solvency. Most 
        States' UI trust funds were underfunded going into the Great 
        Recession and, as a result, States had to borrow billions of 
        dollars to pay required benefits. Today, three States still 
        have outstanding loans and owe over $3.3 billion. Seven other 
        States had bond debt of over $8 billion as of December 31, 
        2015. In addition, 36 States do not have sufficient reserves in 
        their trust funds to pay for a year of benefits in a normal 
        recession a standard that ETA strongly recommends to ensure 
        long-term solvency. The President's budget includes a trust 
        fund solvency proposal designed to improve the solvency of the 
        UI system.
  --We need a permanent Extended Benefit (EB) program that works. The 
        current EB program triggers are not sufficiently responsive to 
        changing economic conditions. The Great Recession started in 
        December 2007, but most States did not trigger on to extended 
        benefits until March or April of 2009, which led Congress to 
        create the Emergency Unemployment Compensation program (EUC) in 
        June 2008. The President's Budget includes a proposal that 
        would establish more effective triggers to fulfill UI's 
        countercyclical purpose and would put in place a permanent 
        tiered program that negates the need for special temporary 
        programs, like the EUC.
  --In addition, the current EB program, which provides up to 20 
        additional weeks of benefits in States with high and rising 
        unemployment, does not provide sufficient help during an 
        economic downturn because it provides too few weeks of 
        additional benefits. As the Great Recession demonstrated, this 
        limitation results in the passage of ad hoc emergency UI 
        programs that begin too late to provide the early stimulus that 
        could lessen the severity of a recession. Gaps in benefits then 
        occur when the short-term emergency program expires and 
        extensions are not passed, which further reduces the value of 
        additional benefits as an economic stimulus.
  --We need to stop States from eroding the UI safety net by reducing 
        the number of weeks of available benefits. Nine States no 
        longer have a maximum 26-week benefit period, with some States 
        providing as few as 12 weeks of benefits, which, in many cases, 
        is simply not enough time to help unemployed workers get back 
        to work. The President's Budget includes a proposal that would 
        require States to provide a maximum 26-week benefit period.
  --We know the Short-Time Compensation (STC or Shared Work) program 
        works and we need to support more States' adoption of the 
        program and expanding its use in those States that have the 
        program. During economic downturns, STC helps employers retain 
        talent, helps workers defray lost income resulting from reduced 
        hours, and saves jobs from being lost to the economy. Last 
        fall, an employer told us that if this program had not been 
        available, her business would not have survived the recession. 
        We know that countries like Canada and Germany were able to 
        more quickly recover during the recession as a result of their 
        greater use of this type of program. From the beginning of the 
        Great Recession through February 2016, 570,000 jobs had been 
        saved as a result of the STC program. The President's budget 
        includes renewed State incentives to encourage adoption of the 
        STC program for future recessions.
  --We need to turn the UI program into a reemployment program to help 
        prevent long-term unemployment. We must build on the proven 
        success of the Reemployment and Eligibility Assessment (REA) 
        program and its successor, the Reemployment Service and 
        Eligibility Assessment (RESEA) program, which reduce UI benefit 
        duration because they return claimants to work faster, saving 
        $2.60 for every $1.00 spent. While Congress has appropriated 
        funds for the current temporary/voluntary RESEA program, the 
        President's Budget proposes a permanent program in all States 
        with increased funding to enable targeting of the top one-third 
        of all UI claimants who are most likely to exhaust their 
        benefits, as well as all transitioning military veterans, who 
        often face barriers to returning to civilian jobs. This 
        proposal will help to ensure that these targeted populations 
        get the intensive reemployment services they need to get back 
        to work and prevent long-term unemployment.
  --We need new strategies to bring workers who have lost jobs that are 
        unlikely to be available due to shifts in the economy back into 
        the labor market. The President's plan would ensure that 
        workers have access to wage insurance that compensates workers 
        for the lower earnings they initially experience when they must 
        start a new career in a different industry and incentivizes 
        workers to begin new careers rather than remaining unemployed 
        or leaving the labor market altogether.
    Question. How can we better connect jobseekers with services like 
Reemployment Eligibility Assessments/Reemployment Services that have 
been shown to shorten the time between being laid-off and finding a new 
job?
    Answer. The most effective way to better connect job seekers, 
particularly unemployed workers, to integrated reemployment services 
and eligibility assessments is by authorizing a permanent Reemployment 
Service and Eligibility Assessment (RESEA) program in every State, and 
providing sufficient funding to enable States to focus on the one-third 
of claimants most likely to exhaust their benefits and all 
transitioning veterans receiving Unemployment Compensation for Ex-
service members (UCX), as provided in the President's fiscal year 2017 
Budget. A permanent program focusing on these populations with greater 
barriers to employment will provide intensive reemployment services 
through American Job Centers to help get them back to work while also 
ensuring their ongoing eligibility for unemployment benefits. Robust 
reemployment services help targeted claimants develop and implement the 
reemployment and work search plans that are critical to getting them a 
job as quickly as possible.
    The Reemployment and Eligibility Assessment (REA) program, funded 
since 2005, has been shown to be an effective tool in reducing improper 
payments and getting claimants back to work more quickly. To date, the 
program has been voluntary and in fiscal year 2015 the RESEA program 
was operational in 48 States. However, only about 16 percent of UI 
beneficiaries were scheduled for an RESEA or REA in fiscal year 2015. 
The fiscal year 2017 Budget proposal would make the RESEA program 
permanent and require it in all States.
    The President's RESEA proposal is based on a successful model, 
established in Nevada, which used an integrated approach to provide 
both reemployment services and UI eligibility assessments. This 
approach helps claimants find jobs faster, eliminates payments to 
ineligible individuals, reduces UI duration, and saves UI trust fund 
resources by reducing overall benefit payments. Recent research2 on 
that service-delivery model found it to be effective in the following 
ways:
  --Claimants were significantly less likely to exhaust their benefits;
  --Claimants had significantly shorter UI durations and lower total 
        benefits paid (1.82 fewer weeks and $536 lower total benefits 
        paid
  --Claimants were more successful in not only returning to work 
        sooner, in jobs with higher wages, but also in retaining those 
        jobs; and
  --$2.60 of savings was produced for every $1.00 of cost.
    By applying this integrated approach to the long-term unemployed 
and transitioning veterans nationally, it is estimated that this 
initiative will reduce the average duration of UI and UCX benefit 
receipt by 1.4 weeks for claimants participating in the RESEA program 
and result in benefits savings of approximately $423 million as a 
result of the fiscal year 2017 investment. Looking forward, the RESEA 
proposal will support a more comprehensive approach to reemployment, 
including strategies to encourage more sophisticated communication 
between the UI and workforce systems, aided by technology that will 
allow both systems to view claimant outcomes on a continuum as they 
move from assessment to services (such as job search and resume writing 
workshops) to job placement.
                          overtime regulation
    Question. I have heard concerns from several Rhode Island colleges 
and universities about the potential impact the Department's proposed 
overtime rule would have on their campuses.
    Please describe the outreach effort, particularly to the higher 
education community, in crafting and seeking public comment on the 
draft regulation.
    Answer. Between March 13, 2014, when the President issued a 
Memorandum directing the Department to update the overtime regulation, 
and the issuance of the Notice of Proposed Rulemaking (NPRM), the 
Department conducted an extensive outreach program, holding more than 
two dozen listening sessions in Washington, D.C., and several other 
locations, as well as by conference call. The listening sessions were 
attended by a wide range of stakeholders: educational institutions, 
employers, business associations, non-profit organizations, employees, 
employee advocates, unions, State and local government representatives, 
tribal representatives, and small businesses. This outreach included a 
May 20, 2014, listening session with the College and University 
Professional Association for Human Resources that was attended by 
several individual universities. The Department advised stakeholders to 
submit any comments or materials that they wanted the Department to 
consider regarding this rulemaking to the official rulemaking record.
    We received comments from colleges, universities, higher education 
organizations, associations of higher education professionals, and 
individual higher education professionals in response to the NPRM. 
Coupled with feedback already received during the earlier outreach, 
these comments provided the Department with the level of insight from 
the higher education community needed to produce a quality and 
responsive regulation.
    Question. Please describe whether and how the Department is 
identifying potential unintended consequences with the proposed 
regulation and how the final rule will address them.
    Answer. We understand this question to be referring specifically to 
higher education. The Department recognizes the important contributions 
that higher education institutions of all kinds make to this country. 
We have taken a very careful look at this issue and determined that the 
impact on higher education institutions will be limited. The Department 
has also been working closely with our Federal partners at the National 
Institutes of Health (NIH) to ensure smooth implementation of the rule. 
NIH is fully supportive of the increased salary threshold for 
postdoctoral researchers, and NIH Director Dr. Francis Collins has 
announced \24\ that NIH will increase the National Research Service 
Awards (NRSA) grants (which fund many postdoctoral researchers' 
stipends) to levels at or above the new salary threshold.
---------------------------------------------------------------------------
    \24\ Https://nexus.od.nih.gov/all/2016/05/18/nih-flsa-2016/.
---------------------------------------------------------------------------
    The Department is committed to thoughtful, responsible 
implementation, and we are working on a wide range of engagement 
options, including but not limited to outreach to higher education 
institutions and organizations interested in the rule. Along with the 
publication of the rule, the Wage and Hour Division produced detailed 
Guidance for Higher Education Institutions on Paying Overtime under the 
FLSA \25\ in order to help these employers evaluate current practices, 
understand the unique provisions of the FLSA that may affect them, and 
choose the appropriate plans for implementation. We welcome hearing 
from other stakeholders in the higher education community about the 
type of technical assistance they feel would be helpful.
---------------------------------------------------------------------------
    \25\ Https://www.dol.gov/whd/overtime/final2016/highered-
guidance.pdf.
---------------------------------------------------------------------------

                          SUBCOMMITTEE RECESS

    Senator Blunt. The subcommittee stands in recess until 10 
a.m. on Thursday, April 7.
    [Whereupon, at 11:21 a.m., Thursday, March 17, the 
subcommittee was recessed, to reconvene at 10 a.m., Thursday, 
April 7.]