[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
REFORMING UNEMPLOYMENT
INSURANCE TO SUPPORT AMERICAN
WORKERS AND BUSINESSES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON WORK AND WELFARE
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JUNE 4, 2024
__________
Serial No. 118-WW08
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
57-013 WASHINGTON : 2024
COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
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SUBCOMMITTEE ON WORK AND WELFARE
DARIN LaHOOD, Illinois, Chairman
BRAD WENSTRUP, Ohio DANNY DAVIS, Illinois
MIKE CAREY, Ohio JUDY CHU, California
BLAKE MOORE, Utah GWEN MOORE, Wisconsin
MICHELLE STEEL, California DWIGHT EVANS, Pennsylvania
LLOYD SMUCKER, Pennsylvania JIMMY GOMEZ, California
ADRIAN SMITH, Nebraska
CLAUDIA TENNEY, New York
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Darin LaHood, Illinois, Chairman............................ 1
Hon. Danny Davis, Illinois, Ranking Member....................... 2
Advisory of June 4, 2024 announcing the hearing.................. V
WITNESSES
J.T. Taylor, Senior Director of Fraud, ID.me..................... 4
Beth Townsend, Executive Director, Iowa Workforce Development.... 19
Chris Stricklin, President, Dunn University...................... 31
Will Raderman, Employment Policy Analyst, Niskanen Center........ 36
Jennifer Phillips, Program Lead, Georgetown University, Beeck
Center for Social Impact + Innovation.......................... 47
MEMBER QUESTIONS FOR THE RECORD
Member Questions for the Record and Responses from Will Raderman,
Employment Policy Analyst, Niskanen Center..................... 92
Member Questions for the Record and Responses from Jennifer
Phillips, Program Lead, Georgetown University, Beeck Center for
Social Impact + Innovation..................................... 97
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 113
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REFORMING UNEMPLOYMENT INSURANCE TO
SUPPORT AMERICAN WORKERS AND
BUSINESSES
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TUESDAY, JUNE 4, 2024
House of Representatives,
Subcommittee on Work and Welfare,
Committee on Ways and Means,
Washington, DC.
The subcommittee met, pursuant to call, at 1:59 p.m. in
Room 2020, Rayburn House Office Building, Hon. Darin LaHood
[chairman of the subcommittee] presiding.
Chairman LaHOOD. Well, good afternoon, everybody. I want to
welcome everybody to our Subcommittee on Work and Welfare for
our hearing today on reforming unemployment insurance to
support American workers and businesses.
And I am grateful for the witnesses for your time and the
effort you took to be here today, and for our conversation and
dialogue that we will have for this hearing. I especially want
to thank the committee members that are here today for this
important subject.
My name is Darin LaHood, and I represent Illinois's 16th
district, covering much of the central and northern part of
Illinois.
For the purposes of today's hearing we want to learn how
Congress can help rebuild and restore confidence in the
unemployment insurance program after the turmoil of identity
theft, fraud, and claim delays during the pandemic.
GAO has estimated that between $100 and $135 billion was
lost from COVID-era UI programs to fraudsters and criminals,
foreign and domestic, deploying sophisticated schemes to divert
benefits from unemployed workers. My home state of Illinois
lost approximately $3.2 billion to fraud. This is outright
theft of valuable taxpayer dollars that were not delivered to
workers who needed them the most.
And while COVID programs have since expired, this data
exposes a number of program weaknesses that need to be
addressed. In February 2023 the Ways and Means Committee held a
hearing with witnesses from the Department of Labor, Inspector
General's Office, GAO, and the Pandemic Response Accountability
Committee. These oversight agencies testified to problems with
outdated state systems and weak online security that made the
UI program particularly vulnerable to fraud.
Last year this committee passed the Protecting Taxpayers
and Victims of Unemployment Fraud Act, which includes steps to
strengthen program integrity, recover lost funds, and prevent
future fraud. The House has since passed this legislation on a
bipartisan basis.
We know fraudsters are still attacking UI and other Federal
benefit programs, and we need to build on these efforts moving
forward. This hearing will investigate three main areas of
reform.
Number one, supporting state program integrity improvements
and technology modernization, which are vital to this process.
We will explore ways to prevent fraud by verifying identity of
UI recipients and moving away from the ``pay and chase'' model
of benefit delivery.
Second, we must focus on reemployment. The purpose of UI is
to provide a bridge between jobs. However, many workers end up
exhausting their benefits and remain out of the labor force.
According to the Department of Labor, 38 percent of UI
claimants exhausted their benefits in the first quarter of
2024. We know the longer a worker remains out of the labor
force, the harder it is to return to work. That is why I have
co-led, along with Ranking Member Danny Davis, to my left, the
BRIDGE for Workers Act, to strengthen the Reemployment Services
to Eligibility Assessments program. Our bill would offer more
flexibility to states to provide job skills training, resume
preparation, and career exploration to connect unemployed
workers to in-demand jobs more quickly. We passed this bill
unanimously out of committee last November, and I look forward
to its consideration on the House floor very soon.
Third, to improve program administration, we will examine
the administrative funding model for state UI programs which
collects but does not distribute adequate resources to states.
The Federal Unemployment Tax, pronounced FUTA, provides a
dedicated revenue stream to support state administration of the
UI program. However, these dollars are not ending up in state
agency hands to enact needed system improvements.
In fiscal year 2022 states received approximately $3.7
billion less in administrative funding than employers
collectively paid in FUTA taxes due to problems with how
dollars flow through the Unemployment Trust Fund. This process
also creates disparities in how funding is allocated across the
country. As part of making the UI program more resilient,
reforms are needed to improve this financing mechanism so
states are able to invest in long-term solutions.
Lastly, I would like to recognize my colleagues
Representative Carey, Representative Steel, and Representative
Tenney for their recent introduction of legislation to
modernize UI and support workers and small businesses. These
bills are important building blocks for us to work on reforming
this critical program for American workers.
Again, I am grateful for the witnesses before us today. I
want to thank you for being here today, and we look forward to
your testimony.
Chairman LaHOOD. With that, I am pleased to now recognize
the gentleman from Illinois, our ranking member, Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chair. And before I begin my
statement, I want to thank you for the hearing and thank the
witnesses for coming.
But I want to convey all of our best wishes to our
colleague, Dwight Evans, who could not join in person today. I
know Dwight is probably watching this hearing and formulating
questions, and we all look forward to having him back with us
in person very soon.
Unemployment insurance is an earned benefit to assist
workers who lost their jobs through no fault of their own,
helping workers pay the rent and put food on the table while
stabilizing our local and national economies. During the
pandemic, 22 million, or about one in four, American workers
received unemployment benefits. Unemployment benefits kept five
million people out of poverty and helped prevent the long, deep
recession predicted by economists. The Biden American Rescue
Plan's extended unemployment benefits and other investments
resulted in record-breaking job growth and the longest stretch
of low unemployment since the 1960s.
However, the pandemic highlighted that much work remains to
make the unemployment insurance program fair and effective.
Millions of workers spent hours or days trying to access and
complete the unemployment benefit application, and many never
succeeded. People of color, younger workers, and lower-paid
workers were disproportionately less likely to know they could
even apply.
The Government Accountability Office also notified us about
a deeply troubling and unacceptable problem among workers who
applied for benefits: White workers were more likely to receive
benefits than Black workers.
Unfortunately, problems with equitable access to
unemployment benefits preceded the pandemic, with many states
making it difficult or near impossible for workers to claim
earned unemployment benefits when they needed them. States
often justified the roadblocks as fraud prevention, but the
stark reality was that workers who were our friends and
neighbors were locked out of benefits they earned.
The good news is that both red and blue states are now hard
at work removing some of these barriers to unemployment
benefits. Ways and Means Democrats worked closely with the
Biden Administration to provide the American Rescue Plan
resources so that the states could take immediate action to
ensure that workers receive their benefits fairly and on time,
while preventing fraud.
The Department of Labor has funded 160 grants in 46 states
to ensure basic fairness to people of all ages and races in our
unemployment system. I am very proud of the good work in my
home state of Illinois, as well as around the country, and I
look forward to hearing about these efforts from Jennifer
Phillips today. The success of the equity grant shows how much
states can do with adequate resources.
But we should not confuse the effects of funding shortfalls
with the appropriate funding consequences states currently
experience when they fail to pay benefits to unemployed
workers. The ARPA equity grants were an important first step to
make sure that all workers received their earned benefits, and
these grants are an investment that should continue.
In addition, there are larger structural issues to address,
starting with giving the Department of Labor the data and tools
it needs to protect workers.
Mr. DAVIS. Thank you, Mr. Chairman, and I yield back.
Chairman LaHOOD. Thank you, Mr. Davis, for your opening
statement there.
We will now go to introduction of the witnesses and have
their five-minute presentation. I will start with introductions
from left to right.
J.T. Taylor is the senior director of fraud at ID.me from
McLean, Virginia.
Next we will have Beth Townsend as executive director of
the Iowa Workforce Development in Des Moines, Iowa.
Next we will have Chris Stricklin, who is the president of
Dunn University in Birmingham, Alabama.
We have Will Raderman, who is an employment policy analyst
at the Niskanen Center in Washington, D.C.
We have Jennifer Phillips, who is the program lead at
Georgetown University's Beeck Center for Social Impact and
Innovation in Washington, D.C.
Welcome to you all.
Mr. Taylor, I will start with you. You are recognized for
five minutes.
STATEMENT OF J.T. TAYLOR, SENIOR DIRECTOR OF FRAUD,
ID.ME
Mr. TAYLOR. Thank you, Chairman. Chair LaHood, Ranking
Member Davis, and distinguished committee members, thank you
for the opportunity to testify today on reforming unemployment
insurance to support American workers and businesses.
My name is J.T. Taylor, and I currently serve as the senior
director of fraud at ID.me. Drawing from over two decades of
public service in the United States Secret Service, the U.S.
intelligence community, and the U.S. military, I bring a
comprehensive perspective on digital fraud and cyber threats.
ID.me is a leading digital identity verification platform,
independently certified against NIST 863.3. We support over 129
million digital wallets, and help dozens of Federal and state
agencies enhance security and streamline identity verification
processes.
The COVID-19 pandemic presented unprecedented economic
challenges requiring a swift response. In March 2020 the CARES
Act was signed into law designed to deliver emergency
assistance to individuals and businesses affected by the
pandemic. However, lacking identity verification controls, this
rapid action opened the door to widespread fraud.
The GAO reported improper payments totaling $247 billion in
2022, with estimates of pandemic-related UI fraud ranging from
100 billion to 135 billion. ID.me estimates this figure closer
to be 400 billion based upon our data and insights from 27
states that we supported during that tumultuous time period.
This discrepancy highlights the persistent challenges in
accurately quantifying and combating fraud due to the
technological limitations and fraud reporting deficiencies
across the state networks.
Overall, 27 states partnered with ID.me for digital
identity verification at the height of the pandemic,
implementing IAL2 controls in their respective programs,
effectively curbing fraudulent activities and expediting claim
processing for legitimate applicants. As a result of our NIST
IAL2 solution, we have been credited by seven states for
helping to avert a staggering $273 billion in potential fraud
loss.
We were brought in, in part, because legacy methods of
identity verification that have traditionally supported public
benefit programs are no longer up to the task of both stopping
fraud and ensuring that the communities who need the programs
the most are able to access them seamlessly. The combination of
stolen personal information and generative AI enables
fraudsters to hyper-scale their fraudulent attempts.
Biometrics, including facial verification and liveness
detection, are essential in combating these threats.
ID.me's responsible use of biometrics, guided by principles
of fairness, transparency, and choice through the multiple
verification pathways ensures that identity verification
processes are both secure and inclusive. However, the
increasing sophistication of deep fakes from domestic
fraudsters to nation-state-affiliated cyber criminals makes
securing these inclusive verification pathways much more
difficult.
The Department of Homeland Security has acknowledged the
clear and present danger posed by synthetic content, which
threatens various domains, including national security and the
financial sector. Biometrics are increasingly proving to be an
effective countermeasure to deep fakes and digital injection
attacks, and ID.me believes that biometrics will need to play
an even bigger role in the protection of benefits in the
future.
Now is the right time to discuss how responsible use of
biometrics, continuous human oversight, and threat research and
monitoring will enable the government to maintain its edge in
the fight against digital fraud. Congress should work with the
executive branch to avoid any form of blanket bans or
restrictions on their use, and advance guidelines for
responsible deployment of biometrics.
The integrity of our national services and benefit programs
hinges significantly on the robustness of our identity
verification processes. My recommendations on strengthening
these mechanisms are as follows: number one, adherence to NIST
guidance on identity verification; number two, opt for NIST
Identity Assurance level 2; and number three, establish
uniformity in data retention and the statute of limitations for
prosecutorial support.
Additionally, legislative efforts like Protecting Taxpayers
and Victims of Unemployment Fraud Act should be commended and
advanced as soon as possible. The longer we wait to act, the
harder it will be to recover what stolen dollars we can
mitigate and the newest evolutions of fraud we are starting to
see.
Key provisions like extending the statute of limitations
for criminal charges and civil actions for prosecuting fraud
from five to ten years, and incentivizing states by allowing
them to retain a percentage of the recovered overpayments of
unemployment benefits and reinvesting these dollars into
program integrity and fraud prevention are crucial. By allowing
recovered funds to be utilized to modernize state systems for
verifying identity and income, states can further enhance their
fraud prevention measures, ensuring UI claims are cross-
verified against the National Directory of New Hires and the
State Information Data Exchange System.
It is also important, however, to underscore that states
have been--effectively demonstrated, when given choice, they
can efficiently leverage the competitive identity verification
marketplace developed around the NIST I02 guidelines. Just as
Congress added the identity verification requirement under
section 242 of the Continued Assistance Act to improve
integrity of the Pandemic Unemployment Assistance Program,
Congress should also consider further steps to add identity
verification to traditional UI and subsequent UI programs.
Recovery and resilience extend beyond strict measures. They
require fostering competitive innovation where technology can
thrive to recover stolen funds and prevent future losses. This
effort must include continuous dialogue and cooperation between
private sector and government entities.
As we tackle these challenges and work to ensure solvency
and crucial public benefit programs like UI, we owe it to the
American taxpayer to implement forward-thinking strategies and
robust infrastructures that ensure accessibility, security, and
privacy.
Thank you again for the opportunity to discuss these
crucial issues.
[The statement of Mr. Taylor follows:]
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Chairman LaHOOD. Thank you, Mr. Taylor, and thanks for your
prior service to the country. We will next move to Ms.
Townsend.
You are recognized for five minutes.
STATEMENT OF BETH TOWNSEND, EXECUTIVE DIRECTOR,
IOWA WORKFORCE DEVELOPMENT
Ms. TOWNSEND. Thank you, Chairman LaHood and Ranking Member
Davis and other members of the committee for the opportunity to
speak to you today about Iowa's Reemployment Case Management
program and our efforts to help Iowans find reemployment at the
earliest possible moment.
I am Beth Townsend and, as the director of Iowa Workforce
Development since 2015, I am here to talk about the value in
providing intensive, one-on-one support and innovative
resources as soon as someone files for unemployment.
Iowa has seen significant and consistent value in
overhauling our approach to helping Iowans find jobs. Iowa
Workforce Development is the centerpiece of workforce
information programing and solutions in Iowa. We are the agency
responsible for administering the unemployment insurance
program, implementing all Federal workforce services programs,
including 15 American job centers located throughout the state.
Iowa, like every state, depends on our employers to move
our economy forward. But real, long-term growth requires a
workforce that is stable as well as sufficient. We want people
to feel fulfilled where they work, which helps decrease the
churn in the labor force that has been so common since the
pandemic. That is why Iowa Workforce Development focuses on
helping its customers find rewarding careers, rather than jobs.
This is the path that benefits our entire state the most, when
both workers and employers grow together.
Nothing is a better illustration of Iowa's innovative
efforts to grow and develop its workforce than the Reemployment
Case Management program, also known as RCM, which was created
in 2021 in response to the workforce shortage caused by the
pandemic. Our path to creating the Reemployment Case Management
program began in 2020, when the COVID-19 pandemic created
unprecedented joblessness and overwhelmed unemployment systems
throughout the nation.
One step Governor Reynolds took in an effort to get more
Iowans back into the workforce and ease the challenge employers
were facing in June of 2021 was to end Iowa's participation in
Federal unemployment programs early. Her actions removed the
disincentive that the generous pandemic benefits had created
for some Iowans to continue to sit on the sidelines.
Additionally, in October 2021, Governor Reynolds announced
a shift in the mission of Iowa Workforce Development. Our
agency's new and overriding policy priority would be to get
those jobless Iowans to the other side of the unemployment as
quickly as possible. This unemployment--or this simple yet
profound change revolved around returning unemployment to its
original purposes: serving as a short-term bridge between
careers, rather than as a means of long-term support.
It is important to understand that the RCM was not created
to eliminate or lessen unemployment benefits. Instead, our goal
was to reduce the need for benefits by helping the unemployed
find work quickly.
Our Reemployment Case Management program is built on two
things: strengthening the incentives that encourage the
unemployed to aggressively search for work, and providing more
assistance earlier in the process to increase the odds of their
success. To do this we decided to implement a modified and
supplementary version of the Federal RESEA program.
As you know, RESEA programs have been part of unemployment
in the United States for more than a decade. Iowa has operated
a version of RESEA since 2015, but under the terms of the
federally-funded program which require waiting until claimants
receive unemployment benefit payments and are notified about
RESEA, career planners were not meeting with unemployment
claimants at the earliest until roughly the fifth week after an
initial claim was filed.
Given the increased demand for workers created by COVID-19,
as well as workers' increased need for job search assistance,
we deemed that delay to be too long. Instead, RCM was created
to be a new, state-funded program that would supplement the
Federal version, meeting with unemployment claimants from the
week after their initial claims were filed.
Unemployment claimants in Iowa now are contacted about RCM
during the first week after they file for benefits. Career
planners schedule one-on-one appointments and immediately
assign claimants to several virtual workshops on topics of how
to navigate the computer system for reporting work search, how
to build a successful resume, and how to interview for a job.
Career planners continue to have regular one-on-one employments
with claimants to review job search results and assign
reemployment activities.
Once the claimant becomes eligible for RESEA, the program
takes over the one-on-one appointments and monitoring. The
claimant continues to receive these services until he or she is
reemployed. If anyone exhausts 50 percent of their eligible
benefit weeks, we shift him or her to more intensive services.
Because of the RCM program, we have seen a reduction of 30
percent--of over 30 percent in the amount of duration of
unemployment benefits, and we have saved approximately $250
million in unemployment benefits in the last two years, paid
out, which results in a reduction in unemployment taxes to our
employers. Through this program we have been very successful in
helping Iowans get back to work faster and helping Iowa
employers find the workforce that they need. Thank you.
[The statement of Ms. Townsend follows:]
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Chairman LaHOOD. Thank you, Ms. Townsend. I also want to
thank you for your prior service in the Air Force.
With that we will next recognize President Stricklin for
five minutes.
STATEMENT OF CHRIS STRICKLIN, PRESIDENT, DUNN
UNIVERSITY
Mr. STRICKLIN. Good afternoon, Chairman LaHood, Ranking
Member Davis, and distinguished members of the subcommittee. On
behalf of the Alabama Workforce Council, I am Chris Stricklin,
a retired Air Force colonel with an encore career in the
construction industry at Dunn Companies in Birmingham, Alabama.
Thank you for the opportunity to speak on our belief the
answer to reducing the number of people on unemployment
insurance, as well as increasing labor force participation and
getting people back to work, lies in revolutionizing our
workforce, both removing obstacles to entry and improving the
opportunity to earn a livable wage while on a career
progression pathway. This requires teamwork and an all-hands-
on-deck approach with business, government, and education
leaders to create multiple pathways for individuals to receive
the education or skills needed to be successful and remain
employed.
Our team of industry partners, the State of Alabama, the
Department of Labor, and our workforce councils simultaneously
focus on training those searching for employment for the first
time, upskilling those yearning for advancement, and retraining
those on unemployment. To be successful we must ask ourselves,
what leads people to need unemployment compensation?
Our group of leaders began efforts with the belief that
workforce issues in UI could not be solved by merely putting a
hammer in someone's hand. Instead, we must capture their hearts
and their minds, and inspire motivation in both our industries
and in their futures. This is not a labor crisis; it is an
issue of finding one's personal identity and purpose.
Our efforts initially targeted areas with some of the
highest unemployment and least skilled population. The training
model delivered awareness of job options in different
specialties so one could find what interested them, then reduce
barriers to entry. Training is provided at reduced cost,
designed to be accomplished quickly, and focused on one simple
task: train the first two weeks on the job. This delivers a
measure by which to guide course development while delivering
to industry partners an individual who understand safety and
basic operation. This translates to employers with a reduction
in on-the-job training, improved safety outcomes, and increased
retention.
Through our efforts we enabled unskilled, under-skilled,
and unemployed individuals the ability to obtain skill
certifications which follows for their entire career. We are
now reaching a previously untapped or underserved pool of
motivated individuals and enabling their career pathways, not
merely jobs.
Our model of certification is hybrid, in which an
individual takes theory portion of the class online, on demand,
and on their schedule, then transitions to an in-person lab for
the last part of the hands-on. Through this effort, over 3,000
Alabamians have earned credentials to date, and the training
has extended to other industries including food and beverage,
hotel operations, meat cutter, and mental health worker.
Along the same motivation, courses have been conducted in
our prisons to reduce recidivism and build a positive future
for parolees, specifically developing a commercial driver's
license program which has graduated 78 parolee students to
date.
Our next innovation is occurring this month at Dovetail
Landing, with a focus on veterans reentering the workforce
after their military service with the Reverse Boot Camp.
Alabama has developed a comprehensive approach to
decreasing the need for unemployment compensation while
increasing the labor force participation and post-secondary
attainment rates by concurrently developing new modalities of
training that integrate supportive services, work-based
learning, enhanced career navigation, and short cycle training
programs to allow individuals facing benefits cliffs to persist
in training and the workforce. By unbundling and modernizing
degrees, Alabama is providing multiple points of entry and exit
for Alabamians to enter training and the subsequent workforce.
What I am most excited about with regard to reducing
unemployment is Governor Kay Ivey's December 23 launch of the
Alabama Talent Triad as the nation's first full-scale talent
marketplace to connect education and training providers,
students and job seekers, and employers based on a direct
skills match. In March this year Alabama State Workforce
Development Board adopted a policy to require the Alabama
Talent Triad to be used for the Workforce Innovation and
Opportunity Act training program intake process.
Where this best impacts our conversation today will be a
policy to be adopted shortly, which would enable unemployment
insurance claimants to apply for all available and suitable
employment using the triad. This will allow the state to
instantly verify work search requirements. Rather than the
traditional three applications per week, Alabamians will now be
able to apply for all jobs, potentially hundreds, with the
click of one button, and this will be a required first step of
signing up for unemployment.
In closing, we are a state working together for a better
tomorrow for our individuals, our companies, our industries,
our communities, our state, and our nation. Together this will
revolutionize our social dialogue and develop career routes
with progression pathways, especially for those who may have
fallen behind.
Thank you for the opportunity to sit before you today and
explain why we truly believe Alabama is number one in the
nation for workforce innovation.
[The statement of Mr. Stricklin follows:]
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Chairman LaHOOD. Thank you, President Stricklin, for that,
and we are grateful for your service.
Mr. STRICKLIN. Thank you.
Chairman LaHOOD. We will next recognize Mr. Raderman for
five minutes.
You are now recognized.
STATEMENT OF WILL RADERMAN, EMPLOYMENT POLICY
ANALYST, NISKANEN CENTER
Mr. RADERMAN. Chairman LaHood, Ranking Member Davis, and
members of the committee, thank you for inviting me here today
and for holding a hearing on how to better administer
unemployment benefits.
My name is Will Raderman, and I am an employment analyst at
the Niskanen Center, a non-partisan think tank founded in 2015.
We have been privileged to support this committee's work, most
recently with the Tax Relief for American Families and Workers
Act. Our central economic philosophy is that strong free
markets and robust social policies together provide the
foundation for a free and fair society.
Unfortunately, programs meant to complement our dynamic
economy and keep families stable following job loss are falling
short. This includes recurring performance issues with the
state unemployment insurance systems. My testimony will touch
on three related points.
One is that Federal funding sent to state UI agencies for
administration has been eroded by inflation and fluctuates year
to year, making it difficult to develop strategic, long-term
investments.
Two, substantial amounts of tax revenue raised specifically
for program administration is not ending up in state agency
accounts to fund upgrades.
And three, Congress should reform the financing process so
that state agencies have the resources needed to maintain
program integrity.
Early on in the COVID pandemic, it became clear that UI
agencies were not equipped to handle the surge of claims.
Although the agencies received an influx of additional funding
to help manage the situation, years worth of necessary
improvements could not be implemented overnight. Many
legitimate applicants were forced to wait months before
receiving their benefits, while criminals stole up to $135
billion, according to GAO estimates.
The magnitude of the fraud was unprecedented. However, the
administrative shortcomings were not. Past emergencies like
Hurricane Katrina exposed many of the same system gaps that
were exploited at a far more costly scale during COVID. Similar
types of malfunctions will repeat themselves without changes to
the administrative financing process so that state agencies can
steadily invest in program modernization. One-off funds are not
a substitute.
Each year Congress provides state agencies with the base
allocation to fund program administration, which they must try
to plan around, but those allocations are not reliable. Since
2007 the value of the base allocation sent out to states has
declined by $900 million when adjusting for inflation, a 27
percent decline. Every agency is worse off as a result.
State space funding is also volatile. Less funding is
released during stronger economic years, when fewer claims are
projected. The result is that UI agencies get fewer resources
when they have the most opportunity to focus on system updates.
To make matters worse, the approved funding is divided up
differently each year through a distributional resource
justification model. This formula causes states' allocations to
fluctuate over time, and tends to shortchange agencies
struggling the most to process benefit claims. In particular,
this formula contributes to significant regional disparities
that hurt central and southern states. Their agencies can
receive half as many dollars per working-age resident as the
best-funded ones.
Part of the problem is that we are leaving hundreds of
millions of dollars of revenue already raised annually for the
purpose of UI administration on the sideline. Eighty percent of
the funding raised through the Federal unemployment tax is kept
in a Federal account to fund program administration, while 20
percent is automatically directed to an emergency benefits
account. Yet agencies are not given full access to the 80
percent of funds intended for program administration, due to
congressional appropriations and complex trust fund rules.
The spare revenue could be used by state UI agencies to
improve their systems, but it is rarely made available for that
purpose. Instead, a strict account law frequently causes unused
funds in the administrative account to be diverted to the
emergency benefits account, including more than $4.5 billion in
the five years leading up to the pandemic. A better use of
those funds would have been to allow UI agencies to upgrade
their institutional capacity.
To counter these issues, we advise Congress to pursue
reforms to establish a stronger connection between what is
raised for program administration and what goes back to the UI
agencies, and to ensure that agencies receive steadier,
inflation-adjusted allocations over time.
In conclusion, administrative financing fixes are necessary
to maximize agency performance and integrity.
Chairman LaHood, Ranking Member Davis, and members of the
committee, thank you again for the opportunity to testify
today. I look forward to hearing your questions.
[The statement of Mr. Raderman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LaHOOD. Thank you, Mr. Raderman. We will now
recognize our last witness, Ms. Phillips.
You are recognized for five minutes.
STATEMENT OF JENNIFER PHILLIPS, PROGRAM LEAD,
GEORGETOWN UNIVERSITY, BEECK CENTER FOR SOCIAL IM-
PACT
Ms. PHILLIPS. Thank you, Chairman LaHood, Ranking Member
Davis, and distinguished members of the subcommittee, for the
opportunity to testify today. It is my honor to share insights
about how state unemployment insurance agencies are helping
historically disenfranchized workers access UI benefits, and
how simplifying and improving access for all workers actually
boosts UI system integrity.
I work for the Beeck Center for Social Impact + Innovation
at Georgetown University, and we focus on best-in-class digital
service delivery solutions to ensure access to public benefits.
And previously I proudly worked for the Illinois Department of
Employment Security as the assistant deputy director for
service delivery.
Unemployment insurance is an economic first responder
program. It safeguards eligible workers from financial crises
when they lose a job, and it helps stabilize the economy.
Eligible workers can and should expect it will work for them
when they need it. And Michigan's mission statement really says
it all: UI should be fast, fair, and fraud free.
Pandemic claim volume, combined with years of declining
investment in state technology, brutally exposed foundational
cracks in aging systems, and millions of eligible American
workers struggled to obtain UI benefits. Research shows that
many were historically disenfranchized workers who were less
educated, younger, and from racial and ethnic groups.
Equitable access means that any eligible worker should be
able to effectively and efficiently obtain and--apply and
obtain for benefits that they are entitled to without facing
undue burdens or barriers. McKinsey Research finds that when a
person's experience utilizing state services meets or exceeds
expectations, it can boost trust in government, improve morale
among civil servants, and lower government agency costs.
U.S. DoL has awarded nearly $800 million for ARPA UI
modernization to help achieve three congressionally-mandated,
mutually reinforcing goals of preventing and detecting fraud,
increasing benefit timeliness, and expanding equitable access
to UI. These innovation-focused grants offer an unprecedented
opportunity to modernize UI. And as a former state UI
administrator, I thank you, and I want you to know that UI
leaders across the country are hard at work meeting those
goals.
State innovation will shine a light on what works and what
does not. That plus U.S. DoL's recent Building Resiliency
recommendations will create a roadmap for the reforms that are
most needed. In my written testimony I outline ten UI access
challenges and corresponding solutions that U.S. DoL and states
are working on, and I will highlight five now.
[Slide]
Ms. PHILLIPS. In Illinois we created an acronym for the
first three: PLATE, Plain Language, Accessibility, and
Translation for Equity. PLATE encourages thinking about
claimant diversity, like for someone who reads at a fifth grade
level, or is blind, or is deaf, or whose first language is not
English. States like New Jersey--and that is up on the screen--
took complicated UI correspondence and made it easy to
understand, with actionable steps for claimants. They also
created a how-to toolkit to share with other states like
Illinois.
Fourth, it is critically important to develop technology
solutions that build in iterative feedback loops via user
research. We need to build, test, improve, launch in phases,
and keep improving. Illinois plans to update its UI application
and online claimant portal. To better understand user pain
points, Illinois partnered with U.S. DoL to analyze over
270,000 claimant survey responses. We conducted live claim
filing observational research, and we analyzed data about where
people abandon in the application process. States are improving
their ability to conduct this type of customer experience and
usability research, ensuring that new technology works for
unemployed workers, especially those historically marginalized.
Lastly, another key challenge is website navigation and how
to apply for UI. States like Michigan, working with human-
centered non-profit Civilla, have created a step-by-step
claimant roadmap on their website. They offer weekly claim-
filing help sessions, and launched a Community Connect program
with regional liaisons to help when needed. State outreach
efforts that increase human interaction also help confirm that
claimants are legitimate filers.
States have pivoted from the crush of the pandemic to now
pioneering and implementing innovative solutions that increase
equitable access to UI. My written testimony has more than 25
examples of that state ingenuity that improve access and can
also drive down non-fraud improper payments. To keep this
momentum, states need flexibility and continued funding. They
need ways to accelerate the work by collaborating. And
organizations like the Beeck Center and others, supported by
private philanthropy, help convene, connect, and catalyze this
change.
States need champions. States need Congress to champion
additional technology modernization and customer experience
improvements to restore faith that when an eligible American
worker loses their job, UI will work for them fast, fair, and
fraud-free.
It was an honor to testify to the committee today, and I
welcome your questions. Thank you.
[The statement of Ms. Phillips follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman LaHOOD. Thank you, Ms. Phillips, and that
concludes our formal testimony today. We will now move to the
question-and-answer period, and I will recognize myself for
questions.
[Chart]
Chairman LaHOOD. Mr. Raderman, I am going to start with
you. For years, states have said there is inadequate
administrative funding available for making needed improvements
to their UI technology and benefit systems. As the chart behind
me shows--and I think is up on the monitoring screens here--
outside economic downturns such as the Great Recession of 2008
and COVID-19, states routinely receive less than half of
Federal tax revenues paid by employers to administer the UI
program. In fact, prior to the pandemic, when the economy was
strong, states received about 40 percent of what employers paid
in.
It is clear that substantial amounts of tax revenue raised
specifically for UI administration is not ending up in the
state agency hands to enact needed system improvements. So, Mr.
Raderman, can you explain some of the challenges this
administrative financing mechanism creates, and what can be
done to improve it?
Mr. RADERMAN. Thank you for the question, Chairman LaHood.
So the current financing mechanism is causing states to
manage their programs with bare bones resources and with little
to no guaranteed funding each year to actually focus on system
improvements. The result of that is a lot of the problems that
you see during COVID we are seeing in past crises like
Hurricane Katrina, as well, because the financing system is not
in a good place to actually let states proactively address
those problems over time.
In order to actually improve the system there needs to be a
stronger connection between what is being raised for program
administration and what is being returned to states each year.
Chairman LaHOOD. And what is your recommendation on
improving that connection from a public policy standpoint?
Mr. RADERMAN. There is going to be kind of two points in
time that I think--or two points of access that need to be
changed. One is the actual appropriations. It needs to be that
all of the dollars being raised are being approved. But there
is also the issue that some of the Federal accounts that manage
the dollars end up diverting funds away from program
administration when that balance for the administrative account
exceeds a pretty low value.
So making sure those funds are actually going back to
states is crucial, as well.
Chairman LaHOOD. And what you just mentioned there, is it
your recommendation that it be codified into law?
Mr. RADERMAN. Currently, there is a statutory provision
that is diverting funds away from the administrative account.
And our view at the Niskanen Center is to change that so those
funds stay for program administration.
Chairman LaHOOD. Thank you for that. I am going to turn
next to Ms. Townsend.
In your testimony you state that unemployment claimants in
the State of Iowa are contacted about the state's reemployment
case management program when they first file for benefits so
claimants can quickly begin developing skills to successfully
navigate a pathway back into the labor force.
As I referenced in my opening, our BRIDGE for Workers Act,
which gives states additional flexibility to provide
reemployment support to any individual receiving benefits as
long as the state believes these services would help them
return to work more quickly.
Ms. Townsend, can you talk more about the return on
investment that reemployment services provide, and how that
relates to rebuilding our labor force, particularly looking at
the success you have had in Iowa?
Ms. TOWNSEND. Thank you for that question.
So since the inception of the program we have spent
approximately $4 million on our Reemployment Case Management,
and that pays for 18 caseworkers and a manager. It also pays
for some computer upgrades so that we were able to better track
individual efforts in terms of their work search activities,
and also manage their cases better.
Of the $4 million, we anticipate that by the end of 2024 we
will have saved $400 million in unemployment benefits. So it is
about a 1-to-100 return so far. Just to give you an idea, in
2019, the year before the pandemic, Iowa paid out roughly $388
million in unemployment benefits. Once the Reemployment Case
Management system went into effect, we paid $253 million in
2022 and $260 million in 2023, and we expect to--or anticipate
paying a similar amount.
But one of the things that I would also point out is the
value that individuals receive in getting that one-on-one
assistance. I receive daily success stories from individuals
who, when they lose their job, they are frustrated, they are
hopeless, they are anxious, and they are not sure where they
are going to go. And having that person in their corner to say,
you can do this, you can do more. Let's apply for that job that
maybe you didn't think you had the experience for, and let's
get your resume and interview skills up to par to get those.
So we are helping Iowans get jobs that are beyond what they
expected to get. They are getting really good-paying jobs, and
they are getting those careers that, like I talked about in my
opening statement, they are going to stay with, and they are
going to continue to benefit the employer that they have come
to in their next act.
Chairman LaHOOD. Thank you for that. And, Ms. Townsend,
have you found that other states have tried to model or look at
your program as a success in what they do?
Ms. TOWNSEND. We have received inquiries from other states
about how we are doing it. I think it is probably a funding
issue. We are--Governor Reynolds gave us ARP dollars to fund
the program, and that is what we have been--we will use until
2026, at which point we will ask the legislature for funding if
we don't have any additional Federal funding.
Chairman LaHOOD. Thank you for that.
Mr. Taylor, I will turn to you now. An April report from
the GAO analyzed data from 2018 to 2022 that showed the federal
government's losses were an estimated $233 to $521 billion
annually to fraud, a substantial portion from the unemployment
insurance program. I think you referenced that in your
statement.
Mr. Taylor, can you describe the current trends your
company has noticed in relation to UI fraud, and what can be
done to strengthen program integrity for the unemployment
program?
Mr. TAYLOR. Thank you, Chair LaHood. I would offer that--
when ID.me was initially retained by the 27 states in my
opening testimony, what we found was an outdated system, a
legacy system built around what is known as knowledge-based
answers, things like looking at a credit report to see what
type of car you drove whenever you were in college or high
school. This was an outdated policy.
Whenever we went into those 27 states, fraud rates went
down, accessibility went up. Today the threats that we are
facing to specifically unemployment are--have risen to a
critical infrastructure level, primarily driven by nation-state
involvement, where they are attacking a number of states. This
includes the country of China, it also includes the country of
Nigeria, predominantly.
So fraud has evolved. Yet the controls that we have put in
place have not evolved at the vast majority of states and
institutions. ID.me has seen great gains specifically around
the IAL2. But even today, we enhance the IAL2 NIST policy by
adding in the machine learning aspects. What we have found is
that you have to fight AI with AI.
And the stolen identities are already out there. Now there
is a hyperscaling that is taking place within these criminal
networks. As an agent on the front lines of this back in 2020,
you would get a phone call and it would be maybe a person that
suffered one instance of identity theft. Whenever I came to
work at ID.me, we verify 60,000 to 70,000 identities per day.
We have a receptacle, we have an email box where you can email
in to our team and see if you are under threat of identity
theft. And the scale that we see today is a direct result of
this hyperscaling of fraud controls.
So what I am seeing today is that not only are the outdated
aspects of identity verification need to be replaced by at
least IAL2, but at the same time fraud is evolving quicker than
our policies, and we need to account for that.
Chairman LaHOOD. Thank you for that, Mr. Taylor. Those
conclude my questions.
I will next turn to Ranking Member Davis for your
questions.
Mr. DAVIS. Thank you, Mr. Chairman, and thank you to all of
our witnesses.
Ms. Phillips, thank you for testifying today and for the
important work you did on behalf of Illinois workers.
One of the things we fought to do in the American Rescue
Plan was invest in equity, and specifically in race equity in
the unemployment program. What are some of the long-term
benefits for children and communities when workers who are
historically left out are able to access their earned benefits?
Ms. PHILLIPS. Thank you, Ranking Member Davis, for that
question. I have four points to answer that question.
One, financial stability is incredibly important. Losing a
job is stressful, it has devastating consequences. Sixty-four
percent of Americans live paycheck to paycheck right now. If
you cannot find a job immediately or get UI benefits that you--
assuming you may be eligible, families may not be able to pay
bills, rent, and other expenses. My written testimony offers
citations on numerous research studies that show how financial
stability is a gateway for better child outcomes, emotional and
educational success for both parents and children, and
reattachment to the labor market.
Financial instability can be a disrupting force, like
having to move to a different school district because you don't
have enough money to pay rent. And parents--research is very
clear on parents' unemployment that can also have long-term
effects on children's lifelong earnings.
The third point is that there is well-documented and well-
researched evidence that shows the mental health and the stress
impacts that unemployed people face. I cite research in the
testimony about that hardship, about anxiety and depression
that unemployed workers face that also affects children.
And finally, the fourth point is that local economies lose
when they--they lose when eligible workers can't get UI, when
people have less income and those dollars are not circulating
into those local economies.
The research also is very clear, and there is numerous
studies cited in my testimony about how unemployment has
extreme disparities for people of color, namely African
American and Hispanic families.
Mr. DAVIS. Thank you. Can you tell us more about why
ensuring equitable access makes unemployment insurance more
effective as a tool for preventing recession or making economic
downturns shorter and less bad?
Ms. PHILLIPS. I also cite research in my testimony that
shows the return on investment for the unemployment insurance
program is $1.2 to every dollar spent. There is evidence in my
testimony that cites a Harvard research project that shows the
importance of UI as an economic stabilizer, demonstrating that
states that have more generous unemployment insurance benefits
actually significantly lessen the volatility of local economic
fluctuations. Having workers have financial stability is good
for local economies, and the lack of UI access that happens
during financial economic downturns when people cannot access
UI and cannot get reemployed right away sets communities of
color back economically.
Mr. DAVIS. Ms. Phillips, can you tell us more about what
data we collect currently to measure fairness in the UI system,
and what additional data we might need to hold states fully
accountable?
Ms. PHILLIPS. Thank you for that question.
Currently, I will cite two examples of where there is data
collected that has really robust demographic information.
Right now the U.S. DoL requires states to report on
recipiency rates. That has strong demographic information. But
I will say that any new reform that can allow for greater
disaggregation of data will help states--will help Congress
hold states accountable. One example that I cite in my
testimony is the ETA 227 report. That is the overpayment report
that states report on--to U.S. DoL quarterly. Within that
report there is a section on non-fraud improper payments.
In my testimony I cite that just in last--in 2023 in
Illinois, the percentage of non-fraud improper payments was
actually higher than the fraud improper payments. And we have
no demographic disaggregated data to show, like, what is
happening with those non-fraud improper payments. They are
this--they are--they can be claimant error, state agency error,
employer error. But we don't know anything about anything
deeper than that.
And then finally, I would just like to say, like, in terms
of recommendations for what states could collect in the future,
Illinois is using its equity grant to look at likelihood to
file. One of the equitable access to UI issues is not just what
happens when someone actually has applied and is on the journey
to reemployment, but we know virtually nothing about people who
don't make it to the front door who are potentially eligible.
One of the things that Illinois is doing with the equity--
the ARPA equity grant is looking at when employers file a WARN
notice, and figuring out if we can find out why people choose
to apply or not apply to UI.
And finally, states could be collecting customer experience
data. They could be collecting survey information like we did
in Illinois that asks claimants about their levels of trust,
satisfaction, timeliness, and ease with the application
process.
Mr. DAVIS. Thank you----
Ms. PHILLIPS. Thank you.
Mr. DAVIS [continuing]. Mr. Chairman, for your indulgence,
and I yield back.
Chairman LaHOOD. Thank you, Mr. Davis. We will now
recognize Mr. Carey of Ohio.
Mr. CAREY. First I want to thank the chairman for having
the hearing, and I want to join the ranking member in wishing
our colleague, Mr. Evans--we can't wait to have you back up
here with us.
I also want to thank the witnesses for being here to
discuss these much-needed reforms to unemployment insurance
program--or UI from now on.
Today, alongside my colleague, Representative Greg Landsman
from Cincinnati, I am proud to introduce the New Opportunities
for Business Ownership and Self-Sufficiency, or as we call it,
NO BOSS Act. This legislation intends to support individuals
pursuing small business ownership by improving the currently
under-utilized Self-Employment Assistance Program within the UI
program. Our legislation aims to make state participation less
burdensome and to encourage greater engagement in the SEAP
program.
[Chart]
Mr. CAREY. Mr. Chairman, currently the Federal Unemployment
Tax, or FUTA, tax is paid versus revenue received by states
whose fraud UI administration is unequal across the states. You
can see from the chart behind me.
The disparity is most pronounced in the Midwest, where I
come from, in Ohio, the south, southwest, according to your own
calculations. In Fiscal Year 2022, according to the Department
of Labor, FUTA receipts versus amounts returned data, Ohio
employers paid an estimated $229 million in FUTA taxes, and
Ohio received $105 million in administrative grants from DoL,
which is--if you do the math, it is only about 46 percent of
the taxes paid.
So as you can see, Ohio kind of is getting the short end of
the stick here on the UA administration funding versus taxes
paid by its employers. Funding that could be used to
potentially administrate programs like the Self-Employment
Assistance Program, or SEAP, which my bill, the NO BOSS Act,
gives states more flexibility to administer.
Can you explain a little bit why this disparity is so
pronounced in these areas?
Mr. RADERMAN. Thank you for the question, Representative.
So the way that the dollars for program administration get
distributed, it is through a resource justification model,
the--kind of the main points of emphasis in terms of how it
gets divided up between the states, it includes both program
efficiency and processing, the various basic workload, and then
how accessible the program is. So is there going to be a higher
workload in the state?
And so the states that--or the agencies that are having the
most issues with either efficiency or accessibility, they end
up getting penalized the most when it comes time to actually
distributing the dollars. And a better approach would make--
would be to make sure that all the states were getting a much
more stable amount, making sure that it was based more on the
working population that was overseen, rather than the claims
levels itself.
Mr. CAREY. Okay, thank you. This committee has done
important work to address fraud and overpayments of the UI
benefits, including the House-passed Protecting Taxpayers and
Victims of Unemployment Fraud Act, which was mentioned earlier
today.
States like Ohio are making investments in fraud recovery
and prevention efforts. And as they continue to recover these
fraudulent payments, we should be working to incentivize their
investments in these efforts. So back to you, sir. What
thoughts do you have on policy recommendations that would
incentivize states to pursue fraud recovery work?
Mr. RADERMAN. Thank you for the question, Representative.
A number of the proposals that have been put forward do
include incentives that provide states a percentage of the
funds that are reclaimed. I know that there has been proposals
to allow the OIG to pursue fraud for a longer period of time,
making sure that that fraud--those fraud dollars end up going
back to the States. It makes sense to us.
But I think making sure that the state agencies have more
robust funding moving forward so all the dollars that are being
raised specifically for administration, ensuring that they go
back to the states and that some of the losses due to inflation
over the past several decades get undone, those are both
important measures to put them in a better financial position.
Mr. CAREY. Again, I want to thank the witnesses, and I want
to thank the chairman and the ranking member for having this
hearing. And with that I yield back.
Chairman LaHOOD. Thank you, Mr. Carey. I will now recognize
Mrs. Steel.
Mrs. STEEL. Thank you, Mr. Chairman LaHood, for holding
this hearing. And thank you, all the witnesses for coming out.
Recently, Chairman Smith and I sent a letter to Acting
Secretary Su asking for all details of any attempt of her to
forgive or write off fraudulent unemployment insurance payments
issued by California or any other state. I would love to submit
this letter for the record, Mr. Chairman.
[Pause.]
Chairman LaHOOD. Yes, I am sorry, yes. [Laughter.]
So ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. STEEL. We are still awaiting a response from the
Department, and I want to submit another record of recent L.A.
Times article titled, ``Job Growth in California Falls Back,
Unemployment Rate Remains Highest in the Country.''
Chairman LaHOOD. Without objection.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. STEEL. Thank you.
Inflation, record high cost, and heavy state regulations
are killing small businesses across the state.
Before I ask Mr. Taylor for the questions, and I want to
ask Ms. Phillips that--you just mentioned while you are
speaking that non-fraud proper overpayment is more than
fraudulent payments?
Ms. PHILLIPS. Thank you, Representative Steel. So, yes, the
U.S. Department of Labor requires all states on a quarterly
basis to file the ETA 227 report, it is the improper
overpayment report. And I am going to just make sure I have the
exact number here.
So in 2023, 62 percent of Illinois's total overpayments
were considered non-fraud, improper payments. And of that 62
percent of non-fraud, improper payments, 57 percent were
attributable to a claimant error made somewhere along the
process.
Mrs. STEEL. So it was Illinois, but not for the national
average.
Ms. PHILLIPS. Yes, I have not done----
Mrs. STEEL. Yes, because we had this hearing with Acting
Secretary Su regarding this, and she said that fraudulent
payments by the law that you cannot really forgive because she
wanted to forgive this loan that fraudulent payments went out
in California. Out of $135 billion, $30 billion happened in
California. It is over 22 percent. So that is actually under
her watch, because she was labor secretary in California. She
was the one who created it. Now she wants to forgive that. That
is taxpayers' money, and it should not go to that. So that is
why I was asking.
I asked the same questions that she couldn't give me any
numbers for. So she was hiding something or, you know, you gave
me some numbers because she said she doesn't know the numbers
nationally, that during the COVID that this UI went out--the
payments went out, and then how much was overpayment or how
much was fraudulent payments.
Ms. PHILLIPS. And Representative Steel, I should amend my
comment that the data, the ETA 227 data, is regular UI. It does
not include the CARES Act program.
Mrs. STEEL. So it has nothing to do with the CARES Act,
so----
Ms. PHILLIPS. Doesn't have the CARES Act.
Mrs. STEEL. So thank you.
Ms. PHILLIPS. Yes.
Mrs. STEEL. Thank you very much for clearing that up.
According to the Pandemic Response Accountability
Committee, California estimated it sent $800 million in
pandemic unemployment benefits to the 45,000 prisoners.
Improper payments to prisoners, scammers, and international
gangs are part of the reason California has a Federal
unemployment insurance loan balance to the Federal Government
of $18.3 billion. If it is not going to be paid, then guess
what happens? Employers have to pay a much higher rate.
Some estimates show California Employment Development
Department distributed approximately 30 billion, as I just
mentioned, during the pandemic. So, Mr. Taylor, in your
opinion, why was California the epicenter for UI fraud during
the pandemic?
Mr. TAYLOR. Thank you, Representative Steel. Let me offer
that prior to implementing ID.me, and right around October
2020, California was experiencing a landslide of fraud at the
time. Coming out of the governor's office and post the ID.me
integration, whenever we implemented the IAL2 controls in
there, reporting out of the governor's office put it right at
$125 billion in fraud savings that ID.me saved the State of
California. Subsequently, California has moved away from the
IAL2 standard, and now you are starting to see those fraud
rates that you are alluding to.
As far as the why, it is going back to an old data broker
model that I referenced in my testimony, where you are asking
for PII that is quite literally available for cents on the
dollar on the dark web.
Mrs. STEEL. Thank you very much, because I want to make
very clear about that, because when Julie Su was Labor
Secretary, she actually mentioned that, you know what, they are
not up to date with how they are going to make proper payments.
I have a few more questions, but I am going to submit in
writing because--since my time is over.
Mrs. STEEL. I yield back.
Chairman LaHOOD. Thank you, Mrs. Steel. I will now
recognize Ms. Chu of California.
Ms. CHU. Ms. Phillips, the Niskanen Center--and indeed,
some on this dais--assert that the formula that allocates the
appropriations among states unfairly shortchanges certain
states because the state employers pay more Federal UI taxes
than they receive in Federal administrative payments. But the
reason that certain central and southeastern states receive
smaller allocations is that they erect barriers to receiving UI
benefits, they pay UI benefits to fewer workers, and therefore
have a smaller claims processing and payment workload. Is that
correct?
Ms. PHILLIPS. So that is--I worked for Illinois Department
of Employment Security, and probably am not the right person to
ask on other states. But lower benefits would result in a lower
FUTA.
I do want to say, Representative Chu, that one of the
things that Mr. Raderman's testimony is spot on is that when
states have fewer resources, when they need to make the
improvements the most, that is a problem, right? State capacity
during the pandemic was at its lowest point, and the funding
goes up when it is raining the hardest, but the funding goes
down when states need to really ramp up and improve both
technological and process improvements.
Ms. CHU. Well, one thing is clear. There has not been full
funding on helping the states deal with the UI workload, and
this problem has been going on consistently. In fact, the only
time they really had those funds was when the American Rescue
Plan modernization funding came in, which you testified about
with regard to its positive benefit.
Now, the Biden Administration has consistently proposed to
increase annual funding and to fully fund the state UI workload
to ensure that workers have access to the earned UI benefits
while simultaneously helping states prevent fraud and errors.
However, Republicans routinely appropriate less than what is
needed to fund the state workload.
Can you talk about how consistent increased Federal funding
for UI administration would enable the state workforce agency
directors to increase support for staffing and technology, and
perhaps even having things like equity grants?
Ms. PHILLIPS. Thank you for that question.
In my testimony I celebrate the ARPA UI modernization
funding. Congress originally appropriated $2 billion. And last
year, as a result of the Fiscal Responsibility Act, that was
reduced to $1 billion. As a state administrator at that time,
we were planning for that funding. We were working on proposals
at that time, and it was a setback, capacity-wise, for us not--
to know that we were not going to have as many resources for
improving technology, improving processes, improving
reemployment efforts, as well.
Ms. CHU. Well, we know that these funds that Congress
provided through the American Rescue Plan have indeed made
significant strides to help states improve their UI systems by
detecting and preventing fraud, promoting equitable access, and
ensuring the timely payment of benefits since the pandemic. In
fact, because California received these funds, you know,
through ARPA, it was able to actually deal with the fraudulent
things that took place, was able to streamline its identity
verification and fraud reporting system, expand language
access, and also eliminate the backlog of unprocessed claims.
So, Ms. Phillips, would these type of improvements have
been possible without the American Rescue Plan funding that
Democrats provided?
And how should the lessons learned from these achievements
inform any further reform of the UI system?
Ms. PHILLIPS. Thank you, Representative. I am going to
start backwards with the lessons.
Organizations like the Beeck Center and others are trying
to help connect states with one another. In my testimony U.S.
DoL also has been documenting the ingenuity that states are
working on not only on equitable access to UI, but also on
timeliness of benefits, and detection of fraud, and preventing
fraud.
I would argue that one of the best ways to prevent and
detect fraud is by--I know this might sound strange coming from
someone working on digital benefits, but making sure that the
digital benefit access is also paired with in-person options,
as is required by law, is an important fraud prevention
mechanism.
Your question about whether this would happen--whether all
of this innovation would have happened or would be happening if
the ARPA funding was not there, I would argue probably not, for
many of the reasons that Mr. Raderman was talking about, that
the resource justification model makes it difficult to have
extra resources to be able to work on modernization efforts.
Ms. CHU. Thank you. I yield back.
Chairman LaHOOD. Thank you. Now I recognize Mr. Moore of
Utah.
Mr. MOORE of Utah. Thank you, Chairman LaHood, for holding
this important hearing.
I would look back to when I first ran for this seat. It was
just three-and-a-half years ago, and unemployment insurance
was, you know, just becoming a thing with--as we were trying to
navigate the pandemic and, you know, seeing the workforce go
through a stress point. And it was that moment that, to me, was
like we are not going to be able to solve these things at the
Federal level. And it continually got worse.
And the thing that was the most frustrating to a lot of my
constituents, particularly small business owners, was not being
able to hire people, or not being able to get some of their
folks back to work. That is an un-American concept. It is un-
American. I get the pandemic was a tricky thing to navigate,
and that different states handled it different ways, but we
can't ever get to that point again. We can't ever get to that
point again where it was easier to stay home and engage in this
type of program than it was to go back to work.
And, you know, we didn't--I look back on it, and we made
mistakes as a country, as a Federal Government, trying to do
too much and creating unintended consequences. And I think the
data will bear that out over the history of time. We saw an
enormous amount of inflation right after the ARPA, or the
American Rescue Plan, was passed. We cannot have so much money
chasing too few goods, especially when there was a stress on
supply chain and things like that.
And that, I think, is leading to my main point and one
question simply that I have for Ms. Townsend. Like Iowa, Utah
is a state that has been on the forefront of creating high-
performance service delivery models for the unemployed and
those lacking the job skills required to fully participate in
the workforce. And so my point here, ultimately, is what are we
doing at the state level to make sure these programs are
actually run well?
And where do we get the outcomes? We are just not going to
get the outcomes from the Federal Government. The nation is too
big, the population is too high, and we do not have the purview
and the ability to properly target where the work needs to be
done.
The Utah Department of Workforce Services, Utah's
integrated model for workforce and social assistance,
simplified the application process for individuals seeking
assistance such as unemployment insurance, and provides a case
manager who identifies suitable services based on an
individual's needs. Can you speak to the effectiveness of
individuals receiving unemployment benefits having case
managers in shortening their duration on unemployment insurance
and finding meaningful employment?
Ms. TOWNSEND. Absolutely. Thank you for the question,
Representative Moore.
So what we have found in Iowa is that when individuals,
like I said before, come into the American job centers or
contact Iowa Workforce Development after they have filed a
claim for unemployment benefits, and we assign a single
individual to help walk them through the process, most of them
have not looked for a job for a period of time. Many of them
have not looked for a new job for decades. And so--and as
anyone who has been paying attention knows, the way to find a
job now is not the way it was even five years ago, even pre-
pandemic.
So having someone available to help them navigate the new
system of basically virtual and all-digital application
process, having someone available to look through your resume--
because, for instance, in Iowa we have more jobs than we have
unemployed, and I know it is the same in Utah. If you are
applying for jobs and you are not getting a response, then the
problem is probably in your resume. It is probably in the way
that you are going about your job search.
And so one of the things that we can do with the
reemployment case management is look at what jobs are you
applying for? Are they the right jobs for your skills and your
experience? What other jobs should you be applying for? And is
there something in your resume that we need to fix or improve?
And so, when they get that one-on-one assistance, it helps
direct them not only to the better jobs that they may not have
otherwise realized they were eligible for, but also gives them
that support and the hope that I can get this job. And they do.
And we see--every day we are seeing stories about people who
are getting jobs that pay them way more than they were making
before they became unemployed.
Mr. MOORE of Utah. Absolutely, thank you. And I think the
irony that--I can even, you know, admit it myself that I am
saying that having a case manager involved, some people would
claim that is more bureaucracy, right? What I am saying is, if
we don't have that special attention to do this at the most
basic level, where we are actually helping the individuals, we
are going to continue, like Mr. Taylor was highlighting, the
just an enormous amount of fraud that slips through the system
unless you give it that special attention.
And that is why I want to be able to communicate and help
spread throughout the country that states that do this well,
they need to be replicated, and we don't need to just continue
to throw more money at the problem. You need to put the right
type of resources at the ground level to help these individuals
get out of this mess, and that should be an incredibly
bipartisan approach. And if you look beyond the rhetoric, that
is what this Work and Welfare Committee is trying to do, is
find the help that they need, and lift people out of these
horrible situations that they get put in.
Ms. Townsend and to the rest of the witnesses, I appreciate
your perspective, and I yield back.
Chairman LaHOOD. Thank you, Mr. Moore. We will recognize
Ms. Tenney of New York.
Ms. TENNEY. Thank you, Mr. Chairman, and thank you to the
witnesses. This is a really important issue.
I am a small employer up in upstate New York. And, you
know, there has been serious systemic problems with
unemployment insurance in this program, and particularly in the
State of New York. There have been over 11 billion fraudulent
unemployment payments since 2020. Yet despite this figure, New
York has only recovered a small fraction of that.
New York is one of only two states, along with California,
that remains delinquent on its loans borrowed from the Federal
Unemployment Trust Fund and the COVID-19--and that was from the
COVID-19 pandemic. The failure of Albany--and it is run by the
Democrats right now, it is one-party rule all across the
board--to repay the debts will force employers to bear the
burden of these increased Federal unemployment taxes. And this
debt remains, and it has been a tremendous burden. It has
forced businesses to close in upstate New York. It is really
heartbreaking.
And I just think it is worthy of note that last year, in
our meeting on February of--I believe it was 2023--we had the
inspector general here to discuss this unemployment at our last
Ways and Means full committee hearing. And I asked the
inspector general about New York, and he specifically said,
``We tasked the governor of New York''--at the time it was
Governor Cuomo--``in 2011 to change the systems in place, the
computer systems, the technology, or you are going to have a
real serious problem with fraud.'' And we ended up with that.
And guess who is paying the price? Our beleaguered employers in
upstate New York.
And so, because of this fiscal mismanagement and these
real-world consequences, they are hiking this Federal
unemployment tax that really particularly hits the smaller
businesses, a lot of restaurants, a lot of businesses forced to
close, and also those who are unable to find people to replace
them.
That is why I am happy to join with Michelle Steel of
California. We introduced legislation to protect employers in
our respective states, New York and California. The small
businesses in New York, and also California, should not be
punished because of their state government's incompetence. And
it really is, it is a huge concern because we do have programs
to help people temporarily move into unemployment in their
attempt to get a new job.
So I appreciate all the ideas and the tasks that you have
here.
And I first wanted to just say thank you to Colonel
Stricklin for your innovation in reading your testimony and
hearing your testimony today on what you have done on trying to
get people back into the workforce, particularly veterans, and
I appreciate that. My son just became a major yesterday in the
Marine Corps, so it was kind of fun to pin his little oak leaf
cluster on him yesterday.
And so--but I know that so many people that--we have so
many incredible people that serve in our military who can
convert those skills into, you know, into the private sector
when they go into their new careers, and so I thought maybe
what you might explain to us in enhancing what you talked
about, how you actually got people back to work, how this
detrimental effect of our workforce shortage--how did you get
businesses to deal with initiatives to get people back into the
workforce in light of some of the issues we have today, where
people almost have more incentives to stay home than they do to
go to work? How do you inspire people to get out, go to work,
take care of their families, pay taxes that we need for some of
our services? How did you do that? And I would love to hear
about it, especially with your unique background as a military
member.
Mr. STRICKLIN. Thank you for the opportunity to respond to
that, and it is something that we are very passionate about.
And when we started this five years ago in our group, we
were not happy with the progress being made. And so we met and
said we are going to make a difference. And this all started on
a cocktail napkin among competitors in industry, among our
training aspects of the Alabama Community College system and
among our government. And we sat down and said, ``How do we get
people inspired to a new tomorrow? We need to find something
they are passionate about, and we need to reduce the barriers
to entry.''
So when we started these courses, it started with a skid
steer and a pile of rocks, a pile of aggregates, and we had
people come in to learn this single piece of equipment. And
everybody agreed that we are going to work together to make a
difference. And then, down the road, when we are finished with
this, we are going to compete over hiring them to get them back
into our workforce. Because if we don't have a better
workforce, there is nothing to compete with down the road.
And these individuals--if I could tell one quick story--so
as we did the first pilot group, somebody went through and he
thought he was going to earn a new job. And in three classes
down the road I happened to be there, and he came up and hugged
my neck, and he said, ``I want to thank you and the committee
for what you are doing because I thought I was getting a new
job, but this didn't change my pay, it changed my family and my
kids' futures, because you changed our level of income so that
now I can offer more to my kids and offer more for their
future.'' And that is how we inspire a new tomorrow to them. We
all want good. We all love this nation.
Ms. TENNEY. So your company invests in getting new people
during that transition period, where they are training and
getting them off unemployment and getting into your business.
Is that----
Mr. STRICKLIN. Yes, ma'am. And originally, we didn't know--
it was funded by a grant. We didn't know if we were going to
get it. And the partners in industry went to our training
aspect. And we said, ``If we don't get the grant, we will write
a check to cover the first year of training.''
Now, mind you, none of us wanted to, but we were willing
to. And luckily, the grant came through. And when I mentioned
in my testimony we have trained over 3,000 Alabamians, none of
those 3,000 Alabamians have paid a cent for their training. It
has all been through grants that we have enabled them to a new
tomorrow.
Ms. TENNEY. Well, thank you so much. My time has expired.
But thank you to everyone. I appreciate your insight.
Chairman LaHOOD. Thank you. I recognize Ms. Moore of
Wisconsin.
Ms. MOORE of Wisconsin. Thank you so much, Mr. Chairman.
And thank you, Mr. Ranking Member. I think this is an
extremely important discussion, and I want to get a few things
straight before I move on.
I think, Ms. Phillips, you were talking about the non-
fraudulent improper payments that were made. Did you say that
we have not disaggregated what percentage of the overpayments
were fraudulent versus non-fraudulent, accidental?
Ms. PHILLIPS. So we--thank you, Representative Moore, for
that question. The ETA 227 has no demographic information.
Ms. MOORE of Wisconsin. Demographic.
Ms. PHILLIPS. There is no disaggregated demographic
information. It is broken down by what type of improper--non-
fraud, improper error code a state reports on that quarterly
report, and the----
Ms. MOORE of Wisconsin. But we do know which ones were----
Ms. PHILLIPS. We know whether----
Ms. MOORE of Wisconsin [continuing]. Which ones were
fraudulent----
Ms. PHILLIPS. Yes.
Ms. MOORE of Wisconsin [continuing]. Versus improper
payment.
Ms. PHILLIPS. Non----
Ms. MOORE of Wisconsin. And what percentage is that? That
wasn't clear to me.
Ms. PHILLIPS. So I only have--anyone could look at the
information, state by state or nationally. But I can only speak
right now to Illinois's numbers. And in 2023, as I mentioned
just a minute ago--I just want to make sure I am completely
accurate here--that 62 percent of Illinois's total improper
payments--total overpayments were considered non-fraud improper
payments.
Ms. MOORE of Wisconsin. Mr. Taylor, would you agree with
that? I probably should have asked you that. What percentage of
these payments were improper and other part fraudulent?
Mr. TAYLOR. It depends on the state, Representative Moore.
There was a wide variety of disparity when it comes to what we
call first-party and third-party fraud, third-party fraud being
the stolen identity----
Ms. MOORE of Wisconsin. Yes, yes.
Mr. TAYLOR [continuing]. First-party improper.
Ms. MOORE of Wisconsin. Well, the reason that I have just
burnt up so much of my time on this, Mr. LaHood, is because I
just think our committee was focusing on this as if the
majority of these payments were fraudulent.
And, I mean, thank God we made these payments because I
think it was Ms. Phillips that said 64 percent of folks live
paycheck to paycheck, and we know what people were doing four
years ago. I mean, they were maxing out their credit cards,
hoarding toilet paper. And so, we want to just be clear that it
was important. I mean, all of you would agree that, despite the
fraud, which is terrible, that we saved people's lives,
literally, by providing this benefit.
Ms. Townsend, your reemployment work strategies. I mean, I
am very impressed with your ability to get people back to work.
It is a model that everybody has to look at. But I am wondering
if what we used to say, that you bite your hand to spite your
face or whatever--haven't we found that states that did a
remarkable job of avoiding inflationary problems over the years
reduced staffing, and then found themselves in this situation
where we had an emergency and they just didn't have the
staffing in place as a punishment, almost, for their doing so
well in getting people unemployed?
So, I am wondering if any of you feel that the formula
maybe punishes states that do a good job. Maybe I will ask you
that, Ms. Phillips, and also--yes, go on.
Ms. PHILLIPS. Well, I think I would go back to Mr.
Raderman's comments earlier that the way the resource
justification model works is that when there is a low demand
for unemployment benefits, that is also a low administrative
amount of money that states have, and so you can't fix the roof
during that time. So that is one point.
But I also want to comment on the workforce aspect because,
as a former fellow UI administrator, states across the country
are working on the RESEA program, and most administrators
believe that the UI program is a temporary--it is a trampoline.
But the people that are eligible to apply for UI are workers,
and they want to get back to work. And most state agencies are
working on----
Ms. MOORE of Wisconsin. Can I----
Ms. PHILLIPS [continuing]. That employment piece----
Ms. MOORE of Wisconsin. Can I ask something very quick
before I get cut off?
Ms. PHILLIPS. Mm-hmm.
Ms. MOORE of Wisconsin. Do we see instances where there are
barriers to applying to unemployment?
I mean, like the state has taken the position that we don't
want to provide this benefit, and so many more people who are
eligible and need it don't get it, and that also lowers the
numbers and sort of masks the need?
Ms. PHILLIPS. Representative Moore, I can really only speak
from my experience in Illinois that there was--there is no
preventing people from applying. But I think we know,
especially through the pandemic, the challenges that any UI
claimant faces in applying, and the administrative burdens that
they face on online applications, on certification processes,
on other documentation that they need to provide.
I know I am over time, but one of the things that I cannot
unsee is I observed these live claim filing observations, and I
watched people from five different regions in Illinois apply,
including an older woman, a 76-year-old woman from downstate
Illinois near Carbondale, who was struggling mightily. She came
into the office because she couldn't apply online. It wasn't
working for her. There were many different blockades that I
won't go into, but there are improvements that can be made to
the actual application process.
Ms. MOORE of Wisconsin. Thank you so much, Mr. Chairman,
for your indulgence.
Chairman LaHOOD. Thank you, Ms. Moore. I recognize Mr.
Smucker of Pennsylvania.
Mr. SMUCKER. Thank you, Mr. Chairman, for convening this
hearing. I would like to talk a little bit about the state's
management of their own unemployment funds.
And as a former business owner, I think most business
owners, you know, we value unemployment. We know that when you
go through rough times, it is a safety net for employees that
they are no longer able to provide work for. Even most business
owners, at least in our case, I think we understood the need
for a rating system--I was in Pennsylvania a rating system
based on your own experience so that businesses who are laying
off more workers are paying more.
But what did get frustrating was when states mismanaged
their own funds and, as a result, businesses in Pennsylvania,
for instance, had much higher rates and it was harder to
compete.
And I am concerned right now, you know--during the pandemic
we, of course, know that states' unemployment budgets were
strained. There was a huge surge in claims. We have been
talking about that this entire hearing. The federal government
provided loans to states to help them bridge the gap and, of
course, expected that to last while the pandemic lasts, and
until individuals returned to work, and then expected, I think,
to begin paying back those loans.
So it is--there are some states, like California, New York
that have yet to pay the federal government for those loans
from four years ago. And in fact, they not only have been
accumulating that debt, but also now paying high interest. So
in California $650 million already paid in interest, and
another $550 million in interest due to the federal government
by September 30. That really, I think, is going to matter to
small businesses in those states who probably will end up
having to bail out the states as a result of the bad policies
by the governors and the administrations in those states. And
it should maybe be even concerning to us, because eventually
all taxpayers, if states can't pay that back, may need to bail
them out even further.
And so I was proud to have cosponsored Representative Steel
and Representative Tenney's legislation to ensure that small
businesses will not have their credits against the FUTA, the
Federal tax rate, reduced and will not see a dramatic increase.
And I hope that today's hearing will call attention to best
practices that states can utilize, can take advantage of during
strong economic times to prevent these kind of future system
strains and collapses in the future.
So Mr. Raderman, what actions can Congress take to ensure
that states who receive Federal loans for their UI programs
repay those loans in a timely manner, with hopefully minimal to
zero impact on small businesses?
Mr. RADERMAN. Thank you for the question, Representative.
In terms of the state loans that were taken out, the way
the programs are currently structured, it does fall to the
states to fund the benefits. Our view is that the taxable wage
base that is used to actually finance the state level
benefits--I can't speak to every state, but I know for
California and New York in particular, those wage bases have
not been adjusted for inflation over time, and so it has become
especially difficult to actually fund the benefits when
downturns do occur, and that kind of results in that large
amount of debt.
So the preference is to make sure that that wage base is
indexed moving forward, or raised and indexed, and you can
actually lower the rates overall so that businesses will have a
bit more stable tax rates moving forward.
Mr. SMUCKER. With the budget hole that we are in now in
those particular states, do you agree it will eventually
probably impact the small businesses there? And how do you
think it will do that?
Mr. RADERMAN. I agree, they are going to be facing higher
rates at the moment. And I think it is important to address the
financing issues now----
Mr. SMUCKER. I think it----
Mr. RADERMAN [continuing]. So that there is not a problem
moving forward.
Mr. SMUCKER. I think there is a lot of concern there. I
appreciate you responding to that.
Mr. Stricklin, your testimony was really impressive. It
sounds like the program that you have in Alabama is very
impressive. I was really just interested in one aspect of it,
and I am out of time. But you talked--I have seen a lot of
employee workforce education and training programs, and
apprenticeship programs, and so on. Your goal is to train the
first two weeks on the job. I have never really seen that
exactly, and I found that really interesting. Really
fascinating, actually. I would love to have you expand a little
bit on that.
Mr. STRICKLIN. Yes, sir. Thanks for the opportunity to
expand on that.
And when we sat down in the beginning, and you look at this
problem--and it is so big you never know where to start, right?
How do we climb a mountain? We have got to take the first step.
And when we looked at this we said we have to have something
manageable and measurable so that we know how to develop the
training courses.
And we said, as owners of businesses, as small businesses,
what do I want most from an employee when they show up? And we
really boiled it back to I would love for somebody to walk in
on day one of their third week, they know how to put on their
safety equipment, they know where to go in the office, they
know basic operation of the equipment. Then we can train them
the specifics of what to do. And that is where that came from,
is let's just train the first two weeks. That way they are
showing up on day one of week three, and they are ready to run.
Like, your company or my company or any company wants to train
them in the specifics of what we do there and what our
competitive advantage is.
Running a piece of equipment is running a piece of
equipment. Operating a piece of equipment is----
Mr. SMUCKER. It is a really interesting concept, and I am
out of time.
Mr. STRICKLIN. Thank you, sir.
Mr. SMUCKER. Thank you, Mr. Chairman, yes.
Chairman LaHOOD. Thank you, Mr. Smucker.
Well, that concludes our question-and-answer period. I know
it went by quickly.
Let me just say in closing here how grateful we are for
your generous testimony here today. As I think we all learned
from this hearing, this is a complex subject. There are many
nuances here that need to be worked out. And we have to figure
out ways to rebuild and restore confidence in this system
moving forward. And so this was a great learning process for
the members here. It was great for me and everybody else here.
So we appreciate your ideas, your proposals, your successes
that you have had. And we look forward to staying in touch with
you as we put together further public policy initiatives to
address these problems and serve the people that we need to
serve.
So with that, please be advised that members have two weeks
to submit written questions to be answered later in writing.
Those questions and your answers will be part of the formal
record.
With that, we are grateful again for you being here today,
and the committee stands adjourned.
[Whereupon, at 3:33 p.m., the subcommittee was adjourned.]
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