Department of Labor: Challenges in Ensuring Workforce Development and
Worker Protection (Testimony, 03/06/97, GAO/T-HEHS-97-85).

GAO discussed the major challenges Department of Labor faces in
achieving its mission, focusing on: (1) Labor's efforts to provide
effective employment and training programs that meet the diverse needs
of its target populations in a cost-efficient manner; (2) Labor's
efforts to ensure worker protection within a flexible regulatory
structure; and (3) how Labor's ability to meet these challenges would be
enhanced by the improved management envisioned by recent legislation.

GAO noted that: (1) although Labor has historically been the focal point
for workforce development activities, it faces the challenge of meeting
those goals within the context of an uncoordinated system of multiple
employment and training programs operated by numerous departments and
agencies; (2) in fiscal year 1995, 163 federal employment training
programs were spread across 15 departments and agencies (37 programs
were in Labor), with a total budget of over $20.4 billion; (3) although
GAO has not recounted the programs and appropriations, GAO is confident
that the same problem exists; (4) rather than a coherent workforce
development system, there is a patchwork of federal programs with
similar goals, conflicting requirements, overlapping target populations,
and questionable outcomes; (5) comprehensive legislation that would have
addressed this fragmentation was considered but not passed by the 104th
Congress; (6) in the absence of consolidation legislation, Labor has
gone ahead with some reforms, such as planning grants for one-stop
career centers, but the actions it has taken have not been enough to fix
the problems; (7) passage of the recent welfare reform puts even greater
demands on an employment training system that appears unprepared to
respond; (8) a second major challenge for Labor is to develop regulatory
strategies that ensure the well-being of the nations' workers in a less
burdensome, more effective manner; (9) Labor has made some changes since
GAO last testified, which are perhaps best illustrated by actions at the
Occupational Safety and Health Administration (OSHA), such as its
partnership initiatives with companies, but OSHA's actions have not been
without controversy, and substantial challenges remain there and at
other Labor components with worker protection responsibilities; (10)
congressional action poses new challenges in the worker protection area
as well; (11) Labor has committed to redesigning its Davis-Bacon wage
determination process with additional funds appropriated by the
Congress; (12) Labor also must issue and enforce regulations to
implement the new health care portability law; and (13) in meeting these
mission challenges, Labor will need to become more effective at managing
its organization.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-97-85
     TITLE:  Department of Labor: Challenges in Ensuring Workforce 
             Development and Worker Protection
      DATE:  03/06/97
   SUBJECT:  Employment or training programs
             Occupational safety
             Labor law
             Information resources management
             State-administered programs
             Technical assistance
             Health insurance
             Workfare
IDENTIFIER:  DOL Job Corps Program
             Consumer Price Index
             
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Cover
================================================================ COVER


Before the Subcommittee on Human Resources, Committee on Government
Reform and Oversight, House of Representatives

For Release on Delivery
Expected at 1:30 p.m.
Thursday, March 6, 1997

DEPARTMENT OF LABOR - CHALLENGES
IN ENSURING WORKFORCE DEVELOPMENT
AND WORKER PROTECTION

Statement of Carlotta C.  Joyner, Director
Education and Employment Issues
Health, Education, and Human Services Division

GAO/T-HEHS-97-85

GAO/HEHS-97-85T


(205342)


Abbreviations
=============================================================== ABBREV

  CFO - Chief Financial Officer
  CPI - Consumer Price Index
  ERISA - Employee Retirement Income Security Act of 1974
  ETA - Employment and Training Administration
  FTE - full-time-equivalent
  GPRA - Government Performance Results Act
  HIPAA - Health Insurance Portability and Accountability Act of 1996
  JTPA - Job Training Partnership Act
  OIG - Office of Inspector General
  OMB - Office of Management and Budget
  OSHA - Occupational Safety and Health Administration
  PWBA - Labor's Pension and Welfare Benefits Administration

DEPARTMENT OF LABOR:  CHALLENGES
IN ENSURING WORKFORCE DEVELOPMENT
AND WORKER PROTECTION
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are pleased to be here today to discuss the challenges faced by
the Department of Labor in carrying out its mission in a
cost-efficient and effective fashion. 

With a budget of about $34 billion and about 16,000 staff in fiscal
year 1997, Labor's mission is to foster, promote, and develop the
welfare of U.S.  wage earners; improve their working conditions; and
advance opportunities for profitable employment.  Over the past
several years, the U.S.  work environment has changed in such a way
that achieving this mission is more difficult.  For example, the
strength of international competition has made us increasingly aware
of the need for a skilled labor force.  At the same time, large
numbers of individuals in this country remain unprepared for such
employment.  Also, changes in employer/employee relations, such as
increased use of part-time and contract employees, pose new
challenges for worker protection.  In addition, the public is
demanding more accountability from government agencies such as
Labor--more assurance that their tax dollars are not being wasted and
that government is operated according to sound business practices. 

Today, I would like to discuss two major challenges Labor faces in
achieving its mission:  first, providing effective employment
training programs that meet the diverse needs of its target
populations in a cost-efficient manner and, second, ensuring worker
protection within a flexible regulatory structure.  In addition, I
want to discuss how Labor's ability to meet these challenges would be
enhanced by the improved management envisioned by recent legislation. 

In summary, although Labor has historically been the focal point for
workforce development activities, it faces the challenge of meeting
those goals within the context of an uncoordinated system of multiple
employment training programs operated by numerous departments and
agencies.  In previous testimony before this Subcommittee,\1

we reported that, in fiscal year 1995, 163 federal employment
training programs were spread across 15 departments and agencies (37
programs were in Labor), with a total budget of over $20.4 billion. 
Although we have not recounted the programs and appropriations, we
are confident that the same problem still exists.  Rather than a
coherent workforce development system, we continue to have a
patchwork of federal programs with similar goals, conflicting
requirements, overlapping target populations, and questionable
outcomes.  As you know, comprehensive legislation that would have
addressed this fragmentation was considered but not passed by the
104th Congress.  In the absence of consolidation legislation, Labor
has gone ahead with some reforms, such as planning grants for
one-stop career centers, but the actions it has taken have not been
enough to fix the problems.  Now, passage of the recent welfare
reform legislation puts even greater demands on an employment
training system that appears unprepared to respond. 

A second major challenge for Labor is to develop regulatory
strategies that ensure the well-being of the nations' workers in a
less burdensome, more effective manner.  Labor has made some changes
since we last testified, which are perhaps best illustrated by
actions at the Occupational Safety and Health Administration (OSHA),
such as its partnership initiatives with companies.  But OSHA's
actions have not been without controversy, and substantial challenges
remain there and at other Labor components with worker protection
responsibilities.  Congressional action poses new challenges in the
worker protection area as well.  Labor has committed to redesigning
its Davis-Bacon wage determination process with additional funds
appropriated by the Congress.  Labor also must issue and enforce
regulations to implement the new health insurance portability law. 

In meeting these mission challenges, Labor will need to become more
effective at managing its organization.  The Department of Labor,
like other federal agencies, is confronted by management problems
that impede its ability to carry out its mission efficiently and
effectively.  Major pieces of legislation that provide a statutory
framework for improving agency operations and accountability include
(1) the 1993 Government Performance and Results Act (GPRA), which
requires agencies to focus on results as they define their missions
and desired outcomes, measure performance, and use that performance
information; (2) the expanded Chief Financial Officers (CFO) Act of
1990, which requires agencies to prepare financial statements that
can pass the test of an independent audit and provide decisionmakers
reliable financial information; and (3) the 1995 Paperwork Reduction
Act and the 1996 Clinger-Cohen Act, which are intended to help
agencies better manage their information resources and make wiser
investments in information technology.  Labor has made progress in
response to each of these initiatives, but work remains to be done
before the goal of improved management is reached. 


--------------------
\1 Department of Labor:  Rethinking the Federal Role in Worker
Protection and Workforce Development (GAO/T-HEHS-95-125, Apr.  4,
1995). 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

Labor, established as a Department in 1913, administers and enforces
a variety of federal labor laws guaranteeing workers' rights to a
workplace free from safety and health hazards, a minimum hourly wage
and overtime pay, family and medical leave, freedom from employment
discrimination, and unemployment insurance.  Labor also protects
workers' pension rights; provides for job training programs; helps
workers find jobs; works to strengthen free collective bargaining;
and keeps track of changes in employment, prices, and other national
economic measures.  Although Labor seeks to assist all Americans who
need and want to work, special efforts are made to meet the unique
job market problems of youths, older workers, economically
disadvantaged and dislocated workers, and other groups. 

In fiscal year 1997, Labor has an estimated budget of $34.4 billion
and is authorized 16,614 full-time-equivalent (FTE) staff-years. 
About three-fourths of Labor's budget is composed of mandatory
spending on income maintenance programs, such as the unemployment
insurance program.  The administration's fiscal year 1998 budget
request is $37.9 billion in budget authority and 17,143 FTE staff. 
The budget request includes $12 billion for Labor's major budget
themes--an increase of $1.7 billion over fiscal year 1997.  Included
in the request for fiscal year 1998 is $750 million in mandatory
funding for a new welfare-to-work jobs program. 

Labor's many program activities fall into two major categories: 
enhancing workers' skills through job training and ensuring worker
protection.\2 Figure 1 shows the organizational structure of the
Department. 

   Figure 1:  Department of Labor
   Organization Chart

   (See figure in printed
   edition.)

Labor's workforce development responsibilities are housed in the
Employment and Training Administration (ETA) and the Veterans'
Employment and Training Service.  Together, they have a fiscal year
1997 budget of about $6.5 billion and 1,595 FTEs.  Labor's employment
training programs include multiple programs authorized by the Job
Training Partnership Act (JTPA), such as those for economically
disadvantaged adults and youth and workers who lose their jobs
because of plant closings or downsizing and Job Corps, an intensive
residential program for severely disadvantaged youth.  Table 1 shows
Labor's appropriations and staff-year spending for fiscal year 1997. 

Labor has four units responsible for most of its worker protection
programs:  the Employment Standards Administration, the Pension and
Welfare Benefits Administration, OSHA, and the Mine Safety and Health
Administration.  Together, these units have 9,020 FTEs and a budget
of $915 million for fiscal year 1997. 



                                Table 1
                
                 Department of Labor Appropriations and
                 Staff-Year Spending, Fiscal Year 1997

                                    Fiscal year 1997        Full-time-
                                      appropriations        equivalent
Category                               (in millions)       staff-years
----------------------------------  ----------------  ----------------
Unemployment insurance and other             $26,467                \a
 income maintenance expenses
Employment training\b                          6,460             1,595
Worker protection                                915             9,020
Employment Standards                             316             3,942
 Administration
Pension and Welfare Benefits                      77               639
 Administration
Occupational Safety and Health                   325             2,241
 Administration
Mine Safety and Health                           197             2,198
 Administration
Pension Benefits Guaranty                         10               731
 Corporation
Bureau of Labor Statistics                       361             2,544
Departmental management                          165             2,274
Office of Inspector General                       47               450
======================================================================
Total                                        $34,425            16,614
----------------------------------------------------------------------
\a Included under employment training. 

\b Includes ETA and Veterans' Employment and Training Service. 

Source:  Department of Labor. 


--------------------
\2 Labor also is responsible for developing economic statistics, such
as the Consumer Price Index (CPI).  Labor's fiscal year 1998 budget
requests $17.5 million to update and improve its key economic
reporting systems, of which $2.1 million is for the first year of a
multiyear initiative to revise and upgrade the CPI. 


   WORKFORCE DEVELOPMENT MISSION
   IS CHALLENGED BY MULTIPLE
   PROGRAMS
---------------------------------------------------------- Chapter 0:2

Our work has demonstrated that the federal government has a patchwork
of job training programs characterized by overlap and duplication,
resulting in the potential for wasted resources and reduced service
quality.\3 We have also noted in past work the limited information
available on employment training program outcomes and
effectiveness.\4 Further, it is uncertain how this fragmented system
will be able to meet the employment demands of those affected by the
recent welfare reform legislation. 


--------------------
\3 Multiple Employment Training Programs:  Information Crosswalk on
163 Employment Training Programs (GAO/HEHS-95-85FS, Feb.  14, 1995)
and Multiple Employment Training Programs:  Major Overhaul Needed to
Reduce Costs, Streamline the Bureaucracy, and Improve Results
(GAO/T-HEHS-95-53, Jan.  10, 1995). 

\4 Multiple Employment Training Programs:  Basic Program Data Often
Missing (GAO/T-HEHS-94-239, Sept.  28, 1994) and Multiple Employment
Training Programs:  Most Federal Agencies Do Not Know if Their
Programs Are Working Effectively (GAO/HEHS-94-88, Mar.  2, 1994). 


      MULTIPLE EMPLOYMENT PROGRAMS
      WITH LIMITED INFORMATION
-------------------------------------------------------- Chapter 0:2.1

A major challenge for Labor is to facilitate workforce development
within the context of a conglomeration of programs operated by Labor
and 14 other federal departments and agencies.  Table 2 shows the
number of different employment training programs that existed in
fiscal year 1995, their target groups, and fiscal year 1995
appropriations.  For example, we found that 9 programs targeting
economically disadvantaged individuals had similar goals; often
served the same categories of people; and provided many of the same
services using separate, often parallel, delivery structures. 



                                         Table 2
                         
                          Number of Employment Training Programs
                         and Fiscal Year 1995 Appropriations, by
                                       Target Group

                                                                    Fiscal year 1995
                                                                     appropriations
                           Employment training programs              (in millions)
                     ----------------------------------------  --------------------------
                                                     At other
                                                     agencies
                                                   (number of
Target groups               Total      At Labor     agencies)         Total         Labor
-------------------  ------------  ------------  ------------  ------------  ------------
Youth                          19             7        12 (5)        $2,848        $2,441
Veterans                       16             4        12 (2)         1,092           175
Dislocated workers             10             8         2 (2)         1,647         1,574
Native Americans               10             1         9 (3)           121            64
Economically                    9             3         6 (4)         3,220           947
 disadvantaged
Women/minorities                6             0         6 (3)            69             0
Migrants                        5             1         4 (1)           100            86
Homeless                        5             1         4 (3)            11             0
Older workers                   4             2         2 (1)           562           463
Refugees                        4             0         4 (1)           109             0
Not categorized                75            10       65 (10)        10,635         1,094
=========================================================================================
Total                         163            37           126       $20,414        $6,844
-----------------------------------------------------------------------------------------
Consolidating federal employment training programs could probably
reduce the cost of providing job training services because of the
efficiencies achieved through eliminating duplicative administrative
activities.  Although the amount of money spent administering
employment training programs cannot be readily quantified and is
generally not even tracked by program, we believe it is substantial. 
For that reason, we identified consolidation of job training programs
as an option the Congress could consider to reduce the deficit.\5
Alternatively, the Congress could spend the same amount of money and
serve more people. 

Further, consolidating similar employment training programs could
result in improved opportunities to increase effectiveness in service
delivery.  For example, consolidating programs could improve the
assistance provided to the target populations because individuals
would be more likely to receive the mix of services needed to achieve
training or placement goals.  And, getting needed services might be
less confusing and frustrating to clients, employers, and
administrators. 

In anticipation of federal consolidation legislation, and to improve
their local service delivery, many states are moving ahead with their
own consolidation plans.\6

Labor has engaged in several efforts to assist states in these
consolidation efforts.  For example, Labor has promoted the
development of "one-stop career centers." These centers are designed
to transform an array of employment training programs into an
integrated service delivery system for job-seekers and employers. 
Labor expects them to identify the jobs that are available, the
skills they require, and the institutions that have proven track
records of preparing people for new work.  This information will
probably be available largely through computer links.  As of February
1996, 54 states and jurisdictions had received planning or
implementation grants to establish one-stop centers. 

In addition, Labor and the Department of Education jointly administer
the school-to-work program--a program designed to build integrated
learning and employment opportunities for youth.  The proposed fiscal
year 1998 budget includes $200 million for each agency to ensure that
"seed capital" grants to states and communities continue. 

Not only are Labor's employment training programs part of a
fragmented system but, despite spending billions of dollars each
year, many federal agencies operating these programs do not know if
their programs are really helping people find jobs.  From our past
work, a common theme has emerged:  Most agencies lack very basic
information needed to manage their programs.  In one of our reviews,
we found that 60 percent of the 77 programs could not provide current
and complete information on how many people were served in fiscal
year 1993.  Programs also lack outcome data.  In our review of 62
programs for which the economically disadvantaged individuals were
eligible, we found that less than half of the programs obtained data
on whether or not participants obtained jobs after they received
services. 

To its credit, Labor has collected much basic information, including
outcome data, on its major employment training programs, such as Job
Corps and other programs funded under JTPA.  It has also conducted
some evaluations to assess the impact of its programs.  However, our
reviews have shown that existing performance measures and studies
still do not provide the kind of information that would provide
confidence that funds are being spent to the greatest advantage of
participants.  Our reviews of the Job Corps program illustrate some
of the weaknesses in current data collection and evaluation
efforts.\7

Job Corps is a national employment training program that provides
severely disadvantaged youth with comprehensive services, generally
in a residential setting, at a cost of about $1 billion a year to
serve about 66,000 participants.  Job Corps has a list of performance
measures on which the over 100 individual centers are ranked each
year.  Moreover, to demonstrate the effectiveness of Job Corps, Labor
cites the positive results of a national impact study.  We have
raised questions, however, about how valuable the information from
these sources is in determining whether the high costs are justified
by program outcomes. 

Jobs Corps reported that, nationally, 59 percent of its students
obtained jobs in fiscal year 1993.  However, when we surveyed a
sample of employers identified in Job Corps records, we were left
with serious concerns about the validity of reported job placement
information.  Despite Job Corps placement verification procedures, we
found that about 15 percent of the reported placements in our sample
were potentially invalid.  In addition, we found that about half of
the jobs obtained by students from the sites we visited were
low-skill jobs--such as fast food worker--unrelated to the training
provided by Job Corps. 

The last comprehensive study of the effectiveness of the Job Corps
program, which supported the cost-effectiveness of the program, was
published more than 15 years ago.  More recently, audits by Labor's
Inspector General, media reports, and congressional oversight
hearings have surfaced issues about the quality of training and
outcomes.  In 1994, Labor initiated a major impact evaluation of the
Jobs Corps program.  This study, the initial results of which are
expected to be available in 1998, should be extremely useful to
inform decisions about the future of the program. 


--------------------
\5 Addressing the Deficit:  Updating the Budgetary Implications of
Selected GAO Work (GAO/OCG-96-5, June 28, 1996). 

\6 The 104th Congress considered legislation to reform and
consolidate federal employment training programs.  Measures were
adopted in both the House and Senate; but, after extended
consideration, a conference report was not agreed upon. 

\7 Job Corps:  High Costs and Mixed Results Raise Questions About
Program's Effectiveness (GAO/HEHS-95-180, June 30, 1995). 


      WELFARE ACT WORK
      REQUIREMENTS POSE CHALLENGES
      FOR WORKFORCE DEVELOPMENT
      PROGRAMS
-------------------------------------------------------- Chapter 0:2.2

The passage of the recent welfare reform legislation is likely to
have an impact on the structure and delivery of employment training
programs at the state and local levels.\8

Because of the work requirements imposed by that legislation, many
individuals formerly on welfare will be needing job assistance and
training services.  The responsibility for service delivery lies with
state and local offices, yet Labor has an important role because of
its expertise and experience.  Labor can encourage and facilitate, as
appropriate, the integration of employment training services that may
be required to meet the needs of the welfare population. 

How to serve those individuals transitioning from welfare to work,
while at the same time meeting the service needs of dislocated
workers and other client populations, is a challenge for Labor. 
Concerns have been raised about the availability of appropriate jobs,
the level of training and skills required for jobs, the impact of
competition for low-skilled jobs on the wages of low-skilled workers,
and the extent to which the current employment training system can
absorb and provide needed services to the expanded welfare
population. 

In addition, it is critical that Labor and other agencies providing
services consider the employment training needs of welfare clients in
the process of providing job placement assistance.  Our work on
promising employment training practices shows that providing
occupational skills alone is not the answer.  Equally, or perhaps
even more, important are employability skills--the ability not only
to get a job but to keep a job.\9

Concerns have been raised that in the rush to place welfare clients
in jobs, if the appropriate mix of skills is not provided, many
clients potentially will lose their jobs and go back on welfare. 

It is too early to determine the direction or magnitude of the
changes that will occur as a result of these pressures.  At the same
time, Labor can begin to monitor the situation and be responsive to
the needs of states and localities as they transition individuals
from welfare to work.  For example, our work on identifying
strategies used by successful employment training projects is the
type of information that can be shared with states to assist their
efforts. 


--------------------
\8 Personal Responsibility and Work Opportunity Reconciliation Act of
1996. 

\9 Employment Training:  Successful Projects Share Common Strategy
(GAO/HEHS-96-108, May 7, 1996).  In addition to improving
employability skills, we identified three other key features that
successful projects incorporated in their strategy:  (1) ensuring
participant commitment to training and getting a job, (2) removing
barriers that might limit a client's ability to finish training and
get and keep a job, and (3) linking occupational skills training with
the local labor market. 


   OPPORTUNITIES EXIST TO IMPROVE
   LABOR'S WORKER PROTECTION
   EFFORTS
---------------------------------------------------------- Chapter 0:3

When we testified before this Subcommittee almost 2 years ago about
the overall federal role in worker protection,\10 we stressed the
need for Labor to change its approach to one that was more service
oriented and made more efficient use of agency resources.  Some
evidence exists that Labor has moved in that direction, especially in
OSHA.  But this change has not been without controversy, and further
opportunities exist to develop alternative regulatory approaches. 

In addition to the overall need to consider alternatives to current
regulatory approaches, Labor faces regulatory challenges in two
specific areas:  (1) redesigning the wage determination process under
the Davis-Bacon Act and (2) as a result of recent legislative action,
developing and enforcing regulations regarding portability of
employer-provided health insurance. 


--------------------
\10 Department of Labor:  Rethinking the Federal Role in Worker
Protection and Workforce Development (GAO/T-HEHS-95-125, Apr.  4,
1995). 


      IMPLEMENTING ALTERNATIVE
      REGULATORY APPROACHES
-------------------------------------------------------- Chapter 0:3.1

Labor, like other regulatory agencies, is faced with balancing the
emphasis it places on different strategies for carrying out its
mission.  These strategies include (1) establishing workplace
standards that directly set the terms and conditions of employment
and relying on Labor's enforcement efforts, in combination with
judicial review, to enforce these standards and (2) encouraging the
direct resolution of workplace problems by the parties themselves. 
In a June 1994 report\11 describing actual employer and employee
experiences with worker protection regulations, we summarized the
concerns of both employers and unions that agencies change their
approaches toward regulation.  They urged agencies to develop a more
service-oriented approach:  improving information access and
educational assistance to employers, workers, and unions and
permitting more input into agency standard setting and enforcement
efforts.  Responding to these concerns would put more emphasis on
giving parties the tools to resolve problems themselves, as well as
make enforcement less of a "gotcha" exercise and more one that
recognizes good faith compliance efforts.  These changes would also
have the potential for improving the way limited agency resources are
used for regulatory purposes. 

Changes in OSHA's regulatory approach illustrate Labor's action in
this direction.  In May 1995, the administration announced three
regulatory reform initiatives to "enhance safety, trim paperwork, and
transform OSHA." This action was considered necessary because,
despite OSHA's efforts, the number of workplace injuries and
illnesses was still too high, with over 6,000 workers dying each year
from workplace injuries and 6 million suffering nonfatal workplace
injuries.  In addition, the administration acknowledged that the
public saw OSHA as driven too often by numbers and rules, not by
smart enforcement and results.  The first initiative, the "New OSHA,"
called for OSHA to change its fundamental operating paradigm from one
of command and control to one that provides employers a real choice
between partnership and a traditional enforcement relationship.  The
second initiative, "Common Sense Regulation," called for a change in
approach by identifying clear and sensible priorities, focusing on
key building block rules, eliminating or updating and clarifying
out-of-date and confusing standards, and emphasizing interaction with
business and labor in the development of rules.  The third
initiative, "Results, Not Red Tape," called for OSHA to change the
way it works on a day-to-day basis by focusing on the most serious
hazards and the most dangerous workplaces and by insisting on results
instead of red tape. 

OSHA has continued to operate with this approach, but it has not done
so without criticism.  For example, the administration's fiscal year
1998 budget request includes an increase of $8.4 million for OSHA's
partnership initiatives.  These initiatives include such activities
as cooperative compliance programs, which build on the "Maine 200
program," initiated as a pilot in 1993.  Cooperative compliance
programs offer companies with high numbers of workplace injuries or
illnesses a chance to conduct self-inspections to identify workplace
hazards and develop worksite safety and health action plans.  In
return for such participation, these companies may have a lower
priority on the primary target inspection list.  For employers who
decline the offer of a partnership, the traditional enforcement
approach is used.  According to trade news press, while many people
have praised the partnership initiatives, others have raised
questions such as the following: 

  -- What data should be used to identify companies with high numbers
     of injuries (workers' compensation claims, claims rates, or
     other data)? 

  -- Has the effectiveness of the pilot effort been demonstrated well
     enough to extend it nationwide? 

  -- Has the emphasis on partnerships been at the expense of
     effective enforcement actions against companies continuing to
     violate the standards? 

Further opportunities exist for OSHA to leverage its resources and
demonstrate "smarter" enforcement.  For example, in a recent study,
we found that the federal government awarded $38 billion in federal
contracts during fiscal year 1994 to at least 261 corporate parent
companies with worksites where OSHA had proposed significant
penalties for violations of safety and health regulations.\12 We
pointed out that agencies could use awarding federal contracts as a
vehicle to encourage companies to improve workplace safety and health
or--if companies refuse to improve working conditions--debar or
suspend federal contractors for violation of safety and health
regulations.  One of our recommendations was that OSHA work with the
General Services Administration and the Interagency Committee on
Debarment and Suspension on policies and procedures regarding how
safety and health records of federal contractors could be shared to
help agency awarding and debarring officials in their decisionmaking. 
Labor recently told us that some discussions have occurred between
OSHA and the Interagency Committee, but final decisions have not been
reached on any new policies and procedures.\13


--------------------
\11 Workplace Regulation:  Information on Selected Employer and Union
Experiences (GAO/HEHS-94-138, Vol.  1, June 30, 1994). 

\12 Occupational Safety and Health:  Violations of Safety and Health
Regulations by Federal Contractors (GAO/HEHS-96-157, Aug.  23, 1996). 

\13 Several newspaper accounts, however, have reported that in a Feb. 
18, 1997, meeting with A.F.L.-C.I.O.  leaders, the Vice President
announced that the administration is developing guidance requiring a
company's record on labor laws and violations of safety and health
laws to be considered in awarding federal contracts. 


      IMPROVING THE DAVIS-BACON
      WAGE DETERMINATION PROCESS
-------------------------------------------------------- Chapter 0:3.2

The Wage and Hour Division within Labor's Employment Standards
Administration has responsibility for administering the Davis-Bacon
Act.  This act requires that workers on federal construction projects
in excess of $2,000 be paid the wages and fringe benefits that the
Secretary of Labor determines to be "prevailing" in their locality
for their class of worker.  The act itself has been controversial
throughout its more than 60 years of existence.  Much of the
controversy has hinged on whether Labor sets prevailing wage rates
that are, in fact, higher than those prevailing in the area--thus
artificially inflating federal construction costs.\14

Labor has acknowledged weaknesses in its wage determination process
that call into question the integrity and accuracy of some of its
wage determinations.  For this reason, it requested funds to develop,
evaluate, and implement alternative reliable methodologies or
procedures that would yield accurate and timely wage determinations
at a reasonable cost.  Labor's fiscal year 1997 budget request
included $3.7 million for that purpose.  The conference report
accompanying the Department's appropriation requested that we review
these implementation activities to determine whether they will
achieve their goals.  We will do so and report our findings to the
Appropriation Committees, as requested, when Labor has completed its
work. 

Labor took some actions that we recommended in our May 1996 report as
a short-term solution to reduce its vulnerability to the use of
fraudulent or inaccurate data in the wage determination process. 
These actions, including increased verification of information
provided by employers, will at least reduce some of the
vulnerabilities of the existing process.  The larger challenge facing
Labor, however, is to examine and substantially improve the overall
process. 


--------------------
\14 Davis-Bacon Act:  Process Changes Could Raise Confidence That
Wage Rates Are Based on Accurate Data (GAO/HEHS-96-130, May 31,
1996). 


      HEALTH INSURANCE PORTABILITY
-------------------------------------------------------- Chapter 0:3.3

Labor's Pension and Welfare Benefits Administration (PWBA) has
significant new regulatory, interpretive, enforcement, and disclosure
responsibilities associated with implementing the Health Insurance
Portability and Accountability Act of 1996 (HIPAA).  These
responsibilities stem from Labor's role in enforcing and
administering the Employee Retirement Income Security Act of 1974
(ERISA), which regulates the 2.5 million private sector,
employment-based health benefit plans that cover an estimated 125
million workers and their families.  HIPAA amended ERISA to provide
for improved portability and continuity of health coverage.  The
HIPAA portability provisions are designed to improve the availability
and portability of health insurance coverage by (1) limiting
exclusions for preexisting conditions and providing credit for
previous coverage, (2) guaranteeing availability of health coverage
for small employers, (3) prohibiting discrimination against employees
and dependents on the basis of health status, and (4) guaranteeing
renewability of health coverage for employers and individuals.  These
provisions will make it much easier for workers to change jobs and
maintain health care coverage.  And, according to Labor, millions
more who have been unwilling to leave their job for a better one out
of concern that they would lose their health care coverage would also
benefit. 

The Congress set a very short timeframe for implementing these
protections:  Although the act was only signed into law on August 21,
1996, the regulations to carry out the portability provisions must be
issued by April 1, 1997.  Labor is working with the Department of
Health and Human Services and the Treasury Department to meet that
date because these provisions--called "shared provisions"--involve
overlapping responsibilities of the three departments.  In a
statement before the Senate Committee on Labor and Human Resources in
February of this year, the Assistant Secretary of Labor for PWBA said
the three departments are "on track" to meet that goal.\15 The
regulations issued by April 1 will target the preexisting condition
limitation and certification of previous health coverage portions of
the portability provisions.  The regulations will reflect comments
received in response to a December notice in the Federal Register and
will be fully effective when issued.  Nevertheless, Labor intends to
ask for public comments after they are issued and consider the need
for any changes on the basis of the comments.  Work will continue on
other portions of the portability provisions after publication of the
first set of regulations. 


--------------------
\15 Statement of Olena Berg, Assistant Secretary of Labor, PWBA,
before the Senate Committee on Labor and Human Resources, Feb.  11,
1997. 


   STATUTORY FRAMEWORK FOR
   IMPROVING LABOR'S MANAGEMENT
   PRACTICES
---------------------------------------------------------- Chapter 0:4

Adopting improved management practices can help Labor become more
effective in achieving its mission of improving workforce skills and
protecting workers.  Recognizing that federal agencies have not
always brought the needed discipline to their management activities,
recent legislation provides a framework for addressing long-standing
management challenges.  The centerpiece of this framework is the 1993
Government Performance and Results Act.  Other elements are the 1990
Chief Financial Officers Act, the 1995 Paperwork Reduction Act, and
the 1996 Clinger-Cohen Act.  These laws each responded to a need for
accurate, reliable information for executive branch and congressional
decision-making.  Labor has begun to implement these laws which, in
combination, provide a powerful framework for developing (1) fully
integrated information about Labor's mission and strategic
priorities, (2) performance data to evaluate the achievement of those
goals, (3) the relationship of information technology investments to
the achievement of performance goals, and (4) accurate and audited
financial information about the costs of achieving mission outcomes. 


      IMPROVING MISSION
      PERFORMANCE AND RESULTS
-------------------------------------------------------- Chapter 0:4.1

GPRA is aimed at improving program performance.  It requires that
agencies consult with the Congress and other stakeholders to clearly
define their missions.  It also requires that they establish
long-term strategic goals, as well as annual goals linked to them. 
They must then measure their performance against the goals they have
set and report publicly on how well they are doing.  In addition to
ongoing performance monitoring, agencies are expected to perform
discrete evaluation studies of their programs, and to use information
obtained from these evaluations to improve the programs.\16

In moving toward an increased emphasis on program performance and
results, Labor has begun developing an agencywide plan that describes
its mission, goals, and objectives.  According to the Office of
Management and Budget (OMB), developing an overall mission and goals
is a formidable challenge for Labor because of the diversity of the
functions performed by its different offices.  OMB officials have
told us that the different offices in Labor have developed draft
strategic plans that describe their respective goals and performance
indicators.  For example, ETA's plan describes its mission, its
strategies for achieving its employment training objectives, and the
measures it will use to assess program outcomes.  These plans were
submitted to OMB with the Department's most recent budget submission. 
Although Labor is not required to submit the strategic plans to the
Congress and OMB until September 1997, this year's early submission
was used to obtain informal review and feedback on the draft plans. 

According to OMB, Labor is committed to developing a strategic
approach that includes measurable outcomes.  OMB's review of Labor's
plans indicated that some parts of the Department are doing better
than others, especially in identifying measures to assess results. 
At the same time, OMB recognizes that developing such measures may be
more difficult for some offices than for others because of the
differences in the specificity of goals and difficulty of quantifying
some outcomes.\17

According to Labor, it is continuing to make progress in meeting GPRA
legislative mandates.  Over the next few months, Labor officials will
continue discussions with OMB as well as consultations with the
Congress and the stakeholders. 

OSHA, as one of the GPRA pilot agencies, has been involved in a
number of activities geared toward making the management improvements
envisioned by the act.  It has developed a draft strategic plan that
identifies its performance goals and measures, and it has been
working to develop a comprehensive performance measurement system
that will focus on outcomes to measure its own effectiveness.  OSHA
and state representatives have discussed the application of this
comprehensive system to OSHA's monitoring of state safety and health
programs.  Although we have not reviewed the quality of OSHA's
performance measures, these types of planning and assessment efforts
are consistent with those set out in GPRA to promote a results
orientation in reviewing programs.  This system, when fully
implemented, will also be responsive to recommendations we made in a
February 1994 report.\18

Labor's decentralized organizational structure makes adopting the
better management practices described in GPRA quite challenging. 
Labor has 24 component offices or units, with over 1,000 field
offices, to support its various functional responsibilities. 
Establishing departmental goals and monitoring outcome measures is a
means by which the Department can ensure that its operations are
working together toward achieving its mission. 


--------------------
\16 Executive Guide:  Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996) and Managing
for Results:  Using GPRA to Assist Congressional and Executive Branch
Decisionmaking (GAO/T-GGD-97-43, Feb.  12, 1997). 

\17 By June 1997, we will be reporting on the prospects for
governmentwide compliance with GPRA. 

\18 In Occupational Safety and Health:  Changes Needed in the
Combined Federal-State Approach (GAO/HEHS-94-10, Feb.  28, 1994), we
recommended that OSHA emphasize measures of program outcome and
evaluations of the effectiveness of specific program features as it
assesses both its own activities and those of the state-operated
occupational safety and health programs it is statutorily responsible
for overseeing. 


      IMPROVING FINANCIAL
      REPORTING
-------------------------------------------------------- Chapter 0:4.2

The CFO Act was designed to remedy decades of serious neglect in
federal financial management operations and reporting.  It created a
foundation for improving federal financial management and
accountability by establishing a financial management leadership
structure and requirements for long-range planning, audited financial
statements, and strengthened accountability reporting.  The act
created chief financial officer positions at each of the major
agencies, most of which were to be filled by presidential
appointment.  Under the CFO Act, as expanded in 1994, Labor, as well
as all other 23 major agencies, must prepare an annual financial
statement, beginning in fiscal year 1996. 

Since 1986, Labor has produced audited departmentwide financial
statements, thus complying with this requirement of the CFO Act. 
Producing audited financial statements that comply with the act
involves obtaining an independent auditor's opinion on the
Department's financial statements, report on the internal control
structure, and report on compliance with laws and regulations.  By
meeting these requirements, Labor has been instilling accountability
and oversight into its financial activities.  Labor also has a chief
financial officer, in compliance with the act. 


      IMPROVING INFORMATION
      MANAGEMENT AND THE USE OF
      INFORMATION TECHNOLOGY
-------------------------------------------------------- Chapter 0:4.3

The Paperwork Reduction Act of 1995 is the overarching statute
dealing with the acquisition and management of information resources
by federal agencies.  The Clinger-Cohen Act of 1996 reinforces this
theme by elaborating on requirements that promote the use of
information technology to better support agencies' missions and to
improve program performance.  Among their many provisions are
requirements that agencies set goals, measure performance, and report
on progress in improving the efficiency and effectiveness of
information management generally--and specifically, the acquisition
and use of information technology. 

The Paperwork Reduction Act is based on the concept that information
resources should support agency mission and performance.  An
information resources management plan should delineate what resources
are needed, as well as how the agency plans to minimize the paperwork
burden on the public and the cost to the government to collect the
information.  The Clinger-Cohen Act sets forth requirements for
information technology investment to ensure that agencies have a
system to prioritize investments.  Clinger-Cohen also requires that a
qualified senior-level chief information officer be appointed to
guide all major information resource management activities. 

Labor has made some efforts to improve its information management
systems; for example, it has appointed a chief information officer. 
OMB, in 1996, raised a question regarding this individual's also
serving as the Assistant Secretary for Administration and Management. 
The Clinger-Cohen Act requires that information resources management
be the primary function of the chief information officer.  Because it
is unclear whether one individual can fulfill the responsibilities
required by both positions, OMB has asked Labor to evaluate its
approach and report back to OMB in a year. 

In past work, we have identified weaknesses in Labor's information
management practices.  For example, our review of Labor's field
offices demonstrated the lack of centrally located information on key
departmental functions, such as field office locations, staffing, and
costs.  We eventually identified 1,074 field offices,\19 having
constructed a profile of information about these field offices from
information Labor provided.\20 But constructing this profile was
difficult.  In response to our request for this information, Labor's
Office of the Assistant Secretary for Administration and Management
queried the individual components and assembled a list of 1,037 field
offices.  We identified other offices using documents Labor provided,
which brought the total to 1,056.  When Labor reviewed a draft of the
report, it amended the list again to add 18 more offices and bring
the total to 1,074.  Consequently, we had to report as a limitation
of our findings that there was no assurance that all the information
provided used consistent definitions and collection methods. 

In our report on Labor's Davis-Bacon wage determination process,\21
we also identified limited computer capabilities as a reason for the
process' vulnerability to use of fraudulent or inaccurate data.  We
found a lack of both computer software and hardware that could assist
wage analysts in their reviews.  For example, Labor offices did not
have computer software that could detect grossly inaccurate data
reported in Labor's surveys to obtain wage data.  And the hardware
was so outdated that the computers had too little memory to store
historical data on prior wage determinations, which would have
allowed wage analysts to compare current data with prior
recommendations for wage determinations in a given locality. 

The OIG cited areas in which Labor needs to improve its information
management practices, especially those used to support financial
accounting systems.  For example, the OIG reported on ETA's system
for accounting for the Job Corps program's real and personal
property.  The OIG noted that ETA's systems were insufficient,
relying primarily on manual spreadsheets; were not integrated with
Labor's general ledger; and were not reconcilable to Job Corps
contractor reports.  As a result, there was insufficient
accountability for Job Corps real property expenditures.\22

This year, we added two new areas to our "high-risk" issues, both of
which apply to Labor as well as to all other government agencies.\23
The first area, information security, generally involves an agency's
ability to adequately protect information from unauthorized access. 
Ensuring information security is an ongoing challenge for Labor,
especially given the sensitivity of some of the employee information
being collected. 

The second area involves the need for computer systems to be changed
to accommodate dates beyond the year 1999.  This "year 2000" problem
stems from the common practice of abbreviating years by their last
two digits.  Thus, miscalculations in all kinds of activities--such
as benefit payments, for example--could occur because the computer
system would interpret 00 as 1900 instead of 2000.  Labor, along with
other agencies that maintain temporal-based systems, is faced with
the challenge of developing strategies to deal with this potential
problem area in the near future. 


--------------------
\19 We defined a "field office" as any type of office other than a
headquarters office--for example, a regional office, district office,
or area office--established by a Labor component. 

\20 Education and Labor:  Information on the Departments' Field
Offices (GAO/HEHS-96-178, Sept.  16, 1996). 

\21 GAO/HEHS-96-130, May 31, 1996. 

\22 Office of Inspector General, U.S.  Department of Labor,
Semiannual Report to the Congress (Washington, D.C.:  U.S. 
Department of Labor, Apr.  1-Sept.  30, 1996). 

\23 High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, Feb.  1997).  See also, High-Risk Series:  An Overview
(GAO/HR-97-1, Feb.  1997) and High-Risk Series:  Quick Reference
Guide (GAO/HR-97-2, Feb.  1997). 


   CONCLUSION
---------------------------------------------------------- Chapter 0:5

Labor's programs touch the lives of nearly every American because of
the Department's responsibilities for employment training, job
placement, and income security for workers when they are unemployed,
as well as workplace conditions.  Labor's mission is an urgent one. 
Each day or week or year of unemployment or underemployment is one
too many for individuals and their families.  Every instance of a
worker injured on the job or not paid legal wages is one that should
not occur.  Every employer frustrated in attempts to find competent
workers or to understand and comply with complex or unclear
regulations contributes to productivity losses our country can ill
afford.  And every dollar wasted in carrying out the Department's
mission is one we cannot afford to waste. 

Labor currently has a budget of about $34 billion and about 16,000
staff to carry out its program activities.  Over the years, however,
our work has questioned the effectiveness of these programs and
called for more efficient use of these substantial resources. 

Like other agencies, Labor must focus more on the results of its
activities and on obtaining the information it needs for a more
focused, results-oriented management decision-making process.  GPRA
and the CFO, Paperwork Reduction, and Clinger-Cohen Acts give Labor
the statutory framework it needs to manage for results.  Labor has
begun to improve its management practices in ways that are consistent
with that legislation, but implementation is not yet far enough along
for it to fully yield the benefits envisioned. 

We are hopeful that the changes Labor is making in its approach to
management will help it better address the two challenges we have
identified: 

  -- developing employment skills through programs that meet the
     needs of a diverse workforce in the most cost-effective way and

  -- effectively ensuring the well-being of the nations' workers
     while reducing the burden of providing that protection. 


-------------------------------------------------------- Chapter 0:5.1

Mr.  Chairman, this concludes my prepared statement.  I will be happy
to answer any questions that you or Members of the Subcommittee might
have. 


   CONTRIBUTORS
---------------------------------------------------------- Chapter 0:6

For more information on this testimony, call Harriet C.  Ganson,
Assistant Director, at (202) 512-9045.  Joan Denomme and Jacqueline
Harpp also contributed to this statement. 



RELATED GAO PRODUCTS
=========================================================== Appendix 1


   WORKFORCE SKILLS
--------------------------------------------------------- Appendix 1:1

Employment Training:  Successful Projects Share Common Strategy
(GAO/HEHS-96-108, May 7, 1996). 

Job Corps:  High Costs and Mixed Results Raise Questions About
Program's Effectiveness (GAO/HEHS-95-180, June 30, 1995). 

Multiple Employment Training Programs:  Information Crosswalk on 163
Employment Training Programs (GAO/HEHS-95-85FS, Feb.  14, 1995). 

Multiple Employment Training Programs:  Major Overhaul Needed to
Reduce Costs, Streamline the Bureaucracy, and Improve Results
(GAO/T-HEHS-95-53, Jan.  10, 1995). 


   WORKER PROTECTION
--------------------------------------------------------- Appendix 1:2

OSHA:  Potential to Reform Regulatory Enforcement (GAO/T-HEHS-96-42,
Oct.  17, 1995). 

Davis-Bacon Act:  Process Changes Could Raise Confidence That Wage
Rates Are Based on Accurate Data (GAO/HEHS-96-130, May 31, 1996). 


   MANAGEMENT ISSUES
--------------------------------------------------------- Appendix 1:3

Managing for Results:  Using GPRA to Assist Congressional and
Executive Branch Decisionmaking (GAO/T-GGD-97-43, Feb.  12, 1997). 

Information Technology Investment:  Agencies Can Improve Performance,
Reduce Costs, and Minimize Risks (GAO/AIMD-96-64, Sept.  30, 1996). 

Information Management Reform:  Effective Implementation Is Essential
for Improving Federal Performance (GAO/T-AIMD-96-132, July 17, 1996). 

Executive Guide:  Effectively Implementing the Government Performance
and Results Act (GAO/GGD-96-118, June 1996). 

Executive Guide:  Improving Mission Performance Through Strategic
Information Management and Technology (GAO/AIMD-94-115, May 1994). 


*** End of document. ***