[Senate Hearing 114-680]
[From the U.S. Government Publishing Office]
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND
RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2017
----------
THURSDAY, MARCH 17, 2016
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:01 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Roy Blunt (chairman) presiding.
Present: Senators Blunt, Cochran, Alexander, Cassidy,
Capito, Lankford, Murray, and Schatz.
DEPARTMENT OF LABOR
Office of the Secretary
STATEMENT OF HON. THOMAS E. PEREZ, SECRETARY
opening statement of senator roy blunt
Senator Blunt. The Appropriations Subcommittee on Labor,
Health and Human Services, Education and Related Agencies will
come to order.
Good morning, Secretary Perez. Thank you for taking your
time to be here with us today to discuss the department's
fiscal year 2017 budget request. We look forward to hearing
your testimony and having the chance to talk about it.
Certainly, fostering an environment and regulatory agenda
where everyone can move forward in a positive way, where jobs
can flourish, where workers are protected, where Americans can
establish and grow businesses, and keep the country's economic
engine driving forward, are shared priorities.
This is a budget that reflects many of those bipartisan and
widespread supported programs, like workforce training,
ensuring safe workplaces, helping Americans who lose their jobs
return to the workforce, that make up really the bedrock of the
department's responsibilities.
At the same time, the devil is always in the details. I was
disappointed with the proposed increase just simply because it
is an anticipated increase of $627 million for the department
when our total nondiscretionary defense spending is increasing
by $40 million.
My advice would be do not make big plans to spend that
money yet, but we will talk about that, I am sure, as the
hearing goes on. I think the increase is only possible because
of some attempts in other parts of this big budget for Labor
and Education and Health and Human Services to believe that
lots of things are going to happen on the mandatory side that I
have reason to believe cannot happen in this Congress this year
on the mandatory side.
That does not mean we are any less committed to the real
priorities we need to have on the discretionary side. I hope we
can work together to find those priorities.
As the country continues to recover from recession, it is
really time, I think, for the administration to admit that
government regulation and overreach are an obstacle to the kind
of job creation we would like to see. I continue to have
serious concerns about the aggressive regulatory agenda and the
use of other methods to short-circuit the way that regulations
should be out there for people to see and think about and
understand before they go into effect.
I hear in our State and from people all over the country
about the adverse effects that the department's regulations
have had on them. I believe I can come up with a regulation
that any group you want to name is concerned about.
I think in many cases, Mr. Secretary, they are less
concerned about the regulations themselves than they are about
the letters of interpretation, the things that seem to be
moving toward more and new regulations without even going
through the regulatory process.
The growth in the agency, the 779 new employees that this
budget requests, is highly unlikely to happen. But we will be
looking at the budget, and we will be really trying hard to
find the areas that we can agree on, too, because we do want to
have an agenda that moves forward for a better trained work
force, a safer workplace, an America that has better jobs, that
creates stronger families.
Your department has an awful lot to do to help create that
atmosphere of growth and better jobs rather than a regulatory
atmosphere where the kinds of things that would normally happen
otherwise cannot get around the obstacles that some regulations
create.
But we are glad you are here.
[The statement follows:]
Prepared Statement of Senator Roy Blunt
Good morning. Thank you, Secretary Perez, for appearing before the
Subcommittee today to discuss the Department of Labor's fiscal year
2017 budget request. We look forward to hearing your testimony.
Fostering an environment and regulatory agenda where everyone can
flourish, where workers are protected, and where Americans can
establish and grow businesses keeps the country's economic engine
driving forward. We have many shared priorities in the budget that
reflect bipartisan and widespread support. Workforce training, ensuring
safe workplaces, and helping Americans who lose their jobs return to
the workforce make up the bedrock of the Department's responsibilities.
At the same time, the devil is in details and I am disappointed
that the $627 million increase for the Department of Labor dwarfs the
total increase for all non-defense discretionary spending--which is $40
million. Further, this increase was only possible with untenable budget
gimmicks within the Department of Health and Human Services' budget
request. Finally, the Administration is attempting to evade the agreed-
upon spending caps by designating large portions of the budget request
as ``mandatory,'' or off-budget, spending.
It is my hope we can work together to identify priorities and find
common ground while adhering to budget caps agreed to a little more
than 4 months ago.
As the country continues to recover from the recession, it is time
for the Administration to admit that government regulations and
overreach do not create job growth. I continue to have serious concerns
about the Department's aggressive regulatory agenda and methods used to
short-circuit the fair and open regulatory process.
I hear from Missourians and Americans across the country about the
adverse effects the Department's regulations has on them and job
creation in their community. Yet the Department continues to move
forward with increasing burdens that deter job creators from hiring.
Even more concerning, the Department pushes many of these
controversial policy changes outside the regulatory process altogether
and without public comment or input. They are being implemented through
administrative memos, sweeping new ``interpretation'' publications, and
changes in definitions that alter the scope of the law. Many small
businesses feel almost overrun by aggressive regulation and by policy
changes that do not result from the legal, full, and open regulatory
process.
Finally, I have concerns about bureaucratic growth. The Department
has again requested large increases in departmental personnel, 779 new
employees in fiscal year 2017 alone. This request is both unaffordable
and primarily used to drive a partisan regulatory agenda.
Mr. Secretary, I look forward to hearing your testimony today and
appreciate your dialogue with us about these important issues. While
there are clearly matters on which we disagree, I know we share a
strong desire to protect and support the American workforce and a
stronger economy.
Thank you.
Senator Blunt. I am certainly glad that Senator Murray and
I get to continue to work together on this committee, and I
turn to her for her opening remarks.
STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. Thank you very much, Mr. Chairman.
Secretary Perez, thank you for being here today and for all
that you do and your department does to help support our
Nation's work force.
This is a really critical moment in the American economy.
While we have seen 72 straight months of job growth, and
unemployment has fallen 5 percent, wages have only risen
slightly in the past year, and 8 million jobseekers cannot find
work.
Back in my home State of Washington, I have seen clearly
that when workers succeed, business succeeds and the economy
succeeds. So I believe the only way to create sustainable
economic growth is from the middle out, not from the top down.
Secretary Perez, I know you agree and this is central to
the mission of the Department of Labor. I look forward to your
testimony and the discussion about the department's funding
needs for fiscal year 2017.
Expanding economic security for more Americans will require
investments in the department's mission. The department's
budget proposal for programs within this subcommittee's
jurisdiction total almost $12.8 billion, which is an increase
of $627 million over last year. The department needs these
investments to help ensure workers have the resources and
support they need to improve their skills and move into 21st-
century careers and strengthen government policies that support
our working families.
I want to start by talking about the administration's
vision for investing in training today's work force and
preparing for the jobs of the future.
Working with Chairman Blunt, I was very pleased we were
able to invest $90 million in an apprenticeship grant program
in the 2016 omnibus. Expanding access to apprenticeships has
been a top priority for me because it sets workers on a clear
career pathway and ladders into the middle class. And research
actually shows that for every taxpayer dollar we spend on these
programs, the return on investment is $27.
So I was pleased to see the President's proposal continue
this important investment to develop comprehensive programs
that expand apprenticeships across multiple sectors.
The proposal also includes investments in programs that
provide comprehensive, in-person support for veterans and
unemployed workers. Those programs have proven to be effective
at helping connect workers with good jobs.
But building our economy from the middle out requires more
than making these training investments. It also calls for
protecting workers' basic rights, and that starts with the
department updating overtime standards and Congress increasing
the minimum wage and passing legislation to combat wage theft.
I understand that we in Congress may not agree on all of
these issues. However, everyone should agree that every
employer should comply with the law as it exists today. That is
why I was pleased to see the $49 million increase proposed in
the budget for the Wage and Hour Division.
The Wage and Hour Division within the Department of Labor
protects workers' paychecks by cracking down on Federal minimum
wage violations. The division also helps make sure that workers
get the overtime pay they have earned.
With no increase in its budget since 2012, the number of
people investigating these violations has declined. If the
funding level is frozen again in 2017, the department will be
unable to conduct an estimated 1,600 investigations, which will
leave workers in our country with few options for collecting
millions of dollars in wages that are owed to them. And
diminished oversight means that some unethical employers will
be able to get away with denying workers the pay that they have
learned.
Updating workers' rights also means expanding paid leave,
eliminating gender pay disparity, and strengthening retirement
security.
I appreciate the budget's focus on these issues as well as
the Secretary's leadership in those areas. It is important to
remember that the 2-year budget agreement rolled back the
automatic cuts and allowed us to restore key investments, but
it, of course, did not go as far as many of us had hoped. That
means, as it often does, that difficult choices will be
unavoidable in 2017. They will be tougher than last year.
Even so, I believe our subcommittee can find a way to write
a bipartisan bill once again, if we have an allocation that
allows us to make the investments needed in worker training and
other vital areas.
I know Chairman Blunt would like to work on this bill in a
bipartisan manner as well. I appreciate it. And I appreciate
the progress we have made.
So I look forward to continuing to work with you, Secretary
Perez, and all of our colleagues here today in the coming weeks
and months.
With that, let me turn it back over to the chairman. Thank
you.
Senator Blunt. Thank you, Senator Murray.
We will probably have time for more than one round of
questions, and we will do that on a 5-minute basis in the order
now that members arrive.
Mr. Secretary, I mentioned my continued concerns that the
impacts of regulations from the department often do not seem to
be--I am sorry. Let's listen to you first.
[Laughter.]
SUMMARY STATEMENT OF HON. THOMAS E. PEREZ
Secretary Perez. It is your committee, Mr. Chairman.
Good morning. It is a pleasure to be here with all of you.
Mr. Chairman, Ranking Member Murray, Chairman Alexander,
Senator Schatz, it is an honor to be here with all of you. I
appreciate all of your attention to these critical issues.
As you correctly said, Mr. Chairman, there is a lot of
common ground in the work that we do together. I want to thank
you for your leadership on the passage of the Workforce
Innovation and Opportunity Act, which is a game-changer for
businesses and jobseekers alike.
I want to thank you for your continued commitment to
apprenticeship and a career in technical education, veterans'
employment. There is so much that we have in common, and I look
forward to continuing that work together.
As we prepare for the final 10 months of the
administration, it is worth reflecting on where we have been,
where we are, where we need to go.
As you know, President Obama inherited an economy in
freefall. In the 3 months before he took office, the economy
hemorrhaged roughly 2.3 million jobs. Seven years later, we
have made tremendous progress climbing out of the worst
economic crisis in a generation.
We are now in the middle of the longest streak of private
sector job growth on record--6 straight years, to the tune of
14.3 million new jobs. Unemployment is down from 10 percent to
4.9 percent. Auto sales reached a record high last year.
So while we have undeniable unfinished business, including
lifting real wages, ensuring shared prosperity, we have made
undeniable progress.
I am proud of the department's important role in this
progress. Our work is critical to fortifying the basic pillars
of the middle class: education and training that allows you to
move up the ladder of success, affordable and accessible
healthcare, a fair day's pay for a hard day's work, a roof over
your head and a mortgage that will not go underwater, and the
opportunity for a secure and dignified retirement.
PLANS FOR THE FISCAL YEAR 2017 BUDGET REQUEST
These pillars took a beating during the Great Recession,
but I have never felt more confident in the resilience of our
economy, our workers, and our employers. I believe our fiscal
year 2017 budget request will help us continue our efforts to
sustain the recovery.
So, for example, despite a major decline in the number of
long-term unemployed, there are still 2.2 million people who
have been out of work 27 weeks or more. To get them the help
they need, we want to continue to strengthen the Reemployment
Services and Eligibility Assessment program, which has a proven
return on investment.
Our budget builds on the increased investments made by
Congress last year, adding $70.9 million for a total of $185.9
million. These dollars will expand services to all veterans
receiving benefits through the Unemployment Compensation for
Ex-Servicemembers, as well as one-third of the UI (Unemployment
Insurance) claimants most likely to exhaust their benefits and
become long-term unemployed.
I am grateful for the Congress' overwhelming bipartisan
support in passing the Workforce Innovation and Opportunity Act
and providing the resources to make the promise of that new law
a reality. Our 2017 budget builds on this foundation by
bringing the WIOA (Workforce Innovation and Opportunity Act)
formula programs to their fully authorized amount while
continuing the 15 percent Governor set-aside for statewide
activities that I made great use of as a State Labor Secretary.
Apprenticeship has been one of the cornerstones of our work
force development efforts, because, as Senator Murray correctly
points out, studies have shown that a $1 Federal investment has
a $27 return. So the $90 million that you added to the budget
for apprenticeship has the potential for almost a $2 billion
return.
We want to make sure apprenticeship is available in every
ZIP Code. To that end, we paid the largest ever Federal
investment in apprenticeship last year, and we are not only
expanding it in the traditional areas, we are diversifying it,
places like Zurich Insurance Company now leading the charge to
make claims adjuster apprenticeship programs and building that
model out, making sure it is available in IT, so much momentum.
Apprenticeship is the other college, except without the
debt, and we want to continue those efforts. We look forward to
working with you on the reauthorization of Perkins, because
there is so much relationship between the apprenticeship
conversation and the CTE conversation, Mr. Chairman. So I am
very excited about those potentials for synergy.
The mission of the department is not to just help people
find good jobs, but to ensure strong labor standards to give
them the best possible quality-of-life. So as a result, for
instance, our Wage and Hour Division has been able to secure
back wages totaling nearly $1.6 billion for 1.7 million
workers, and we are requesting a total for all of the
enforcement offices of $1.9 billion to continue to safeguard
the health, safety, wages, working conditions, and retirement
security of our workers.
PURSUING AN ACTIVE REGULATORY AGENDA TO PROTECT WORKERS
We continue to pursue an active regulatory agenda in this
space, in consultation with all stakeholders, including Members
of Congress. We are working, for instance, on the overtime
rule, which we submitted to OMB for final review earlier this
week. It stands for the simple proposition that if you work
extra, you should be paid extra.
We also strongly support the Murray-Scott minimum wage bill
and appreciate, Senator Murray, your leadership in that area.
I believe it is a false choice to suggest that we either
have economic growth or workplace safety. We must have both.
That is why our Occupational Safety and Health Administration
is close to issuing an updated rule that will save lives by
significantly reducing worker exposure to silica.
In the retirement context, we know that the Ozzie and
Harriet era of defined benefit plans has been largely evolving
into a world of defined contributions and IRAs. We need to make
sure that when people are making decisions, that they are
getting the advice they need. As Jeff Bogle, the founder of
Vanguard said, when you put your customer's interest first, it
is great for your customers and it is great for business.
So those are areas that we are working on, and I have had
the privilege of making a lot of housecalls in this job, Mr.
Chairman. Last summer, I met a man named Bruce Ives in Missouri
who had lost his job, having been laid off. He was 60 years
old. He was not sure he was going to get another job. But I
often refer to the Department of Labor as Match.com. We help
connect jobseekers who want to punch their ticket to the middle
class with employers who want to grow their business.
So we were able to enroll him in a program called ReBootU,
which helped him get computer programming skills that led to a
job making $36 an hour as an IT analyst at a hospital.
So I have seen those inspiring stories, but I have also
seen folks who are still struggling: the fast food worker in
Detroit who had slept in her car with her three kids the night
before I met her, the school bus driver in Connecticut who had
to take her newborn onto her bus route because she did not have
paid leave, the foundry worker in Buffalo I met with last week
who has silicosis.
These are the challenges that keep me up at night. In the
309 days that remain, and I do count the days, but I want to
make sure I make every day count.
I look forward to working with all of you to make sure that
we build an America that works for everybody. Thank you, and I
look forward to your questions.
[The statement follows:]
Prepared Statement of Hon. Thomas E. Perez
Chairman Blunt, Ranking Member Murray and members of the
Subcommittee, thank you for the invitation to testify today. I appear
before you with a great sense of optimism and pride--not just about
what has been achieved in these past 7 years, but about the direction
we are headed in the future. I am especially proud of the Department's
role in helping shape this future--a future of opportunity and shared
prosperity, a future of robust job growth and a thriving middle class,
a future where workers nationwide get the skills and training they need
to receive a fair wage without risking their health or safety.
The 2017 President's Budget reflects this sense of optimism and
provides the resources necessary to address the unfinished business of
this recovery. It builds on 7 years of investments that have helped us
climb out of the worst economic crisis in generations. The Budget
supports the President's vision of an economy that works for everyone--
one where your zip code doesn't determine your destiny; one where a
full-time job pays a living wage; one where a lifetime of work leads to
a dignified retirement; one where America's businesses are on a level
playing field with their international counterparts; and one where job
security also means that the workers are safe from unlawful
discrimination, retaliation, and workplace hazards.
We've come a long way since the darkest days of the Great
Recession. We've now experienced 72 months of private sector job
growth, with the unemployment rate down to 4.9 percent, the lowest
level since February 2008. Yet this recovery is not reaching every
community and every household. Too many people are finding opportunity
beyond their reach. Too many people, no matter how hard they work,
can't get by, let alone get ahead. Some people have given up hope,
leaving the job market completely. Others have settled for part-time
employment when they want and need a full-time job. Many youth--
especially those who grew up in poverty--do not see hope for the
future. We have accomplished a lot together, but there is still more
work ahead. The Department's fiscal year 2017 Budget will allow us to
do that work, supporting bipartisan investments made to date and
proposing new investments that meet important needs.
training americans for jobs of the future
In my two and a half years as Secretary of Labor, we have made
significant progress in building a training system that invests in the
workforce of today and tomorrow. The Department worked in 2014 with the
Vice President and other agencies to conduct a thorough review of
America's training programs, to make them more job-driven and more
responsive to employers' needs. I'm grateful for the bipartisan
leadership in Congress that led to passage of the Workforce Innovation
and Opportunity Act (WIOA), which we are hard at work implementing. We
have lifted up apprenticeship as never before, making the largest-ever
Federal investment in this learn-while-you-earn model and appreciate
Congress appropriating resources that will allow us to continue
expanding apprenticeships. We know more now than ever about what works
in job training--we need to foster partnerships between the workforce
system, employers, workers, intermediaries and others so that we are
preparing workers for in-demand jobs. We need to be data driven and
meet the diverse needs of our workforce. The Department of Labor, with
our partners throughout the Administration and the States, is leading
the process of making these important strategic changes.
Our employment and training programs served over fifteen million
people in the Program Year ending June 30, 2015. The reforms supported
by WIOA--like accountability for business engagement and new
requirements to measure and report additional program outcomes--are
tools that help us identify what is working, fix or end programs that
aren't effective, and provide good information to workers so they can
select training programs that are effective. The Department's staff has
been working tirelessly, and in strong partnership with colleagues at
Education, HHS, and elsewhere, to support and implement WIOA's
alignment of employment and training programs, so we can provide more
effective services with maximum impact. In fiscal year 2016, Congress
appropriated additional resources for a number of WIOA programs. The
fiscal year 2017 Budget builds on this foundation by bringing the WIOA
formula programs to their fully authorized amount while continuing the
15 percent Governor's set aside for statewide activities. The Budget
also includes resources for additional staff to help all States and
localities implement WIOA, as well as technical assistance to States to
improve the quality of services provided to participants. An investment
of $40 million will help States track longitudinal educational and
employment outcomes of WIOA participants, so we can know what services
are most effective. In fiscal year 2017, we are also proposing modest
increases specifically to assist dislocated coal industry workers and
to pilot ways to better serve Native American youth who do not live on
reservations.
Apprenticeship is one model where we have evidence of substantial
success. Apprenticeships offer a path to the middle class, as well as
the opportunity for trainees to earn while they learn. Much of
apprenticeship's success is attributable to the strong connection
between the trainee and the employer and, in many cases, the strong
partnership between management and labor. Those who finish their
program secure an average starting salary of $50,000, and over the
course of their careers they earn $300,000 more than their peers who
did not participate in an apprenticeship program. Since the President
launched the American Apprenticeship Initiative in 2014, we have 75,000
more apprentices in training, a step towards the President's goal of
doubling the number of apprentices. Over 165 employers and other
organizations have joined the Department's LEADERs program to be
champions of the apprenticeship model. The Department's Registered
Apprenticeship College Consortium, now 239 colleges and 976 training
programs strong, make it easier for apprentices to earn college credit.
I am appreciative of Congress appropriating $90 million in fiscal year
2016 for apprenticeship grants, and the fiscal year 2017 Budget
continues this investment. The Budget also proposes $2 billion in
mandatory funds for an Apprenticeship Training Fund that will provide
grants to States and regions to bring more employers to the table in
providing high-quality apprenticeships.
Apprenticeship, like most successful workforce programs, depends on
partnerships. To scale successful partnerships, we are requesting $3.0
billion in mandatory funding to create an American Talent Compact. This
mandatory competitive funding would create regional partnerships
between workforce boards, economic development organizations,
employers, and educational institutions to train workers for in-demand
jobs. It would give employers better forums to communicate their skill
needs and help educators better understand the job market, so they can
tailor their courses, certificates, and degrees accordingly. We
anticipate being able to train and place 90,000 people per year through
this program.
The Job Corps program has trained nearly 2.7 million people since
its inception more than half a century ago. The program was created to
open doors of opportunity for at-risk young people from diverse
backgrounds, giving them the tools to change course and reach higher
rungs on the ladder of opportunity. We now have Job Corps centers in
every State, the District of Columbia and Puerto Rico. In recent years,
the centers have been collaborating more closely with businesses and
community colleges. The credentials students earn are industry-
recognized, increasing the value to both the students and employers.
Nearly 80 percent of Job Corps graduates successfully start careers,
including in the armed forces, or enroll in higher education or
advanced skills training. But we are also looking to improve the
program in the coming years. The Department is committed to producing
innovation and continuous improvement within the Job Corps program. We
recently released a solicitation to pilot an innovative approach to the
Job Corps model at the Cascades center in Washington, and we are
preparing for additional pilots in the future. The Department will also
launch a major external review of the program beginning in 2016, with
the goal of positioning the program for continued success.
Strengthening student safety and security is a top priority. We
have initiated a National Safety Campaign--Standup for Safety--that
includes increased staff training, more intensive center oversight and
a requirement that all centers review and strengthen their security
procedures. Job Corps has also worked with our students and contractor
community to support a student-led Youth 2 Youth: Partners for Peace
initiative, designed to address youth-on-youth violence, aggression and
bullying. We also know we need to make additional investments in mental
health counselors and other personnel, as well as structural upgrades
to better provide safer, more secure and stable learning environments
at Job Corps centers nationwide--the Budget invests in both of these
areas.
Since around one in seven Americans between the ages of 16 and 24
are out of both school and work, the Administration is proposing a
comprehensive approach to put these individuals on the path to getting
a diploma and connecting to postsecondary education and jobs. WIOA also
takes an important step forward in addressing this problem by directing
that at least 75 percent of Youth formula funds be used for out-of-
school youth, while also calling for additional investments for this
disconnected and vulnerable population. The Budget proposes $5.5
billion in mandatory funding to help engage young people in the
workforce and set them on a path to a better future. Of this, $3.5
billion will be used to provide paid work opportunities--bolstering
young people's resumes and giving them the opportunity to gain useful
work experience. These youth will also be given the means and support
necessary to complete a high school degree or its equivalent, as well
as assistance with financial literacy. In addition, $2 billion will go
to local governments in communities struggling with high rates of youth
disengagement, high school dropouts and youth unemployment. These
resources will help communities locate and reengage youth, providing
them with counseling, support services, education and employment
opportunities.
As we build a more integrated, demand-driven job training system,
we must use data to understand the labor market. The Bureau of Labor
Statistics (BLS) is the principal Federal statistical agency
responsible for measuring labor market activity, working conditions and
price changes in the economy. These data are invaluable to decision-
makers. To better understand what is happening in the workplace, the
Budget includes, among other resources, funding for the first year of
activities for a Survey of Employer-Provided Training, which will fill
a key gap in knowledge about the workforce system. The Budget also
covers inflationary costs to ensure no diminution in the quality of the
Bureau's core surveys.
Data on training, careers and jobs should also be more easily
accessible. Every year, millions of people begin a post-secondary
education. While we know that this can be a crucial investment in one's
future, many people choose a school or education track with little
information about job placement rates, sometimes leading to thousands
of dollars of debt without meaningful job opportunities. We want to
empower workers to make smart time and money investments. Thus, we
propose $500 million in mandatory funds for a Workforce Data Science
and Innovation Fund that will invest in state data systems so they are
able to create easy-to-understand scorecards about outcomes, like job
placement, earnings, job tenure and other indicators of success. That
way, workers can better compare one program to another and make
informed choices about which program is best for them. The Department
will also work with the Departments of Commerce and Education to
develop new standards, analytical data sets, and open source data
products on jobs and skills, so that researchers can do deeper
analysis. This type of information will give consumers of education and
training the best chance to build a successful career.
supporting our veterans and long-term unemployed
Despite giving years of their lives to our country, far too many
veterans struggle with unemployment and even homelessness. The
Veterans' Employment and Training Service (VETS) helps veterans and
separating servicemembers transition to a good civilian career,
starting with a robust and revitalized 3-day Employment Workshop that
is required for every separating servicemember. These workshops are
part of a comprehensive veterans' employment support program, which is
anchored in our American Job Centers across the country.
The Homeless Veterans Reintegration Program (HVRP) helps transition
homeless veterans into meaningful employment. The Department's fiscal
year 2017 request includes an increase of $12 million to fully fund
this program at the authorized level, allowing us to serve more
veterans who have struggled mightily in making the transition to post-
military life. Our most recent data show that over 68 percent of HVRP
participants who completed the program obtained jobs making an average
of nearly $12 an hour. We are eager to expand on this success.
We know the number of long-term unemployed--among both veterans and
civilians--remains too high. We can and should be doing more to reach
those left on the sidelines during the economic recovery. The data show
that people who are out of work for longer periods of time have more
trouble finding jobs. The Department seeks to reduce long-term
unemployment by continuing to invest in the evidence-based Reemployment
Services and Eligibility Assessments (RESEA) program. In fiscal year
2017, the Budget builds on the increased investments made by Congress
last year, including an additional $70.9 million for a total of $185.9
million. These dollars will expand services to all veterans receiving
benefits through the Unemployment Compensation for Ex-Servicemembers,
as well as the one-third of Unemployment Insurance (UI) claimants who
are most likely to exhaust their benefits and become long-term
unemployed. Research shows that each dollar invested in these services
yields approximately $2.60 in benefits savings, thanks to shorter
unemployment duration.
Unemployment is sometimes caused by unnecessary barriers that a
worker faces when he or she has to move. The Department's efforts at
developing industry-recognized and portable credentials have helped
increase labor mobility, but different States often have a wide variety
of licensing rules for the same occupation. By simply moving across a
State border, trained professionals with years of experience sometimes
have to pay high licensing fees or spend months redoing coursework to
obtain a job for which they already have the skills. The Budget
proposes to build on the resources provided by Congress in fiscal year
2016, investing $10 million in fiscal year 2017 to identify and address
areas where occupational licensing requirements are creating an
unnecessary barrier to labor market entry or labor mobility. This
investment will be particularly useful to transitioning service
members, military spouses, formerly incarcerated individuals and
dislocated workers.
supporting working families
As some people struggle with retraining or recertification, others
working full-time, minimum wage jobs are still unable to make ends
meet. No matter how hard they work, they fall further behind. Many of
these people need public assistance and visit food banks just to
sustain their families. Often, they are one setback away from financial
devastation. The current Federal minimum wage of $7.25 per hour is
insufficient to support a family.
The value of the minimum wage, which has not increased in almost 7
years, has failed to keep pace with increasing costs of basic
necessities. Raising the minimum wage is good for workers, their
families and the economy. When minimum wage workers have more money in
their pockets, it spurs consumer demand, with that money pumped back
into the economy. Congress hasn't taken action, but 18 States and the
District of Columbia have raised their minimum wage since President
Obama called for an increase in his 2013 State of the Union address.
Workers on many Federal contracts also now receive higher wages, thanks
to an Executive Order signed by the President. Yet there are millions
more who continue to struggle. In one of the richest countries in the
world, no one working full time should live in poverty.
American workers also struggle with the difficult choice between
caring for a new baby or sick family member and a paycheck that the
family desperately needs. While the Family and Medical Leave Act allows
workers to take unpaid leave without losing their jobs, many families
simply cannot afford to take the time off. The United States is the
only industrialized Nation that fails to offer workers paid maternity
leave. Paid parental leave empowers families and produces better
outcomes for children. The Department has given out grants to States to
research the feasibility of paid leave, and the fiscal year 2017 Budget
proposes a $1 million increase to expand these efforts. But we can do
more. To encourage more States to enact paid leave legislation, the
Budget includes $2 billion in mandatory funding for a Paid Leave
Partnership Initiative. Under this initiative, the Department would
provide funding for up to five States to launch paid leave programs.
States that choose to participate in the Initiative would be eligible
to receive funds for the initial set up and 3 years of benefits. The
Budget also proposes legislation that would allow Federal employees six
weeks of paid administrative leave for the birth, adoption, or foster
placement of a child. An investment in healthy families is an
investment in our Nation's future.
protecting workers, wages, and retirement security
At the Labor Department, we reject the false choice between
economic growth on the one hand and worker protections on the other.
While most employers play by the rules, there are too many cases where
workers are cheated out of their hard-earned wages or forced to endure
an unsafe workplace. At the Labor Department, we are more strategic
than ever before about cracking down on wage violations, enforcing
workplace safety, and protecting the retirement savings of your
constituents who have worked their whole lives to build a nest egg. In
doing so, we both protect workers and create a level playing field for
law-abiding employers.
Our worker protection agencies have helped recover $1.6 billion in
back wages owed to over 1.7 million workers since 2009. We have
prevented catastrophic falls (which lead to days of lost productivity
and large workers' compensation payments), reduced workers' exposure to
harmful and cancer-causing agents, and awarded over $150 million to
whistleblower complainants. We have made progress in addressing unequal
pay for equal work; helped workers with disabilities receive reasonable
accommodations; and helped applicants who were denied jobs because of
racial discrimination. We have trained small businesses and thousands
of workers on mitigating high-risk safety and health hazards. In 2015,
we helped mine operators achieve the lowest number of fatalities ever,
with underground respirable dust levels in coal mines falling to an
all-time low. We have recovered more than $1.7 billion affecting nearly
700,000 benefit plans and 190 million plan participants.
I am proud of this work. The Budget includes $1.9 billion so we can
continue meeting our responsibilities to safeguard the health, safety,
wages, working conditions and retirement security of American workers.
To protect America's workers, we need to make sure their employers
compete on a level playing field in the global economy. As part of the
Administration's trade agenda, the Bureau of International Labor
Affairs (ILAB) is on the front lines helping to ensure that our global
trading partners adhere to agreed-upon labor standards, preventing
foreign businesses from gaining an unfair advantage on the backs of
workers. The Budget includes a $15 million funding increase for ILAB to
promote consistent, effective enforcement of the labor provisions of
free trade agreements. And we also seek the restoration of $5 million
in grants, which were reduced in fiscal year 2016 appropriations, to
continue (among other activities) preventing the worst forms of child
labor.
Protecting workers' retirement plans is a cornerstone of our work,
especially given an aging population and the decline of defined benefit
pensions. Planning for retirement used to be simple, but today one out
of three workers do not have access to a retirement savings plan
through their employers. Contractors and temporary employees are
ineligible to participate in employer-based plans. And many workers who
move to a new job are forced to manage a number of retirement accounts
from previous jobs. Careers may be mobile, but some retirement accounts
and savings plans are not.
The Budget includes $100 million for a mandatory funding proposal
to provide grants to States and nonprofits to test innovative, more
portable approaches to providing retirement and other employment-based
benefits. The goal is to encourage the development of a new model that
workers can take from job to job and that can accommodate contributions
from multiple employers for an individual worker. The Budget proposes
legislation that will allow multiple unrelated employers to come
together and form pooled retirement plans, lowering the cost and burden
for each employer. In addition, small employers who auto-enroll
employees in a retirement plan would receive a tax credit to offset
administrative expenses. Until legislation is enacted, we have also
taken administrative steps to promote savings. The Department has
proposed regulations and issued guidance to facilitate States' efforts
to create their own retirement plans for private sector employees. The
budget request for the Employee Benefits Security Administration (EBSA)
also includes an increase of $6.5 million to pilot different approaches
to increasing retirement plan coverage in States.
The Pension Benefit Guaranty Corporation (PBGC) acts as a backstop
to insure pension payments for workers whose companies or plans have
failed. Both PBGC's single-employer program and multiemployer program
are underfunded, with combined liabilities exceeding assets by $76
billion at the end of 2015. Premium rates remain much lower than what a
private financial institution would charge for insuring the same risk
and are well below what is needed to ensure the solvency of PBGC. To
address these concerns, the Budget proposes giving the PBGC Board the
authority to adjust premiums and directs the Board to raise $15 billion
in premiums in the budget window only from the multiemployer program,
given the single-employer program's improving financial projections.
This level of premium revenue would nearly eliminate the risk of the
multiemployer program becoming insolvent over the next 20 years.
The budget request for the Wage and Hour Division provides
resources to enforce laws that establish the minimum standards for
wages and working conditions in workplaces across the United States,
particularly in industries where workers are most at risk and are least
likely to assert their rights. The Budget also expands funding for
efforts aimed at ensuring that workers receive back wages they are
owed, as well as funding to crack down on the illegal misclassification
of some employees as independent contractors. Misclassification
deprives workers of basic protections like unemployment insurance,
workers' compensation, and overtime pay, and it undercuts employers who
play by the rules while their competitors skirt their obligation to
provide wages, benefits, and social insurance.
The Occupational Safety and Health and Mine Safety and Health
Administrations (OSHA and MSHA) enforce safe and healthful working
conditions for America's workers. Across the two agencies, the Budget
provides more than $992 million for these activities. That includes
funds for OSHA to bolster the agency's ability to enforce safety and
health standards; provide compliance assistance to employers and
vulnerable workers; and administer more than 20 whistleblower laws that
protect workers from discrimination and retaliation when reporting
unsafe and unscrupulous practices. The Budget will also allow OSHA to
enhance safety and security at chemical facilities, and it will provide
MSHA with the resources it needs to conduct statutorily required mine
inspections and enforce laws that protect miners who report safety or
health problems.
Finally, the Office of Federal Contract Compliance Programs (OFCCP)
enforces equal opportunity and affirmative action requirements covering
Federal contractors and subcontractors. OFCCP ensures that their job
applicants and workers do not face discrimination because of their
race, color, religion, sex, sexual orientation, gender identity,
national origin, disability, or veteran status; or because they inquire
about, discuss, or disclose their compensation or the compensation of
other employees or applicants. The fiscal year 2017 Budget request for
OFCCP would allow the agency to continue its current work, while also
creating two Skilled Resource Centers and continuing modernization of
the core Case Management System. The implementation of the targeted
Skilled Resource Centers will allow OFCCP to better align its
investigative skills trainings for existing and new compliance officers
with geographically concentrated business sector industries. The
dedicated funding for the Case Management System would support the
continued improvement of OFCCP's enforcement efforts. It will assist in
the standardization of the Department's Digital Government Integrated
Platform, which is designed to modernize legacy systems within the
Department; to support enterprise data analytics and mobile data
applications; and to enhance staff productivity and efficiency.
improving data-driven decision-making, creating efficiencies, and
program reform
In recent years, the Department has been striving to increase the
productivity and efficiency of its own workforce. We believe our
mission-driven focus and data-driven performance work have borne fruit.
The Department's staff is becoming more effective at their jobs, and
this has led to significant improvements in the Department's rankings
of best places to work. The Budget includes a number of investments to
continue improving the Department's ability to serve the public,
increase DOL employee effectiveness, streamline processes and enhance
agencies' ability to target enforcement efforts.
The Department continues to work to improve its IT management. Over
the past few years, we have consolidated nine separate IT
infrastructure components into one consolidated system. Within this
system, the Department is implementing a consolidated platform, which
will support information-sharing and improve the efficiency and
effectiveness of the Department's workforce. The Department's IT
Modernization budget includes an increase of $33 million to further
these efforts and to address the security of our systems.
Also, several agencies' budgets--including the Office of Labor-
Management Standards (OLMS), the Office of Federal Contract Compliance
Programs (OFCCP), and the Office of Workers' Compensation Programs
(OWCP)--include proposals to upgrade case management or claims
processing systems. The goal is to improve the agencies' enforcement
targeting, enabling them to better identify those employers who are
violating the law. OWCP's 20-year old Longshore and Black Lung claims
processing systems are out of date, and the FECA claims system is
approaching the end of its life. OWCP is looking to move toward a
unified claims-based system that would facilitate more effective
delivery of benefits to claimants across the four programs OWCP
administers, while also yielding savings in future years. The OWCP
Interactive Voice Response proposal will bolster these efforts by
providing a more seamless experience for callers, including improved
response from a mobile workforce, leading to shortened processing
times. Similarly, OLMS' 15-year-old, obsolete IT system jeopardizes
mission critical functions. Modernization would ensure continuity of
operations; enable sharing of enforcement data; expand online
reporting; improve transparency of union, employer, and labor
consultant finances and activities; and dramatically enhance web search
and navigation.
Thanks in large measure to the work of our Chief Evaluation Office,
the Department has been held up as a leader in data-driven
decisionmaking. The Budget includes an increase for the office, while
also continuing to allow for the transfer of resources from agencies
for evaluations of their programs.
The Budget also proposes several program reforms. Unemployment
Insurance provides critical income support to unemployed workers. After
cutbacks in coverage by States and due to broader changes in the
economy, about one out of every three unemployed workers receives UI
benefits. The Budget includes cost-neutral reforms to both strengthen
and modernize the UI program. These reforms will provide additional
benefit access to part-time workers, low-wage workers and workers who
must leave a job for a compelling family reason. The Budget also helps
unemployed workers return to work more quickly; reforms UI to help
prevent layoffs; makes the UI program more responsive to economic
downturns; and shores up the solvency of State UI programs. Lastly, it
proposes to establish a wage insurance program to help workers make
ends meet if a new job pays less than the old one.
We are also once again proposing changes to the permanent labor
certification program. This is the process we use to certify that an
employer seeking to obtain employment-based permanent residency for a
foreign worker--also called a Green Card--has adequately tested the
U.S. labor market, demonstrating that there are insufficient U.S.
workers available and qualified for the job, and that no adverse effect
on wages and working conditions of U.S. workers will occur. These
conditions must be met under the Immigration and Nationality Act before
a Green Card is issued. One of our most critical budget proposals would
authorize legislation allowing the Department of Labor to establish and
retain fees to cover the costs of operating the foreign labor
certification programs, helping us improve the speed and quality of
certification processing. The Department has heard from businesses
across the country that support a filing fee to expedite the process.
There is precedent for such authority: under the H-1B visa program for
temporary employment in specialty occupations, we use a portion of the
proceeds from employer fees to process labor certifications. There are
no backlogs in processing applications under that program, despite a 76
percent increase in applications over the last 5 years. The inability
to charge a fee to support more efficient application processing and
program administration hurts businesses, workers and our economy.
conclusion
During the time that I have served as Secretary, and throughout the
7 years of this Administration, the Labor Department has done important
work to expand opportunity to more workers, families and communities.
Our efforts have played an indispensable role in the Nation's economic
recovery. Continuing and strengthening those efforts requires a strong
but responsible budget, which makes smart investments in our Nation's
workers, job-seekers and retirees. America has no greater economic
asset than our people, our human capital. This President's Budget
empowers our people, giving them the tools they need to thrive in 2017,
and for years and decades to come.
Mr. Chairman, thank you again for this opportunity. I look forward
to discussing our budget request with you and all members of the
committee, and I'm happy to respond to any questions you may have.
Senator Blunt. Thank you, Mr. Secretary. Obviously, I look
forward to asking my questions. I was ready to do it even
before we let you make your opening statement.
Job preparation, the opportunity for families to move
forward to better jobs and stronger families is something we
are all for, something we need to work for. And there are times
when we are not going to agree, but I think we do agree on the
importance of that goal.
NEW REGULATORY PLANS
Right now, back to my comments about regulation, there are
more than 70 new regulations on the department's to-do list for
the last few months of the administration, regulations that,
frankly, this administration will not have to live with the
results of. Somebody else is going to have to live with the
results of those regulations.
As we are talking today, there are three new regulations
pending at the Office of Management and Budget that,
conservatively, according to the agency's own estimate, would
cost the economy about $3 billion. I think at least one of
these, the one on silica, has not been subjected to a full
small business impact process in over a decade, and even that
was associated with a different version of the rule.
Mr. Secretary, can you talk to me a little bit about your
process of developing the cost, and I may come back to that
topic a little later, but also developing the cost-benefit
analysis of a rule that might add a little bit to the
workplace, but the benefit not equal to the cost of
implementing that rule? How do you all evaluate that at a time
when the economy is struggling to move forward?
Secretary Perez. Whether it is silica, conflict of
interest, or the Section 503, which is related to the
employment of people with disabilities and veterans, we have
the same approach, which is you build a big table, an inclusive
table, and you take the time necessary to listen and to learn
from people, and you make sure you bring a healthy dose of
humility to the process.
So look at the silica rule, for instance, 2 weeks ago 80
years ago, Frances Perkins held a conference at the Department
of Labor on the dangers of silica. We have the grainy video of
her opening remarks. So we have known about silica as a killer
for literally 8 decades or more.
SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT
So what we did in this process was not only to follow the
SBREFA (Small Business Regulatory Enforcement Fairness Act)
requirements, but we had an extensive pre-notice comment
process of interactions with NIOSH (National Institute for
Occupational Safety and Health) and others, because we wanted
to understand the science. Then we had the formal rulemaking,
which included lengthy hearings at the Department of Labor. And
it has been a very, very extensive and inclusive process.
CONFLICT OF INTEREST
The same thing in the conflict of interest process. I pride
myself on the fact that it is really important to listen to
people and to conduct and subject our rules to very vigorous
analysis.
I would note this is an op-ed that Secretary Tom Ridge
wrote in the Wall Street Journal. ``Business and Government
Working Together. Really.'' It was in the aftermath of our 503
regulation where there was a lot of concern that we were
imposing quotas on employers to employ veterans and people with
disabilities. What he said was that Labor Department's
rulemaking process should be a model for how government can
work with stakeholders in crafting regulations that are
practical and effective. That is, Secretary/Governor Tom Ridge.
That is what we aspire to do.
Senator Blunt. I think we are for practical and effective,
and we work with you hard to do things that create new pathways
for veterans to get their skills recognized in the workplace
and get to the workplace in new ways, and to have that
recognized.
OVERTIME REGULATION
But on one of the rules, the overtime rule, for instance, I
hear a lot from higher education about that rule, the not-for-
profit sector, more than I do from the for-profit sector.
The Missouri Baptist Children's Home was in and they said
almost none of their counselors are at the $50,000 level, but
they are available all the time. They are not called all the
time, but they are available all the time. We do not see how
they are going to be able to comply with the overtime rule.
I had the people from Southeast Missouri State University
in this week who believe that the rule will cost them
approximately $2.7 million, $2.5 million of that is the impact
on nearly 31 percent of their faculty and staff, people in the
residence hall, the RAs in the residence halls.
We do not seem to see the kind of exemptions for an RA in
the residence hall or a counselor at the Missouri Baptist
Children's Home. Are you looking at those problems and how
particularly not-for-profits and educational institutions will
deal with this rule?
Secretary Perez. The short answer is yes, we received
comments there. Before we went to the formal rulemaking, we did
about a year of informal outreach. I personally participated in
that.
We met with retailers. We met with folks in the nonprofit
world. We met with folks in higher education. We met with SHRM,
the Society for Human Resource Management, and many other
people, because we wanted to learn about what their experiences
were.
We wanted to learn how they adjusted to the 2004 changes
that were significant that the Bush administration made, so we
could go to school on that.
We have gotten comments from nonprofits supporting the
rule. There have been comments from nonprofits expressing
concerns about the rule. We are taking all the comments,
roughly 300,000 in total, into careful account as we craft a
final proposal. I would be glad at the conclusion of the
process to come and brief anyone and everyone who is
interested, so that you understand the decisions we made, the
changes we made, and the various ways in which compliance can
be obtained.
Senator Blunt. We may very well ask you to do that. I am
glad you are willing to. I will not ask now, but the question I
have is, jumping one step from $23,660 as the amount of money
that if you were below that, you were subject to overtime and
you were not an exempt employee, in one step to $50,440. I do
not want to take other people's time for you to answer that
now, but I may come back to why that kind of increase is
necessary in one regulatory jump.
Senator Murray.
Senator Murray. Thank you, Mr. Chairman.
Secretary Perez, I was really pleased that Chairman Blunt
and I were able to fund the new apprenticeship grant program in
the 2016 appropriation bill. As we both talked about, that is
going to put tens of thousands of workers on a proven path to
middle class, and it will also address employers' needs, and I
hear that all the time, for skilled workers.
We know that registered apprenticeships are effective. They
are business-driven programs in predominately high-growth
industries. You mentioned several--IT, healthcare, advanced
manufacturing--all of which face critical worker shortages
today.
UPCOMING PLANS FOR GRANT PROGRAMS
I really appreciate that you have sought some really wide
input from Congress and from stakeholders as you put the final
touches on the grant solicitation. I wanted to ask you today if
you could talk a little bit about your plan for these grants,
how many States, how many employers do you anticipate will be
involved? And how long will it be before we can actually see
this put slots created on the ground?
Secretary Perez. First of all, thank you for your
leadership on a bipartisan basis. This money is going to be
well-spent. Apprenticeship, as I said before, really is the
other college except without the debt. We are transforming
apprenticeship in this country. I think as a Nation, to our
detriment, we devalued career and technical education and
apprenticeship over a period of decades. Now that is turning
around in a bipartisan fashion.
With the $90 million, we really have four basic aims in
mind. Number one, we want to build up the State apprenticeship
system, so we are going to be sending out grants to States.
There is wide variability in the State apprenticeship
infrastructures across the country. Some are very-well
developed, South Carolina, being an example. I have been down
there, and they have been going gangbusters for a while.
Others literally have one or two people. That is their
apprenticeship office. They want to do more, but these
resources are going to help them build that capacity.
Secondly, we want to diversify apprenticeship. We want to
make sure it is available to women. We want to make sure it is
available to a greater extent to veterans, to people in
underserved communities.
I did an event with former Mayor Nutter of Philadelphia
introducing IT apprenticeship to kids graduating from the
Philadelphia Public School System. When my iPhone goes on the
fritz, I go to my 13-year-old. I do not call Apple. So we are
taking that fluency that young people have and translating it
into a middle-class career.
Then finally, we need to fortify the Federal infrastructure
in apprenticeship because as we expand the State
infrastructure, and I am excited that that is happening, we
need to make sure that we keep up, because we are an important
stakeholder in that as well.
So that is the $90 million.
We also had $175 million in the H-1B----
Senator Murray. When will we start to see some of those
grants actually being announced?
Secretary Perez. Imminently. We did outreach to
appropriators, to States. We had really constructive
conversations with your staff, because we wanted to know what
you thought would be the best use of that money.
We are acutely aware that time is of the essence. We want
to synergize these investments with the $175 million that has
already been awarded and on the street. So we are moving with
great alacrity.
Senator Murray. Good. Okay. I appreciate that. I want to
keep working with you on that.
ILAB'S ROLE IN ENFORCING RULES UNDER TRADE AGREEMENTS
There has been a lot of talk about trade. Over the last
year, we had to fight to get the ExIm Bank reauthorized and the
Trans-Pacific Partnership agreement is still pending. As you
know, my home State of Washington is the most trade-dependent
State in the Nation.
So we not only want to have a seat at the table to make
sure that trade deals are fair and strong when they get
negotiated, we also want to make sure they actually get
implemented in a way that works for workers and businesses,
because it is one thing for a trade deal to include strong
protections when it comes to labor and the environment, for
example, it is another for those protections to actually be
enforced.
Your Bureau of International Labor Affairs (ILAB) has an
important role in enforcement and supporting clients with the
rules that exist for these trade agreements. I wanted you to
explain to us today how the bureau promotes compliance with
labor provisions of existing trade agreements, and what kind of
outcomes are you achieving?
Secretary Perez. ILAB is a critically important part of our
trade enforcement. I spend a lot of time with them.
So for instance, the Colombia Free Trade Agreement (CFTA),
we have an ILAB employee who is literally working in the State
Department in Bogota right now helping to implement the labor
provisions of CFTA because it is really important not only for
them to get the laws right, and we help them actually write
those laws in Colombia, now we are helping them implement those
laws and build the infrastructure necessary to ensure
compliance, because it is one thing, as you correctly point
out, to have the words on a sheet of paper in the trade
agreements. It is another thing to make sure we give them full
force. The ILAB office does this.
We do a lot of work in the context of child labor, for
instance. So we have worked very collaboratively with Nestle
and other major multinationals to eliminate child labor in
Ghana and Cote d'Ivoire, and other places where cocoa is being
grown with the assistance of child labor.
So ILAB punches above its weight, and it is a critically
important part of our trade enforcement. I appreciate your
support for it.
Senator Murray. Thank you very much.
Thank you, Mr. Chairman.
Senator Blunt. The chairman of the full committee, Chairman
Cochran.
Secretary Perez. Good morning, Mr. Chairman. It is nice to
see you again.
Senator Cochran. Mr. Secretary, welcome. We appreciate your
being here and cooperating with our committee as we review the
budget request from the administration for the Department of
Labor.
NEW OVERTIME RULE
We have some people back home calling me and writing me,
telling me about how a new rule being considered by the
administration will affect their businesses in severe ways.
The Department of Health, for example, let us know that
their employee threshold would drop from 69 percent to 11
percent exempt status. Those are words of art, I know, and I am
reading them, so I will not misrepresent this.
But this regulation, my folks down home are saying that it
took into account no regional differences in cost-of-living or
other expenses that relate to jobs in our State. It did not
consider the adverse effect that it would have on charity
organizations or religious establishments or public
universities and colleges.
What is your reaction to that?
Secretary Perez. Mr. Chairman, I assume you are referring
to the overtime rule, and both during our informal outreach and
during the formal notice and comment process, we have heard a
lot about the issue of regional disparities, how you craft a
rule that can apply to the entire country, which the current
overtime rule is a rule of general application, so that is not
a new issue. The minimum wage at the Federal level, that is an
issue of general application. We have heard from nonprofits,
and we have heard from higher education.
We reached out to them before we actually did notice and
comment, because we knew that those are going to be areas of
concern. So we wanted to proactively reach out, and we got a
lot of feedback before the notice and comment. We got a lot of
feedback during the formal process. I can assure you that we
are taking careful account of that.
When we reach the conclusion of our rulemaking process, I
look forward to briefing you and anyone else on decisions that
were made and the roadmap for compliance, and how we took into
account these concerns.
Senator Cochran. Thank you very much.
Thanks, Mr. Chairman.
Senator Blunt. Senator Schatz.
Senator Schatz. Thank you, Mr. Chairman.
Mr. Secretary, thanks for all your good work.
Secretary Perez. Good morning.
Senator Schatz. Good morning.
FIDUCIARY RULEMAKING
You have taken a lot of heat for your proposal to end
conflicts of interest in the retirement investment space. Can
you tell me, under the current system where the 1975 fiduciary
rules are in place, what happens when someone walks into a
brokerage firm to get financial advice, what kinds of
protections they have, and how would that interaction
potentially change when your rule is finalized?
Secretary Perez. Sure. The rule that most folks who provide
advice--by the way, I have great respect for people who provide
this advice. This is not a case about people with malice in
their heart. This is a case about the malalignment of the
incentives.
What I mean by that is someone providing advice has a duty
to make sure that what they are telling you is suitable for
you. You can have four different options that are ``suitable''
and one option of those four increases the commission at the
expense of the consumer, and that is still suitable. In my
opinion, that is not in your best interest. That is the
problem.
The CEA (Council of Economic Advisers) has quantified in a
portion of the industry that this is a $17 billion problem. If
you get 1 percent less, if you invested $10,000 and it was
there for 35 years, and you had 1 percent less return because
of conflicted advice, you would have $27,500 at the end of that
35-year instead of $35,000. So your nest egg diminishes by 25
percent. Compounding compounds the problem of conflicted
advice. That is what we are getting at.
Our times have changed. The Ozzie and Harriet world of
defined benefit plans are increasingly becoming rare. When
people have to make decisions, I think that we should treat
this context no differently than lawyers and doctors where they
have a duty to look out for your best interests. That is the
North Star of this rule.
Senator Schatz. Thank you for that. I heard from some in
the banking community about whether or not this would actually
accidentally include bank tellers, individuals in the customer
service space. Someone walks into a bank and says I am
interested in establishing an IRA or savings account.
My sense of the rule, having read it, is that there is not
a strong basis in the language of the rule, but I know through
the public comment period that you have made modifications. I
just want to be assured that this is narrowly tailored to the
problem that you are talking about.
Secretary Perez. We received a lot of comments regarding
the rule, including comments such as the one that you have
received. We have received a lot of comments about the best
interest contract that is in the proposed rule.
As I said to folks, our North Star in this enterprise is an
enforceable best interest standard. We have heard from a lot of
folks in the industry who say I agree with that North Star. I
think there is a more linear path. Our response to them is show
us that path, give us your ideas in specificity.
We have gotten a lot of those ideas. I look forward, at the
end of this process, to sitting down again with any and all of
you to show you, here were the proposals, here is the feedback
we have gotten, here are the changes that we made. That is what
notice-and-comment rulemaking is all about, listening, learning
and improving. I am confident that I will be able to sit down
with you at the end of this process and explain the changes
that we made that we think will produce an even better final
product.
Senator Schatz. Thank you.
NATIONAL DISLOCATED WORKER GRANTS FOR HAWAII
Mr. Secretary, as you know, the last sugar plantation in
the State of Hawaii is shutting down in central Maui at the end
of this year. They are doing their last harvest. It is about
700 jobs.
We have been working with the department on a number of
avenues to try to provide some help in the very difficult
transition. I know the ILW has a pending application for TAA
(Trade Adjustment Assistance). I would not ask you to comment
specifically on that. But what I would like you to do is offer
your continued commitment to work with the people of Maui, the
County of Maui, the State Government, and the delegation, to
make sure that we do whatever we can for these dislocated
workers.
Secretary Perez. The short answer is absolutely. I want to
thank you. You were dogged. You contacted me literally the
moment that this news started to break, and we have been
working very closely with your office and with the workers and
the employers.
We have discussed a National Dislocated Worker Grant and
other tools in our toolbox that we can use to help mitigate the
impacts.
So thank you for your dogged leadership, and I assure you
that we look forward to continuing to work with you and all the
affected folks and businesses.
Senator Schatz. Thank you.
Senator Blunt. Senator Alexander.
Senator Alexander. Thanks, Mr. Chairman.
Welcome, Mr. Secretary.
Secretary Perez. Good morning, Senator. It is good to see
you.
IMPACT OF OVERTIME RULE ON UNIVERSITIES
Senator Alexander. We hear a lot of talk from all of us,
including the administration, about keeping tuition down and
lowering college costs. Yet I have a letter here, which I ask
consent to put in the record, from all of the Tennessee
independent colleges and universities. This is what Senator
Blunt mentioned.
These are the private nonprofit institutions in our State,
most of them church schools, smaller schools. The nonprofit
colleges and universities across our country attract about 15
percent of all of our students. This is what they wrote about
the new overtime rule.
One of our members, the letter says, calculated the first
year impact would translate to a $1,000 per student increase in
tuition, a $1,000 increase in tuition from a rule from the
Department of Labor. It says it is expected the change will
cost each 4-year campus a minimum of $1.3 million.
Another rural campus noted the change would impact 133
employees for a total of $3.2 million. If they choose, however,
to reclassify those employees to an hourly schedule from salary
status, a mere 5 hours of annual collective overtime would cost
$1.1 million and 10 hours would cost $2.3 million.
Mr. Secretary, we cannot keep imposing new good-sounding
regulation costs on any segment of American society, but if the
President is going to go around and I am going to go around and
all of us are going to go around saying we want to keep college
costs down, how can you justify an overtime rule that might
raise the cost of college by $1,000 per student?
This organization, of all the independent and private
nonprofit colleges in Tennessee, says they do not oppose
increasing the current minimum salary threshold. They think
that might even help make sure that white-collar exemptions are
not abused. But the proposed salary threshold is simply too
high, too fast, and the increased threshold would result in the
inappropriate classification of many employees.
So my question is, why would you impose on independent
colleges and universities a rule that the colleges say could
raise tuition by $1,000 per student? And while you are
answering that question, maybe you could tell me when you think
this rule will become final.
Secretary Perez. Let me answer your second question first.
We sent this over to OMB earlier this week, Monday or Tuesday,
so their review has commenced. So I do not know exactly when
that will be completed, but we expect it to be completed within
the next 45 to 90 days, something like that.
On the issue of higher education, again, before we put the
rule out, we had outreach with higher education to hear them.
We had outreach with nonprofits to hear how this rule would
impact them and what they do.
In 2004, when a new rule was put into place, there was
impact on retail, on higher education, on nonprofits----
Senator Alexander. Mr. Secretary, this is a $1,000 per
student. This is a prestigious group of every single college in
Tennessee that is a private nonprofit college. That is an
outrageous number.
Secretary Perez. Well, again, we have received a lot from
higher education.
When we have discussed minimum wage, we have heard a lot of
feedback about the impacts of minimum wage.
When we did the coal dust rule, we also heard a lot of
impact. What we have learned in the implementation of the coal
dust rule is that we now have had 99 percent of our new tests
in the coal dust rule that have been under the new----
Senator Alexander. You just think they are wrong. You think
they are wrong?
Secretary Perez. Well, I do not know whether they are right
or wrong. I am simply saying that in the coal context, concerns
were raised that we would never be able to meet this new
standard. The good news is that they have been able to meet
that new standard. We take very seriously----
Senator Alexander. I do not mean to be rude. I have another
40 seconds. I just want ask one more question about rules.
Secretary Perez. Sure.
EEOC PROPOSED RULE ON EMPLOYEE DATA-COLLECTION
Senator Alexander. Yesterday, the Equal Employment
Opportunity Commission held a public hearing on a proposed rule
that would increase by 20 times the employment data it collects
from 61,000 employers on their 63 million employees, increase
by 20 times the employment data it collects from 61,000 private
employers on 63 million employees.
I introduced a bill to suggest that before the EEOC
collects this massive amount of data from private employees
that it first collected from all the Federal employees and see
how much time it takes.
Now, this is a rule that in one form your department
planned to issue at one point. You were going to do it through
the Office of Federal Contract Compliance Programs.
Since the EEOC is proposing to collect this kind of data
from all private employers, will you now withdraw your similar
rule to collect that same kind of data from Federal
contractors?
Secretary Perez. Yes. We are working with EEOC on that
initiative, because we got feedback that given the EEOC's work,
it is more efficient to work through the EEOC and the EEO-1
form. So the answer to your question is yes.
Senator Alexander. If I had more time, Mr. Chairman, I
would ask, don't you think it would be a good idea to give the
Federal Government a dose of its own medicine by collecting all
this information from all the Federal employers before we
impose it on the private employers, but I do not have time for
that question.
Senator Blunt. Senator Cassidy.
Secretary Perez. Good morning, sir.
Senator Blunt. Senator Cassidy, then Senator Capito, then
Senator Lankford.
Senator Cassidy. Yes, I was thinking I was after those two,
so I was caught off guard.
ADVICE GAP CREATED BY UNITED KINGDOM FIDUCIARY RULE
The follow-up to the fiduciary rule that you and I
discussed I think a while ago, at the time, when I asked
whether or not the experience in England and Great Britain had
been that when those restrictions placed upon advice for those
with lower incomes, you mentioned a study which showed that not
to be the case. Now, subsequent to that, I have been given more
information, and apparently you have, too.
So subsequent of being given more information, and the
information I have been given is that in the study you cited,
there was still evidence that smaller investors no longer had
access to advice.
For example, from the report that you mentioned, it says
that steps need to be taken to make the provision of the advice
and guidance to the mass-market more cost-effective. This is
after they say that those who are upper income continue to get
advice. Elsewhere, it speaks about the number of firms which
have ceased to give advice requiring assets of an equivalent of
$142,000, 70 percent of advisers turned away low-income
customers, et cetera.
You mentioned at the time, in your response to my question,
that there had been a net increase of 500,000 advisers, or
something such as that.
But the retort I have heard is that, yes, there are that
many more advisers, but they are not advising those who are
lower income.
There has been a subsequent report, which I have here,
which again verifies this. This is by Her Majesty's Treasury,
so the regulator himself, again along this line, that the lower
income no longer have access to the advice and increasingly it
is restricted.
Now that said, what are your thoughts on how I have posed
this so far?
Secretary Perez. Senator, as you know, the U.K. proposal
banned commissions. It imposed new licensing requirements.
The evidence that I have seen, and I personally traveled to
the U.K., because I heard this question with sufficient
frequency that I thought I am going to stop listening to
lobbyists and go see it for myself. So I went to the U.K., and
I met with the regulators in the U.K.
What they told me is that one of the most remarkable
impacts of this has been a movement of funds away from complex
instruments into more simple instruments, like index funds.
DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES FIDUCIARY RULES
Here is the nub of this issue. For most people in America,
they have a pretty simple portfolio. They have saved a couple
hundred thousand dollars through their hard work and grit. They
do not need a complex instrument like a variable annuity. They
need something simple, and that is what has happened in
England. More people are getting the simple, low-cost, good-
reward funds like----
Senator Cassidy. Let me ask, because you have moved beyond,
if you will, whether or not they are getting advice into
whether or not they need advice. So that is actually a
different question.
So the fundamental question we are told, not by lobbyists
but by people who--put it this way, they work in the business,
so you could say they are lobbying, but they are presenting
their perspective. And the perspective is that they are no
longer, under this rule, going to give advice to people who are
lower income, period.
So, of course they move into index funds, because that will
be all that is available, if you have no--so, in a sense, I am
getting that you are conceding the argument that there will be
fewer people giving advice, but you are saying that does not
matter because they should not be in complex instruments
requiring advice anyway.
Secretary Perez. I could not disagree more with your
characterization, with all due respect.
I have made this offer to every Senator and every Member of
Congress. I would love to bring in folks who are in the
industry now. They are already operating by a fiduciary
standard. They work with small investors, large investors
alike. The thing they tell me is, to those who say they are
going to leave the market if this rule is passed, please give
them my email, please give them my phone number, because I have
a business model that is enabling me to do good and do well.
I would love to have these folks come in, and I will get
out of the way, because these are folks who are doing it right
now. We have already a controlled experiment in America
because, again, there are a subset of folks in this space who
are our already fiduciaries. They are doing it, and they are
doing well by it, so I would love to have them come in and----
Senator Cassidy. I am out of time, but I will submit for
the record a report from Her Majesty's Treasury that shows that
an effort that is already being implemented there, which is
similar in effect to that which is proposed here, has resulted
in fewer people giving advice to this market and, therefore,
less access to them for more sophisticated advice.
Senator Blunt. Without objection.
[The report link follows:]
Https://www.fca.org.uk/publication/corporate/famr-final-
report.pdf.
Senator Blunt. Senator Capito.
Senator Capito. Thank you, Mr. Chairman.
Secretary Perez. Good morning.
Senator Capito. Thank you, Mr. Secretary. Good morning.
I wanted to talk about the item that was in the omnibus on
the displaced worker training funds. There was an initiative
that was placed in the omnibus that would give $19 million
specifically to assist dislocated workers in the coal industry.
DISPLACED WORKER PROGRAMS
I cannot begin to tell you how bad the situation is,
particularly in the Appalachian region. We have lost since 2011
10,000 mining jobs. Along with that, it is estimated that for
every mining job, there are another four jobs that go along
with that. It is resulting in our State having the highest
unemployment, if not the highest unemployment, the second
highest unemployment and rising.
Our State budget is now over $400 million in the hole.
Boone County is laying off 70 teachers. It is just a desperate
situation where we are.
So I would like to know specifically what you have done
with these funds, what you are planning to do with these funds,
where you are focusing. And I hope that I do not hear that we
are going to have committees that are going down to have town
meetings and talk about the problem.
Secretary Perez. No, I am a huge believer and supporter of
the POWER Initiative. It has really helped to make sure that we
help people transition.
Senator Capito. I would dispute that, but go ahead.
Secretary Perez. Well, there was $19 million included in
the fiscal year 2016 appropriation that has been used toward
the POWER Initiative.
Senator Capito. How has that been used? That is my
question. In what form?
Secretary Perez. Sure. You worked in the coal industry, you
are laid off, we are now training you for the jobs of tomorrow.
Senator Capito. But where are you doing that? Do you know?
Do you have a listing?
Secretary Perez. I will give you a listing of all the work
that we are doing. I will provide that to you.
[The information follows:]
the power initiative
The $19 million included in the fiscal year 2016 appropriation for
the POWER+ Plan are Program Year (PY) 2016 resources that will become
available on July 1, 2016, so that amount has not yet been awarded. But
in 2015, the Department committed $20 million from its Dislocated
Worker National Reserve to support the POWER Initiative, an
intergovernmental effort to address the displacement of workers and
communities that have relied on the coal industry. Investments made
under the POWER Initiative are designed to support affected coal
communities. Part of that support is ensuring that workforce
development strategies are coordinated and integrated with economic
development strategies to prepare affected workers for jobs with the
area's high-growth and high-wage employers.
DOL funds committed to the POWER Initiative are awarded to impacted
States as POWER Dislocated Worker Grants (POWER DWGs). These grants
provide States and their local workforce area partners with necessary
resources to temporarily expand their capacity to serve workers
dislocated by changes in the coal industry. By the end of September
2016, the Department will have awarded a total of $39 million in POWER
DWG grants ($20 million in PY 2015 grants and $19 million in PY 2016
grants). Specifically, the $19 million will be used to expand, where
needed, previously awarded POWER DWGs and award additional grants the
Department wasn't able to fund with its previously committed funds; it
will also allow ETA to increase the maximum available grant amount for
POWER DWGs to $5 million from the current $2 million, for both new
grant applications as well as for previously awarded POWER DWGs. This
larger grant amount will enable the grantees to conduct more
comprehensive strategic planning efforts and provide reemployment
services and training for more workers in the affected communities.
POWER DWG funds are available for award between July 1, 2015 and
September 30, 2018. DOL's current investments under POWER include:
------------------------------------------------------------------------
Funding
Funding Awarded
POWER DWG Grantee Requested (Initial
Amount)*
------------------------------------------------------------------------
Kentucky................................ $2,000,000 $1,098,800
Ohio.................................... 2,000,000 916,250
Virginia................................ 1,965,730 1,965,730
Pennsylvania............................ 2,000,000 2,000,000
Total............................... $7,965,730 $5,980,780
------------------------------------------------------------------------
* DWG awards may be funded on an incremental basis, with an approved
initial increment and an overall up-to award amount.
However, it is important to note that the POWER initiative is a
subset of Dislocated Worker Grants, and other grants were also made to
States to help address the needs of workers dislocated from the coal
industry. Through our regular Dislocated Worker Grants, West Virginia
has received $10,728,278 to serve dislocated coal workers (subject to
the same note that additional increases could be added incrementally
upon this amount). The Department provided a briefing for Senator
Capito on April 19, 2016, on this issue. Our discussion covered the
interaction of the NDWG and POWER grants, and included discussion of
some of the specific grants in the States. ETA is preparing follow-up
documentation for the Senator on outcomes from a number of ETA grants
and the formula funds that West Virginia receives, as requested.
The Department is requesting $20 million for the POWER+ program in
the fiscal year 2017 Budget.
Senator Capito. How many people have actually attended?
Secretary Perez. I would be glad to provide you with that
specificity. I traveled with Chairman Rogers, who is obviously
going through a similar thing, and I went to a company named
BitSource that was in Pikeville. It was a training program that
we were funding.
RETAINING DISLOCATED WORKERS
It is a company that is doing coding, computer coding.
Everybody in the room was a displaced coal miner and they
inspired me, Senator, because they were making a remarkable
transition.
One guy told me that he had gotten a call the previous
Friday from his old employer at the mine offering his job back,
and he told them no because of this investment.
We were able to help basically start this up through
investments like the ones we are doing in West Virginia as
well. I would be happy to give you a briefing on this.
I grew up in Buffalo, New York. I watched jobs in the
middle class get hollowed out. So for me, this is very
personal. When I travel to Eastern Kentucky or West Virginia,
for me, that brings back memories of Buffalo and my parents'
generation.
So I am very committed to working with you. If there are
areas where you think we are falling short in how we are
delivering those services, I want to hear that, too, because
everybody who has been displaced, I want to make sure we can
get them the skills to do tomorrow's job.
Senator Capito. I appreciate that. My concern is that it is
more of a pat on the head. Your industry is being destroyed.
You are being displaced from your community, your job. There is
a sense of deep pessimism.
You know, $19 million sounds like a lot of money but to
recover from something like this, not only will it take a long
time, I would like to see specifically where this money is
being spent, through what initiatives, through what training
programs, how many people are being trained, how much
assistance is being given.
Secretary Perez. We will be glad to come in and brief you.
Senator Capito. You are asking for another $20 million for
the next year.
Secretary Perez. I would be happy to. It was inspiring to
be at BitSource. I walked away from there with an incredible
amount of optimism, because folks were getting kicked in the
gut and they were getting up, and they had a lot of grit and
determination, and I want to make sure that we help them.
Senator Capito. Thank you.
Senator Blunt. Senator Lankford.
Senator Lankford. Thank you.
Secretary, good to see you again.
Secretary Perez. Good morning, Senator. Good to see you.
RETROSPECTIVE REVIEW PROCESS
Senator Lankford. We talked before about retrospective
review. It is one of the areas that the Department of Labor has
focused in on, and we have had hearings. In the committee that
I chair dealing with regulatory affairs, we have had some
Department of Labor folks in to talk about the process.
If my memory serves correctly, about 2011, there were 29
retrospective reviews that were going to be in process.
Fourteen of those had been completed by the time of our
hearing. I believe one more had been done, but only one has
been done in the last 6 months.
What I am trying to figure out is, there are over 600
different rules that are out there. Not all of them rise to the
level of needing retrospective review. I am trying to figure
out, where is the process going on retrospective review on
regulations within the Department of Labor? Are you looking
back at some of these old rules and trying to evaluate them?
And with only one done in the last 6 months, what is the
progress in the coming days?
Secretary Perez. Let me give you a couple examples of what
we are doing in this context. In our dust rule that we released
last year, we built in a retrospective review of some of the
new technology that we are requiring.
Senator Lankford. When you say you built in a retrospective
review, you set the date when that will occur?
Secretary Perez. That begins on February 1, 2017. I think
that was built into the rule.
The PERM rule, which is one of our immigration rules, one
of the things when we were conducting our retrospective
review--I think I may have talked to you about this when we
were at the White House at that event.
Under the current rule, when you are trying to hire
workers, you have to advertise in the Sunday newspapers. It is
a very sort of 1970s kind of paradigm. So we have sent a
proposed PERM rule to OMB----
Senator Lankford. I am going to run out of time. I have
several questions. But those are all good. We have talked about
that, but that was a year ago. What I am trying to figure out
is some of the progress on these.
The targets seem to be slipping, as far as when they will
be completed and when they will be done, and I want to try to
see the progress of how we can keep the target dates from
slipping again. With only one of these complete in the last 6
months, it looks like only one coming this year, I want to try
to help the department continue to press on this.
If there is something that is missing on it, let us know,
because going back and reviewing as you just mentioned with
that rule, it is extremely important that we get things up-to-
date and stay consistent with the original statute as well.
FRANCHISE RULE
I also want to get a chance to chat with you. You and I
have swapped letters back and forth on a series of questions
that we have and that Chairman Johnson and I have for the
Homeland Security and Governmental Affairs. That is on this
issue of Department of Labor and NLRB (National Labor Relations
Board) cooperating together on the Franchise Rule and the
communications ahead of time.
When we asked for initial documents on that, we had been
told, hey, there are not initial documents. Then we find out
later, well, there may be a few documents. I sent a letter to
you asking for all those documents. No documents were sent to
me.
Then a FOIA (Freedom of Information Act) request from an
outside group separate from me, they get a big dump of
documents that looked to be very consistent with what we had
asked for and were told there were not any documents.
So we get those same documents then from an outside group
that had a FOIA request. Those reference other documents and
other conversations that seem to be pertinent.
All we are trying to do is provide basic oversight between
the Department of Labor and some of the communications they had
on the Franchise Rule before it ever came out with NLRB.
All I want to know is, will you assure me we will get all
the documents that we have asked for. It has not been a big
giant laundry list. It is a very specific group of documents.
We want to get all the responsive documents.
Can you assure me that we will get that?
Secretary Perez. Yes.
Senator Lankford. And not have to have an outside group do
a FOIA request and then we get it after they do a FOIA on it.
Secretary Perez. I said yes, sir.
Senator Lankford. Terrific. Thank you. Do you have a time
period on that, that you think that would come?
Secretary Perez. I believe we have sent hundreds of pages
to date.
Senator Lankford. Wait. Nonresponsive hundreds of pages.
The pages that came to us initially were that there was not
anything. Then a FOIA request was sent, so we got the FOIA
request information. What we are trying to follow up is to just
make sure we really do have everything.
Secretary Perez. I will make sure you have everything.
Senator Lankford. Thank you. I would appreciate that very
much. We just want to be able to do the task on it.
IMPACTS OF OVERTIME RULE
When we get into the overtime rule, let me just read a
couple things to you, and this is the reason so many of us on
this panel have the question about this and why this is so
concerning.
Let me just give you a couple things, the concern that is
happening in my State.
From one of the battered women shelters in my State, this
is what the H.R. director said. She is a committee member of
the YWCA battered women shelter and is concerned about the
impact of changes the overtime regulations will have on their
nonprofit organization and employees. All employees make less
than $50,000, except for top management. The impact of this new
legislation could be catastrophic for payroll as employees will
have to be moved from exempt to nonexempt status simply due to
the salary base being proposed. That is from one of the
battered women's shelters.
From the Counseling and Recovery Services of Oklahoma, they
said about 80 percent of our work force will be impacted. The
cost to meet the proposed regulations is expected to be in the
hundreds of thousands and will have a devastating impact to the
community mental health industry overall.
From tribal governments, to hear from tribal governments
who are concerned about this and the use of a single national
salary threshold would adversely affect already limited
revenues, especially for tribes in rural areas. They are very
concerned about their people and about the Nation.
I can go on and on, from small-business owners, from those
who work for senior adults.
The standard of the economy in Oklahoma and the standard of
living there is very different than San Francisco and New York.
And there are a lot of agencies, entities, and businesses in my
State that are very concerned about this overtime rule. And
they are watching it and understanding the devastating impact
it will have.
We will follow up with questions for the record on that.
Secretary Perez. Thank you.
Senator Blunt. We have time for a second round, and Senator
Murray is going to start the second round.
Senator Murray. Mr. Secretary, I am really pleased that
there has been a part of good progress on improving employment
rates for our veterans. Thank you very much to your department
for your efforts in that area.
HOMELESS VETERANS' REINTEGRATION PROGRAM
However, there is a lot more that needs to be done to help
the men and women who served our country. At the heart of these
efforts is our commitment to end veteran homelessness, which
has declined sharply over the past 5 years, but it also
includes helping these men and women find employment.
So I was actually really pleased that your budget includes
a significant increase for the Homeless Veterans' Reintegration
Program. Can you talk a little bit about how these services
help to transition homeless veterans into jobs and what impact
that will have?
Secretary Perez. Thank you for your question.
The budget request takes the Homeless Veterans'
Reintegration Program to its authorized level.
I have had the privilege until recently of chairing the
Interagency Council on Homelessness. I am very proud of the
progress that we have been able to make to reduce homelessness
generally, and reduce veteran homelessness, in particular.
These funds go exactly toward that end. We have been able
to really forge partnerships with people like your wonderful
work force system in Seattle with whom I have spent a lot of
time. Homeless veterans receive customized employment and
training services.
My wife works with homeless people here in the district,
including many veterans. They have many different challenges,
so it is not simply they need to brush up on a resume. They may
have a substance abuse issue. They need to get housed because
housing first will lead to good things after that.
So this program has been a linchpin, and we know that it
works. We have had it studied, so we know there is a good
return on investment. We want to scale it up, so that we can
really reach our goal of zero veteran homelessness.
THE 503 RULE
Senator Murray. Okay. The department's Office of Federal
Contract Compliance has a role as well in making sure that the
rights of veterans in hiring and employment by Federal
contractors are respected. Can you tell me about the progress
being made there to protect veterans, particularly on the new
rule, which some have suggested establishes employment quotas?
Secretary Perez. The 503 rule, I mentioned the piece by
Governor Ridge, Secretary Ridge.
I never know whether to call him Governor or Secretary, Mr.
Chairman. You have been both. You can give me some guidance
someday.
But that rule has been indispensable in helping us help
veterans get into the workplace. I am very proud of the fact
that 34 percent of DOL's new hires are veterans and over 20
percent of our work force is now veterans.
Under the leadership of Pat Shiu, we have had a very
collaborative approach to problem-solving.
One of the people that I met who led the charge in the
litigation, which was unsuccessful, against us is now one of
our strongest advocates and understands that, ``You know what?
As I look in my company''--and this person is a senior
executive in a Fortune 500 company--``when I started looking
behind the numbers, I realized that we had a lot of work to do,
and I also realized that we are leaving talent on the
sidelines.''
So the veteran rules that OFCCP (Office of Federal Contract
Compliance Programs) has been enforcing have really helped us
move the needle on veteran employment. I want to thank you for
your unwavering support on that issue.
Senator Murray. Thank you.
IMPORTANCE OF OVERTIME RULE
You have been asked a lot about the overtime rule here. I
know everybody is anxious to see what it is and make sure that
some of these stories could be real, may not be, whatever the
rule is.
But I just want to ask you, talk to me about why you think
it is important that we implement this rule and what you have
seen out there that brought you to this.
Secretary Perez. I have met a number of people who are
working 70 hours a week. They are the most important people in
their organizations. I am not going to name names, but they are
working at a lot of places that you go to, to get food or
coffee or whatever. They have missed their kids' graduations.
They have missed dinners. They have missed PTA meetings. They
have done so because they are really dedicated to these jobs.
As a result of the 2004 rule, frankly, leverage was taken
from workers and given to employers. ``When was the last time
you had a vacation?'' And one of these managers said,
``Vacation? For me, a vacation is a 40-hour week.'' Those were
not my words. Those were his words, and they really stuck with
me.
The overtime rule is, I think, an illustration of what
happens when Congress does not index things, because you know
what? When we have these conversations about the minimum wage
and you hear about concerns about disruption, your proposal
with Congressman Scott will eliminate that issue by indexing.
If we had simply indexed the 1975 threshold, today's
threshold would be something like $58,000.
Senator Murray. So your proposal is actually less than what
it would have been.
Secretary Perez. If we had simply indexed, the proposed
rule would be less.
So I think when you look at these issues, people are
concerned about wages. We had a conversation about wages. When
I grew up in Buffalo, New York, when my friends' parents were
managers, they were in the middle class. There are a lot of
folks who are managers doing responsible things, and they are
no longer in the middle class. They are donating 20 to 30 hours
of their time. I do not think that is fair.
Senator Murray. Thank you very much. I really appreciate
that.
INDEXING EXEMPTIONS SALARY FOR THE OVERTIME RULE
Senator Blunt. On the overtime rule, since we are spending
some time on that, particularly in the not-for-profit sector,
there appear to be real concerns, if you had indexed that
$23,660 in 2004 to any reasonable index I am aware of, you
certainly would not go to $50,440 today. Your belief would be I
guess the $23,660 was the wrong number, but these same jobs
with same responsibilities, Mr. Secretary, have not more than
doubled in their compensation in the economy we have seen.
Your contention is that the number you started with, the
$23,660, was the wrong number in 2004?
Secretary Perez. I do not want to get too specific right
now, because we are in the middle of the rulemaking process,
but I would simply note that indexing is not a new concept.
Indexing Social Security benefits, if people did not have their
benefits indexed----
Senator Blunt. What do you think it would be if you had
indexed $23,660 over the last 12 years?
Secretary Perez. I do not have that exact answer. It would
certainly be less than this. But we had if we had indexed--back
in 1975 was when the rule was changed and there was a short
test and a long test. That was $250 a week, if my memory serves
me. If you index that now, you would be at that $57,000 or
$58,000 figure that I am talking to.
Again, I hope when Congress passes a minimum wage, they
have an indexing provision, so we do not have to have this
conversation, because it has an impact when you suppress wages
for that long and then you have to catch up.
Senator Blunt. When you set this number this high this
quickly and suggest that one national standard makes sense, one
national standard may have made some sense at the lower number.
I think it just does not make sense here. And you have heard
from Oklahoma and Tennessee and Mississippi and Missouri that
these jobs, particularly in the not-for-profit sector, with
responsibilities that have people committed to a job maybe not
onsite, but committed to be available, are out-of-touch with
this number.
I am sure you are now anticipating that when the rule does
come out, we will have a lot of discussions.
Secretary Perez. We have certainly heard that. We have
heard your sentiment in the comment process. We have also heard
Senator Murray's sentiment and others.
Senator Blunt. Speaking of the direction of the committee,
here is another example of a change in department policy that
has a lot of impact that does not really have a rules change.
This does not follow the Administrative Procedures Act.
RETAIL EXEMPTION
There was an OSHA (Occupational Safety and Health
Administration) memo last year, July 22, altering the retail
exemption application that had been in place for over 20 years
for anhydrous ammonia, which is a farm fertilizer. In fact, in
the current appropriations language, the language prohibited
OSHA from enforcing that July 22, 2015, retail exemption memo
unless they carried out a full rulemaking process.
Six days later, after the bill went into effect, the one
that said you should not do this, OSHA issued a notice that it
would start enforcing the memo on the first day of 2017. No
rulemaking, no other language, nothing happening there.
Why would OSHA ignore the clear congressional intent here
that you would have to go through a rulemaking process to make
this change? The small retailers, your estimate is it would
cost them about $2,000 to comply. Their estimate is it would
cost them about $20,000 to comply.
But I think my first question is, why wouldn't you follow
the specific intent of the appropriating language that you not
do this without going through the rulemaking process?
Secretary Perez. With all due respect, Mr. Chairman, I
think we did. What our announcement was was that we were
extending the enforcement date to the end of this fiscal year
to comply with the rider. That is exactly what the rider said,
and that is exactly----
Senator Blunt. So your memo would become the rule?
Secretary Perez. Pardon me?
Senator Blunt. Your memo would become the rule?
Secretary Perez. No, what our memo said--you instructed us
in the appropriations rider not to enforce this in this fiscal
year. Our memo said that we will not enforce this in this
fiscal year.
This issue is an outgrowth of the horrible catastrophe in
West Texas where 15 people, mostly first responders, died in a
horrific incident and----
Senator Blunt. Anhydrous ammonia was not involved in that
accident.
Secretary Perez. But the President's directive to us
afterward was to make sure that we improve safety in chemical
facilities.
There was an elementary school that got leveled, and thank
God this occurred in the middle of the night or else we would
have had hundreds of people--so we actually did do what we call
a request for information. We did not simply come out with
guidance.
We solicited feedback. We got feedback. We issued a
guidance document, which we think is within our rights. That is
subject to litigation. Whatever happens at the end of
litigation, we will comply with.
Senator Blunt. And it certainly is within our rights to put
the same language in the bill again this time then that says do
not do this beginning January 1, 2017, without going through a
rule. I just do not understand why you want to continually
resist the administrative rulemaking process with these memos
and letters that have the impact of rules without having gone
through the process of what it takes to make a rule.
CHEMICAL SAFETY BOARD RULES
The U.S. Chemical Safety Board says that there is no
evidence that there has ever been an ammonia nitrate problem if
the current rules were being followed.
Secretary Perez. Again, Mr. Chairman, we all have a shared
interest in preventing another West Texas from occurring. I
recognize that we both have that interest. We were in a
situation where we got feedback, we solicited that feedback,
and the cost of taking 2 years to solicit additional feedback
or however long that process would take, I was frankly
concerned that if we did that and during that period another,
God forbid, incident occurred, then I would be at oversight
hearings where I would be asked, why didn't you move faster? So
I am a little bit damned if I do and damned if I don't on this
one.
I appreciate that, and again----
Senator Blunt. I appreciate your feeling that that might be
where you are, but if the United States Chemical Safety Board
says when the current rules are followed, there is no evidence
there has ever been a problem, and when anhydrous ammonia was
clearly not the problem that you are concerned about in that
horrific accident. Nobody wants to see those accidents happen.
My belief is that the current rules were not being followed
there, based on what I read about this and understand.
But what you really do is add a substantial cost penalty to
small retailers who have never had an accident, who follow the
current rules, the current rules thought to be sufficient, and
without going through the rulemaking process.
And while it technically does not violate the direction of
the appropriations bill, the way we would I guess continue to
express the will of Congress is every year prohibit you from
doing something that you could have done properly by proposing
a rule. The legislative bill did not say do not go through the
rulemaking process. It said, in fact, you should go through the
rulemaking process rather than not do that.
Chairman Cochran, do you have another question?
GULFPORT, MISSISSIPPI JOB CORPS CENTER
Senator Cochran. Yes, Mr. Chairman. I have a sore subject
that I hate to bring up, because it has been hanging out here
for 10 years, but I am going to bring it up again until I wear
it out or I retire or run off or get run off.
Two years ago, we had a commitment from the Department of
Labor, Secretary Solis, who was involved in this, in helping
draft suggestions to resolve issues about a $18 million
Gulfport, Mississippi, Job Corps Center that was destroyed or
labeled destroyed by somebody.
We submitted language to authorize funding to restore,
rebuild this historic structure. There was a feasibility study
done, a report estimating costs. There was a Mississippi
Department of Archives and History report that was done. They
awarded an environmental effects study.
Anyway, several steps have been taken to try to get back
this department asset, which is a Federal investment sitting
around for several years now.
Anyway, I would like for you to look into the situation,
see what you can recommend about the restoration and rebuilding
of the Gulfport Center in Gulfport, Mississippi.
Secretary Perez. Absolutely. I believe that we submitted
last week a report required by you, and I think we briefed your
staff or spoke to your staff about this. Then I think we are in
the process of doing two separate procurements. One is for the
NEPA study, the National Environmental Protection Act study,
and then the structural engineering analysis.
Whenever there are issues of historic preservation, I used
to be a local government elected official, whenever we had
those historic preservation issues, one thing I learned from
that was that the process took seemingly forever, and it was an
undeniable source of frustration for everyone.
I certainly appreciate the amount of time that has been
spent, and your dogged persistence on this is something that we
very much appreciate. So I can assure you that we are doing
everything in our power to move forward, and we will continue
to work with you and your staff. Your staff has been, as usual,
superb on this issue, Mr. Chairman.
If there are things that you think we should be doing that
we have not done, I hope you or your staff will bring it to our
attention, because, again, this should not take this long, I
know. But when we are talking about local processes and
compliance with a bunch of different State, Federal, local
provisions, and then listening to the community, which is
obviously very important, it takes the amount of time that it
has.
So I look forward to continuing to work with you.
Senator Cochran. Thank you very much for your seriousness
of purpose. I look forward to helping celebrate the completion
of the center.
Secretary Perez. I would like to go to that grand opening--
reopening.
Senator Cochran. Thank you.
Senator Blunt. Before I go to Senator Cassidy, I think you
mentioned earlier that I had been Governor and Secretary. I was
Secretary of State. I was not Governor. My son Matt was.
Secretary Perez. I am sorry.
Senator Blunt. I did not want somebody to suggest that I
allowed my resume to be inflated.
Secretary Perez. My bad, Mr. Chairman. I apologize.
Senator Blunt. I am of the view that maybe being Governor
is the best job in politics, and I think they all put on their
stationery from then on Governor. So Governor Ridge is where I
would go, if I was going to talk of Governor Ridge or Secretary
Ridge.
Senator Cassidy.
Senator Cassidy. Mr. Chair, you asked my questions, so I
yield back.
ADDITIONAL COMMITTEE QUESTIONS
Senator Blunt. Any other questions?
Well, thank you, Mr. Secretary. The record will stay open
for 1 week for additional questions. I am sure there will be
some.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Roy Blunt
department of labor rulemaking process
Question. Each year, I hear from small businesses owners, large
businesses, and anyone who is trying to recover from the recession
about the onerous regulations being implemented by the Department.
Can you please speak to the Department's process for developing a
cost-benefit-analysis and how it is justified to move forward with
rules that will be extremely onerous to the U.S. economy?
Answer. Each of the Department's rulemaking efforts is conducted in
line with governing laws and executive orders, including Executive
Order 12866, which requires the use of regulatory impact analysis in
certain circumstances. Costs and benefits are quantified, monetized, or
analyzed qualitatively consistent with OMB's guidance in Circular A-4.
Over the course of this Administration, the benefits of the
regulations that the Department has implemented far outweigh the costs.
Like you, I also talk to business owners in my travels, and many thank
us for helping to level the playing field so that they are not forced
to compete with other businesses who take the low road in dealing with
their workforce. When we level the playing field for business owners
that want to comply with the law, that is good for the economy.
fiduciary expansion rule
Question. Mr. Secretary, it is important for the Department to have
a full understanding of the adverse economic effects on businesses and
employers that these rules have. For example, regarding the proposed
fiduciary expansion rule, Morningstar (a highly-respected financial
information firm) said that while this rule officially has a high-end
annual cost estimate of $1.1 billion, Morningstar believes the low-end
estimate to be more than double that.
What accounts for such a large discrepancy between government
estimates and those of outside experts?
Answer. While developing the final rule and the exemptions, the
Department also reexamined its cost estimates, in light of public
comments and other information available at the end of the comment
period. The new cost estimates are published along with the final rule.
While the Morningstar report in question was made public after the
close of the comment period, the Department reviewed the report. The
Department's cost estimates did not change as a result of its review of
the Morningstar report.
The Morningstar report considered the proposed rule, not the final
rule and exemptions. The report exaggerated the negative impact the
proposed rule would have had on commission-based product sales and the
final rule and exemptions have been streamlined and clarified to better
accommodate such sales. In addition, Morningstar focused more on the
rule's effect on financial firms' revenue, not their compliance cost.
Much of that revenue would translate directly into savings in
investors' pockets who will pay less for financial products and
services.
Question. Does the Department of Labor, who has not previously
regulated on this particular issue, fully understand the implications
of the proposal?
Answer. Since 1978, the Department has been charged by Congress
with interpreting and issuing exemptions from the prohibited
transactions provisions of both ERISA and the Internal Revenue Code
(IRC). Since that time, the Department has issued a number of
regulations related to the IRC prohibited transactions provisions, as
well as a number of prohibited transaction exemptions. The Department's
role regulating fiduciary investment advice to IRAs long predates the
2010 Proposal--it was established 35 years prior and was recently
explicitly recognized and expanded by the Pension Protection Act in
2006. The new rule and exemptions fit within the Department's scope of
responsibility to interpret the IRC's prohibited transactions
provisions and issue prohibited transaction exemptions in connection
with investment advice regarding IRAs.
Under ERISA, the Department is responsible for creating rules and
regulations that protect America's workers when they put their
retirement savings in the hands of brokers and other financial
advisers. ERISA gave retirement investments uniquely tax-favored status
and special fiduciary protections from advisers' conflicts of interest.
These tax benefits promote retirement savings and the fiduciary
protections protect the workers who rely on these assets for their
retirement security. In addition, there are many transactions involving
retirement savings (such as advice to purchase some insurance annuity
and bank products) to which Federal securities laws do not apply, but
ERISA and the Internal Revenue Code (IRC) do. We want to make sure that
people who provide fiduciary investment advice can comply with all the
rules and their obligations and have therefore designed a rule that
will neither undermine nor contradict the securities laws. Our aim is
for consumers to receive the full protection of ERISA, the IRC and the
securities laws.
The Department undertook incredibly thorough and extensive public
outreach over the past 6 years, culminating in an extended public
comment process, four days of public hearings, and an additional public
comment period that ended on September 24, 2015. We received feedback
on the proposal from thousands of commenters. The Department took into
consideration the full range of public comments received in finalizing
the rule.
economic analysis of fiduciary rule
Question. Will the Department provide a more rigorous economic
analysis of the rule and any changes made in the final version, or does
it plan to rest this rulemaking on the initial, potentially-fatally
flawed, economic analysis?
Answer. The economic analysis of the final rule and exceptions is a
detailed evaluation of the impact of the final rule. The Department
received feedback on our proposal, including our economic analysis,
from thousands of commenters. Over the course of 6 years, we heard from
hundreds of thousands of members of the public in the form of emails,
petitions, hand-delivered comments and hearing testimony. The proposed
rule and exemptions that we published in April 2015 were much more
robust than the version we proposed in 2010. The final rule and
exemptions published in April 2016, including a final regulatory impact
analysis, is an even stronger and more comprehensive product than the
2015 proposal due to the constructive feedback we have received in over
5 months of comment period, four days of public hearings, and almost
100 meetings.
The Department's final economic analysis reflects careful
consideration of the entire public record, and it refines and extends
the analysis previously provided with the proposal. It confirms the
conclusions of the initial analysis: that adviser conflicts cause
avoidable, serious harm to retirement investors, and that the stronger
consumer protections included in the final rule will benefit those
investors at a reasonable cost.
impact of expanding the definition of fiduciary
Question. In 2011, the Department stated that its own rules that
apply to fiduciaries are at least in part responsible for over $100
billion of investment losses every year, a far greater number than the
Administration's $17 billion figure that has been publicized. So by
vastly expanding the definition of a fiduciary, the concern is that
this number could be increased significantly under the proposal. But
the official DOL (Department of Labor) economic analysis does not
contain any discussion of this issue. It doesn't even mention the prior
work by DOL.
What work has been done on this issue and why wasn't it included in
the official DOL economic analysis?
Answer. Both the 2015 proposed and 2016 final regulatory impact
analyses refer to the 2011 rule and analysis. In 2011, the Department
estimated retirement investors make errors totaling more than $114
billion annually, and the Department's 2011 rule would extend access to
affordable fiduciary advice and reduce those errors by between $7
billion and $18 billion annually. The Department stated in 2011 that
the errors could be at least partially attributable to ERISA's
prohibited transaction rules, which preclude various advice
arrangements. The 2011 rule increased access to fiduciary advice by
implementing an exemption that allowed fiduciary advisers to engage in
otherwise prohibited transactions, subject to strong protective
conditions that ensure their advice is impartial and in investors' best
interest. As the Department stated in the 2016 analysis, if instead the
investors affected by the 2011 regulation would have received
conflicted investment advice, the benefits of the exemption forecasted
in 2011 would be much lower and possibly negative.
In contrast, the Department's analysis for the new rule and
exemptions focuses on the cost of investor errors attributable to
conflicts of interest in non-fiduciary advice, which are estimated to
be as much as $17 billion annually for only one segment of the IRA
market (broker-sold front load mutual funds). The 2011 analysis has no
relevance to estimating such costs. In our regulatory analysis for the
2016 rule and the exemptions, the Department also estimated the
benefits to recipient investors of impartial advice rendered by persons
subject to a stringent fiduciary standard.
The Council of Economic Advisors estimated the cost of such errors
related to conflicted investment advice total $17 billion annually in
the IRA market. The Department's Best Interest Contract Exemption,
which likewise permits fiduciary advisers to engage in certain types of
otherwise prohibited self-dealing (subject to a different set of
protective conditions), will further extend, beyond what was achieved
with the 2011 rule, the availability of fiduciary advice in retirement
investors' best interest.
occupational safety and health administration retail exemption rule
Question. I am concerned about a change in Departmental policy that
will have the impacts of a rule change but side-steps the full checks
and balances process required in the Administrative Procedure Act: the
OSHA (Occupational Safety and Health Administration) memo of last July
22nd altering the retail exemption applicable for over 20 years to
anhydrous ammonia, a farm fertilizer. In fact, the fiscal year 2016
Omnibus incorporated language that prohibited OSHA from enforcing the
July 22, 2015, ``retail exemption'' memo unless OSHA carried out a full
notice-and-comment rulemaking. Six days later, OSHA issued notice that
it would start enforcing the memo on the first day of fiscal year 2017,
ignoring the language's other requirements.
Why has OSHA ignored the clear congressional intent to conduct a
proper rulemaking on the ``retail exemption'' before increasing the
scope of the Process Safety Management regulation?
Answer. OSHA's announcement that it will not enforce the July 22,
2015, ``retail exemption'' memo through September 30, 2016, is
consistent with the language of the report accompanying the fiscal year
2016 appropriations bill, which specifically prohibits enforcement of
the retail exemption during fiscal year 2016 absent formal rulemaking
and other steps. In addition, OSHA recently began the process for
potential rulemaking. On May 5, 2016, OSHA issued a background document
to small employer representatives as part of the Small Business
Regulatory Enforcement Fairness Act (SBREFA) process. OSHA included a
definition of ``retail'' in its Background Document to the SBREFA panel
being convened to consider the impact on small businesses of possible
amendments to the PSM (Process Safety Management) standard. This is the
first step in a process that could potentially result in the inclusion
of definition of ``retail'' in an NPRM.
Question. OSHA has stated that it estimates it will cost
agricultural retailers about $2,160 to comply with the rule, but I am
hearing from many retailers that it will cost more than ten times that
amount to comply--about $25,250 on average. How did OSHA come up with
its estimate?
Answer. OSHA assumed that most facilities affected by the retail
memo are already compliant with EPA's Risk Management Program (RMP)
Level 2. RMP Level 2 contains requirements nearly identical to eight of
the requirements in PSM. Generally, compliance with RMP Level 2
constitutes compliance with those eight overlapping PSM elements. To be
fully compliant with PSM, facilities now in compliance with RMP 2 need
only implement those additional elements of a PSM program not already
part of their existing safety management system. OSHA's estimate
reflects the additional incremental costs of those PSM elements not
already required under RMP 2.
proposed increases to department of labor staffing levels
Question. The Department has proposed a very large increase in
staffing. The budget request calls for 779 new Federal employees at the
Department. 318 of those are for the Wage and Hour Division alone,
increasing the number of employees by over 18 percent. Staffing at Wage
and Hour has already increased by over 44 percent during the current
administration. The staff in the Departmental Management account would
increase by 149 people or 10 percent.
Given the increasing pressure on the budget, how can you expect the
Subcommittee to increase agency bureaucracy again at these levels?
Answer. In formulating the budget, DOL carefully identified areas
where increased staffing was needed to fulfill our mission. Among many
critical investments, we are rebuilding our enforcement capacity,
addressing the challenges of monitoring and enforcing international
trade agreements, and otherwise ensuring we have the resources to
fulfill the mission of the Department.
The Budget includes additional funding to ensure that all of the
Department of Labor's (DOL) worker protection agencies can meet their
responsibilities to defend the health, safety, wages, working
conditions, civil rights, and retirement security of American workers,
and level the playing field for law-abiding employers. As you note, the
Wage and Hour Division (WHD) is one area where we have added staff. The
WHD's mandate is vast yet the resources are relatively small--even with
the modest staffing increases since 2009. With less than 1,000
investigators, it is charged with protecting over 135 million workers
in more than 7.3 million establishments nationwide. Given limited
resources to effectively achieve the mission, WHD has adopted a
strategic enforcement approach to achieving compliance. WHD prioritizes
efforts in industries where the problems are greatest, where workers
are least likely to exercise their rights, and where WHD can have an
impact on compliance. To make this approach most effective, WHD
requires a workforce that can address compliance issues at the industry
level through a combination of enforcement, stakeholder engagement and
compliance assistance. Further investments are necessary to establish
WHD as a modern, data-driven enforcement agency that is equipped with
the necessary combination of personnel, technology, and equipment, and
to effectively carry out its mission.
In addition, the Departmental Management account includes several
program agencies where staff increases are proposed. In one notable
example, the Budget proposes 14 additional staff for the International
Labor Affairs Bureau to make sure American businesses are on a level
playing field with their international counterparts. Since 2012, the
U.S. has signed free trade agreements with Panama, Colombia, and South
Korea. New ILAB staff will continue to improve the monitoring and
enforcement of labor provisions of free trade agreements and trade
preference programs, investigate allegations of trade agreement labor
violations, and protect the interests of American businesses to ensure
that they are not being unfairly undercut by foreign businesses. These
additional staff will also act as the principal liaison with other
governments on labor issues, assist in the negotiation of new labor
commitments, and provide the research and analysis necessary to address
the labor rights concerns in beneficiaries of U.S. trade preference
programs.
The Department of Labor appreciates the support that it has
received from the Committee and looks forward to working with you on
these additional requests. With these investments, the Department will
be able to enhance our ability to protect the wages and working
conditions of workers across the U.S., monitor international trade
agreements, and fulfill the critical mission of the Department. While
your support has allowed the Department of Labor to grow and improve
upon its outcomes, there is still more that we can accomplish together.
frameworks for reciprocity for occupational licenses
Question. The Omnibus included a new $7.5 million program requested
by the Administration to establish a consortium (or multiple consortia)
of States to begin the analysis and development of frameworks for
reciprocity or other forms of portability for certain occupational
licenses. This will help reduce unnecessary barriers to mobility and
re-employment for thousands of dislocated workers, transitioning
servicemembers, military spouses, and others. An additional $10 million
is requested for fiscal year 2017. It is my understanding that the
Department plans to quickly implement the initiative. I appreciate the
Department's work in this area and look forward to hearing about the
first stages of this effort once implemented.
Mr. Secretary, can you tell the Subcommittee about your
expectations for this initiative and what might be accomplished?
Answer. We envision that one or more national or regional
organizations will work with one or more consortia of States to review
and analyze occupational licensing requirements and development
recommendations to make progress toward two main objectives designed to
achieve greater labor mobility and access to employment opportunities
for qualified jobseekers:
--Identify unnecessary licensing criteria to ensure that existing and
new licensing requirements are not overly broad or burdensome
and that they do not create unnecessary barriers to labor
market entry; and
--Improve portability and reciprocity provisions for selected
occupational licenses across State lines.
Question. I am hopeful that the Department will also foster
discussion and agreements about recognition of some categories of
military training. Separating servicemembers face similar barriers that
inhibit civilian recognition of their military training. Do you think
progress is possible in that area as well?
Answer. Transitioning Servicemembers (TSM), as well as military
spouses, are both populations where there is a particular opportunity
to streamline pathways to licensure through recognition of prior
learning, as well as reduction of administrative barriers, and we
envision both of these activities being part of this project. The soon-
to-be-released report required by Section 237 of the VOW Act of 2011
lays out a military to civilian training gap analysis framework that
can be used as a blueprint for other States to follow. The report
summarizes the results of a demonstration project conducted with six
States that was specifically designed to identify civilian occupational
skills for licenses or certification requirements that could be
satisfied (in whole, or in part) by military training and experience;
and to accelerate the attainment of civilian credentials by veterans
with appropriate skills and experience. The report on the pilot lays
out a strategy that State stakeholders can undertake and adapt on their
own. The report is highlighted as a potential technical assistance
resource for awarded organizations and State consortium participants.
Question. How much time do you anticipate being necessary until
participating States can achieve something?
Answer. We anticipate that the project period will provide a full 3
years to expend the funds. We anticipate that it could take at least 18
months after award for appreciable results to be realized at the State
level.
Question. How many States do you expect to participate initially?
Answer. While we cannot be certain of the level of response, we
hope to see a few strong consortia of three or more States that would
each bring cross-agency teams and unite around shared interests and
shared challenges to work together to improve portability and access to
employment for all qualified individuals. The additional investment of
$10 million requested for fiscal year 2017 will allow for extending
this initial effort.
worker programs gold standard evaluation results
Question. I understand that early results of a major departmental
evaluation--the Worker Programs Gold Standard Evaluation (WGSE)--will
be available shortly. This is one of the Department's most rigorous
studies of the effectiveness of the Department's job training programs
in recent years.
Please describe any preliminary results you may have received about
effectiveness, cost versus benefit, and the general training approach.
Answer. The Workforce Investment Act (WIA) Gold Standard Evaluation
is a rigorous evaluation to assess the effectiveness of intensive
services and training offered to customers through the WIA Adult and
Dislocated Worker formula-funded programs. (Twenty-eight randomly
selected Local Workforce Investment Areas [LWIAs] participated in the
evaluation so the study findings are representative of the national
programs.) The evaluation is ongoing, but to date, the Department has
issued two reports:
1) Evaluating National Ongoing Programs: Implementing the WIA
Adult and Dislocated Worker Programs Gold Standard Evaluation
\1\
---------------------------------------------------------------------------
\1\ Http://wdr.doleta.gov/research/
keyword.cfm?fuseaction=dsp_resultDetails&pub_id=2572&
mp=y.
---------------------------------------------------------------------------
2) Providing Services to Veterans Through the Public Workforce
System: Descriptive Findings from WIA Gold Standard Evaluation:
Volume I and Volume II \2\
---------------------------------------------------------------------------
\2\ Http://wdr.doleta.gov/research/
keyword.cfm?fuseaction=dsp_resultDetails&pub_id=2569&
mp=y.
---------------------------------------------------------------------------
The first report discusses the challenges and issues when
implementing a nationwide evaluation of an ongoing program and is
primarily intended for policy makers and researchers contemplating a
large-scale evaluation of this type. The second report discusses the
results of the Veterans Supplemental Study (VSS), a component of the
evaluation.
The VSS report describes the characteristics of veterans served by
the public workforce system during the time the WGSE was in process as
well as the services provided and the outcomes experienced by
participating veterans. Among other things the report reveals:
--Veterans were not always aware of the services to which they were
entitled or their right to priority of services when they
entered an American Job Center (AJC).
--AJC staff, including WIA staff and veterans' representatives funded
by Jobs for Veterans State Grants (JVSG), reported that a key
activity was translating veterans' military experience to
civilian job opportunities.
--The report also includes an in-depth analysis of administrative
data from two States which allowed the evaluation team to
correlate service receipt with veterans' average post-program
quarterly earnings.
The Department plans to release in Summer 2016 a report describing
program operations at the 28 LWIAs participating in the study as well
as a series of implementation briefs. In combination, the briefs and
report will provide information about the general approach for offering
services and training. Two impact reports are scheduled for release in
2017 and 2018; they will provide information about the effectiveness of
workforce services at 15 months and 30 months, respectively, after
participants were randomly assigned into the study. The final report
also will provide the results of the cost-benefit analysis. While this
evaluation is of WIA, there are significant parallels to the service-
delivery structure under the Workforce Innovation and Opportunity Act,
which superseded WIA, and will be relevant under WIOA.
Question. Are there useful insights coming out of it?
Answer. The qualitative data described in that report will provide
insights about various practices or approaches that will help States
and local areas improve service quality. The forthcoming implementation
report will be available in early summer 2016 and will provide a
snapshot of how the WIA Adult and Dislocated Worker programs were
operating nationwide in the early 2010s. Early findings from the
evaluation substantiate a number of the changes instituted under
Workforce Innovation and Opportunity Act (WIOA) that provide more
flexibility to local areas to better serve their clients based on their
immediate needs, existing strengths and skills.
Question. It appears that much of the data upon which the study was
based comes from the program before implementation of the new
authorization act of 2014. Does that change the way the results should
be received?
Answer. Although WIOA made some important changes to the public
workforce system, it leaves intact important elements of the service-
delivery structure of the adult and dislocated worker programs. For
example, services will continue to be accessed at AJCs, a similar set
of services will be offered, and customers will continue to choose the
service mix they view as most appropriate, with some restrictions.
Thus, the evaluation findings can guide workforce decision-makers and
practitioners as they continue to improve workforce system operations
and services under WIOA.
One example of this is the finding noted above that AJC staff,
including Adult and Dislocated Worker program staff and veterans'
representatives funded by JVSGs, reported that a key activity was
translating veterans' military experience to civilian job
opportunities. In the fiscal year 2016 appropriation the Department
received $7,500,000 for an Occupational Licensing Grant program that
includes the opportunity for States to work on the translation of
veterans' military experience to civilian occupations where licensure
is required. The 2017 Budget requests $10,000,000 for this work.
Question. Will the results come in time to help shape a more
effective implementation of the new WIOA act to help fix deficiencies
it may reveal?
Answer. While the impact results from the WGSE are scheduled for
release in early 2017 and in 2018, the series of implementation study
briefs and qualitative findings will help States and localities as they
continue to implement WIOA. During the next several years, State and
local officials and workforce development boards will have many
opportunities to use the results from the WGSE to improve practices and
the quality and types of services offered through AJCs.
updated interpretation of the fair labor standards act
Question. On January 20th, the Wage and Hour Division Administrator
issued an ``Administrator's Interpretation'' changing the
interpretation of the Fair Labor Standards Act (FLSA) and its related
regulations in place since the early 1960's with respect to joint
employer relationships. The interpretation changes the agency's
enforcement posture and seems to expand upon the NLRB's recent decision
in Browning Ferris in August.
What is your view of the effect of the new interpretation
statement?
Answer. The Wage and Hour Division (WHD) published Administrator's
Interpretation (AI) No. 2016-1, Joint employment under the Fair Labor
Standards Act and Migrant and Seasonal Agricultural Worker Protection
Act to provide additional, detailed guidance concerning joint
employment in order to assist the regulated community.
This AI reflects existing WHD policy. From their enactment, the
FLSA and MSPA allowed for the possibility that a worker may have
multiple employers, and the statutes' joint employment regulations were
promulgated decades ago. The guidance provided in this AI is consistent
with those regulations, WHD's investigative and enforcement efforts,
and its previous guidance, including fact sheets, Opinion Letters, and
AI 2014-2 on joint employment of home care workers in consumer-
directed, Medicaid-funded programs by public entities under the FLSA.
The joint employment analysis applicable in FLSA and MSPA cases is
not the same as the analysis applied by the NLRB. The NLRB is an
independent agency and its decisions are based on a different statute
(the National Labor Relations Act) with a different standard for
determining joint employment.
Question. Since it cannot be construed to carry the weight of law
or regulation, is it simply intended as helpful guidance or compliance
assistance to stakeholders? Or do view it as more than that?
Answer. WHD constantly seeks opportunities to provide helpful
guidance and compliance assistance, such as AIs, to the regulated
community.
The Administrator published this AI to provide additional, detailed
guidance concerning joint employment under the FLSA and MSPA in order
to assist the regulated community.
The AI identifies common scenarios in which two or more employers
jointly employ an employee and are thus jointly liable for compliance,
and common scenarios in which no joint employment relationship exists.
It pulls together all the relevant authorities: statutory provisions,
regulations, and case law to provide comprehensive guidance on joint
employment under FLSA and MSPA so that potential joint employment
scenarios can be properly analyzed.
Question. Is the interpretation intended to fundamentally change
the scope of the Fair Labor Standards Act and its existing regulations
and expand the liabilities and compliance costs placed upon the
stakeholders, including employers that have no direct or exercised
control over employment matters in the given situation?
Answer. No, the AI does not change the scope of the FLSA or MSPA.
It reflects the FLSA and MSPA as written, as well as existing WHD
policy. The AI does not impose any new obligations on employers or
represent a change in the Department's statutory interpretation or
policy.
Question. The Administrative Interpretation seems to have the
expressed purpose of changing the scope and long-standing
interpretation of law and regulation. In fact, the statement says
explicitly that the Wage and Hour Division may ``consider joint
employment to `achieve' statutory coverage.'' This seems to be a direct
acknowledgement that the interpretation seeks to extend the scope of
the law beyond what it was written to do. Why would the agency not use
a full Administrative Procedures Act process (including steps like
public notice and comment, cost-benefit analysis, and small business
impact evaluations) to formally change the regulations or
interpretations--especially given how controversial and impactful this
matter is?
Answer. As discussed in response to the question above, the AI does
not change the scope of the FLSA or MSPA. It reflects the FLSA and MSPA
as written, as well as existing WHD policy. The AI does not impose any
new obligations on employers or represent a change in the Department's
statutory interpretation or policy. Therefore, the content of this AI
does not require notice and comment rulemaking.
Question. Why is the Department circumventing those processes for
such major changes?
Answer. The content of this AI does not require notice and comment
rulemaking. WHD issues AIs when it determines that further clarity
would be helpful on the proper application of existing law to
particular situations or categories of workers. The AI provides
additional detail and analysis of WHD's position concerning the
identification of joint employment, and does not impose any new
obligations on employers or represent a change in the Department's
statutory interpretation or policy.
addressing gao criticisms of vets' performance goals
Question. In the past several years, the unemployment rate for
veterans has been significantly higher than the national average. It is
critical that veterans transition effectively out of military service
into civilian life. The Government Accountability Office (GAO) has
issued several reports on how to better target and coordinate
employment and training programs focused on our Nation's veterans. One
of the criticisms that GAO cites is the lack of transparency with
regard to the extent to which veterans' employment training services
are meeting performance goals. In particular, questions were raised
regarding whether outcomes are attributable to program participation
and challenges with coordinating veterans' employment programs within
the Department and across other Federal agencies.
Mr. Secretary, can you discuss what the Department has done and is
doing to address these concerns?
Answer. This Administration has made significant progress in
improving employment outcomes for veterans, undertaking efforts to
conduct formal evaluations of our programs that link program
participation to long term outcomes, and addressing GAO's concern
regarding increased transparency in program performance information.
The Administration's efforts to address unemployment for all
American workers, and its specific programs targeted at veterans, have
contributed to a significant decrease in the unemployment rate at a
time of economic recovery. These include strategies to work with
private sector employers and to build partnerships among Federal
agencies that have a stake in veteran employment.
Perhaps the most prominent effort with respect to veterans in
particular is the White House's Joining Forces initiative. Currently in
its fifth year, this initiative mobilizes private sector employers to
hire an increased number of veterans and transitioning servicemembers.
Building on this model, the Department of Labor's Veterans' Employment
and Training Service (VETS) has established the Office of Strategic
Outreach, with Regional Veteran Employment Coordinators (RVECs)
stationed throughout the country linking private employers to job-ready
veterans. Additionally, within government, there has been an incredible
interagency effort (with partners from DOL, Veterans Affairs, the
Department of Defense, the Department of Education, and the Small
Business Administration), prompted by the VOW Act, to modernize support
to servicemembers as they transition to civilian life.
In part, as a result of these and similar efforts, the veteran
unemployment rate has consistently been lower than the national
average. In fact, in the 87 months since January 2009, the veteran
unemployment rate has been lower than or equal to the national average
in all but 2 months, January 2011 and November 2013. Included below is
a line graph displaying the Bureau of Labor Statistics' national
unemployment rates (Table 1) for these months, and the veteran
unemployment rate (Table 2). Note: The national unemployment rate is
for all persons 16 years and over while the veteran unemployment rate
is for veterans ages 18 and over.
[The graph follows:]
[The tables follow:]
It is correct that in some demographic cohorts, such as veterans
ages 18-24, veteran unemployment had been consistently higher than
nonveterans of the same age. In response, the Administration has
pursued policies to address this disparity, significantly decreasing
the gap between these cohorts' unemployment rates. The unemployment
rate for veterans aged 18-24 has dipped below their nonveteran peers in
several months over the last year.\3,4\
---------------------------------------------------------------------------
\3\ National Unemployment Rates: DOL, BLS, Labor Force Statistics
from the Current Population Survey (CPS), Table A-1 Employment status
of the civilian population by sex and age, seasonally adjusted, found
at: http://www.bls.gov/webapps/legacy/cpsatab1.htm.
\4\ Veterans Unemployment Rates: DOL, BLS, Labor Force Statistics
from the CPS, Employment status of persons 18 years and over by veteran
status, age, and sex, not seasonally adjusted, found at: http://
www.bls.gov/webapps/legacy/veterans_by_age_and_sex.htm.
---------------------------------------------------------------------------
The Department attributes this improvement in part to targeted
efforts to reach this population and provide them with the employment
supports necessary to facilitate their transition into the civilian
workforce. Some examples of these efforts include:
--Classifying veterans, ages 18-24, as a special population eligible
to receive intensive services from a Disabled Veterans'
Outreach Program (DVOP) specialist in American Job Centers
(AJCs);
--Reengineering the Transition Assistance Program's Department of
Labor Employment Workshop (TAP DOLEW) to better meet the needs
of transitioning service members, especially those with the
most barriers to employment, such as 18-24 year olds (the
largest demographic participating in TAP) who lack labor force
attachment, education, and/or career credentials; and
--Establishing a program to provide in-person reemployment services
to recently-separated servicemembers drawing Unemployment
Compensation for Ex-Servicemembers (UCX), including veterans
ages 18-24 that have significant barriers to employment for
reasons stated above.
The Department has taken additional steps to serve veterans that
are in most need of employment services through policy changes. Perhaps
the most significant policy change occurred in April 2014, when VETS
and ETA released joint guidance providing that only veterans with
significant barriers to employment or other select populations were
referred to the Jobs for Veterans State Grants (JVSG) program. Prior to
this change, many States were referring all veterans in AJCs to the
JVSG program.
This policy was designed to target veterans with significant
barriers to receive increasing levels of intensive services, and it has
largely succeeded. These intensive services include formal skills
assessment, the development of an individual employment plan, group and
career counseling, interview skills, etc. VETS has worked
collaboratively with States to provide technical assistance in
implementing this policy, and it has resulted in significant changes to
the services provided to participants and their eventual employment
outcomes.
The percent of JVSG participants receiving intensive services has
increased from 22 percent in PY 2009 to 81 percent in PY 2015 as of
December 31, 2015 half-way through the program year. During that same
time period, the entered employment rate for JVSG participants
increased from 48 percent to 59 percent. Further, the employment
retention rate of JVSG participants, or those who retained employment 6
months after program exit, has increased from 74 percent in PY 2009 to
83 percent today, and the average six-month earnings of these
participants rose from $14,751 to $16,903.
Another key Departmental objective in improving veteran employment
outcomes is eliminating veteran homelessness. Over the last year, I
have been honored to have served as the Chairperson of the United
States Interagency Council on Homelessness (USICH), a collaborative
effort among Federal agencies to end homelessness once and for all.
VETS' Homeless Veterans' Reintegration Program (HVRP), a vital
component of this endeavor, is singularly focused on attaching homeless
veterans to the labor force.
Similarly to the JVSG program, HVRP participant outcomes have
improved over the course of this Administration. The placement rate of
HVRP participants was 59 percent in PY 2009 compared to 69 percent at
the end of PY 2014 (the most recently completed program year). This was
the highest placement rate since the program began. During that same
time period, average hourly wage of placed participants rose from
$10.16 to $11.84. The 2017 Budget seeks an increase of nearly $12
million to bring HVRP to its authorized level of $50 million.
I would like to point out some of the important evaluation efforts
related to veteran employment outcomes conducted by the Department's
Chief Evaluation Office. The first is an exploratory analysis of
participant services and employment outcomes of participants in the AJC
system, which demonstrated the following positive outcomes for JVSG
participants compared to participants of other programs:
--On average, JVSG veterans receive their first staff-assisted
services more quickly (8 days) than non-JVSG veterans (10 days)
and non-veterans (10 days).
--JVSG veterans have smaller gender earnings gaps and smaller
military-separation-time earnings gaps.
--In the first 9 months after exit, male-female gender earnings gaps
for JVSG veterans ($2,386) are 19 percent smaller than gender
earnings gaps for non-JVSG veterans ($2,942) and 34 percent
smaller than gender earnings gaps for non-veterans ($3,638).
--In the first 9 months after exit, the earnings gap between Pre-9/11
and Recently Separated JVSG veterans is roughly $825; this
earnings gap is $2,711 for Pre-9/11 and Recently Separated non-
JVSG veterans.
More information on this study can be found here: http://
www.dol.gov/asp/evaluation/completed-studies/VeteranNon-
VeteranJobSeekers.pdf.
With respect to GAO's suggestion regarding ``transparency with
regard to the extent to which veterans' employment training services
are meeting performance goals.'' The Department initially raised a
concern about statements in the GAO draft report that incorrectly
asserted VETS does not report on the number of veterans receiving
intensive services. As we stated in our original response to GAO, this
measure is one of three Agency Priority Goals, each of which are
reported quarterly on the Administration's performance.gov website. For
your reference, I have included the link here: https://
www.performance.gov/node/37072?view=public#apg.
Further, to address a concern related to the transparency of
performance information, 2 years ago, VETS began publishing the
following annual performance targets and outcomes on the Agency's
website:
--JVSG state-by-state negotiated targets and outcomes for: Entered
Employment Rate (EER), Employment Retention Rate (ERR), and
six-month Average Earnings (AE), which can be found here:
http://www.dol.gov/vets/vetoutcomes/index.htm; and
--HVRP national targets and outcomes for: All HVRP Participant
Placement Rate, Homeless Female Veteran Placement Rate, and
Cost per Participant, which can be found here: http://
www.dol.gov/vets/programs/hvrp/main2013.htm.
On the next page, for your reference, is a copy of our written
comments to the GAO report, which were reproduced in the letter to Mr.
Mihm from Mr. Kerr, dated August 26, 2015.
new job training initiatives in eta
Question. The President's request includes $12.5 billion of new job
training initiatives using mandatory rather than discretionary funds.
Most of these initiatives are duplicative of existing programs, but
represent a massive increase in spending not subject to the caps. One
component of this initiative, the American Talent Compact, provides for
$3 billion for training ``featuring strong industry partnerships and
focus on in-demand sectors.''
Why do you propose creating a separate mandatory program focused on
achieving this specific goal?
Answer. The President's 2017 Budget provides discretionary funding
coupled with complementary mandatory investments to ensure that
American workers have the knowledge and skills to succeed in middle-
class jobs, and that employers have the skilled workforce they need to
compete.
While the Bipartisan Budget Act of 2015 (BBA) provided a critical
increase in discretionary funding for 2016 and 2017, not fully
replacing sequestration in 2017 limits our ability to make needed
investments. For that reason, the Budget includes a series of
investments using mandatory funding, including investments in job
training.
The Administration's proposed Job Driven Training investments will
advance State capacity to expand proven training pathways to the middle
class; improve the effectiveness of workforce programs through enhanced
and expanded access to data; set 1 million young Americans on a pathway
to successful careers; and support targeted economic growth and job
creation in regions across the country.
One of the main assets a business considers when deciding where to
locate and grow is the availability of talent. Specifically, the
American Talent Compact would fund 50-60 regions (``Talent Hotspots'')
a year, to train and employ 500,000 people. The Talent Compact would
create regional partnerships of employers, educators, training
providers, and workforce and economic development leaders that
prioritize a high-growth sector and make a commitment to recruit and
train the workforce to help local businesses grow and thrive, attract
more jobs from overseas, and fuel the talent needs of entrepreneurs.
The 21st century American worker faces an increasingly complex and
dynamic job market. Globalization, automation, and technological
innovation are driving rapid changes in available jobs and demanded
skills. The President is proposing a plan to ensure that our education
and training systems do more to help workers succeed as the labor
market evolves.
All of these plans hold the promise of economic growth and job
creation. Growing evidence shows that firms engaged in regional
clusters supported by institutions providing education, training,
finance, and marketing services experience higher rates of job and wage
growth than comparable firms not engaged in these regional
partnerships.\5\
---------------------------------------------------------------------------
\5\ Https://hbr.org/2012/03/a-jobs-compact-for-americas-future.
---------------------------------------------------------------------------
Question. Why not maintain the focused effort through the existing
primary programs, which are already funded at the highest levels in the
last several years amid slowing demand and participation?
Answer. Although overall participation in workforce programs has
declined since the peak of the recession, overall demand for services
remains high. In PY 2014 (7/1/2014--6/30/2015), Workforce Investment
Act and Wagner-Peyser programs provided services to over 15 million
individuals.
Formula funding under the Workforce Investment Act and the
successor Workforce Innovation and Opportunity Act has not kept up with
inflation. The 2017 Budget funds the core DOL WIOA formula grants--
Adult, Youth and Dislocated Workers--at their full authorized level--an
$138 million increase over fiscal year 2016, for a total of $2.8
billion. Put in historical context, this is a modest investment--even
with this increase, funding for these programs would still be 25
percent below where it was 10 years ago.
The $3 billion funding request for the American Talent Compact
builds on these investments in the base WIOA programs, targeting
regional partnerships to train workers to meet local employers' demand
while also fostering economic growth.
Funds will be provided on a competitive (versus formula) basis,
which will allow funding to be targeted on particular economic regions
to catalyze and accelerate job growth and advancement opportunities.
Competitive funding opportunities, such as the American Talent Compact,
ensure scarce Federal resources are directed to the highest quality
applicants.
mine safety and health administration equipment approval process
Question. On many occasions we have heard that MSHA (Mine Safety
and Health Administration) has difficulty with the process to analyze
and approve mine equipment. Approval is required before the equipment
is permitted to be used in certain mines. One particular such concern
is that MSHA does not recognize equipment approvals issued by
internationally-recognized standard setting and approval authorities.
Has MSHA evaluated the cost and time burdens that U.S. equipment
manufacturers face related to the approval process for equipment that
has already received international approval?
Answer. MSHA's primary goal is protecting the safety and health of
miners. To this end, MSHA approves and certifies new mining equipment
and technology to ensure it does not introduce an explosion or fire
hazard in an underground mine. MSHA has not evaluated the cost that
equipment manufacturers incur from securing MSHA approval of equipment
that has already received international approval.
MSHA will accept tests and evaluations performed by any laboratory,
provided that MSHA product approval requirements are followed. This
third-party testing provides equipment manufacturers with an
alternative to MSHA testing, which may reduce waiting times. Under 30
CFR Part 7, MSHA will accept tests and evaluations performed by an
independent laboratory, provided that MSHA product approval
requirements are followed. This third-party testing provides equipment
manufacturers with an alternative to MSHA testing, which reduces
waiting times. MSHA will also accept product approvals based on
international standards under 30 CFR Part 6 (effective in 2003), if
MSHA has determined the international standards are equivalent to MSHA
standards. MSHA has evaluated one product (explosion-proof enclosure)
based on international standards after determining that the
international standards were equivalent to MSHA's. MSHA will continue
to apply international standards to future approvals, as appropriate.
Question. Are there appropriate means to alleviate unnecessary or
redundant procedural burdens?
Answer. For products that are tested using non-MSHA standards, MSHA
has a process that allows the Agency to approve these products so long
as the testing provides for the necessary margin of safety. This allows
MSHA to approve products without additional testing, thereby
eliminating redundancies. Recently, MSHA has asked NIOSH (National
Institute for Occupational Safety and Health) to assess the overall
safety of the MSHA requirements as compared to an international
standard for intrinsically safe portable battery operated equipment.
This approach would permit MSHA to accept the international standard as
equivalent to the MSHA requirements without any modification, and would
alleviate the burden of modifying existing products to obtain MSHA
approval. We expect a final report to be issued to allow acceptance of
the standard in 2017.
proposed rule for proximity detection systems
Question. Last year MSHA published a proposed rule for proximity
detection systems for mobile machines in underground mines. The comment
period has closed and presumably the agency is working to complete the
final rule before the end of the year. At the same time NIOSH, the
government's preeminent mine safety research agency, has an aggressive
and vigorous research program underway to make sure the technology that
is ultimately required is functional and will protect miners as
intended.
Will the Department allow NIOSH to complete its research before
MSHA finalizes the rule?
Answer. MSHA published a Notice of Proposed Rulemaking (NPRM) on
Proximity Detection Systems for Mobile Machines in Underground Mines on
September 2, 2015. After holding a series of public hearings, MSHA
received a request to extend the comment period. In response to this
request, the end of the comment period for the NPRM was extended from
December 1, 2015 to December 15, 2015. MSHA received considerable
comments on the proposal for the development of a final rule, and is
currently analyzing these comments. MSHA will continue to work closely
with NIOSH in the development of design parameters and performance
guidelines for proximity detection systems in underground mines. MSHA
will also apply lessons learned from the performance of these systems
on continuous mining machines in underground coal mines as we develop
the final rule for mobile machines.
______
Questions Submitted by Senator Thad Cochran
addressing visa application backlog
Question. I have heard from constituents that the Department is
experiencing significant delays in processing visa applications for
agricultural and non-agricultural workers.
What steps has your Department taken to address the backlog of
applications to ensure an on time start date for workers?
Answer. The Office of Foreign Labor Certification (OFLC) is
experiencing significant H-2B program delays as a result of an
unprecedented combination of external and internal challenges that
impacted processing of prevailing wage requests and certification
requests from mid-December 2015 until early February 2016. The Office,
as of May 12, completed its recovery from these challenges, which are
briefly described below.
The Consolidated Appropriations Act, fiscal year 2016 (Omnibus) was
enacted on December 18, 2015, and contains provisions significantly
affecting the H-2B program requirements that were established in the
2015 H-2B Interim Final Rule and Final Wage Rule that were implemented
at the end of April 2015. Among other things, the Omnibus H-2B
provisions broaden the use of employer-provided surveys to set the
prevailing wage; prohibit the Department from enforcing its regulations
requiring employers to offer minimum hours of work for three-fourths of
the work contract period and requiring that similarly employed U.S.
workers receive at least the same wages and benefits as H-2B workers;
and prohibit the Department from using funds to conduct audit
examinations and supervised recruitment to ensure program compliance.
The Omnibus requirements took effect immediately, without any
transition period. In order to implement changes to program
requirements, OFLC had to pause its processing to ensure that the new
requirements were fully implemented. OFLC requested and received Office
of Management and Budget authorization for emergency processing of
changes to application forms so that they complied with the new program
requirements, and the agency issued emergency guidance to the
stakeholder community so program users were aware of the changes. OFLC
immediately resumed processing on January 5, 2016, and continues to
implement all new program requirements contained in the Omnibus.
Coinciding with the processing pause to implement new program
requirements contained in the Omnibus, OFLC experienced more than a
two-fold increase in new H-2B application filings during a three-week
period from December 26, 2016 to January 15, 2016, as compared to the
same period last year.
In January 2016, OFLC also experienced intermittent technical
problems with the iCERT electronic filing system, resulting from the
implementation of required IT security specifications. These technical
problems impacted the timely processing of pending H-2A and H-2B
applications for several weeks. DOL has taken steps to address this
backlog in the H-2B program. We increased staff resources prior to our
typical seasonal filing increase, but the unexpected and unprecedented
high volume of new H-2B applications in late December to mid-January
far exceeded processing capacity. Therefore, we again reallocated staff
and increased staff overtime hours, while attempting to maintain
program integrity and minimize delays in processing labor certification
applications in other visa programs administered by the Department.
In addition, on February 19, 2016, we implemented an emergency
procedures processing plan. Employers experiencing significant delays
could request emergency processing via email through April 30th.
Employers that are granted emergency processing may conduct recruitment
of U.S. workers on an expedited basis without filing a new application,
which will save eight to 10 days of processing time. Because OFLC has
now recovered from these challenges, it has not extended these
emergency procedures.
Finally, we have implemented changes in work processes to increase
efficiencies after recruitment has taken place. A dedicated team of
employees has been established to conduct final reviews of employer
recruitment reports once they are submitted to the Department. A prompt
review of the employer's recruitment report is a critically important
step before issuing a final determination. This new business process
has reduced processing times from approximately two weeks to within
three business days of receiving the report.
The Department is also reviewing the H-2B program and determining
what, if any, additional steps it can take to improve efficiency in the
program. Because the H-2A filing season overlaps with the H-2B filing
season, the resources available for processing both H-2B and H-2A
applications were insufficient to meet the demand. Therefore, we also
have been experiencing longer processing times for some H-2A
applications. OFLC has also taken prompt action to try to restore
normal processing times and reduce the number of pending H-2A cases as
quickly as possible. We are reallocating resources to hire seasonal
contract staff and increased staff overtime hours, while attempting to
maintain program integrity and minimize delays in processing. We have
already reduced the number of pending H-2A applications by almost 57
percent between February 6 and April 30 (from (1,594 pending to 683
pending). Additionally, although the percentage of complete H-2A
applications processed on time (i.e., no later than 30 days before the
start date of need) dropped to 85 percent for the month of February
2016, we recovered quickly to 99.1 percent on time for the second week
of May 2016.
Question. What changes is your Department making to ensure that the
visa backlog does not become an annual problem?
Answer. The Department is monitoring processing times to ensure all
requests and cases are processed as expeditiously as possible, and will
reallocate resources by reassigning staff and increasing available work
hours as necessary. We continue to assess our processes and procedures
and conduct extensive stakeholder outreach and provide employer
assistance in order to ensure that the programs are effective for
employers with a legitimate need for temporary foreign workers.
However, the continuing substantial increase in the volume of
applications could contribute to longer processing times and potential
backlogs in the future absent additional resources. Annual OFLC
application volumes have risen by 84 percent when compared to fiscal
year 2010, while the appropriations used to process these applications
decreased by 9 percent. Even before the H-2B challenges that arose
earlier this year, overall H-2B application volumes had grown by 59.6
percent, while H-2A volumes had increased by 38.5 percent from fiscal
year 2012 to fiscal year 2015. The President's 2017 Budget seeks
authorization for the Department to expand the current H-1B fee-based
funding authority to foreign labor certification applications filed
under the Permanent and H-2B programs, including possible expedited
processing fees. The Department also seeks authority to adjust the
amount and retain the fees currently deposited in the U.S. Treasury for
applications filed under the H-2A temporary labor certification
program. This market-based legislation will help ensure that the
Department has sufficient resources to efficiently process applications
and effectively respond to employer demand by aligning the program's
resources with the level of demand for its services.
Question. What can our Committee can do to help address this issue?
Answer. We expect the demand for temporary worker programs to
continue to increase, particularly in light of Congressional enactment
of the returning worker exemption to the statutory cap on H-2B visas.
Annual OFLC application volumes have risen by 84 percent when compared
to fiscal year 2010, while the appropriations used to process these
applications decreased by 9 percent. While we continue to implement
efficiencies, we believe this situation will worsen without a more
comprehensive solution. Therefore, we urge you and your colleagues to
support the President's fiscal year 2017 Budget Request for a fee-based
funding structure similar to that used by the DHS for foreign labor
certification programs. This market-based approach would provide the
necessary resources to ensure the program can provide timely case-
processing services and respond effectively to employer demand by
aligning the program's resources with the level of demand for its
services. If enacted, the proposal would reduce processing times and
provide better customer service to employer applicants. We have heard
particularly from users of the permanent certification program that
employers are willing to pay program fees in order to receive
certifications more quickly. The fee proposal would offset Federal
costs for the OFLC program and, once implemented, could eliminate the
need for appropriations. We will continue to work with the Committee to
address this question through the appropriations process.
disability employment initiative
Question. The Disability Employment Initiative (DEI) grant program
is intended to assist disability providers and State governments to
implement services that benefit individuals with disabilities in
gaining employment opportunities.
In awarding DEI grants, does the Department give consideration to
States that have not won in recent years?
Answer. In the 2015 Funding Opportunity Announcement for DEI
grants, only States that had not won in the previous DEI round were
eligible for funding. DOL is considering whether to include a similar
provision in the upcoming Funding Opportunity Announcement for 2016,
which is due to be published in late spring.
Question. What is the Department doing to ensure this program
reaches rural communities and addresses the unique challenges facing
individuals with disabilities living in rural communities?
Answer. The Department has taken steps to ensure the DEI grants
strengthen the capacity of American Job Centers (AJCs) to serve
underserved populations in rural communities. Specifically, in making
DEI awards, the Department's Grant Officer may take into consideration
factors such as geographic distribution of funds and other relevant
factors. Currently, the entire States of Alaska and South Dakota are
pilots in DEI. In addition, for other States where there are pockets of
rural representation receiving DEI funds, we have identified the
following communities benefiting from DEI grants:
--Illinois--Peoria area;
--Kansas--Southeast local workforce investment area (LWIA);
--New Jersey--Cumberland/Salem areas;
--New York--Several rural areas such as Chenango-Delaware-Otsego
Counties and Broome-Tioga Counties;
--California--Golden Sierra area, Madera County and Merced County;
--Tennessee--LWIA 1 and 8; and
--Wisconsin--West Central and Southwest are all rural communities.
including the retail exemption in the process safety management
standards update
Question. Last year, Congress included language in the joint
explanatory statement accompanying the fiscal year 2016 Omnibus
appropriations bill that prohibited the Occupational Safety and Health
Administration (OSHA) from using funds to enforce a July 22, 2015
``retail exemption'' memo regarding anhydrous ammonia chemicals. The
report language specifically stated OSHA should go through the formal
rulemaking process to change the retail exemption. However shortly
thereafter, OSHA issued a memo delaying enforcement until the beginning
of fiscal year 2017. It is my understanding that OSHA is already in the
early stages of rulemaking to update Process Safety Management (PSM)
regulations.
Why did OSHA not include ``retail exemption'' in the list of issues
to be covered in the updated PSM regulations?
Answer. OSHA's announcement that it will not enforce the July 22,
2015, ``retail exemption'' memo through September 30, 2016, is
consistent with the language of the report accompanying the fiscal year
2016 appropriations bill, which specifically prohibits enforcement of
the retail exemption during fiscal year 2016 absent formal rulemaking
and other steps. In addition, OSHA recently began the process for
potential rulemaking. OSHA included a definition of ``retail'' in its
Background Document to the Small Business Regulatory Enforcement
Fairness Act (SBREFA) panel being convened to consider the impact on
small businesses of possible amendments to the PSM standard. This is
the first step in a process that could potentially result in the
inclusion of definition of ``retail'' in an NPRM.
Question. Is OSHA aware of any accidental releases of anhydrous
ammonia chemicals by an agricultural retailer in compliance with
current regulations?
Answer. Data released to OSHA by the EPA shows that between 2004
and 2013, farm supply merchant wholesalers, some of whom were formerly
exempted from the PSM standard as ``retail,'' experienced 128
reportable anhydrous ammonia releases. These incidents injured 84
workers, 9 emergency responders, and 66 members of the public. However,
the data is not sufficiently detailed to enable OSHA to determine which
of the facilities experiencing releases qualified for the retail
exemption under the prior interpretation or the compliance status of
those facilities.
On April 5, 2016, an agricultural distribution facility in
Stewardson, Illinois, experienced a release of nearly 20 tons of
anhydrous ammonia causing evacuation of 200 residents and
hospitalization of 20. No employees were involved or injured. OSHA is
gathering information on the incident and at this time the agency is
uncertain whether the facility is in compliance with current standards.
Question. If so, why is OSHA not updating those current standards
as opposed to adding retail facilities to current PSM standards?
Answer. No current standards, other than PSM, directly address the
hazards associated with the handling and use of large quantities of
anhydrous ammonia in processes. Changing the interpretation of
``retail'' to ensure that farm supply merchant wholesalers who handle
large quantities of anhydrous ammonia are not exempted from coverage
under the PSM standard will help protect against catastrophic releases
of this highly hazardous chemical.
Question. If not, then why are agricultural retailers being added
to the PSM standards when compliance efforts should be focused on
manufacturing facilities?
Answer. While most of OSHA's PSM compliance efforts are directed
toward chemical manufacturers, which are covered under the North
American Industrial Classification System 325, processes involving bulk
use of highly hazardous chemicals also occur in a variety of other
industry sectors. Farm supply merchant wholesalers, that may store and
handle tens or hundreds of thousands of pounds of anhydrous ammonia,
have an increased risk of catastrophic release because of the large
quantities of this highly hazardous chemical they handle.
______
Questions Submitted by Senator Lamar Alexander
proposed overtime rule's impact on tuition costs
Question. At the hearing I asked about the impact of the overtime
proposed rule on independent, non-profit colleges and universities--
specifically regarding how the rule may lead to increased tuition for
students. When I asked if you thought the schools were wrong when they
said the rule could increase tuition by $1,000 per student, you stated,
``I don't know if they're right or wrong.''
Without discussing the coal dust rule, or any rule other than the
overtime rule, please explain why you would impose on independent
colleges and universities a rule that they say could raise tuition by
$1,000 per student?
Answer. In 2014, President Obama directed the Department of Labor
to update and modernize the regulations governing the exemption of
executive, administrative, and professional employees from the minimum
wage and overtime pay protections of the Fair Labor Standards Act
(FLSA). The Department last updated these regulations in 2004. On May
18, 2016, the Department announced the publication of the final rule,
which was published in the Federal Register on May 23. The rule updates
the salary level required for exemption to ensure that the FLSA's
intended overtime protections are fully implemented, and to simplify
the identification of overtime-protected employees, thus making the
exemption easier for employers and workers to understand and apply.
Consistent with the statute and current regulations, neither the
proposed rule nor the final rule included a general exemption for
higher education institutions. Employees at these institutions are
generally covered by the FLSA's minimum wage and overtime provisions.
However, there are several provisions of existing law that would limit
the impact of the rule on higher education. First, the rule does not
alter an existing exemption for all employees whose ``primary duty'' is
``teaching, tutoring, instructing or lecturing in the activity of
imparting knowledge and who is employed and engaged in this activity as
a teacher in an educational establishment,'' regardless of salary
level. 29 CFR 541.303(a). In addition to professors, a coach, for
example, may qualify as an exempt teacher if teaching is his or her
primary duty. In addition, the rule does not alter an existing rule
that exempts academic administrative personnel whose ``primary duty is
performing administrative functions directly related to academic
instruction or training in an educational establishment or a department
or subdivision thereof,'' even if paid on a salary basis less than the
standard salary level if the employee is paid ``on a salary basis which
is at least equal to the entrance salary for teachers in the
educational establishment by which employed.'' 29 CFR 541.204 (a) and
(b). Finally, the Department generally views graduate and undergraduate
students engaged in research under a faculty member's supervision, in
the course of obtaining a degree as being in an educational
relationship with the school. As such, the Department would not assert
an employment relationship with the school and will not assert that
such workers are entitled to overtime. Nothing in the rule alters this
view of student research assistants.
The letter from the Tennessee Independent Colleges and Universities
Association (TICUA) to Senator Alexander does not provide sufficient
information for the Department to assess the accuracy of the estimate
provided by one university that the proposed increase to the standard
salary level would result in a tuition increase of $1,000 per student.
Moreover, employers have a variety of options for responding to the
revised regulations. The Department does not dictate what options
employers should use to comply. Employers may increase employees'
salaries to the proposed salary level to maintain their exemption from
overtime, pay overtime for extra hours to salaried employees (newly
non-exempt employees do not have to be converted from salaried to
hourly), evaluate and realign employee workload to minimize overtime
hours without changing workers' pay, and/or they could hire additional
employees to cover the workload previously handled by one employee to
eliminate the need for overtime pay. Public universities, if they are a
public agency under the Fair Labor Standards Act, may even be able to
provide comp time rather than overtime payments in certain
circumstances. There is more detailed information on all of these and
other options available in our comprehensive guidance for higher
education employers.\6\
---------------------------------------------------------------------------
\6\ Https://www.dol.gov/whd/overtime/final2016/highered-
guidance.pdf.
---------------------------------------------------------------------------
Question. If you disagree with the colleges' and universities'
assessment, please explain why you believe their comments and
calculations are incorrect?
Answer. The letter from TICUA states that one unnamed university
estimated that it would raise tuition $1,000 per student if the
Department adopted the salary level as proposed in the NPRM of $970 per
week (or $50,440 for a full-year worker). No methodology is provided
for this estimate or any other estimate of costs in the TICUA letter,
and so I am not able to specifically respond to those estimates. As
noted in response to the previous question, the rule maintains existing
provisions for teachers and for certain academic administrative
personnel, and allows for employers to determine the compliance option
that works best for them and their workforce. It is also important to
note that the final rule also sets the salary level at the 40th
percentile of weekly earnings of full-time salaried workers in the
lowest-wage Census Region (currently the South) or $913 per week (or
$47,476 for a full-year worker). This was partially in response to some
commenters' concerns that setting the salary level based on national
data, as in the proposed rule, would unduly impact certain regions of
the country.
Many of the cost estimates we have seen from some higher education
institutions may be based on unrealistic assumptions about the number
of people who will be affected and how the institution must respond. We
do not believe that higher education institutions should have to
increase tuition in order to cover the costs of the rule. The rule's
economic analysis shows that the total costs and transfers to the
``Education and health services'' sector are estimated to be just .03
percent of payroll and .01 percent of revenue. (See Table 30 in the
rule, page 32498.)
new energy employees occupational illness compensation program act
rules
Question. I've heard from almost 1,500 constituents regarding their
concerns with the changes the Department proposed in November 2015
regarding the Energy Employees Occupational Illness Compensation
Program Act (EEOICPA). My constituents are concerned that the changes
may adversely impact claims adjudication, prevent them from seeing the
doctor of their choice, and result in loss of access to the program due
to illness or minor paperwork errors. The National Defense
Authorization Act of 2015 created an advisory board tasked with
advising the Department on technical issues regarding the program. The
members of this board have not yet been seated. Earlier this month, the
Government Accountability Office (GAO) released a report on the
effectiveness of claims adjudication at the Department.
Why didn't the Department wait to propose the new EEOICPA rules
until after the Department adopts the recommendations of the GAO report
and until after fully seating the congressionally-mandated advisory
board and allowing it the chance to review the program and make
recommendations as well?
Answer. The GAO found that the Office of Workers' Compensation
Programs (OWCP) generally followed its policies and procedures in
adjudicating claims under Part E of EEOICPA. The GAO made two
recommendations: 1) to require supervisory review of all decision
letters prior to issuance and 2) to require documenting final review of
the Site Exposure Matrices for updates prior to issuing a recommended
or final decision denying a claim. OWCP is in the process of
implementing both of these recommendations. Neither of these
recommendations requires regulatory changes, nor do the recommendations
relate to the proposed regulatory changes in the EEOICPA Notice of
Proposed Rulemaking (NPRM) published on November 18, 2015.
The members of the Advisory Board on Toxic Substances and Worker
Health have been fully seated since March 21st, and, in consideration
of your feedback and others, on April 5th, we reopened the comment
period for the NPRM until May 9, 2016. The reopening of the comment
period allowed the Advisory Board the opportunity to review the NPRM
and at their first meeting on April 26-28, 2016 to discuss and agree to
any recommendations regarding the proposed changes to the regulations
that fall within the four areas set out in the Act creating the Board.
The Department provided members of the Board with an overview of the
NPRM in advance of the Board's first meeting. We alerted your staff of
the extension, and a Federal Register Notice was posted to inform the
public. Additionally, stakeholders are welcome to provide formal
feedback as part of the EO 12866 process.
safety at job corps centers
Question. In September 2015, Senator Isakson and I wrote a letter
to you asking about safety at Job Corps Centers after two students were
killed at two different Job Corps centers last summer. I understand the
Department has made safety at Job Corps centers a priority after those
incidents, but since then at least two more assaults have occurred--one
just earlier this month involving the assault of a 16-year-old girl in
Kentucky. The Department's efforts to date haven't stopped the assaults
against students in the Department's care.
Is the Department going to do something different than what it has
done before to stop the violence?
Answer. The Department continues to initiate new changes and takes
seriously its responsibility to ensure the safety and security of
students participating in the Job Corps program, which helps
disadvantaged young people overcome obstacles and become successful
participants in America's workforce. More specifically, the purpose of
the Job Corps program is to ``assist eligible at-risk youth, which
includes those who have been connected to the criminal justice system,
to connect to the labor force by providing them with intensive social,
academic, career and technical education, and service-learning
opportunities.'' \7\ The Job Corps program is often the last chance
that participating youth have to change the direction of their lives
and become productive participants in the labor force. Job Corps
strives to meet students' social and academic needs while also ensuring
policies and procedures are in place so that students can learn and
grow in a safe environment.
---------------------------------------------------------------------------
\7\ WIOA Sec. 141(1)(A).
---------------------------------------------------------------------------
The Office of Job Corps has taken a number of steps over the last
18 months to improve safety and security, and additional initiatives
are currently underway. Job Corps now regularly conducts data-based
center risk assessments to identify those centers with indications of
safety and/or security concerns. This allows the program to target
resources on prevention and assistance at the centers most at risk. As
a result of these assessment, between August 2014 and August 2015, the
Department conducted visits at 22 centers, 18 of which were unannounced
and 4 of which were identified as having potential zero-tolerance
policy enforcement issues but were already scheduled to receive
Regional Office Center Assessments (ROCAs). Of the 22 visited, 13
received more than one visit. Between September 2015 and February 2016,
Job Corps conducted another 30 unannounced visits at Centers around the
country to evaluate targeted safety and security areas. Team members
utilized a newly developed risk assessment tool and evaluated areas
such as standards of conduct, rules and sanctions, investigation of
incidents, counseling services, center culture, personal safety and
security, evening supervision in the dormitories and recreational
areas, and campus access procedures, among others. As a result of these
later visits, Job Corps took corrective action with 27 centers for a
variety of reasons--from inconsistent campus access procedures to non-
compliance with counseling requirements, and required each center to
submit a corrective action plan for remedying items found not to be in
compliance.
In addition, in February 2016, Job Corps revised the Policy and
Requirements Handbook (PRH) which contains, among other things, the
Student Conduct System to ensure that it supports a safe, secure
learning and living environment for all students and staff. All center
operators must comply with the new policy per the terms of their
contract. The recent revision, reclassified numerous offenses from
Level II infractions to Level I zero tolerance infractions that require
student discharge for the infraction. These behaviors include: threat
of assault; fighting; arrest for a violent misdemeanor; possession,
consumption or distribution of alcohol while on center or under center
supervision; robbery or extortion; and inciting a disturbance or
creating disorder. Additionally, there is a limit to the number of
Level III minor infractions, which is 4 in a 60-day period. When a
fifth minor infraction occurs, it is elevated to a Level II ``Pattern
of Minor Infractions'' and it is referred to the Fact-Finding Board for
adjudication. Further, these changes will help facilitate consistent
application across the Job Corps community by clarifying the definition
of several of the infractions. The Department believes that these more
rigorous and consistently applied student conduct standards will reduce
the potential for violent incidents at the centers, and result in the
immediate separation of any student who engages in violent behavior.
Additionally, in the fall of 2015, the Department began requiring
operators, as part of their proposal to operate a Job Corps Center, to
describe their approach to student safety and behavior management. We
recently issued solicitation for a new support contract to conduct
national criminal background checks in order to provide a more
comprehensive and uniform system for screening applicants' criminal
background information. The Department anticipates the contract will be
awarded June 2016. Further, ETA is in the process of contracting for a
small number of operators who would be available to take over the
operation of a center where serious incidents result in the termination
of a contract or a decision not to exercise an option year. This will
result in a more nimble contracting process should serious issues
arise. Job Corps has also developed a service plan to provide a live,
24-hour safety hotline for Job Corps students and staff to report
safety and security related issues. A solicitation for provision of
these services was issued on April 1, 2016. Finally, Job Corps is
developing revised admissions procedures to ensure that Job Corps
enrollees are a good fit for the Job Corps program and can participate
successfully without interfering with other students' progress.
The President's 2017 Budget includes additional resources to
improve safety and security at Job Corps centers across the Nation.
Specifically, the Budget includes $10 million in the Operations
activity to upgrade Job Corps safety and security for students and
staff. The requested increase will be used for mental health
counselors; increased security personnel staffing; training for staff
to help them to detect security risks; additional staff to conduct
productive evening activities; and an integrated approach to behavior
management. There is also a requested increase of $20 million in the
Construction activity that will allow the Department to conduct
vulnerability assessments and address the most urgent physical security
needs, such as security cameras, perimeter fencing, site lighting,
electronic badge security, and enhancements to emergency communications
systems at Job Corps Centers.
Any act of violence on a Job Corps center is unacceptable. As you
can see, actions we have already taken have resulted in meaningful
improvements. You can be assured that the Department will continue to
work closely with center operators and other stakeholders to provide a
safe and effective learning environment for all Job Corps students.
finalizing the lm-21 form
Question. The Labor-Management Reporting and Disclosure Act (LMRDA)
``advice exemption'' or ``persuader'' rule was recently finalized.
However, the LM-21 form, the form on which employers have to report
their persuader activities, is not scheduled to be proposed until this
fall. I am concerned that the rule will infringe on employers' ability
to access legal advice. I'm also concerned that the rule was finalized
without a final LM-21 form, because the form will include the detail
required to be reported.
Why did the Department finalize the persuader rule prior to
finalizing the LM-21 form?
Answer. On March 24, 2016, after an extensive comment period, the
Office of Labor-Management Standards (OLMS) published a final rule that
revised the interpretation of the ``advice'' exemption of section
203(c) of the LMRDA. The Persuader Rule will not infringe on employers'
access to legal advice because none of the information required to be
reported (e.g., the identity of the parties, terms and conditions of
the agreement, and types of persuader activities undertaken) is covered
by the attorney-client privilege. Privileged information is excluded
from the reporting requirement by statute.
The Persuader Rule did not necessitate changes to the LM-21 and,
therefore, the LM-21 did not need to be completed at the same time as
the rule. Nevertheless, in a separate action, the Department of Labor's
spring 2016 Semi-Annual Regulatory Agenda reports that OLMS intends to
pursue a rulemaking to revise the Form LM-21, Receipts and
Disbursements Report, in September 2016. The rulemaking will propose
mandatory electronic filing for Form LM-21 filers, and it will review
the layout of the Form LM-21 and its instructions, including the detail
required to be reported.
In light of changes to the Form LM-20 and potential changes in Form
LM-21 reporting obligations that may be proposed in the upcoming
rulemaking, OLMS announced on April 13, 2016, that a special
enforcement policy will apply. Those filers of Form LM-20 who must also
file a Form LM-21 will not be required to complete two parts of the LM-
21. Specifically, OLMS will not take enforcement action based upon a
failure to complete the following Parts of Form LM-21:
--Part B (Statement of Receipts), which ordinarily requires the filer
to report all receipts from employers in connection with labor
relations advice or services regardless of the purposes of the
advice or services, and/or
--Part C (Statement of Disbursements), which ordinarily requires the
filer to report all disbursements made by the reporting
organization in connection with labor relations advice or
services rendered to the employers listed in Part B.
This special enforcement policy was effective immediately upon
publication of the policy on April 13. It will remain in effect until
further notice, and the Department will provide no less than 90 days'
notice prior to any change in this policy.
road to retirement surveys
Question. On February 29, the Department issued a proposed
information collection request regarding the ``Road to Retirement''
surveys. The Department states the research study is being undertaken
because, ``relatively little is known about how people make planning
and financial decisions before and during retirement.'' I believe this
request for information suggests the Department is blindly moving
forward with the fiduciary rule, even though it has the potential to
cut off access to affordable retirement advice for millions of
Americans and their families. In response, a spokesperson at the
Department stated that the request for information would ``build upon
our already robust body of retirement research.'' The request for
information about having relatively little information contradicts the
Department's statement about having a robust amount of information.
Why is the Department requesting this information if its knowledge
is robust and, if it is not so robust, why move forward with the
fiduciary rule before gathering additional information about how it may
impact access to retirement education and advice for millions of
Americans?
Answer. The evidence already available is indeed robust that
financial advisers' conflicts of interest are costly to retirement
investors. That evidence is detailed in the regulatory impact analysis
that the Department issued together with the new final fiduciary rule.
A review of the evidence demonstrates that the rule itself is well
grounded and has the potential to deliver gains for retirement
investors.
The study the Department is pursuing is a broad examination of how
U.S. families prepare financially for retirement. The survey has an
unprecedented level of detail about retirement preparation throughout
adulthood. It looks at all major aspects of families' decisionmaking
and planning relevant to this preparation. The scope of the study is
far broader than the question of conflicts in investment advice, and
broader even than investing generally, but encompasses how, when, and
how much is saved, and how savings is translated into consumption in
retirement. It will provide data on who has access to retirement plans,
the types and features of those plans, and who chooses to participate
in them. It will inform future research and policy toward a range of
issues including, for example, effective disclosure, financial
education and literacy, and plan design. Building upon our already
robust body of retirement research does not diminish the validity of
our efforts to reduce conflicts of interest in retirement advice that
cost workers many billions of dollars each year.
advice gap created by united kingdom fiduciary rule
Question. At the hearing, you denied that the United Kingdom's (UK)
similar fiduciary rule created an advice gap for low- and middle-income
individuals. The Department's economic analysis denied that an advice
gap existed in the UK and you also previously testified that there was
no advice gap. However, on March 14, 2016, the British Government
published a report finding that the similar fiduciary rule did create
an advice gap, disproportionately harming lower-income individuals. The
report further states that almost 70 percent of advisors rejected small
customers in the past year, and it's becoming more common for advisors
to require at least 100,000 [British Pounds] in assets before providing
advice. Experts, including Kent Mason of Davis and Harman LLP, are
saying the Department's fiduciary rule, if finalized similar to its
proposal, will have the same effect as the UK's fiduciary rule.
Are you worried about the impact the final fiduciary rule will have
on lower- to middle-income individuals and do you believe the
Department should study the impact the rule has on Americans' access to
advice after it is implemented?
Answer. While some advisers left the market soon after the passage
of the UK's Retail Distribution Review and some have increased minimum
asset requirements in the UK, overall the availability of advice does
not appear to have been significantly reduced, and some of those that
left have since returned to the market. The UK's experience lends
support for the Department's conclusion that its reforms, which do not
ban commissions or increase adviser qualifications like the UK reforms,
are unlikely to result in a significant diminution of advice for small
and middle-income investors. In fact, the FAMR report mentioned above
also provides positive data on the supply-side of the financial advice
market in stating that ``some larger firms have recently signaled a
return to the advice market and in some cases this is being facilitated
by effective and creative use of new technologies to increase the
number of customers they serve.'' The Department does anticipate some
changes in the industry as firms compete in a new environment and as
the cost of advice becomes clearer to customers. The Department will
continue to watch these changes carefully and will provide additional
guidance and assistance as needed.
______
Questions Submitted by Senator Patty Murray
wage and hour division fiscal year 2017 budget request
Question. Mr. Secretary, as I mentioned in my opening statement,
there are a range of views in the Senate about whether we should raise
the minimum wage or increase overtime protections. I believe we should
do both, because they would benefit working families. The Department's
Wage and Hour division enforces these protections as they exist today
in an environment with increasingly complex business models that make
it more challenging to ensure employer compliance. Despite these
challenges and a flat budget, last year the division collected almost
$250 million in back wages for more than 240,000 workers. That figure
includes $74 million for low-wage workers. I see that your budget
requests an increase for the Division so that it can do more on behalf
of workers.
Unfortunately, resources will almost certainly be constrained this
year, so I'd like you to tell us what impact another year of flat
funding would have on the Division and its ability to ensure workers,
especially those making modest wages, are treated fairly.
Answer. Flat funding would hinder the significant progress made in
rebuilding and strengthening the agency's ability to carry out our
mission. Since fiscal year 2010, those efforts have included restoring
investigator ranks that had reached their lowest level since the 1970s;
reviving the use of all available enforcement tools to achieve broad,
sustained compliance, including enhanced compliance agreements as well
as liquidated damages and civil money penalties; and developing an
evidence-based, data-driven approach to enforcement that aims for
compliance at the industry level. Flat funding risks eroding those
gains, particularly as the agency continually confronts the limitations
of our infrastructure in carrying out our work. In fiscal year 2015,
WHD (Wage and Hour Division) directed investigations found $8,900 per
investigation and over $800 per worker in directed investigations. Flat
funding inhibits WHD from increasing its ability to conduct more
directed investigations, which keeps those lawfully earned wages out of
the hands of workers. Additional funding would allow WHD to increase
the amount of back wages it recovers. At WHD's fiscal year 2017 request
level, the increased FTE could boost back wage recovery by at least
$50,000,000 for an additional 50,000 workers.
WHD focuses on industries that employ significant numbers of low-
wage workers that are often the least likely to complain and the most
likely to suffer workplace violations. In fiscal year 2008, WHD found
back wages of $57.5 million in low-wage industries for 76,900 workers.
In fiscal year 2015, WHD found $74.3 million in low wage industries for
102,000 workers. That is more than a 29 percent increase in back wages
and more than a 32 percent increase in the number of workers. Those
gains were achieved through investments in the WHD workforce and
infrastructure since fiscal year 2010. Also importantly, WHD aims for
systemic compliance at the industry level, which requires new levels of
coordination around enforcement, media, and stakeholder strategies;
robust data analysis, research, and evaluation capabilities; and an
infrastructure that fully supports the training, technology, planning,
and communication needs of the organization. At the same time, a recent
study on wage violations in New York and California demonstrates that
rampant minimum wage violations account for an estimated $33-49 million
total in lost weekly income in those States (estimates vary by the two
data sources used).\8\ This study did not even account for overtime
violations. Strategic enforcement is critical to ensure that DOL's
limited resources have maximum impact, but flat funding for DOL means
that thousands more families will be driven further into poverty due to
DOL's limited resources to enforce the law.
---------------------------------------------------------------------------
\8\ Available at https://www.dol.gov/asp/evaluation/completed-
studies/WageViolationsReport
December2014.pdf.
---------------------------------------------------------------------------
The agency is confronting the limitations of working with
technology, operations, and systems built for a different era.
Notwithstanding its outdated information systems, through strategic use
of resources WHD has been able to increase its recovery of back wages,
including for low wage workers. To continue achieving system-wide
impacts, however, WHD requires additional capacity, including more
staff, to cover more of the 7.3 million workplaces in this country and
conduct outreach, as well as updated information systems and data
analytic capabilities, which will allow us to continue to focus on
industries with the largest compliance problems and the most vulnerable
workers. We will do this through a more in-depth understanding of
industries, business models, and a more coordinated approach to
conducting enforcement across networks of businesses, supply chains, or
contracting relationships. Our Budget also includes $5.8 million to
replace our aging case management system. A 2011 assessment estimated
that moving WHD's applications to a cloud-based system would allow
greater investigator productivity, enabling investigators to handle an
additional case per quarter, or nearly 4,000 additional compliance
actions a year.
The agency must also update and modernize its approach to
compliance assistance. Employers who are aware of their legal
responsibilities (and the consequences of breaking the law) and workers
who are aware of their rights are better positioned to identify and
remedy violations, or to prevent them from occurring in the first
place. While the agency continues to improve its public-facing website
and enforcement database, WHD is also identifying ways to make its
administrative data and information more accessible and usable to the
public, employers, employees, journalists, developers, stakeholders,
and the research community. These are the types of critical investments
that will be adversely impacted by flat funding, significantly
hindering WHD's ability to achieve greater compliance.
effectively combating wage theft and labor law violations
Question. As you know, I have introduced a bill to tackle wage
theft. Do you believe that strengthening the Fair Labor Standards Act
would help in combatting wage theft?
Answer. Although the Administration has not taken a formal position
on the Wage Theft Prevention and Wage Recovery Act, we are supportive
of Congressional consideration of ways to provide that workers receive
a fair day's pay for a fair day's work and to improve the provision of
basic information to workers of how their pay was calculated. As a
general matter, the Department believes that it is important for
workers to have the information that they need to ensure that they are
being paid all of the wages due and to assert their rights if they are
not. As a normal part of doing business, most employers give their
workers a pay stub with basic information about their hours and wages.
As you know, President Obama took an important step forward in
providing additional paycheck transparency to workers as part of the
Fair Pay and Safe Workplaces Executive Order. Once implemented, this
Executive Order will require covered Federal contractors and
subcontractors to provide their workers on covered contracts with
information each pay period regarding how their pay is calculated. The
Order is an important step for workers and also for the Federal
agencies, because it means that any pay-related problems on Federal
contracts can be caught early before they become more costly to
resolve.
Question. Can you comment on the strategies being adopted by the
Division to achieve the broadest possible compliance across industries?
Answer. WHD focuses resources in industries where evidence shows a
history of violations and where large numbers of vulnerable workers are
found. WHD prioritizes enforcement in areas where issues can be
addressed systemically. Data show that agency-initiated investigations
and the strategic use of enforcement resources have particularly
positive results for low-wage workers. In fiscal year 2015, WHD
maintained increases in the percent of agency-initiated investigations,
in contrast to investigations that are responsive to complaints, with
42 percent directed investigations--a 25 percentage point increase from
fiscal year 2010. The agency found violations in 79 percent of these
agency-initiated investigations in fiscal year 2015, demonstrating that
the agency is focusing on the right industries and the right workplaces
within those industries. Even with the focus on low-wage workers, in
fiscal year 2015, compliance actions in low-wage industries resulted in
more than $1,000 in back wages per employee paid in violation.
Question. How does the Division decide where to target it
investigations to industries with the greatest likelihood and
concentration of labor law violations so that it's not wasting its
resources on law-abiding businesses?
Answer. The laws enforced by WHD apply to over 7.3 million
establishments and protect over 135 million workers. We will never have
enough investigators to examine every business. Our strategies
recognize the need to prioritize and direct resources based on where
data and evidence show the problems are largest, where emerging
business models lead to violations, and where workers are least likely
to exercise their rights. WHD also seeks to impact compliance beyond
the investigated employer, so that enforcement actions resonate
throughout a particular sector and increase compliance across the
entire industry, leveling the playing field for law-abiding businesses.
A growing percentage of investigations are directed, i.e., agency-
initiated, which allows the agency to carry out strategies that aim for
industry-level compliance.
Since undertaking this strategic approach, WHD has increased its
performance results. To start, the agency has increased the number and
percent of directed investigations, that is, investigations based on
objective evidence that indicates a likelihood of finding violations.
In fiscal year 2015, WHD maintained increases in the percent of
directed investigations with 42 percent a significant increase from
fiscal year 2010. Evidence that WHD has improved its ability to
identify violators is that the percentage of directed cases in which
WHD finds no violations declined from 35 percent in fiscal year 2009 to
21 percent in fiscal year 2015. In fact, in 2015 the ``no-violation
rate'' for directed investigation was almost the same as for
investigations triggered by a complaint: the no-violation rate for
complaint cases was 18 percent versus 21 percent for directed cases,
suggesting that directed investigations, despite the absence of on-the-
ground information from complainants, are nearly as accurate as a
complaint in finding employers with violations.
The benefit of directed investigations is that it allows WHD to
protect workers in industries where workers are unlikely to file a
complaint, either because of intimidation, fear of interacting with the
government or a lack of knowledge of their rights. By using sound
empirical evidence and robust data, WHD has been able to initiate
investigations without information from complainants, without
increasing the likelihood of wasting resources on investigating law-
abiding employers. Directed investigations also allow WHD to focus
efforts, including stakeholder engagement, communication, and outreach
to affect compliance more broadly within an industry.
paid leave analysis grant
Question. Mr. Secretary, I was pleased that the Department's
Women's Bureau awarded a Paid Leave Analysis grant last fall to my home
State of Washington. These funds will help the State study options for
implementing Washington's Family Leave Insurance Act of 2007. I see
that the budget proposes additional funding for the Women's Bureau to
help more States study options for paid leave programs. It also
proposes $2 billion in mandatory funding to help up to 5 States cover
the initial costs of their programs. I believe we need to strengthen
family leave policies. Currently, more than 40 million workers do not
have access to paid sick days, a problem that a bill I introduced with
Congresswoman DeLauro--the Healthy Families Act--would help address.
And Federal contractors will provide up to 7 days of paid sick days
thanks to the executive order President Obama issued last fall. And, I
have been pleased to see more States and communities, such as Seattle,
adopt paid leave programs.
Mr. Secretary, what impact are these policies having on local
business where paid leave programs have been implemented?
Answer. In the three States that have implemented paid leave
programs (California, New Jersey, and Rhode Island), businesses have
benefited from a more stable workforce without having to incur the
costs of establishing a paid leave program by themselves. Businesses
and workers can share the costs broadly, limiting the impact on any one
person or company. In fact, research has shown that paid leave
increases the probability that women continue in their job after
childbirth, rather than quitting, saving employers the expense of
recruiting and training new employees.\9\ After California and New
Jersey enacted paid family leave benefits, most businesses in those
States reported positive or neutral experiences and few negative
effects.\10\ In California, a study funded by the Department of Labor
on California's Paid Family Leave law concluded that the law had not
caused major problems for California's employers.\11\ Approximately 90
percent of employers surveyed reported positive effects or no
noticeable effects in terms of productivity, profitability, retention,
and morale. Small employers reported fewer problems than large firms.
Another study of California's law determined that the business
community's concerns that the law would impose extensive new costs and
become a serious burden for employers proved unfounded; after more than
5 years' experience with paid family leave, the vast majority of
employers reported that the law had minimal impact on their business
operations.\12\ Similarly, a study of Rhode Island's paid family leave
law found little evidence of significant impacts to employers, and the
results were suggestive of employer support for paid family leave
laws.\13\
---------------------------------------------------------------------------
\9\ Available at https://www.dol.gov/asp/evaluation/completed-
studies/WageViolationsReport
December2014.pdf.
\10\ IMPAQ International. January 2012. Impact of the Reemployment
and Eligibility Assessment (REA) Initiative in Nevada.
\11\ The report is available at www.dol.gov/ilab/reports/pdf/
Public_Report_of_Review_of_
US_Submission_2015-01.pdf.
\12\ Appelbaum, E. and Milkman, R. 2011. ``Leaves That Pay:
Employer and Worker Experiences with Paid Family Leave in California.''
http://cepr.net/documents/publications/paid-family-leave-1-2011.pdf.
\13\ Bartel, A. et al. 2016. ``Assessing Rhode Island''s Temporary
Caregiver Insurance Act: Insights from a Survey of Employers.'' U.S.
Department of Labor. Retrieved from http://www.dol.gov/asp/evaluation/
completed-studies/
AssessingRhodeIslandTemporaryCaregiverInsuranceAct_InsightsFromSurveyOfE
mployers.pdf.
---------------------------------------------------------------------------
Question. Are they hurting businesses or reducing employment?
Answer. No, in the three States that have implemented paid leave
programs (California, New Jersey, and Rhode Island), businesses have
benefited from a more stable workforce without having to incur the
costs of establishing a paid leave program by themselves. Businesses
and workers can share the costs broadly, limiting the impact on any one
person or company. In fact, research has shown that paid family and
medical leave increases worker retention and reduces turnover, saving
businesses significant costs associated with replacing employees. In
New York, more than one hundred business owners and business
associations formally expressed support for the State's paid family
leave insurance program, recognizing that such a program ``will help--
not hurt--their success.'' \14\
---------------------------------------------------------------------------
\14\ Community Service Society, Press Release, ``New York
Businesses Support Paid Family Leave'' (Mar. 23, 2016), http://
www.cssny.org/news/entry/new-york-businesses-support-paid-family-leave.
---------------------------------------------------------------------------
Question. And, what have they meant for working families?
Answer. The laws have had a positive effect on working families.
Paid leave helps individuals deal with important life events, such as a
serious personal or family illness or to care for a new child or an
aging parent, without jeopardizing their economic security. When
workers are forced to take unpaid leave, they manage the financial
impact by cutting back spending, spending down savings, putting off
paying bills, accumulating debt, and/or even going on public
assistance. Paid leave reduces the chance of working families needing
to make these tough decisions. Research on California's Paid Family
Leave program shows that uptake of paid family leave increased among
the less-educated, unmarried and minority mothers who took the shortest
leaves before the law took effect.\15\ Paid parental leave can increase
female labor force participation by making it easier for women to stay
in the workforce after giving birth, which contributes to economic
growth and can increase women's lifetime earnings. It also has a
positive effect on the overall health and wellbeing of parent and
child, substantially increasing breastfeeding rates and maternal time
spent on child care.\16\ When parents are better supported at work
through paid family and medical leave, they are also less likely to
rely on public assistance benefits. Economists have found that with
paid leave, more people take time off, particularly low-income parents
who may have taken no leave or dropped out of the work force after the
birth. Paid leave raises the probability that mothers return to
employment later, and then work more hours and earn higher wages.\17\
---------------------------------------------------------------------------
\15\ Bartel. A. et al. 2014. ``California's Paid Family Leave Law:
Lessons from the First Decade.'' U.S. Department of Labor. Retrieved
from: http://www.dol.gov/asp/evaluation/reports/
paidleavedeliverable.pdf.
\16\ Michael Baker and Kevin Milligan. 2008. ``Maternal Employment,
Breastfeeding and Health: Evidence from Maternity Leave Mandates.''
Journal of Health Economics 27:871-887.
\17\ U.S. Department of Labor. 2015. ``The Cost of Doing Nothing:
The Price We All Pay Without Paid Leave Policies to Support America's
21st Century Working Families.'' Retrieved from http://www.dol.gov/
featured/paidleave/cost-of-doing-nothing-report.pdf.
---------------------------------------------------------------------------
Although there is less research on the effects of paid leave on
employment outside the context of parental leave, studies show these
same positive impacts on employment and retention may extend to workers
taking leave for other reasons. California's Paid Family Leave program
notably increased job retention of workers in ``low-quality'' jobs
(those with lower wages and fewer benefits). When they experienced a
triggering event like a serious health problem or a family member
needing care, they were more likely to return to work and to their same
employer.\18\ Moreover, care for adult family members with significant
health needs, including ill spouses and aging parents, is a key
challenge that affects working families. When workers have access to
paid leave for family members' long-term care, as well as acute medical
needs, it can reduce work-family conflict and negative employment
impacts.\19\ The Department's 2015 report titled ``The Cost of Doing
Nothing'' outlines the myriad ways in which paid leave policies help
working families, and how lack of access to such policies comes at
significant cost.
---------------------------------------------------------------------------
\18\ Appelbaum, E. and Milkman, R. 2011. ``Leaves That Pay:
Employer and Worker Experiences with Paid Family Leave in California.''
http://cepr.net/documents/publications/paid-family-leave-1-2011.pdf.
\19\ U.S. Department of Labor. 2015. ``The Cost of Doing Nothing:
The Price We All Pay Without Paid Leave Policies to Support America's
21st Century Working Families.'' Retrieved from http://www.dol.gov/
featured/paidleave/cost-of-doing-nothing-report.pdf.
---------------------------------------------------------------------------
bureau of international labor affairs trade enforcement
Question. I'd like to follow up on my question related to trade
enforcement, particularly your comment that ILAB (Bureau of
International Labor Affairs) punches above its weight.
Would you please say more about the outcomes ILAB is achieving for
our workers and its partnerships within the executive branch?
Answer. ILAB's efforts, in coordination with the Office of the U.S.
Trade Representative (USTR) and the Department of State, are designed
to strengthen the monitoring and enforcement of labor provisions of
free trade agreements (FTAs) and trade preference programs, and help to
level the playing field for American workers and business. Labor
exploitation in trading partner countries such as child labor, forced
labor, unsafe working environments, or unfair working conditions
undermines U.S. workers, U.S. businesses, and U.S. values.
ILAB uses its leverage through trade agreements, trade preference
programs, technical assistance grants, reporting, and diplomacy to
improve working conditions around the world. ILAB uses its technical
assistance grant funding to build government capacity to improve labor
rights among trade partners and address the root causes of the worst
forms of child labor. Through the Administration's trade agenda, ILAB
played a key role in helping USTR negotiate successively stronger labor
provisions of FTAs. Under the Trans-Pacific Partnership agreement, the
U.S. government negotiated the strongest labor rights provisions of any
FTA to date along with consistency plans that will require
implementation of critical labor reforms in Vietnam, Malaysia, and
Brunei prior to entry into force of the agreement.
These successes are part of a broader interagency effort to make
trade work better for workers at home and abroad through greater
monitoring and enforcement. ILAB, USTR, and the Department of State's
recent work with the Government of Honduras is a strong example of
recent bilateral and interagency collaboration to effectively monitor
labor commitments under an FTA. ILAB completed a public submission
report concerning Honduras that found evidence of labor law violations
in nearly all of the included cases and noted serious concerns
regarding the Government of Honduras's enforcement of its labor
laws.\20\ Maintaining a constructive working relationship with Honduras
throughout the submission review process enabled the Department of
Labor, USTR, and State to cooperatively develop and sign a Monitoring
and Action Plan designed to address the concerns identified in the
submission report.\21\ This was supported by an ILAB technical
assistance grant of $7 million to build the capacity of the government
to address the issues identified in the Plan, and will continue to be
monitored by the labor attache, who is expected to be in country later
this year.
---------------------------------------------------------------------------
\20\ The report is available at www.dol.gov/ilab/reports/pdf/
Final_Report_of_Review-Honduras_Submission_022715_redacted.pdf.
\21\ This plan is available at www.dol.gov/ilab/media/pdf/
Honduras_MAP.pdf.
---------------------------------------------------------------------------
Likewise, with the Government of Guatemala, ILAB played a critical
role in negotiating an enforcement plan to address labor enforcement
concerns under the Dominican Republic-Central America Free Trade
Agreement (CAFTA-DR). When Guatemala failed to fully implement the
plan, ILAB assisted USTR in bringing the U.S. government's first ever
dispute settlement case under an FTA, arguing that Guatemala has not
complied with the labor provisions of the CAFTA-DR. With ILAB's
assistance, the U.S. government also entered into consultations with
the Government of Bahrain to address the targeting of union leaders in
the 2011 Arab Spring. Since then, Bahrain has reinstated nearly all of
the over 4,000 workers dismissed in the public and private sectors. In
2016, ILAB, in close consultation with USTR and State, published a
report in response to a labor submission under the Peru FTA that
identified significant concerns regarding freedom of association in
Peru, offered recommendations to address those concerns, and expressed
the U.S. government's commitment to continued engagement with the
Government of Peru.\22\ The report further committed to assess the
progress in addressing those concerns within 9 months.
---------------------------------------------------------------------------
\22\ The report is available at www.dol.gov/ilab/reports/pdf/
Public_Report_of_Review_of_
US_Submission_2015-01.pdf.
---------------------------------------------------------------------------
ILAB is investing its resources in putting personnel on the ground
in countries where there is a clear plan of action for improving labor
rights and a commitment from the trading partner government to
implement those reforms. This is critical to ensuring high-level
attention and progress on these issues. For example, in 2013, the U.S.
suspended Bangladesh's trade benefits under the Generalized System of
Preferences (GSP) after an extensive interagency review of workers'
rights and worker safety. In an effort to demonstrate ILAB's commitment
to address the issue, ILAB established its first labor attache at the
U.S. Embassy in Dhaka, Bangladesh in August 2014, where she plays a
critical day-to-day role supporting the efforts of the U.S. government
in working closely with the Government of Bangladesh, unions, and
employers in promoting progress for Bangladesh workers on the Labor
Action Plan.
Similarly, along with grant funding for capacity building projects
in Colombia, ILAB established a second labor attache in Bogota,
Colombia in April 2015 to help coordinate U.S. government efforts with
the government of Colombia in meeting its obligations under the free
trade agreement and the associated Colombia Labor Action Plan, which
ILAB also helped to negotiate. Likewise, ILAB will soon send labor
attaches into the field at the Embassies in Hanoi, Vietnam, and
Tegucigalpa, Honduras. In the fiscal year 2017 Budget, ILAB requests
additional funds to expand the labor attache program into more trading
partner countries, such as Peru, Mexico, Malaysia, Guatemala, and the
Dominican Republic, to further their progress on labor rights.
green jobs act of 2007
Question. Mr. Secretary, your Bureau of Labor Statistics conducted
work earlier this decade on measuring green jobs in the economy. The
Green Jobs Act of 2007 called on BLS to do this work and the American
Recovery and Reinvestment Act provided resources to help get this work
started. Unfortunately, across the board cuts in 2013 reduced the BLS
budget by 5 percent, and the BLS made the decision to eliminate related
programs and products.
Would you please describe the key accomplishments achieved with
this funding?
Answer. The fiscal year 2010 Consolidated Appropriations Act
included $8,000,000 in funding to expand several Bureau of Labor
Statistics survey programs to collect new data on green-collar jobs in
the economy.
With the funding, the BLS produced four ``measuring green jobs''
products:
--Green Goods and Services (GGS) Industry survey (http://www.bls.gov/
ggs/): provided data on employment by industry for businesses
that produced green goods and services;
--GGS Occupations survey (http://www.bls.gov/ggsocc/): provided
employment data by occupation;
--Green Technologies and Practices (GTP) survey (http://www.bls.gov/
gtp/): provided data on the occupations and wages of jobs
related to green technologies and practices;
--Green Career Information (http://www.bls.gov/green/
greencareers.htm): provided career information related to green
jobs.
Initially, funding supported the development of the surveys,
including collection instruments, systems development and other
information technology needs. The first set of estimates from the new
surveys were published in fiscal year 2012; the initial green career
information product was published in September 2010.
Question. And, what do you think policy makers at all levels lost
with the elimination of this BLS data source?
Answer. Anytime we lose funding, the Department and BLS have to
make tough choices about how to do more with less. In this case, we
made the choice to stop collecting data on green jobs. As a result,
policymakers lost sources of information on the green goods and
services sector of the economy when green jobs data products were
eliminated in fiscal year 2013, including:
--The Quarterly Census of Employment and Wages eliminated the
collection and publication of industry employment data on
120,000 establishments in select industries defined as green
for the Nation and States; and ceased production of 3,200 green
goods and services industry job series.
--The Occupational Employment Statistics program eliminated 10,000
green series on occupational employment and wages data for
businesses that produce green goods and services; and ceased to
conduct special employer surveys to provide information on the
nature of the jobs held by green workers, such as the Green
Technologies and Practices survey.
--The Employment Projections program stopped producing narratives on
green careers.
preparing states for workforce innovation and opportunity act
implementation
Question. The passage of the Workforce Innovation and Opportunity
Act (WIOA) in 2014 represented a bipartisan commitment to support
training that prepares workers for the jobs that are available with the
skills that businesses need to succeed. I am pleased that we were able
to fund increases for training and employment services in 2016, but
it's important to note that funding for these programs has remained
static over the last three decades while the size of our economy and
workforce has more than doubled. WIOA requirements take full effect
this summer as States still await the Federal regulations and guidance
they will need to comply with the law. Washington State is a national
leader in WIOA implementation and I recognize that the Department has
been working very hard to ensure that all States are prepared this
summer.
Do you still anticipate that the final regulation will be issued
prior to the July 1st statutory deadline?
Answer. Yes, the Departments of Labor and Education continue to
work aggressively toward making the final regulations publicly
available in June 2016.
Question. How is the Department working with States to provide the
technical assistance and flexibility they need to be ready to implement
the new regulation due out this summer?
Answer. The Department of Labor, in collaboration with our Federal
partners, has taken many steps to guide the swift and effective
implementation of the law. For example, the Department launched a WIOA
resource page on July 21, 2014, to provide State and local leaders,
practitioners, and stakeholders with information resources and
technical assistance materials. This page had recorded 517,174 total
views through March 2016. We also have hosted 28 WIOA technical
assistance webinars; shared numerous assessment tools to help leaders
at all levels of the public workforce system plan for WIOA
implementation; and distributed podcasts and videos describing
workforce system best practices and replicable models. In addition, we
have shared over 40 pieces of operating guidance for States and local
workforce areas on a range of topics, such as transition funding, grant
management, youth programming, and governance.
In January 2016, teams from 49 States attended a National Convening
that the Department co-hosted with Federal partners and stakeholders.
The leadership conversation focused on strengthening partnerships,
learning from one another, and sharing best practices in WIOA
implementation. We continue to be available as a resource to help
States and local areas work through WIOA implementation challenges and
take advantage of its opportunities.
States and territories are working hard to bring the principles of
WIOA to life, convening their partners to align strategy, service
delivery, and performance reporting across programs. Most States and
outlying areas already have WIOA-compliant State and local governing
boards in place. All States and territories have submitted their WIOA
State plans, and reviews of WIOA State plans are underway.
With regard to specific regulatory training, the Department of
Labor is working with its Federal partners to develop training on the
new regulations, among other necessary technical assistance. We also
are collaborating on a monitoring approach that recognizes the
transition and transformation of the public workforce system that is
currently underway. The Department has issued 19 different TEGLs as
WIOA Operating Guidance and posted 31 subject-based FAQs specifically
addressing expectations for certain provisions of WIOA during
implementation. All public guidance and information related to WIOA
implementation is available through a WIOA landing page at
www.doleta.gov/wioa.
______
Questions Submitted by Senator Jack Reed
workforce innovation and opportunity act implementation and libraries
Question. How is the Department working with the Institute of
Museum and Library Services to engage public libraries in the
implementation of WIOA?
Answer. The Departments of Labor and Education continue to work
with the American Library Association (ALA) and the Institute of Museum
and Library Services (IMLS) to conduct outreach to libraries. This
outreach is intended to help libraries understand the vital role that
the workforce system plays in providing education, training, and career
services to job seekers and provide information about how public
libraries can partner with the workforce system, including as a
recipient of WIOA funding. As part of this outreach, the Departments
conducted a webinar with ALA and IMLS, and maintain regular
communication regarding WIOA implementation.
Question. What guidance and technical assistance will the
Department provide to ensure that libraries providing workforce
development services have access to resources under WIOA?
Answer. WIOA explicitly identifies public libraries as potential
partners of the American Job Center network, and acknowledges
libraries' ability to provide an expansive array of job search
services. The law also recognizes libraries as important providers of
federally supported training and employment for adult education and
literacy activities. Public libraries may enter into agreements with
local workforce boards to provide services. The Departments of Labor
and Education are developing additional guidance on how the workforce
system can make better connections with libraries and will continue to
engage with ALA and IMLS to identify areas where additional guidance
and technical assistance is needed.
work sharing
Question. How does the work-sharing or short-time compensation
program help States, employers, and employees save money in their UI
trust funds, keep workers on the job, and employees connected to the
work force?
Answer. Short-Time Compensation (STC) benefits both employers and
employees by allowing employers to retain a skilled work force within
the affected unit or units through a partial reduction of employees'
hours of work rather than laying off some employees within the unit.
STC preserves employees' jobs during times of lowered economic activity
and cushions the negative impact of the reduced business activity
within the unit by permitting employees to collect an STC payment to
replace a portion of their lost wages.
Participation in an STC plan allows the employer to retain its
trained workers until demand for its products and services resumes, at
which point employers have the opportunity to restore hours. Through
the duration of the plan, the participating employer can maintain
productivity and quality levels because it has the same experienced
employees doing the same work. A participating STC employer avoids the
costs of having to hire and train new workers when normal business
activity levels resume. Also, by participating in an approved STC plan,
an employer communicates to its employees (and the local community)
that it values the well-being of its workers. In addition, the STC
program helps employers keep businesses viable, provides important
assistance to workers and their families, and benefits local economies.
STC benefits workers in the affected unit or units by averting the
loss of employment during declining business activity. Workers receive
an STC payment to cushion the impact of the reduction in the usual
hours of work while maintaining health and retirement benefits under
the same terms and conditions as though the employee's workweek were
not reduced during the duration of the STC plan. Individuals may be
able to participate in training to enhance their work skills as part of
the STC plan. By participating in the STC program, employees stay
connected to their job, continue to apply their skills, and avoid the
need to look for alternative employment. Retaining employment and
income can be particularly important for a family, especially if other
family members lose their jobs or face reduced work hours. Once the
economic conditions for the employer improve, the employees can then
resume their regular hours of work.
Question. How would an extension of funding encourage additional
States to adopt work sharing programs?
Answer. The financial incentives provided under the Middle Class
Tax Relief and Job Creation Act of 2012 (the Act) promoted additional
State adoption of STC programs and improved administration and
promotion of the program.
A total of twenty-eight States amended their STC laws or enacted
new STC provisions in their State UI laws to conform to the new
definition of STC in the Act. The following seven States enacted new
STC programs after enactment of the Act: Illinois, Michigan, Nebraska,
New Jersey, Ohio, Virginia and Wisconsin.
Twenty-two STC States received Federal STC benefit reimbursements
totaling $266.7 million between 2012 and 2015. Federal reimbursement of
STC benefit costs ended in August 2015. The Act provided for 100
percent reimbursements of STC benefits paid. However, the reimbursement
became subject to reductions as a result of sequestration for mandatory
budget activities carried out under the Balanced Budget and Emergency
Deficit Control Act.
Sixteen States took advantage of available STC grant funds under
the Act, totaling $46.1 million, and are using the grant funds to
automate their systems or for other program improvement activities.
States are using the promotion/enrollment grant funds to conduct
outreach to employers and stakeholders, design and update STC
promotional materials, improve STC websites, hire/train staff, and
develop data warehouses to identify potential employers that may
benefit from the STC program.
The Department believes that an extension of these incentives would
result in increased adoption of the STC program and improved
administration and promotion of the program, thus saving more jobs in
more States. As of February 2016, when the Department released its STC
Report to Congress, 570,000 jobs had been saved as a result of STC
since the beginning of the Great Recession. The full report can be
found at: http://www.ows.doleta.gov/unemploy/docs/stc_report.pdf.
job corps
Question. What is the process for determining what academic and
career training programs are offered at Job Corps Centers?
Answer. One hundred twenty-six Job Corps Centers are operated
nationally, and training is provided by a variety of providers,
including for-profit companies, community colleges, national labor
organizations, industry organizations, and the U.S. Forest Service.
Each center provides a fully supervised program of education, including
academic and career training programs, which are selected based on
requirements of the Workforce Innovation and Opportunity Act (WIOA),
the Job Corps Policy Requirements Handbook (PRH), and through workforce
council identification of in-demand industries. The PRH requires
instruction in the following content areas:
--Career Technical Training (CTT)
--High School Diploma and/or High School Equivalency
--Reading
--Math
--English as a Second Language
--Information Technology
--Wellness
--Drivers Education
--Financial Literacy
In accordance with WIOA, each Job Corps center must establish a
workforce council that includes representatives of private sector
employers, labor organizations (where present), employees, and Job
Corps enrollees and graduates. In the case of a single-State local
area, the workforce council must also include a representative of the
State Board. The workforce council must work with local boards and
review Labor Market Information (LMI) to recommend in-demand industry
sectors or occupations of focus, determine employment opportunities
that students are well suited for, identify the skills and education
necessary to obtain employment, and recommend career and technical
training that should be implemented at the center.
Job Corps has partnerships with local boards, American Job Centers,
workforce councils, numerous business industry associations,
credentialing agencies, and national labor organizations. These
entities provide guidance consistent with WIOA requirements on current
and projected in-demand industries and associated occupational skill
requirements and industry-sponsored certifications needed to fill those
jobs.
Question. What steps is Job Corps taking to ensure that the
academic and career training programs are meeting employer needs
nationally as well as locally?
Answer. In addition to the approach outlined above, on an annual
basis, the Office of Job Corps conducts Career Technical Training (CTT)
performance reviews that examine the overall grades, credential
attainment rate, and placement ratings for all CTT programs. This
national performance audit ensures strong alignment between employer
needs and center offerings.
At the national and regional level, Job Corps continually develops
major industry partnerships with large, national employers as well as
with national labor organizations and business and industry
associations in order to provide both work-based learning and job
placement opportunities. These partnerships allow students to
participate in pre-apprenticeship and apprenticeship training programs
and have access to job placement support from union apprenticeship
programs, union contractors, and major employers.
Job Corps' relationships with employers, unions, apprenticeship
programs, local boards, American Job Centers, business associations,
and workforce councils help to ensure that the academic and career
training programs are meeting employer needs nationally as well as
locally. The changing needs of academics and industries are being
monitored and modifications are made to the Job Corps program to
provide the best academic and career technical training for students
and employees for employers. Centers that recently made changes to
their offerings, based on relevant labor market information, include:
--The Grafton Job Corps Center, which increased the size of its
Advanced Human Service Worker-Residential Advisor program and
its Clinical Medical Assistant program. Both residential
advisors and medical assistants are considered ``Bright Outlook
Occupations'' by O*NET, a DOL-sponsored database of
occupational information. In addition, the Bureau of Labor
Statistics (BLS) projects job openings for these two
occupations to outpace national and Massachusetts State
averages from 2012 to 2022.
--The Miami Job Corps Center, which added a United Brotherhood of
Carpenters (UBC) Carpentry Pre-Apprentice program. The Bureau
of Labor Statistics (BLS) projects carpentry to be among the
fastest growing occupations from 2012 to 2022 in the State of
Florida, with an expected change of 34 percent. The State is
also currently ranked third in the country in terms of
employment levels for the occupation.
--The Turner Job Corps Center, which added an International Masonry
Institute (IMI) Tile Setting Pre-Apprentice program. Regional
labor market information supported this request, with continued
high demand from employers and high Job Training Match
placements expected. In Southwest Georgia, where the center is
located, BLS projects the employment rate for tile and marble
setters to grow 25 percent between 2010 and 2020, faster than
regional and national averages.
Job Corps also leverages employer partnerships to increase
opportunities for graduates. A recent example is a new relationship
with MasTech, a company based in Pittsburgh, PA. MasTech is the second
largest Hispanic-owned company in America and a premier company for
electric, natural gas, and fiber-optic infrastructure. The company
partnered with the Overhead Lineman/Smart Grid Advanced Training
program to offer jobs to 26 members of the Oneonta Job Corps Academy.
Once they finish their training, the Lineman graduates will work on the
FCC's Connecting America broadband project in North Carolina.
The fiscal year 2017 budget includes two requests that we believe
will help with this work. The first is an increase of $5,000,000 to
introduce a suite of demonstration pilots to test a range of novel
approaches that can be implemented over a multi-year period to improve
student outcomes. In order to align with the Job-Driven Training vision
strategy of promoting what works, Job Corps will use its demonstration
authority to experiment with evidence-based innovative models to
achieve improved results for students. More specifically, Job Corps is
considering models that would create career pathways, engage employers,
and manage behavior. Potential options include blended academic and
occupational training combined with work experience in a high-demand
field; a residential model for at-risk youth with a rigorous academic,
college preparatory and career focus; dual enrollment in Job Corps and
community college; or other innovative models that integrate cognitive
and non-cognitive skills training. A second requested increase of
$12,127,000 will be used to modernize curricula, upgrade equipment to
meet industry standards, refine training to provide skills and
credentials that are in high-demand by employers, and undertake actions
required for the implementation of WIOA.
unemployment insurance
Question. During the recovery, we had several disruptions in the
availability of emergency benefits for job seekers. These disruptions
hurt workers, slowed the recovery, and strained the States charged with
administering the program.
How does the Department's UI proposal reflect the lessons learned
during that period?
Answer. During the Great Recession, economists repeatedly pointed
to Unemployment Insurance (UI) as one of the fastest ways to generate
economic activity in communities and to stabilize the economy, as it
reduced the potential decrease in the country's Gross Domestic Product
by 18 percent.\23\ In addition, UI served as a safety net to millions
of unemployed workers and their families, keeping them from falling
into poverty. At the height of the recession and in the early days of
the recovery in fiscal year 2010, an estimated 16.2 million unemployed
workers received $156.4 billion in UI benefits.
---------------------------------------------------------------------------
\23\ The GDP number is from an IMPAQ study entitled The Role of
Unemployment Insurance as an Automatic Stabilizer During a Recession,
published in July 2010, page 66.
---------------------------------------------------------------------------
As the U.S. economy has continued to recover, however, we have seen
the UI system struggle to keep pace, and it is in need of modernization
to ensure it can continue to fulfill its important mission. The UI
package included in the 2017 Budget is intended to provide the
necessary systemic improvements. These proposals are founded on the
critical economic lessons learned from the Great Recession and its
aftermath, including:
--We need reforms that will support UI trust fund solvency. Most
States' UI trust funds were underfunded going into the Great
Recession and, as a result, States had to borrow billions of
dollars to pay required benefits. Today, three States still
have outstanding loans and owe over $3.3 billion. Seven other
States had bond debt of over $8 billion as of December 31,
2015. In addition, 36 States do not have sufficient reserves in
their trust funds to pay for a year of benefits in a normal
recession a standard that ETA strongly recommends to ensure
long-term solvency. The President's budget includes a trust
fund solvency proposal designed to improve the solvency of the
UI system.
--We need a permanent Extended Benefit (EB) program that works. The
current EB program triggers are not sufficiently responsive to
changing economic conditions. The Great Recession started in
December 2007, but most States did not trigger on to extended
benefits until March or April of 2009, which led Congress to
create the Emergency Unemployment Compensation program (EUC) in
June 2008. The President's Budget includes a proposal that
would establish more effective triggers to fulfill UI's
countercyclical purpose and would put in place a permanent
tiered program that negates the need for special temporary
programs, like the EUC.
--In addition, the current EB program, which provides up to 20
additional weeks of benefits in States with high and rising
unemployment, does not provide sufficient help during an
economic downturn because it provides too few weeks of
additional benefits. As the Great Recession demonstrated, this
limitation results in the passage of ad hoc emergency UI
programs that begin too late to provide the early stimulus that
could lessen the severity of a recession. Gaps in benefits then
occur when the short-term emergency program expires and
extensions are not passed, which further reduces the value of
additional benefits as an economic stimulus.
--We need to stop States from eroding the UI safety net by reducing
the number of weeks of available benefits. Nine States no
longer have a maximum 26-week benefit period, with some States
providing as few as 12 weeks of benefits, which, in many cases,
is simply not enough time to help unemployed workers get back
to work. The President's Budget includes a proposal that would
require States to provide a maximum 26-week benefit period.
--We know the Short-Time Compensation (STC or Shared Work) program
works and we need to support more States' adoption of the
program and expanding its use in those States that have the
program. During economic downturns, STC helps employers retain
talent, helps workers defray lost income resulting from reduced
hours, and saves jobs from being lost to the economy. Last
fall, an employer told us that if this program had not been
available, her business would not have survived the recession.
We know that countries like Canada and Germany were able to
more quickly recover during the recession as a result of their
greater use of this type of program. From the beginning of the
Great Recession through February 2016, 570,000 jobs had been
saved as a result of the STC program. The President's budget
includes renewed State incentives to encourage adoption of the
STC program for future recessions.
--We need to turn the UI program into a reemployment program to help
prevent long-term unemployment. We must build on the proven
success of the Reemployment and Eligibility Assessment (REA)
program and its successor, the Reemployment Service and
Eligibility Assessment (RESEA) program, which reduce UI benefit
duration because they return claimants to work faster, saving
$2.60 for every $1.00 spent. While Congress has appropriated
funds for the current temporary/voluntary RESEA program, the
President's Budget proposes a permanent program in all States
with increased funding to enable targeting of the top one-third
of all UI claimants who are most likely to exhaust their
benefits, as well as all transitioning military veterans, who
often face barriers to returning to civilian jobs. This
proposal will help to ensure that these targeted populations
get the intensive reemployment services they need to get back
to work and prevent long-term unemployment.
--We need new strategies to bring workers who have lost jobs that are
unlikely to be available due to shifts in the economy back into
the labor market. The President's plan would ensure that
workers have access to wage insurance that compensates workers
for the lower earnings they initially experience when they must
start a new career in a different industry and incentivizes
workers to begin new careers rather than remaining unemployed
or leaving the labor market altogether.
Question. How can we better connect jobseekers with services like
Reemployment Eligibility Assessments/Reemployment Services that have
been shown to shorten the time between being laid-off and finding a new
job?
Answer. The most effective way to better connect job seekers,
particularly unemployed workers, to integrated reemployment services
and eligibility assessments is by authorizing a permanent Reemployment
Service and Eligibility Assessment (RESEA) program in every State, and
providing sufficient funding to enable States to focus on the one-third
of claimants most likely to exhaust their benefits and all
transitioning veterans receiving Unemployment Compensation for Ex-
service members (UCX), as provided in the President's fiscal year 2017
Budget. A permanent program focusing on these populations with greater
barriers to employment will provide intensive reemployment services
through American Job Centers to help get them back to work while also
ensuring their ongoing eligibility for unemployment benefits. Robust
reemployment services help targeted claimants develop and implement the
reemployment and work search plans that are critical to getting them a
job as quickly as possible.
The Reemployment and Eligibility Assessment (REA) program, funded
since 2005, has been shown to be an effective tool in reducing improper
payments and getting claimants back to work more quickly. To date, the
program has been voluntary and in fiscal year 2015 the RESEA program
was operational in 48 States. However, only about 16 percent of UI
beneficiaries were scheduled for an RESEA or REA in fiscal year 2015.
The fiscal year 2017 Budget proposal would make the RESEA program
permanent and require it in all States.
The President's RESEA proposal is based on a successful model,
established in Nevada, which used an integrated approach to provide
both reemployment services and UI eligibility assessments. This
approach helps claimants find jobs faster, eliminates payments to
ineligible individuals, reduces UI duration, and saves UI trust fund
resources by reducing overall benefit payments. Recent research2 on
that service-delivery model found it to be effective in the following
ways:
--Claimants were significantly less likely to exhaust their benefits;
--Claimants had significantly shorter UI durations and lower total
benefits paid (1.82 fewer weeks and $536 lower total benefits
paid
--Claimants were more successful in not only returning to work
sooner, in jobs with higher wages, but also in retaining those
jobs; and
--$2.60 of savings was produced for every $1.00 of cost.
By applying this integrated approach to the long-term unemployed
and transitioning veterans nationally, it is estimated that this
initiative will reduce the average duration of UI and UCX benefit
receipt by 1.4 weeks for claimants participating in the RESEA program
and result in benefits savings of approximately $423 million as a
result of the fiscal year 2017 investment. Looking forward, the RESEA
proposal will support a more comprehensive approach to reemployment,
including strategies to encourage more sophisticated communication
between the UI and workforce systems, aided by technology that will
allow both systems to view claimant outcomes on a continuum as they
move from assessment to services (such as job search and resume writing
workshops) to job placement.
overtime regulation
Question. I have heard concerns from several Rhode Island colleges
and universities about the potential impact the Department's proposed
overtime rule would have on their campuses.
Please describe the outreach effort, particularly to the higher
education community, in crafting and seeking public comment on the
draft regulation.
Answer. Between March 13, 2014, when the President issued a
Memorandum directing the Department to update the overtime regulation,
and the issuance of the Notice of Proposed Rulemaking (NPRM), the
Department conducted an extensive outreach program, holding more than
two dozen listening sessions in Washington, D.C., and several other
locations, as well as by conference call. The listening sessions were
attended by a wide range of stakeholders: educational institutions,
employers, business associations, non-profit organizations, employees,
employee advocates, unions, State and local government representatives,
tribal representatives, and small businesses. This outreach included a
May 20, 2014, listening session with the College and University
Professional Association for Human Resources that was attended by
several individual universities. The Department advised stakeholders to
submit any comments or materials that they wanted the Department to
consider regarding this rulemaking to the official rulemaking record.
We received comments from colleges, universities, higher education
organizations, associations of higher education professionals, and
individual higher education professionals in response to the NPRM.
Coupled with feedback already received during the earlier outreach,
these comments provided the Department with the level of insight from
the higher education community needed to produce a quality and
responsive regulation.
Question. Please describe whether and how the Department is
identifying potential unintended consequences with the proposed
regulation and how the final rule will address them.
Answer. We understand this question to be referring specifically to
higher education. The Department recognizes the important contributions
that higher education institutions of all kinds make to this country.
We have taken a very careful look at this issue and determined that the
impact on higher education institutions will be limited. The Department
has also been working closely with our Federal partners at the National
Institutes of Health (NIH) to ensure smooth implementation of the rule.
NIH is fully supportive of the increased salary threshold for
postdoctoral researchers, and NIH Director Dr. Francis Collins has
announced \24\ that NIH will increase the National Research Service
Awards (NRSA) grants (which fund many postdoctoral researchers'
stipends) to levels at or above the new salary threshold.
---------------------------------------------------------------------------
\24\ Https://nexus.od.nih.gov/all/2016/05/18/nih-flsa-2016/.
---------------------------------------------------------------------------
The Department is committed to thoughtful, responsible
implementation, and we are working on a wide range of engagement
options, including but not limited to outreach to higher education
institutions and organizations interested in the rule. Along with the
publication of the rule, the Wage and Hour Division produced detailed
Guidance for Higher Education Institutions on Paying Overtime under the
FLSA \25\ in order to help these employers evaluate current practices,
understand the unique provisions of the FLSA that may affect them, and
choose the appropriate plans for implementation. We welcome hearing
from other stakeholders in the higher education community about the
type of technical assistance they feel would be helpful.
---------------------------------------------------------------------------
\25\ Https://www.dol.gov/whd/overtime/final2016/highered-
guidance.pdf.
---------------------------------------------------------------------------
SUBCOMMITTEE RECESS
Senator Blunt. The subcommittee stands in recess until 10
a.m. on Thursday, April 7.
[Whereupon, at 11:21 a.m., Thursday, March 17, the
subcommittee was recessed, to reconvene at 10 a.m., Thursday,
April 7.]