· c o n t e n t s he a ri n gheld on : m a rch 9, 1 995 ap ril 4, 1 995 s t a teme n t of: m a...
TRANSCRIPT
OT O VERSIGHT H EARING O N THE DEPARTMENT OF
74/7 1 0V
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H E AR IN GSBE FO R E T H E
SUBCO MM ITTEE O N H UMAN RESOURCESAN D INTERGO V ERNMENTAL RELATIO NS
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RE FO RM AN D O V E R SIGH T
H O USE O F RE PRE SE N TATIVE SO N E HUN DR E D FOURTH CON GR E SS
FIR S T S E S S IO N
M AR CH 9, AN D APR IL 4 , 1 995
Pr in te d for the u se of th e Committee on Gove xzpfle n t R e form a n d Oversight
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AND INTERGO V ERNMENTAL RELATIO NSO F THE
CO MMITTE E O N GO V E RNME N T
REFO RM AN D O V E R SIGH T
H O USE O F REPRE SE N TATIV E S
O N E HUN DR E D FOURTH CON GR E SSFIR S T S E S S IO N
MAR CH 9,AN D APR IL 4 , 1 995
for th e u se of the Committee on Governmen t Reform a n d Oversight
U.S . GO VE R N M E N T PR IN T IN G O FFICE23-21 9 CC WA SHI N GT O N 1 996
For sa le by th e US . Governmen tPn'
n tin g O ffice
S upe rin ten de n t ofDocumen ts , Con gxe ssion a] S a les O ffice , Was hin g to n , DC 20 4 0 2
I S BN 0 - 1 6 -0 525 4 4 -6
CO M M IT TE E O N GO V E RN M E N T RE FO RM AN D O V E RS IGH T
W ILLIAM F. CLIN GE R ,JR .
,Pen n sylva n ia ,
Cha irma n
BE N JAM IN A . G ILM AN,N ew York CAR D IS S CO LL IN S , Illin ois
DAN BURT O N,In dia n a HE N RY A . WAX M AN ,
Ca liforn iaCO N S T AN CE A . M O R E LLA , M a ryla n d T O M LAN T O S
,Ca liforn ia
CHR IS T O PHE R SHAYS ,Con n ecticu t R O BE RT E . WIS E ,
JR .,Wes t Virg i n ia
S T E VE N S CHIFF,N ew M ex ico M AJO R R . O WE N S
,N ew York
ILE AN A R O S -LEHT IN E N,Flor i da E DO LPHUS T O WN S
,N ew York
W ILL IAM H. Z E LIFF,JR .
,N ew H amps h ire JO HN M . S PR AT T
,JR .
,S ou th Ca rolin a
JO HN M . M CHUGH, N ew Yor k LO UIS E M C IN T O SH S LAUGHT E R,N ew
S T E PHE N HO RN ,Ca liforn ia
JO HN L. M ICA,Florida
PET E R BLUT E , M a ss a ch u settsTHO M AS M . DAVIS
,Virg in ia
DAVI D M . M CIN T O SH,In dia n a
JO N D . FO X ,Pen n sylva n ia
RAN DY T AT E ,Wa s h in g ton
D ICK CHR YS LE R,M ich ig a n
GIL GUT KN E CHT ,M in n esota
M AR K E . S O UDE R , In dia n aW ILLIAM J . M AR T IN I
,N ew Jersey
JO E S CAR BO R O UGH, Flori d aJO HN B. S H ADEGG
,Ari z on a
M ICHAE L PAT R ICK FLAN AGAN,Illin ois
CHAR LE S F. BAS S , N ew H amps h ireS T E VE N C . LAT O UR ET T E
,O h io
M AR S HALL “M AR K”
S AN FO R D,S ou th
C a rolin a BE R N AR D S AN DE R S,Ve rmo n t
R O BE R T L. EHR LICH,JR .
,M a ryla n d ( In depen den t)JAME S L. CLAR KE , S ta ff DirectorKEVIN S ABO
,Ge n e ra l Cou n s e l
JUD IT H M cCoy,Ch ief Cle rk
BUD M YE R S,M in ority S ta ff D irector
S UBCO M M I'I'I‘E E O N H UM AN R E SO URCE S AN D IN T E R GO VE R N ME N T AL R E LAT IO N SCHR IS T O PHE R SHAYS
,Con n ecticu t
,Cha irma n
M AR K E . S H O UDE R,In d ia n a E DO LPHUS T O WN S
,N ew York
S T E VE N S CH IFF,N ew M exico T O M LAN T O S ,
Ca liforn iaCO N S T AN CE A . M O R E LLA
,M a ryla n d BE RN AR D S AN DE R S , Vermon t (In d .)
THO M A S M . DAVIS,Virg in ia THO M AS M . BAR R E T T
,Wis con sin
D ICK CHRYS LE R , M ich ig a n GE N E GR E E N,T exa s
W ILLIAM J. M AR T IN I,N ew Jersey CHAKA FAT T AH
,Pen n sylva n ia
JO E S CAR BO R O UGH, Flori da HE N RY A . WAX M AN ,Ca liforn ia
M ARS HALL “M AR K" S AN FO R D
,S ou th
Ca rolin a
E x O FFIC IOW ILLIAM F. CLIN GE R
,JR .
,Pen n sylva n ia CAR DIS S CO LL IN S ,
Illin oisLAWR E N CE HALLO R AN
,S ta ff Director
CH R IS TO PH E R ALLR E D,Profess io n a l S taff M embe r
RO BE RT N EWMAN,Profes s ion a l S ta /7
!
M ember
T H O MAS CO S T A,Cle rk
CH E RYL PH E LPS,M in ority Profes s ion a l S ta ff
PAUL E . KAN JO R S KI,Pen n sylva n iaGARY A . CO N D IT
,Ca liforn ia
CO LLIN C . PET E RS O N,M in n esota
KAR E N L. THURM AN ,Flori da
CAR O LYN B. M A LO N E Y, N ew YorkTHO M A S M . BAR R E T T ,
Wis con s inGE N E T AYLO R,M iss is sippi
BAR BAR A -R O S E CO LLIN S,M ich ig a n
E LEAN O R HO LM E S N O R T O N , Dis tr ictColumbia
JAM E S P. M O RAN,Virg in iaGE N E GR E E N
,T exa s
CAR R IE P. M E EK,Flori da
FR AN K M AS CAR A,Pen n sylva n ia
CHAKA FAT T AH,Pen n sylva n ia
C O N TE N T S
Hea r i n g held on :M a rch 9 , 1 995
Apr il 4 , 1 995
S ta temen t of:M a sten , Cha rles C ., In spector Ge n era l , US . Depa rtmen t of La bor , a ecomp a n ie d by Joe Fisch , A ssista n t In spector Ge n e ra l for Au dit ; a n d Cl a ren ce C . Cra wford, Associa te Director , Edu ca tion a n d Em lo men t Issu es
,Hea lth, Edu ca tion , a n d Huma n S ervices Division , US
Y Ge n era lAccou n tin g Of ficePin du s, N a n cy, Urba n In stitu te, a ccompa n ied by Demetra Smith N ig h tin
ga le ,Urba n I n stitu te ; a n d Bu rt S . Bam ow , prin cipal resea rch scie n tist,
n stitu te for Po licy S tu dies , John s Hopkin s Un iversityReich,Robert , S ecretary of La bor
Letters , sta temen ts, e tc . , su bmitted for the record by:Ba rn ow , Bu rt S . Prin cipa l R esea rch S cien tist, In stitu te for Pol icy S tu dies
,Joh n s H op in s Un iversity, prepa red sta temen t ofCra wford, Cla ren ce C . , A ssocia te D i re ctor, Edu ca tion a n d Employmen t
Issu es,Hea lth , Edu ca tion , a n d Huma n S e rvices Divi sion , US . Ge n era l
Aocou n tin Of fice, prepa red sta temen t ofFisch, Joe , s s ista n t In spector Gen era l for Au dit, in forma tion con cern in gE TA a n tsGreen ,
on . Ge n e, a Repre sen ta tive in Con gre ss from the S ta te of T exa s ,pre pa red sta temen ts of
M a sten,Ch a rles C ., In spector Ge n era l, US . Depa rtmen t of La bor , pre
pa red sta temen t ofM orella , H on . Con sta n ce
,a Repre sen ta tive I n Con g ress from the S ta te
of M a la n d, prepa red sta temen t ofPin du s, a n cy, a n d Demetra Smith N ightin ga le, Urba n In stitu te , pre
pa red sta temen t ofReich
,Robert, S ecreta ry of La bor :
In forma tion con cern in g gra n ts to labor u n ion s a n d pu blic in terestgrou ps
Pre a red sta temen t ofS h a s, on . Chr istopher , a Repre se n ta tive in Con g re ss from the S ta teofyCon n ecticu t, prepa red sta temen t of
T own s , H on . Edo lphu s, a Re pre sen ta tive in Con gress from the S ta te
of N ew York , prepa red sta temen t of
29,52
O V ERS IGH T H EARIN G O N T H E DEPARTM EN T
O F LAB O R
THUR SDAY , M AR CH 9 , 1 995
HO US E O F R E PR E S E N T A T IV E S ,
S UBCO M M IT '
I‘
E E O N HUM AN R E S O UR CE S AN DIN T E R G O V E R N M E N T A L R E LAT IO N S
,
CO M M IT T E E O N GO V E R N M E N T R E FO R M AN D OV E R S IGHT,
Wa sh in g ton , DC.
T h e subcommittee met, pursuant to notice , at p .m. ,in room
224 7 , Ra yburn H ouse Offi ce Building,Hon . Chri stopher Shays
( chairman of the subcommittee) presiding.
Present: Representatives Shays,Morella
,Davis
,Chrysler
,Mar
tini,
l
sl
ca rborou g h ,T owns , Lantos , Sanders , Barrett, Green , and
FattaStaff present: Lawrence Halloran
,staff director coun sel ; Chris
toph e r Allred and Robert Newman , professional staff; T homasCosta , cl erk ; Doris Jacobs , associate counsel ; and Cheryl Phelps ,minority professional staff.
Mr . SHAYS . Mr . Secretary, it’s wonderful to have you here . Wehave two members of our committee
,and we’re going to start.
We’re going to have a number of interruptions , but we’re going totry very hard to accommodate your schedule . We’re delighted you’rehere . You’re an extraordinarily articulate spokesman for the a dministration , and we l ook forward to hearing what you have to say.
Our overall objective in this committee i s to help you end up wi tha better department . Our primary task is to look at waste , fraudand abuse in the department
,and to look at programs once they’ve
been set in operation . We will al so pass judgment on legislationdeal ing with how this department may be reorganized
,both inter
nally or if it’s combined with others . We’ll have a sign ifi cant sayin that process , and want to know how you feel about that i ssue .
We would like to know what you think the department is doingwell ; where you think the challenges are in the department ; andwhat you think about the whole is sue of reorganization . But thebottom line i s , this i s your hearing. We’re del ighted you’ve come before our committee . We look forward to hearing what you have tosay . An d I
’
m starting without my ranking member because hedidn ’t make the elevator I was on . I don’t know if Bernie Sanderswould like to make a statement.[T h e prepared statement of H on . Chri stopher Shays follows zl
2
PR E PAR E D S TAT E ME N T O F H O N . CHR IS TO PHE R S HAYS , A R E PR E S E N T AT IVE INCO N GR E S S FR O M T H E S TAT E O F CO N N E CT ICUT
O n beha lf of the Hu ma n R esou rces a n d In te rgovernmen ta l Rela tion s S u bcommittee
,let me welcome ou r witn ess today, the S ecreta ry of La bor , Robert B . Reich. We
a sked h im to la u n ch ou r oversight of the La bor Depa rtmen t by describin g the a gency
’s mi ssion ,
its su ccesses a n d its cha llen ges .In thi s hea r in g, a s with a ll the de a rtme n t oversight hea rin we will con du ct,
ou r mission is to a sk some very fu n rfime n ta l qu estion s a bou t t e depa rtmen t a n dit pro ams . In some ca ses, these qu estion s ha ve n ot been a sked for a very lon gtime, u t mu st be a sked n ow if we a re to meet bo th ou r bu dgeta ry a n d service goa l sin te ll igen tly a n d com a s s ion a te ly .
S o toda y,we a sk a u t every To am a n d po l icy: Wha t is the mission ? Is it sti ll
the r ight mission ? Is it still wortIr (fan H a s the mission been a ccompl ished? If we
were n ot a ld do in it, wou ld the fefier a l governmen t n ow g o in to it .T oda we wil a lso ocu s on DoL’
s orga n iz a tion , O pera tion s, policies a n d pro grams .We wi l discu ss the S ecre ta ry’s pla n s for redu cin g costs , improvin g efficien cy, a n drein ven tin g a n d streamlin in g the depa rtmen t .We a re pa rticu la r
lyin terested in ex lor in g in itia tives which coordin a te a n d co n
so lida te the mu ltitu e of overla ppin g oLIpr
og rams in edu ca tion a n d job tra in in ga rea s . Accordin g to Ge n era l Accou n tin g 0 Ice (GAO ) reports, there a re cu rren tly1 63 federa lly fu n ded programs a dmin istered by 1 5 federa l a gen cies which provideemploymen t tra in i n g a ssista n ce. T hese progr ams, a ccordin g to the GAO , ofte n ta rget the same clien ts, sh a re the same goa ls , a n d provide simi la r services; yet, thea gen cies h a ve sepa ra te a dmin istra tive sta ffs to oversee a n d ma n a ge du plica tive progr ams .
T h e FY 96 bu dget requ est for DoL is bil lion , u p or billion overthe bu dget a u thority for FY95 . T his in clu des a billion re u est ‘
for discre tion a ryspen di n g, a r ise of or bil lion over FY95 bu dget a u t orit DoL
’
s employmen t level requ est wou ld a lso r ise slightly from to We hope to identify opportu n ities for su bsta n tia l co st sa vin gs in these n umbe rs a s we ca refu l lystu d e x istin a n d pla n n ed rog rams a n d a ctivities .A dition a l ea ri n gs a re ge in g la n n e d on DoL. We will ha ve a s witn esses : th e
GA O ; DoL’
s Of fice of I n spector n era l ; Con s s ion a l Bu dget Office ; a n d othersfrom the pu blic a n d priva te sectors fami li a r wit DoL a n d its programs .In the fu tu re , thi s S u bcommittee wil l a lso examin e pre po s a ls to con so lida te theDepa rtmen t of La bor, Depa rtmen t of Edu ca tion a n d perha ps other re la ted a gen ciesin to a sin gle depa rtmen t .We look forwa rd to the S ecre ta ry Reich’s te stimon y a n d a pprecia te his time a n d
views . His te stimon y wil l be most helpfu l to this S u bcommittee a s we di scha rge ou r
oversight a n d reform respo n sibil ities.
Mr . SAN DE R S . Before questions,or should we start questions?
Mr. SH AYS . No , if you have a statement to make , I’d be delightedto have you make a sta tement.Mr . SAN DE R S . Sure .
bII
VIT . SHAYS . Or we can put it in the record,that might be a dvis
a e .
Mr . SAN DE R S . Let me just open up by thanking Mr. SecretaryReich for being with us
,and to tell him that I think he has cer
tain] been one of the excellent members of the President’s Cabinet. think you need a pay raise ; you’re doing a great job . And Iespecially applaud your efforts in terms of fig h tin to raise theminimum wage . I a precia te what you’re doing on t is striker’sthe replacement strifier i ssue and so forth .
T h e concern s that I have,Mr. Secretary— and actually I commu
n ica te d those to you in writing a while ago— i s that I think it becomes , and I wanted to focus on the Bureau of Labor Statistics ifI might for a moment—one small part of the overall workMr. SH AYS . But in your qu e stion inMr. SAN D E R S . Should we wait for ti e questioning?Mr. SHAYS . Yes
,let’s wait for the questioning.
Mr . SAN DE R S . O K,then that’s all . Delighted to have you here .
3
Mr. SHAYS . Mr. Secretary , if I could , if you would stand u p—weswear in all our witnesses , everyone who comes before the committee is swom in .
[Witness sworn .]Mr. SHAYS . T hank you . Mr. Secretary, before we ask you to
begin,we have the ranking member of the committe e , Mr. T owns .
And,Mr. T owns , we’re going to in sert , without objection ,
any of thestatements that Members have. But I ’d love to have you make astatement before the Secretary if you’d like .
Mr . TO WN S . Mr. Chairman , what I would like to do is just getpermission to include my statement in the record
,and we just
move right into the hearin I’
m so anxious and eager to see interms of what the S ecreta ryi a s to say . T hese are very diffi cult moments
,and we’re trying to reform welfare and we’re t ing to do
a lot of things that I think it creates a tremendous bur en on theSecreta of Labor because of the fact that when we do thesethings , t at he will need a lot of support.So I want to see in terms of some of the ideas and pla n s that
he has,and see what we can do together to sort of soften the bl ow
of people that need assi stance . So I yield back , Mr . Chairman .
[T h e prepared statement of Hon . Edolphus T owns follows z]PR E PAR E D S T AT E ME N T O F H O N . E DO LPHUS T O WN S , A R E PR E S E N T AT IvE IN CO N GR E S S
FR O M T H E S T AT E O F N Ew YO RKI tha nk you , Cha irma n S ha ys , for schedu lin g this hea rin g which I kn ow you ha vepla n n ed a s a ca n did a n d ba la n ced first look a t depa rtmen t of la bor O pera tion s a n dmea n in gfu l discu ssion of its fu tu re . For tha t rea son
,I am plea sed to jo in you in we ]
comin g the S ecreta ry of La bor before this su c mmitte e .
T h e rein ven tion of govern men t a s it perta in s to this a gen cy will tou ch the livesof every America n . T h e committee’s oversight of D .O .L. opera tion s , a s well a s a n yre form in itia tives u n der con sidera tion is critica l to the socia l a n d econ omic vita l ityof this cou n try.
However , M r . Cha irma n , it seems to me tha t in light of the Con tr a ct with America
”a n d the u n der lyin g goa ls set ou t by the Repu blica n lea dership
,wha tever con clu
sion s we re a ch here , a n d wha tever recommen da tion s we u ltima tely ma ke will bemea n in gless .We me t with th e H UD S ecre ta ry on e da y—then wa tched tha t a gen cy’s 1 995 bu dg
e t get cu t by $7 billion a week la ter . We me t with S ecreta ry S h a la la la st weekwhen legi sla tion ra n s a ckin critica l progr ams for poor women a n d children wa su n der con sidera tion the wee before .
T oda y, a lthou gh we ha ve in vited S ecre ta ry Reich before u s to testify a bou t h isa gen cy’s a ctivities a n d pla n s for the fu tu re
,the GO Pe n g i n e e re d rescission s pa cka ge
ttin g h i s a gen cy by billion will be u p for con sidera tion on the floor beforet e mon th is ou t.Wha t rea son a ble body wou ld develop a welfa re re form pla n
,impo sin g a ma ssive
work ma n da te on S ta te s by requ ir in g them to move 50 % of their welfa re re cipien tsin to '
obs, a n d a t the same time cu t the employmen t a n d tra in in g prog rams provid
in g t ese people the n ecessa ry work skill s? .
Clea rly, we don ’t n eed to wa ste a n y effort examin in g mission , M r . Cha irma n . We wou ld be mu ch better served examin in g ou r own a gen da .
M r . S ecreta ry, I a pprecia te you r ha rd work a n d look forwa rd to you r views on thefu tu re of you r a gen cy a n d the popu l a tion on serve
,both a s you ha ve pla n n ed, a n d
possibly a s a ca su a lty of the repu blica n on tra ct with America ”. I am pa rticu la rlyin te rested in you r prog ress towa rd restru ctu rin g bu t i n vite you r commen tson h ow you r progress ca n be a dva n ced by this lo4 th Con gress .Mr . SHAYS . T hank you. Mr . Scarborough
,do you have a state
ment that you’d l ike to make?Mr. SCAR BO R O UGH . No , not at this time .
Mr . SHAYS . O K Mr. Lantos .
4
Mr. LAN T O S . Well , I just want to join you, Mr. Chairman ,in wel
coming our most di stingui shed witness . Secretary Reich hasbrou ht to th is administration a degree of intell ectual prowesswhio i s awe-in spiring
,and has done his job with exemplary dis
tinction .
Mr . SHAYS . I thank the gentleman , and I’d like to ask the sta ffif they would try to anticipate when we’re oing to have votes . I’mgoing to suggest to some Members that we s a ve before the signal .And I ’m happy to
give the gave] to either s ide of the aisle so that
we can proceed wit out in te rru tion when testimony is given .
Mr. TO WN S . T hat means t e Democrats might even have achance to hold it?Mr. SHAYS , We’re checkin it out. [Laughter .]Mr . Secretary , I ’d love to ear your statement .S T A T E NI E N T O F R O BE R T R E ICH, S E CR E TAR Y O F LABO RMr . R E ICH. Mr. Chairman , in the interest of time , with your per
mission,I will submit my formal statement for the record . Mr.
Chairman,members of the committee
,I applaud your efforts to
l ook at how the government works and how to make it work better.I want to assure you that we have been actively en a ed for the
last 2 years in making the Department of Labor wor Iietter andmore effi ciently for American workers . And we have to do that, because even ‘ ven the resources we have right now , we are able todeal with onTy a small fraction of the problem that American workers are facing.
And if you bear with me,I thought it might be helpful for you
if I went through a couple of very quick charts to kind of graph foryou what we are up against. And
,Michael Littl e
,if you could just
remove the first chart,please .
Mr . SHAYS . Mr . Secretary,I’
m going to point out that we haveno one el se speaking today
,and we don’t want you to feel rushed
in your testimony. So feel free to share with us whatever you’d like .
Mr . R E ICH . O K,thank you . T hi s chart is a chart that shows , as
graphically as I know how to show,what happened to American in
comes between 1 950 and 1 97 8 . I call this “
g rowing together,” because you can see for every quintile
,the bottom 20 percent , the
next 20 percent in terms of wages , the middle 20 percent of Americans in terms of wages
,and even up to the top 20 percent
,between
1 950 and 1 97 8,everybody’s income at least doubled .
T h e people at the top went up just about double . Look at the people at the bottom
,that yellow graph— the bottom 20 percent actu
ally saw their incomes increase almost 1 4 0 percent. T his i s in inflation-adjuste d terms . We’re talking about real increases
,real stand
ard of l iving.
But,Mr . Chairman
,members of the committee
,I would like to
take a look by contrast—and,Michael
,perhaps you could put that
chart right below the next chart you’re going to show— look whathas happened to Ameri can incomes between 1 97 9 and 1 993. Mr .
Little,perhaps we could put the other chart just below thi s chart
so we can see the contrast. T h e bottom,20 percent actually saw
their incomes decline . I’
m talking about in fla tion -adjusted incomes .T his particular chart is in 1 993 dollars . T heir incomes declined by1 7 percent
,that yellow l ine .
5
N ow ,people at the top
,they saw their incomes increase by 1 8
percent. But you see everybody in between is struggling. T h e top20 e rcen t did very well . T h e next-to-the-bottom 20 percent
,that
i s t e second from the bottom , they saw their incomes decreasesubstantially
, 8 percent. Even the people in the middle suffered a3 percent decline in their incomes , adjusted for inflation . In otherwords
,if the period from 1 950 to 1 97 8 can be termed the peri od
of growing together, the period from 1 97 9 to 1 993 can be termedthe period of owing apart.I submit
,AT; Chairman and members of this committee , this i s
one of the most serious social problems thi s country faces , be causethis trend toward more and more in equ a lit greater a n d greaterinequality
,i s not decreasing. In fact
,if a n y t ing, it i s accel erating.
We are g rowing apart at a remarkable rate .
T h e problem i s not that the ri ch are getting ri cher. T h e problemi s that so many people are getting poorer. Next chart , please .
Why has this occurred? Why i s there a widening gap betweenpeo le at the bottom and people at the top , and even people in themi dle
,who are seeing their wages over the last 1 5 years decline .
Much of it—not all of it, but much of it—has to do with the chartthat you are now taking a look at. Skill s matter more.
T hi s chart shows what has happened to incomes of people withdifferent levels of education and training. As you can see from thischart
,the top l ine, col lege graduates , they compri se roughly 25 per
cent of the work force .
T heir incomes , over the past 1 5 years , have been heading u pward. Not everyone , not every coll ege graduate has enjoyed ri singincomes
,obviously . T here are many young college graduates today
who still find themselves living with their parents and still struggling to find a j ob
,or find a good job . I don ’t mean to
over
ie n e ra liz e , but on avera e , college graduates are doing better
and etter. You see , they too a little bit of a hit in the last recess ion , but the ’
re back on an upward trajectory .
Compare t em with eve bod else : people who just have somecollege ; people who have on y a ig h school degr ee ; and people whohave less than a high school degree . In fact, if you look at 1 97 9,over on the left of the chart
,you see that the gap between the high
school a du a te and the 4 -year coll ege graduate was about 4 0 percent. T a t is , the colle e graduate was earn ing, on average , 4 0 percent more than the b ig school adn ate .
T ake a look at 1 993, and by t e way , if we had 1 994 ,prelimina
indications are that these trends continue to widen . T h e gap is amost doubled . T h e coll ege g raduate , on average , i s now earn ing 80percent more than the graduate with only a high school degr ee .
Again
,this doesn’t explain everything
,but it does explain quite a
ot .
T echnology and globalization,like a tidal wave
,have en lfed
the American economy. T echnology and globalization means t at ifyou have skill s
,if you have education
,you are prepared to deal
with tech n olo and global ization . If you don’t,these trends are not
your friend,t ey’re your enemies . If you do have skill s and edu
cation , these trends are on your side .
T hi s i s not to s a that the answer is to hold back technology orto hold back g loba iz a tion . T his i s to simply state
,as a matter of
6
trend and fact, what is happening in America . And this i s why investments in education
,investments in job training
,investments in
skill s are more important today than they have ever been in ourhistory . Next aph , please .
At a time w en Cong res s i s struggling with the question of howto get s o le off of welfare and into work, this part icular graph ispa rticu ar y powerfii l and important. You see here that the hourlyearnings at the bottom 1 0 th percentile
,between 1 97 3 and 1 993
and by the way,the 1 994 figures are just bein analyzed , but earl
indications are that the trend you see there , t at downward trencontinues— those hourly earnings have been trending downward .
Adjusted for in fla tion— now,thi s i s all adjusted for in fla tion
this I S from the CPS ,the current population su rve of the Bureau
of Labor and Statistics . In 1 993 dollars , people are Iia vin g a harderand harder time making ends meet. And in fact, the gra h that Idid not brin but is also quite telling
,the percentage 0 families
who are wor ing families— that is , where there is at least one fulltime worker— the percentage of those working families that are inpoverty is going up .
In the l 99o’
s , over 1 1 percent of working families are not earningenou gh to keep out of poverty , as the government defines poverty:minimally adequate—minimally adequate—food and shelter a n dclothing. In the 1 97 0 ’
s , it was only about 7 or percent. In the1 980
’
s , i t was about or 9 percent . N ow, more than 1 1 percentof families with a full-time worker are not out of poverty. Peopleare pla yin by the rules
,the are working hard
,and yet they are
falling furt er and further behind .
Apropos of this chart, Michael , i s the next one . You see the relation sh ip between this chart, which shows the real minimum wage ,the in fla tion -adjusted minimum wage and the chart that I justshowed you , in terms of the bottom 1 0 percent. T here’s almost adirect relationship . Inflation adjusted
,in terms of real purchasing
pgyygr, the minimum wage has dropped by about a third s ince
You see in 1 989 a majority of Republicans and a majority of
Democrats voted for a 90 -cent increase in the minimum wage , thesame as the increase that the President is now proposing. But youalso see that that increase that was voted on in favor and wasassed into law has been eroding because of inflation . Indeed , ateast half of that increase has already eroded because of inflation .
It i s , in my view - and the President’s view , vitally important thatwe make work pay .
If we are serious about getting people off of welfare and intowork , we must, at the bottom ,
make sure that people can earnenough to get by . We are talking about the difference between
a year for a full-time worker and a year for a fulltime worker. T hese are not teenagers working part time from middle-class famil ies . A majority of these people are adults ; 60 to 7 0percent are over 20 years old . And the average minimum wageworker—the average minimum wage worker— i s bringing homehalf of family earnings .But raising the minimum wage is not nearly enough . And by the
way, I ’m happy to get into the question with the committee as towhether raising the minimum wage has any negative job effects . It
7
does not,in my view and in the view of the administration . T h e
studies show it does not, a modest minimum wage increase of 90cents . And we can get into that if you wi ll .But let me just move on to the next issue
,which is '
ob tra ining,
because althou gh the minimum wage may be helpful or peopl e atthe bottom , ultimately , as I pointed out before , there is a eaterand greater correlati on between your wages and also your evcl ofski ll .For every level of formal education , this chart shows that median
weekly earnings of youn workers increased with some training,in
addition to the level of ormal education . And we can get into thedetail s if you wish . I just want to make my point as graphically aspos sible : j ob training does work .
N ow, it is true that there are certain occupations and there arecertain groups , such as disadvanta ged teenagers , for whom veryshort-term job training does not work
,but longer term job training
does work . An d in general , job training does have a positive in fluence on wages . Next , please .
Mr. SHAYS , Could you define job training.
Mr. R E ICH . We are talking about j ob training as any vocationalcourse of instruction , directly related to gaining job skill s , outsideof a formal degree program .
T h e President has proposed to con solidate more than 7 0 jobtraining programs . N ow , there are a lot of numbers flying aroundas to how many job training programs there are in the FederalGovernment. T h e GA O , Ge neral Accou nting Offi ce , has come upwith one estimate . T here are different estimates . Let me warn thecommittee , however , that there are apples and oranges in many ofthese estimates .T h e GAO fi g u re
—and the GA O , by the way , has been enormouslyhelpful to us . I don’t want to in any way imply that the GAO hasnot been . But their fig ure does include every program you canimag ine , such as vocational rehabilitation programs for veterans ,such as sma ll
’
bu sin e ss assistance programs for entrepreneurialski ll s . T here are many programs that really don ’t deal with broadbased , general j ob training. We’re talking about the job trainingprograms that are across the board .
Mr. CH R YS LE R . How many programs is that?Mr . R E ICH . Our estimate is that there are closer toM r . CHR YS LE R . T heir estimate .
Mr . R E ICH . Oh , their estimate . T hey submitted one estimate,I
bel ieve , that was in the range of 1 4 0 or 1 50 . T hey revised that estimate upward. Our estimate
,with regard to core j ob training pro
g rams , i s closer to 7 0 .
And what the President is proposing to do is consolidate those7 0 programs . Some of them are for adults
,and you can see the two
groups at the chart are the adult job training and the two groupsat the bottom are the youth job training— those out of school youth
,
by and large ; there are some in -school youth .
And what the Pr esident is proposing i s a consolidation thatwould enable workers and you ng people out of school to get all ofthe training they needed in a fa r ' more streamlined way. We canget into the details of this .
8
But let me just say, one important feature with adults would beto turn the j ob training system into a system of one-stop careercenters where you can get job search ass istance,
°
ob,cou n seling,
good information about what °obs are available, u t al so what
ski ll s are necessary for those jo s and what in stitution s have provided the best record in terms of getting those skill s .T hat information would be computeri zed ; it would be digitized . It
would be available not only at one-stop career centers where on
could pick up your unemployment check or your welfare check,
u t
i t could al so be available—a n d we are doing private projects rightnow, making it available at shopping centers , at shopping malls .And the President is al so proposing that much of the adult job
training be put in the form of skill g rants , or vouchers . Armed withgood information and skill gra nts or vouchers , we think that themarket ca n work effective] and efli cie n tl to provide good training.
Or to put the matter anot er way, Mr. h a irma n,members of the
committee , we believe that we have to move job training out of j obtraining programs and into purchasing power . And I want to u n
der score that.We have seen over the past 25 to 30 years , j ob training programsoin up and down the ladder of federalism— the Comprehensivemp oyme n t and T raining Act; before that , the Manpower Develop
zu ent and T raining Act ; in the 1 980 ’
s , the Job T ra ining Partnershipct.JT PA as ori 'nally drafted , was in effect a block grant formula
funded to the tates . In recent years , it has moved back a l ittle bittoward Federal Government management because of the number ofproblems that were identifi ed by man y people , including the Inspector General
,as to how those moneys were being used.
I would respectfully submit, it i s a mistake to do this once againas a block gran t. Instead , we ought to award vouchers . We havelearned that bureaucracies are not going to be as responsive tomarket forces
,when ou’re talking about job training, as a market
would be . Armed wit good information—computerized good in formation— some quality control
,in terms of making sure that these
institutions are accredited— that’s n ot that diffi cult, most of themare community colleges
,technical institutes— and some skill grant,
the market would police itself,by a n d large .
I note that there is a great interest in block granting as muchas can be block granted . I n th is area of adult training, when youhave the problems you have gettin people the skill s they need , letus not simply follow the crowd a n g move in the direction that wehave tried before on block grants . T h e stakes are too high ; theneeds are too great. We know that the analogy , the Pell Grant,works well
,reasonably wel l . Adults—we can expect them to work
even better. And if we had the information and j ob counseling andjob search as sistance in one-stop centers
,this is a system that
could help people get new 'obs a n d get new jobs qu i ckly. It makesthe entire economy more e Icie n t.
Mr . SHAYS . Mr. Secretary , I’m sure we’re going to have a numberof questions in this area . What I ’m thinking about is when we’regoing out to vote
,we can turn those charts on end and leave them
up . T hat way a Member can ask you to bring one up and we cango back and refer to it.
9
M r . R E ICH . O K,if we could go to the next one
,please . An d there
are just a few more,a n d I
’
ll get through these very quick]I wan t to go through the Department of Labor specifical ly
, because this chart shows the number of employees in the Departmentof Labor, relative to the growth of the US . work force . As you cansee
,in 1 980 , there were almost employees in the Depart
ment of Labor. T oday we have a little bit more than T h eUS . work force , during the same period, has gone from roughly 95million workers up to 1 25 million workers .My suggestion to you is that we have got to do , and are continu
ing to do , a better and better j ob with the resources we have . SinceI’
ve been Secreta ry of Labor, FT E has dropped by And we’regoing to continue to improve the quality of our services
,provide
customers the best service we possibly can , and do it more ‘
a n dmore effi ciently . Next, please .
Here we see staffing level s . Again,the Department of Labor, full
time equivalent and relative to US . employment. T his i s a slightlydifferent way of putting it
,but the same chart.
I will get into the detail s with you,but these are our reinvention
savings that we are right now working at and developing— a 4 -yearsavings , million . You can see for fi scal year 97 , 98 , 99 andup to the year 20 0 0
,what we are aiming toward in terms of
reinvention savings .
Some of the benchmarks,as I said
,employment down since Jan
uary 1 993, FT E reduction s exceed targets in 1 993 and 1 994 ;senior level position s reduced b 1 1 6 since 1 993. If we could °uststop at that for one moment an just say that like any large
,e e c
tive organization , we have been pushin responsibility and we’vealso been pushing responsibility outwar to the fi eld so that moreand more staff can actually be servin customers and not servinbureaucrats . Headquarter positions re u ced 24 2 since 1 993; contropositions reduced b 9 1 since just 1 993.
Some other hi h ig h ts in terms of improving customer servicethe Bureau of abor Statisti cs improves the timeliness of theconsumer CPI information . T h e Occupational Safety and HealthAdministration’s Main 20 0 program— let me just stop there andbriefly explain that, and we can get into more detail . T hat’s a program in which OSHA targeted those industries and emp lo ers withthe hi hest injury and death and illness rate
,and ba s ica l y said to
them , ook, you can bring down your injury and illness rate if youwill set up management labor committees
,train our employees
and come up with a health and safety program ; a nd,
if you do that,
you don’t have to worry about inspections without complaints,you
don’t have to worry about nearly the amount of paperwork that youhave to do ; in other words , if you accept a different kind of strueture for preventing accidents before they occur
,we want to e n cou r
age you to do that.T h e net results of that have been extraordinarily positive— in ’uries , illness rates , death rates down . We can give you more in or
mation about that. I think this is a direction we would like to goin in the future .
Also the Employment and T raining Administration ’s Bociu R eemployment Project. I’ll stop there for just half a second an justsay there , with regard to defense downsizing and al so major cor
1 0
por a te down sizings , we’ve developed an innovation which is a kindof S WA T . team . T hat is , we have a n interagency , in te rdep a rtmental effort led by the Department of Labor going in and helpingpeople quickly et new jobs before they lose the old jobs . And that’sbeen enormous y effective in many base closing in stances and alsomajor corporate downsizings .Pension and Welfare Benefi ts Administration case processing
backlog has been reduced dramatically. T h e Office of Workers’Compensation ro ams—has streaml ined our claim review proces s . We had a ac l og going back 1 5 years , and we’ve cleaned upmost of that backlog.
T h e Pension Benefi t Guaran tee Corporation s Missing ParticipantOutreach Program— this is something we rarely think about, but infact there are an awful lot of people who have pensions owed themwho don’t know they have pensions owed them b companies . Andwe’ve identified them and restored millions of dol ars to people whodidn’t even know that they had paid into pension plans , that theydeserve it and they are now etting it.Seven Hammer Awards . flow,
I don’t know if this committeeknows what a Hammer Award i s . T h e V ice Pres ident has been giving out what he calls Hammer Awards to various agencies and depa rtme n ts for reinvention and innovation . We’ve got seven of
them— I’m proud to say, the most of a n y department or agency inthe Federal Government
,in terms of the innovations that we have
come up with up to date . And I ’m proud of t h e department ; I’mproud of the staff ; I’m proud of the people who continue to makemore with les s .I think that brings to a close my formal remarks
,and I would
be happy to answer any questions , Mr. Chairman , the committeemay have .
Mr . SHAYS . T hank you again , Mr. Secretary. You’ve given us alot of provocative information
,a n d it would be nice to have you
here even longer,but we’re going to get on out by 3. What I’m
suggesting to your staff— if they ca n turn t e charts on end so theyca n fit more . Doris , maybe you can help them out . If you have themin groupings , each one does not have to be separate . But I don ’tneed to use a chart right now . Can you hit the 5 minute . T hankyou.
What I’d like to ask you first, in fairly brief terms , i s where doyou think you’re having the biggest successes right now in the dep a rtme n t, and where are you having your biggest challenges?Mr . R E ICH . Mr. Chairman ,
some of the biggest successes , interms of employment and training
,have been most recently in e s
tablish in g one-stop career centers , as I mentioned before . We havea competition going among the States— six States have been
inwa rded g r ants to set these things up . T hey’re spreading like wildIre .
T h e States understand that they are working— the re helpingpeople not only get unemployment in surance and ot er benefi tsqu i ckly
,but they are also identifying people who are unlikely to get
their old jobs back , and they are consol idating a lot of employmentand training and job search assistance in one place .
We’re also succeeding,I think
,in the school-to-work opportuni
ties area that is under a new piece of legislation . T hat, too , has
1 2
desktop publi shing, physical therapists , occupational therapists ,home health care workers
,numerical] controlled machine tool op
e ra tor s . I can go through a long li st. T ese people are the new middle class .If we can get people trained and give them some help—they’re
already trying, but given the trends , the odds are against themif we ca n ,
as a society,get them some help to et across the great
divide , there are the beginnings of a new mid le clas s in Americathat can be sustained .
Mr. SH AYS . Before I call on Mr. Sa nders to have his 5 minutes,
I don ’t know if that clock is working,but I do want to introduce
other Members who have been here while you have made yourpresentation . Mr. Chrysler from Minnesota—Michigan , I’m sorry .
Mr . CH R YS LE R . I was born in Minnesota , so it’s O KMr . SHAYS . O K,
from Michigan ; Mr. Davi s from V irginia ; Mr .
Martini from New Jersey ; Ms . Morella from Maryland ; also Mr.Fattah from Pennsylvania ; Mr. Green from T exas was here ; andMr. Barrett from Wisconsin . We all are appreciative of your testimony.
I just would make a comment before Mr . Sanders asks you questions . You seem to be
,in my own mind
,reinforcing the general con
cept Steve Gunderson has made that we need to combine labor a n deducation into one department. A lot of what you seem to talkabout is education and labor needs . An d it seems to me to be a verycomfortable marriage . I
’
m not asking you to addres s that now, be
cause my time is u p ,but maybe later you’l l addres s that is sue . Mr .
Sanders .Mr . SAN DE R S . T hank you very much ,
Mr. Chairman . I' very much
enjoyed the Secretary’s presentation . I have basically two questions .I appreciate his opening remarks because he raised issues that
are not raised often enough in this coun try. And what he talkedabout is the growing gap between the r ich and the poor. He talkedabout the decl ine in real wages facing ordinary American workers .He indicated the rise in low-wage jobs
,which is certainly the truth
in my Sta te of V ermont. And he talked about the signifi cant de fcline of the purchasing power of the minimum wage
,which i s to
my mind a terribly important issue .
Mr . Secreta I’
d like to read for you a quote by a fellow e con o
mist,Lester T urow
,who I’m sure you know from M IT . And Mr .
T hurow writes,he says
,and this i s May 8
,1 994
,i t says “
In theUnited States
,if one adds together the offi cially u n emplo ed , dis
cou ra g ed workers who have stopped actively searching or workand those with part-time jobs who want full-time work
,1 5 percent
of the labor force,1 9 million people , are looking for work .
”
Is he right?Mr . R E ICH . T hat’s approximately correct . Again , we do not have
the February figures yet,but in January
,a lth ou h the offi cial n u
employment rate was down to that offi cia rate hides twothings . No . 1 , it hides the people who are working part time andwould rather be working full time
,and it al so hides the people who
are too discouraged to look for work.
I might also add that it hides the people who would like to work,but who
,because there is no work that pays nearly enough to make
1 3
it worthwhile for them to work , would otherwise be in the workforce . And finally , and this perhaps is the most important, it hidesthe fact that there are so many mill ions of people who are barelyma king it, whose wa ges , even thou gh they are working, are notenough to support a family.
Mr . SAN DE R S . Right. In other words , if you work for 20 hours aweek for $5 an hour, you are offi cial ly employed, if you had a college degree .
Mr. R E ICH . You are offi cially employed . What we are s e ein
around the country,and we saw this beginning 1 5 years ago a n s
it is accelerating,many families have now two wage earners , but
they also,in the family
,you have a third shift.
Mr. SAN DE R S . Let me just jump in here , because we don’t havea lot of time . And the second question that I wanted to ask you is ,I get u set when every month these stati stics come cuff—the econom is oomin g but presumably it’s slowing down . And none of thatm es sense to a n ybod in the State of V ermont. T hey don ’t believeit. Unemployment in the ma ' or city in the State of V ermont, Burl ingtou
,3 percent. Nobody be ieve s it.
I would urge you , in the strongest possible terms , to try to comeup with statistics that reflect everything that you have alreadysaid . In other words , the economy is not doing well for ordinarypeople . We could talk about average income , right? You make amillion dollars
,I’
m broke ; we’re averaging half a million dollars ayear. Not bad . I
’
m not doing so well .Can we come up with stati stics which inform the American peo
ple about the well-bein or the not-so-well-being of the averageAmerican worker
,in clu ing a lot of the information you gave us
today,so that people don’t think they’re craz y when they turn on
the televis ion— the economy is booming; gee , it’s not booming forme . Can we come up with sta tistics that ordinary people can u n
de rsta n d who don’t have a Ph .D . in economics?Mr. R E ICH . Congres sman ,
the BLS now has started every monthto indicate not only the number of workers who are part-time who’drather be working full time
,and also the number of workers who
were too discouraged to look for work , but even that other categoryI mentioned . T hat is
,workers who say that they might otherwise
look for a job , but they don’t see it presently worthwhile to look .
In other words , the current reports , as they have been revised , provide all the information you seek.
Perhaps there is a nother way of di splaying it. But the CPS hasbeen revi sed . In fact , weMr. SAN DE R S . I
’
m sorry,let me just interrupt you with something
because I’m going to run out of time in a second . T h e concern thatI have is the official statistic that gets most of the play in the papers back home is unemployment at 5 percent. What you are telling me , everything that you are sayin to us i s that there’s a lotmore that’s going on in the economy t an that . I would urge youto try to et that informati on out to at l east as great a degree asthe so-cal ed official u nemployment statistic s .Mr. R E ICH . Yes . I think that’s a good point. Let me just add one
further note,and that i s that I think we can justifiably be proud
as a country , as a government , as a society of the '
0 b growth thatwe’ve had over the past 2 years million new jo 3 through Ja n
1 4
uary . T hat’s net new jobs . An d those jobs,by the way
,are paying
better than the average exi sting jobs .T h e problem i s the 1 1 0 or 1 1 5 million existing jobs a re startin gto split between a relatively few paying better and better and amuch larger number paying worse and worse . An d that’s whereyou’re etting a lot of the polarization in the work force .
Mr . AN DE R S . T hank you.
Mr . SHAYS . Mr. Davis . I ’d just like to say that I want the prayersand the protection of all my colleagues
,because I asked the ra nk
ing member if he would anticipate the next vote , being a roll callvote . And he thoughtfu lly went to a roll cal l vote that was neverasked for . So I’m going to give him 7 minutes when his turn comes .[Laughter.]Mr. Davis .
Mr . DA V IS . T hanks . T hank you , Mr . Secretary,for your presen
ta tion . I was grateful to see the one about a col lege education andhow much more income its average , because my son is here todayschool day is off in Fairfax—and I wanted him to see that as wetalk about the importance of education .
I’
ve been really pleased about the establi shment of two programsin your department—the Women and Apprenticeships in Nou -T r a
dition a l Occupations Act and the Non-T raditional Emplo ment forWomen’s Act Programs . T hey were both establi shed wit bipartisan support. I think they’ve shown real potential as we move forward ou welfare reform .
But given the proposal for consolidating many employment andtraining programs into the G I . Bill of Rights for American workers , I want to ask how these efforts are going to be continued atthis point?Mr . R E ICH . Yes , Congres sman . Just quickly, two points . With t e
gard to the fi scal year 96, the President, as I indicated in my re
marks , has proposed consolidating the Women and Apprenticeshipsin Non-T raditional Occupations Program
,as well as many other
small programs,into the adult work force system that I outlined
a moment ago . And that is part of what we are calling the new G I .Bill for America’s workers .N ow
,in S tates that establish one-stop career centers , local com
mu n itie s can provide outreach for women and apprenticeship a c
tivitie s , along with many other activities . We would not support,this point, a set-aside for this or other small programs that arebeing consolidated because one of the problems we’ve had in thepast is the prol iferation of many of those small programs .I just want to say one word about the Non-T raditional Occupa
tions Prog ram ,as well . With regard to non-traditional occupations ,
there has also been a pilot project underway. And that pilot proj ecthas been funded out of our pilot proj ect fund , but that fu nd hasbeen caught in the current round of reci sions . T h e Pilots and Demon str a tion s has been cut by $ 1 0 million , actually , in the currentround of reci sions . So we will need to examine our priorities withregard to non-traditional employment for women .
I’
m hoping that we can continue to fund it,but given that very ,
very sharp cut in recisions that was passed by the House,we’re
going to have to really stretch to make sure that we do that .
1 5
Mr. DA V IS . As they move into some of these larger programs andif i t goes down to the States , the authority wil l just move down tothose level s of government, a n d they’ll rise or fall on their ownmerits .Mr. R E ICH . Some of the programs will ris e a n d fall on their own
merits . Ag ain , the Non-T raditional Em loyme n t for Women—and Iwant to make sure that I distingu i sh e twe en the apprenticeshipprogram and the Non-T raditional Employment for Women . T h e a pprenticeship program is right now a separate program . It
’
s one of
an abundance , I mentioned before , 7 0 -odd separate programs weare con solida tinT h e Non-T r a ition a l Employment for Women , however , i s notconsol idated . T hat is fu nded out of the Pilots and Demonstrationprogram . I
’
m hoping we can continue to fund that, but again , thathas been cut b $ 1 0 million and we’re just going to have to establish priorities t ere .
Mr. DA V I S . Let me just ask one other question . T h e ConsumerPrice Index and the definition of that, in terms of the basketthere’s been a lot of discussion . Alan Greenspan , CongressionalBudget Office and others seem to believe that it may be sl ightlyoverstate d . T hat fall s under your '
u risdiction .
Any effort being made, are furt er resources needed to try to geta true l ine on what the actual number is? Because I think in fairness to ever
ybody on both sides of this equation
,we want to make
sure we’re e a lin with accurate numbers because there are tremen dou s costs an benefits riding on that.Mr . R E ICH . Oh ,
absolutely . Every 1 0 years , the CPI i s revi sed .
And it is going through its 1 0 year revi sion right now. We’ve requested additional funds to even speed it further. T here are two issues— and I know that time is ve limited—but let me just put onthe table very quickly two issues t at bedevil that revisron . And astechnology changes , those revi sions become even more complicated .
One has to do with the fact that people inevitably substituteproducts when one product gets more expensive . T his i s the steakversus hamburger. If ou’re now buying more hamburg er thansteak , are you worse off, should you continue to measure steak interms of its increase or should you start measuring hamburgers?T h e second has to do with the quality of products . Ag ain , an issuethat is even more diffi cult
,given tech n olo ' cal changes
,if you buy
a tire these days that’s twice as good and asts twice as long as theold tires , but costs not quite twice as much ,
how should that becounted in the CPI?T h e BLS is doing the technical work
,but what concerns me— and
I want to repeat my concern for the record here—there should notbe, in my view,
any effort on the part of Con ess to force the BLSto do something or to come out with results t at the BLS does notfeel is absolutely accurate . We need to make sure that politics doesnot intrude on BLS analyses .Mr . DA V IS . Can I just take 1 0 seconds , Chris , to just follow?Mr . SH AYS . Yes .
Mr. DAV IS . I would ag ree with that, and I think it makes thewhole process suspect to do that. But I think if you need more reso
uirce
sland can get a qu i cker answer
,it would behoove everybody
to o t at.
1 6
M r . R E ICH . Yes , and that’s why we’ve sou ght additional “
re
sources .Mr. DAV IS . O K, thank you.
Mr . SH AYS . Mr. T owns , you have a very generous 5 minutes coming to you .
Mr. TO WN S . T hank you very much ,Mr. Chairman . Mr . Secretary,
l et me also say that we appreciate the good work that you’ve done .
And as I pointed out in my O pening statement, there’s probablysome difficult days ahead . As we look at welfare reform legislationand all the legislati on that’s been forth , even talked about, we’vetalked about a nationwide work mandate , and , of course , I agreethat work i s extremely important to any kind of reform .
Does this legislation offer enough support for training and education services designed to move people from welfare into work?Mr . R E ICH. Congres sman , if you’re talking about the legi slation
just recently submitted , -I don’t believe so , no . It is going to costmoney to move people from welfare to work , in terms of job training
,job search assistance
,child care . O f the approximately 5 mil
l ion adults ou welfare— that is , you have a population on welfare ,total population
,somewhere in the range of 1 5 million—of the over
5 million adults , approximately 7 0 percent do get work now within2 ears , contrary to the popular mythology . But most of them thenfa 1 back onto welfare in the future .
You see , we’re dealing wi th a whole stratum of society, of thework force
,that is falling onto welfare , or if they get out, they fall
back onto welfare . T hese are the very low,marginal working poor.
T hey need help with job search assi stance and job training andchild care . T hey cannot simply be assumed to get off welfare andbe on the street.I don’t want to overstate thi s
,and I don’t think I ’m overstating
it when I say that we want a welfare-to-work program,not a wel
fare-to-the-street prog ram .
Mr . TO WN S . You know,I’
m looking at this whole reform,and I
think if there’s one budget in town that should be left intact,if not
increased,i t’s your budget.
N
g
t . R E ICH . Well,I would agree with you
,Congressman . [Laugh
ter.Mr . TO WN S . I
’
m tell ing you,I think that that point has to be
made,because if you’re serious about real ly putting people back to
work,I think that job training— I looked at the charts— i s very
,
very important . An d I think that that’s an area where we need al ot of help
,and your agency would be the agency to provide that
kind of leadership .
Mr . R E ICH . T h e most important social program we can come upwith as a society i s a job
,and better than a job—a good job .
Mr . TO WN S . Many of the State s’ j ob services still face sig nificantT JT C processing backlogs for 1 994 . Has the Department of Labortaken a position as to whether employers who hire T JT C eli 'bleworkers through December 1 994 are entitled to have those wor ersprocessed by the local j ob service?Mr . R E ICH . T hey could be processed
,Congressman
,the problem
is that the funding l iterally runs out in December unles s the T JT C ,
l ike other tax benefi ts,are extended beyond January. And there
1 7
fore , although they may be technically certifi ed, there wil l not bemoney. T here simply will not be money behind them .
I am of the view that the T argeted Jobs T a x Credit, as currentlydesigned
,i s not working. T h e Inspector General has repeatedly
found— the Inspector General of the Labor Department has repeatedly found that as it is currently designed , most of the employerswho hire T argeted Jobs T a x Credit recipients , that is , people whoare eligible for the T argeted Jobs T a x Credit, would have hiredthose people in any event.I am eager to work with Congress in refashioning a T argeted
Jobs T a x Credit that would , in fact, help people get j obs and stayin jobs and get the training they need. An d we have some ideas forhow that could be accomplished .
Mr . TO WN S . Right. Well , let me say this , I’m concerned thatmany of the employers who follow the rules , play by the game a n ddo what the were supposed to do—they wil l not get the creditsthey’re e n tit ed to . Ma ny States indicate they will cease proces singall requests shortly. So does DOL intend to instruct State job services that employers are entitled to have all T JT C hires through December 1 994 processed? I mean , how do you plan to handle thi s?Mr . R E ICH . Well , again , Congressman , it seems to me that if
there is not going to be money there from the Federal tre a suthat is going to be authorized and outlays that are going to be cliffated beyond December, then although it may be permissible forStates to go through the technical exerci se , I think you’re a bsolu te ly right—it would be somewhat misleading to employers tothink that they are getting a T JT C eligible person when
,in fact
,
there is no money behind that. And frankly, we haven’t made a decision yet pending final decision by Congres s .But in the past
,the T JT C has been renewed
,and renewed retro
actively,when the T JT C has run out. And as I said , until we get
what looks like a fi nal deci sion from Congress,it i s very diffi cult
what to do in terms of informing the States .Mr. TO WN S . Right. Let me just raise this one question , and it
might have been answered,but I was sort of like l eaving and I did
not hear the entire an swer. And I asked my staff and, of course ,
she said,I don’t think it was an swered . So I ’m going to have to rely
on staff in this instance,as to whether it was answered or
Chairman Shays raised the question regarding Gu nderson’s proposal , that you were not provided an opportunity to answer fu llyfor me as I was leaving. Does this proposal make sense to you?Mr . R E ICH . If you’re referring to the proposal to consolidate E du
cation and Labor Departments,it does not make sense to me for
a couple of reasons . First, the role of the Education and the roleof primary and secondary education in this society has a great dealto do with citizenship . It has to do with a va riet of education oa lshaving l ittle to do with narrow occupational ski Is . In fact , we avetri ed very hard in thi s coun try not to mix the two up .
Obviously, people who are wel l-educated and have a good primary and secondary school education do have a head start andhave a foundation on which to build . But there are so many otherpurposes to primary a n d secondary school education . We have inour culture and our society a tradition of free public schools , pri
1 8
mary and secondary schools , built around the notion of citizenshipand community , of training and democracy .
T h e Labor Department’s roles are very different. We are focusingupon preparing people for jobs and protecting them once the arein jobs . We are focused very specifi cally on occupational skil s , onthe transitions people have to make from one j ob to another, a n dalso on the prote ctions they need, with regard to pensions and safety and health . T hey’re very, very different roles , ve different res on sibilitie s . And I think there are some down si es to mixingt em up .
Let me say one final thing. I am skeptical , quite fra nkly of simply moving around orga nizational boxes in attempt to show thatthere is real
,genuine reform . Secretary of Education Ri ley a n d I
have worked very,very cl osely together on a few of the pro
'
ects
where there is overlap . Our two staffs , I’m proud to say,ave
worked in an exemplary way.
T here is no substitute for that kind of interdepartmental , interagency coo era tion ,
even if we were un der one heading,even if
those two epa rtme n ts were theoretically joined together. You stillare making no pro ess unless staffs having different re spon sibilities are working e ective ly together. Simply changing the orga niz a tion a l boxes , as I said , i s no substitute for genu ine reform .
Mr . TO WN S . T hank you, Mr. Secretary .
Mr . SHAYS . T hank you , Mr . T owns . Mr. Scarborough ,you
,too
,
have a very generous 5 minutes coming to you .
Mr. SCAR BO R O UGH . Mr. Secretary, thanks for coming. I a ppre
ciate you being here and I certainly appreciate the setting, Mr.Chairman
,that you set up so we can have an in forma l s ettin g . And
we all real ize we’re going throu h some diffi cult times,and it
helps,I think
,this process
,I thin helps keep the edge off of it .
So,I’
ll start with a softball question for you here . You don ’t l ikeconsol idation . What would you say to those that have been talkingabout abol ishing the Department of Labor? And what specific cri seswould occur
,in your mind
,for the American work force if that were
pursued?Mr . R E ICH . Congressman , the Department of Labor exi sts as the
core agency , the core department concerned with the numbe r of
j obs a n d the quality of jobs in the United States . Our training programs our employment pro ams
,our programs to ensure the safe
ty a n d health of workers,t e pension benefi ts of American work
ers,our programs to ensure that there is not discrimination at the
workplace,to ensure
,in short
,that American workers have the
fullest productive lives poss ible would be severely jeopardized byany effort
,even to reduce in this day
.
and age , given the changesthat are u nderway in the American economy, to reduce the budgetof this department.N ow,
I know that every Cabinet Secretary,every agency head ,
every government head always says the same thing—don ’t cut. ButI can sit here and tell you in all s incerity and all honest we aredoing much more with fa r less . We have new responsibilities ; theAmerican work force is owing. And as I said in my opening re
marks , the challenge to a y i s so much greater than it was beforebecause so many Americans are trapped into the old economy.
T hey need to have pathways to the new economy.
20
ning $20 0 billion deficits each year could have a substantial impacton the American work force and jobs in the next 20 years
,correct?
Mr . R E ICH . I do , but Congressman , put this in context. When wecame into office
,there was a $4 trillion debt.
Mr. SCAR BO R O UGH . Right.Mr. R E ICH . T hat debt, in 1 98 1 , was trillion .
Mr . SCAR BO R O UGH . Right.Mr . R E ICH . We have brought the defi cit-GDP ratio , which is prob
ably the most im orta n t thing to keep your e es on , down from 5percent—where t e deficit was 5 percent of DP—d own to aboutpercent
,percent. We’re keeping it there ; hopeful] it’s going
to 0 down even further . But as long as we can get t at defi citGD ratio down and continue to keep it down and maybe get itdown further and get it on a down ward trajectory , we are , it seemsto me
,exercising fiscal responsibility
,fiscal prudence .
What I worry,frankly
,i s that we end up throwing out the baby
with the bathwater .
Mr . SCA R BO R O UGH . Certainly , and I understand that. My onlyquesti on
,excuse me , my question was , though ,
you do see a threat,
though . And thi s i s taking Department of Labor and your budgetcompletely out of it. You do see the debt and the deficit as causinga real threat to the American work force in the next 20 years .Mr . R E ICH . If we had done nothing about it, if we had not a ]
ready committed ourselves with detailed plans for $50 0 billion of
deficit reduction , and got a major head start on doing that ; plus a nother $ 1 4 0 billion , more recent] then I would worry.
But, Congres sman , we are a ready on the road to ma' or, major
deficit reduction , control over the debt . I would worry t at e x ce ssive zeal in cutting programs that help people become more productive in the future— and I’m talking now about job training
,in par
ticu la r— i s a false economy, because if you cut programs that helppeople become more productive , then the denominator on the equation , which is economic growth ,
does not grow nearly as fast as itought to .
What we want to shrink is the defi cit-GDP ratio .
Mr . SCAR BO R O UGH . Which leads— all these questi on s , actually ,are leadin to a point, if you can believe it. And that is , if we aren’tgoing to a olish the Department of Labor or consolidate , i s it possible for the Department of Labor to come forward with a bud et
that spends no more the coming year than it spent last year, c
cause I noticed in your budget summary and I saw your chartsabout how you all have been acting very responsibly since you tookoffi ce , and you’ve been moving in the ri ht direction . Is it pos siblein this year of tremendous budget cru n c es for you to—let’s see , Ithink you’re going u p— spending increase is $5 billion and full-timestaff increases by over 30 0 people . Is i t possible for you to streamline and reinvent government to such a degree that you don’t spendmore money the coming year that you spent this last ear?Mr . R E ICH . Congressman , we are continuing to ma lfe every effort
to reinvent, spend money in ways that go further and further witheach tax dollar. But we are only dealing with the tip of the iceberin terms of the growing problem of the gap between people witski lls , without skill s ; the problems of people who are facing workplaces that are substandard ; the emergence in this country of
21
sweatshop condition s and third-world working condition s like wehaven’t seen since the turn of the century. It i s getting worse andworse .
Mr . SHAYS . Mr. Secretary, I’m sorry to interrupt you. I was hoping to have a collea gue come back to replace me , but we have a bout4 minutes until the cl ock ru ns out on our vote . Mr. Chrysler andMr. Martini have left. T hey’ll come back ; as soon as the ’
re back ,whichever one is here can start. Mr. Fattah will al so ask i s roundof questions , so
'ust be at ease for a recess for a short period .
Mr. R E ICH . O K[Reces s ]Mr. MA R T IN I [presiding]. I’m back. I
’m out of breath , but I’mback . T hank you, Mr. Secretary, and tha nk you for be ing here thisafternoon .
I didn’t hear the earliest part of your testimony , and I hope I’mnot
,therefore
,at a disadvantage , but in just reviewing some of the
mater ial s in a nticipation for today’s hearing, and in li stening toyour testimony, you’ve repeatedly talked about consolidating someof these programs ; and the one chart in particular where 7 0 prog rams are, I as sume , going into four areas to be—from that point,I guess they’l l be maintained in four programs
,i s that correct
,Mr .
Secretary?Mr. R E ICH . Yes .Mr . MA R T IN I . An d in li stening to other things in your testimony
about streamlining and reinventing government,I therefore find
what may be a contradiction . But the fiscal year budget seems togo up from 1 995 to 1 996. An d then
,even though you’ve shown a
reduction in employees,I think
,from 1 993 to 1 994 , yet the fiscal
year request for 1 996 i s a n increase of employees . Could you firstjustMr . R E ICH. Well , first of all , the numbers , the increase in our request has to do substantially with the G .I .
—what we’re calling thenew G .I . bill . T hat is , making sure that there is even the barestadequate amount of money to provide the j ob search assis tance , thej ob counseling and the job training for people who are losing theirj obs and also for people who are low-wage .
As I s tarted to say to the chairman,just before people had to
leave , there i s right now a very relatively small percentage of thework force getting the kind of assistance that they need in orderto be more productive
,in order to get quickly new jobs . T h e country
benefits in terms of the taxpaying a n d more productive citizen , andwe can more quickly get them new jobs . And so the President haschosen to take money out of el sewhere in hi s 1 996 proposed budgetwhich does reduce the budget. He overall continues on a course toward budget-defi cit reduction
,but he wants to take the money from
elsewhere and maintain,enhance actually the amount of resources
available for that sort of job training in the GI bill , for dislocatedworkers and also for low-wage workers .Your second question
,having to do with ET E s
,the major in
crease in FT E s has to do with immigration,the problem of u n docu
men te d immigration . And the President is proposing that we increase the number of inspectors in the Wage and Hour Division .
What we have found , after a lot of our investigations , i s that someemployers in major cities in the United States are wi lling to risk
22
the penalties as sociated with hirin illegal aliens for the sake -
ofgetting ve —people who will be wi ling to work for extremely lowwa ges insi e the United States in squal id working conditions .And if we can ta rget those industries , those cities and those em
p loy ers and enforce the laws as they are already on the books , interms of minimum wages and working conditions , we can dema gn etiz e that magnet for undocumented al ien s in what I consider tobe a very humane way of dealing with the problem . And the President a ees .
Mr. T IN I . T hen if I’m reading your last comment, your a nswer to my question correctly, you’re say ing the increase in the request in the budget i s largely due to the GI bill for Americanworkers and this new initiative on immigration enforcement.Mr. R E ICH. Not entirely . We also are requesting additional
,some
additional FT E s for complia nce as si stance . What we’re tryin to doin the regulation and en forcement area— again , the context ere is6 million work places . We have 93million workers covered by theseemployment laws . T h e number of workers i s goin
gup every day.
Wh at we are trying to do is provide employers wit more a n d better assistance in preventing accidents and illnesses and pen sionproblems and minimum wage and working and hours and otherviolation s before they occur.We call that compliance assistance . Actually, it’s something that
businesses appreciate a great deal . We are shifting resources inthat direction
,but we also have to maintain with that many work
places , reali stic enforcement authority as well , and that’s why weare seeking additional compliance assi stance . But again ,
the majority of those FT E s will go toward that immig ration effort, which focuses on minimum wa es , working conditions ; an effort to root outsweatshops and sweats op conditi on s .Mr. MAR T IN I . In consolidating the—I see , if I’m correct in readingsome of the statistics , you reduce approximately 1 63 programs to7 0 programs and the next step will be to try to consolidate those7 0 programs into four areas of programs , i s that correct?Mr . R E ICH . Well , that’s roughly correct.Mr. MAR T IN I . I’m looking at your chart, and let me just, if I may ,
just follow through . Just getting a glance at all the programs thatare out there , and one of the problems out there , having served justfor a couple of years on a county commission level of government,one of the maj or problems with all of the Federal Government programs is u n de rsta n din which ones are for which
,and how to find
out what’s out there . So your effort to try to consolidate them isone that I applaud .
But it would seem to me that in looking at those 7 0 programs ,aren’t they duplicitous with what is being proposed in the G I . billfor America’s workers
,and therefore
,why do we need to spend
have a bigger budget request for the two programs,which if we’re
really serious about streamlining government and cutting s endingin government
,I see an increase request of bil lion a n g an in
crease in employees when I think the sentiment of the Congresstoday is to try to find areas where we can reduce government,streamline , make them more effective .
And that’s what most of the language is in your proposals aboutflexibility, streamlining, consolidating, avoiding duplicity . And then
23
I see new pro ams coming up , yet we have 7 0 programs left onthe board whio are be ing con so lidated .
Mr. R E ICH . T his isn’t a new program,and I apologize if I have
been unclear. T h e Pres ident’s proposed new G .I . bill for Americanworkers i s
,itself
,the consolidation . It
’
s the use of the one-stop ca
reer centers arou nd which the consolidation i s bui l t. It’s sli h tlymore funding to make sure that dislocated workers and wor erswho are low-wage ca n get the skil ls . But it’s built around the consolidation . T h e consolidation i s part of that plan .
Mr . MAR T IN I . Alright. Just one other question— I think you wereprobably an swering it when I was asked to go vote, and you mayhave an swered it, but ou were beg inning it. You talked about thatit’s the lower-end worker that’s having problems getting into thesystem and advancing in the system ,
a n d it’s largely due to education and skill s a n d that many of the job opportunities out thererequire a higher or more advanced skill .And the question came up
,with respect to the merger of the De
p a rtme n t of E ducation , and you were a nswering it when I left.Mr. SHAYS [presiding]. It s going to have to be a short answer,
Mr. MAR T IN I . It just s eemed to me that as these jobs requireeater skill s
,there is a much closer alignment between these two
epa rtme n ts— the Education Department and the Labor Department—in that area of education . T o keep them separate , as we getto a level of society where the job market requires even greaterski ll s , just— I haven’t been convinced by your testimony thatthere’s a need to keep them separate there . And I don’t know if
there’s a nything you could add to that to convince me , bu tM r . R E ICH . Well , again ,
my two points are No. 1 , that in my exp erie n ce both in Washington a n d as a researcher of government ,my experience has been that merely moving the boxes around orpushing different organ iz ational units together and calling it something doesn’t accomplish a great deal in and of itself.But No . 2, that there is a different focus and a different mi ssion .
T h e Department of Labor is focused on specifically prep a rin workers for specific j obs
, a n d also protecting their safety and hea th a n dpensions and many of their other needs . T h e Department of E ducation , with regard to most of the education programs , focuses onprimary and secondary education which has local control
,usually
community control . It i s free public education , Its goals go fa r beyond the workplace ; have to do with citizenship , democracy, community. It i s a fundamentally different operation , although there isobviously a relationship between the two .
Mr . SHAYS . Mr. Secreta ry, if I could , I see the sincerity in theway you are looking at each oth er a n d this could go on for a longtime . It
’
s a very importa n t i ssue, but I know other Members aregoing to come back
, a n d I’
m goin to try to honor my 3 o’clock commitme n t to you . Mr. Fatta h has e floor.Mr. FAT TAH . T h ank you , Mr. Cha i rman . Let me , first of all , com
plime n t you, Mr . Secretary, for the work that you’ve done ; it’s goodto see you again . As you have mentioned
,there are a number of
States who are moving forwa rd with the one-stop centers , andPennsylvania has been in the forefront of that work ; along with thefact that we’ve realized early on through the Joint Jobs Initiative
24
in 1 987 , under Governor Casey and the legislature , we created aprocess in which the Welfare Department, the Labor Departmentand the Education Department worked together arou nd some issues
,collaborative efforts not by merg ing the departments , be cause
there are distinct responsibilities , but pulling people together inways in which it made sense . And the one-stop centers and someof the other innovations in Penn sylvan ia are a result of that.I’m interested, however, in our comment on a nother matter at
the moment—the Chamber 0 Commerce in Pennsylvania a n d anumber of other entities , when conducting a study around is suesof productivity in the Sta te, indicated that one of the eatest challen g e s that they felt we faced in terms of the work orce was thei ssue of diversity and having people have the ability to work together
,coming from different backgrounds
,races
,religions
,regions
of the State .
And there is on the H ill now,and here in Washington
,a great
deal of debate about how much effort on the part of government isworthwhile to include women and under-utilized minority groumembers in the workplace . I
’
d be interested in your comments reative to affirmative action in this challenge in the American workp ace .
Mr. R E ICH. Cong r es sman , this administration— I , the President,the entire administration
,believes firmly in the goals of affirmative
action , ensuring that employers make every extra effort to findqualified people who don ’t look just like them . I think there’s a natural human tendency, and I don’t even suggest that there is explicit prejudice , racism , sexi sm , but there’s a natural human tendency for people to want to replicate themselves when they hire andpromote employees .And it’s necessary to make the extra effort to cast the net morewidely . We’re not talking here about quotas ; we’re not talking hereabout preferences . We’re talking about goals and plans and efforts .Most of the la ws *a n d re la tion s that we are enforcing have to dowith plans and goals an efforts . An d we’re going to continue to review those laws and re la tion s to make sure that they are a ch ieving their ends . Obvious y, we have to make sure that the
y-ire effec
tive . But we are not goin to retreat from the purpose,w ich is to
end discrimination,to en sexism and racism to the extent possible
in our society .
I’
m goin to be very shortly unveiling the results of what iscalled the lass Ceiling Commissi on . Founded by Senator Dole andcommenced under the inspiration of his wife , Elizabeth Dole, thiscommission has toiled for 4 years , coming up with data on thenumbers and the percentages of minorities and women at the highest ranks
,highest reaches of corporate America . T h e preliminary
results I ’ve seen are very discouraging.
Mr . FA T T AH. Mr. Secretary , I ’m sure once you e t through withthat analysis
,you won’t find it as diverse as the O fymp ic team that
the United States fields . T h e question I have , however, i s that aswe looked at all your charts
,there are a lot of challenges facing the
American worker. Somehow it’s been su gested recently that a ffi rma tive action is somehow at the top 0 this list of challenges . Ididn’t notice it on our charts . You talked about the decline in realincomes , to what e g re e i s the whole is sue one of some significant
25
merit in the public discou rse at this point, relative to these otherchallenges?Mr. R E ICH . Congressma n , the challen e of ensuring that women
and minorities get j obs a n d get good jo s and have equal O pportu n ity with men and with white men is a major challen e for thissociety . An d I could have gone on at some length with ot er chartsI have , showing that the incidence of unemployment and low-wageemployment amon women and minor ities i s much , much greaterthan it is amon w ite men .
Mr . FAT TAH , K,thank you. T h e chairma n is urging me to come
to some conclusion . T hank ou , Mr. Secretary .
Mr. SH AYS . T hanks , Ch a lfa ,we might have more time at the end .
Representative Morella is going to be given the floor at the courtesy ofMr. Chrysler.Ms . MO R E LLA . I really appreciate that, Mr. Chrysler.Mr. CH R YS LE R . Sure.
Ms . MO R E LLA . I appreciate the courtesy of this committee . I’
m
g!oing over to the Senate to testi on the airport bill to make sure
t at National Airport i s safe for a l of us .Secretary Reich
,it’s a pleasure to be here with you , and I a ppre
ciate the work thatyou’ve done at Department of Labor and work
in
gwith you. I tha n the cha irman for having planned such a very
in orma tive and important overview hearing for us .I wanted to pick up briefly on a concept that was mentioned ear
l ier. You know ,the Non-T raditional— the Apprenticeship Pr ogram
,
I mentioned,was made
,the Non-T r aditional Employment for
Women Program,which I certa inly support. But the Apprenticeship
Prog ram ,women in apprenticeships a n d non-traditional employ
ment is my bil l that became law,and it has been working ve
ve succes sfully . And I know that it is one of the items probab yinc u ded within the recision li st. However, I think it was ori 'nallyon your targeted list, which is how it was looked at, I think , y thesubcommittee in terms of the pos sibil ity for reducing. I am hopinthat you will reiterate the fact that it will definitely be continueI think it was a spin-O ff, also , to come up with a minority program ,
because that one was working exceedingly well . And I’m just wondering if you ca n give us the sense that you are goin to continuewith the progr am that I think is doing exceedingly we]Mr. R E ICH . Yes , Congresswoman , our indications are that the
program works exceedingly well . And I did not mean to imply inany way to the Appropriations Subcommittee or the AppropriationsCommittee that that shou l d be rescinded ; in fact, quite the contra ry . Our goal here is to expa nd these kinds of opportunities forAmericans .My concern—and I have to be very ca ndid with you and other
members of this panel— i s that the reci sions that we are e x p erie n cing over a $2 billion reci sions for the Department of Labor for 1 995are recisions that cut to the ve heart of the mission of this country in preparing people for proa ctive work in society. It i s a falseeconomy, in my view
,to cut funds for dislocated workers ; to cut
funds for disadvantaged you ng people to get training ; to cut fundsfor even summer jobs— 1 995 and 1 996 , as a result of the recision sthat have been passed by the House
,by the Appropriations Com
mitte e , in 1 995 and 1 996, there will be no summer jobs for dis
26
adva ntaged you n people million young people,di sadva nta ged
you ng people wil not have any opportu nity to work.
T hese are kids who wan t to work,des era te ly ,
duri n the summer. Again , it may save some money in tlie short te rm . In the longterm , society will pay the price .
Ms . MO R E LLA . T h e Women and Ap ren tice s Program is only likeso it’s a small amount. A n ssince it’s workin well—and
I understand what you’re saying about the summer °
o 3 program,
and I agree with you—but I am hoping that you wilfdo what youca n to continue with that program as on do your consolidating.
T here are a lot of people relying on it . t has helped an awful lotof employers .I wanted to just bri efly also indicate , I’d be happy to work with
you, too, as I know this committee will , and was already mention ed your T argeted Jobs T a x Credit—I think it’s a ve importa nt element that has expired . And I hope that we’ll be ab e to putsomething together in that regard also .
Mr . R E ICH . Yes , Congresswoman , I said before— I’m not sure youwere here at the timeMs . MO R E LLA . I think I heard you resp
ond to the question thatyou’d be happy to work with us
,i s that it .
Mr. R E ICH. Yes , in fact, I’m eager to work with you to make thatprogram work . Right now ,
I have some problems with it becausethe evidence we have suggests in its present form
,it i s not work
mg .
Mr. SH AYS . If the g e n tle la dy wouldn’t mind,I’
m going to ask Mr .
Green be given 5 minutes and then we’ll give Mr. Chrysler 5 minutes .Ms . MO R E LLA . Absolutely.
Mr . SH AYS . And Mr. Barrett i s leaving now to see if he can comeback and ask you some questi on s . Mr . Green , you have the floorfor 5 minutes here .
Mr. GR E E N . T hank you , Mr. Chairman . If my coll eague fromMaryland has fini shed , I—have ou finished?Ms . MO R E LLA . I have fi n ish e and if I might al so submit some
questi on s to you, Secretary Reich .
Mr . R E ICH . Oh ,sure . An d by the way, I’m very gratified to hear
that you a e e with me on summer jobs . I hope you persuade manyof our col e a g u e s .
s . MO R E LLA . I wish I had a magic wand for a lot of things .T ha nk you, Mr. Green .
[T h e prepared statement of Hon . Constance Morella follows :]PR E PAR E D S T AT E ME N T O F H O N . CO N ST A N CE M O R E LLA , A R E PR E S E N T AT IV E IN
CO N GR E S S FR O M T H E S T AT E or M ARYLAN DI wou ld l ike to commen d you ,
M r . Cha irma n , for hol din g this importa n t overs ighthea r in g re a rdin g the Depa rtmen t of La bor (DO L). I a lso welcome S ecreta ry Re icha n d exte n my a ppre cia tion for his wil lin gn ess to en li hte n me a n d other membersof the S u bcommitte e a bou t the importa n t ro le of the 0 L a n d efforts to make theDe a rtme n t even more effective a n d ef ficien t .
e Depa rtmen t of La bor pla ys a n esse n tia l ro le in helpin g America n workersface the n eeds of a cha n gin g eco n omy. Drama tic ch a n ges a re occu rr in g in th e ma r
ke tpla ce . Ra pidly-evolvin g techn ologies , corpora te restru ctu rin g a n d global com tition a ll con tribu te to the cha llen es fa cin toda
y's America n workforce . T echn o ogy
cha n ge s dema n d tha t workers eve lop t e ski is to ma tch the n eeds of a n evercha n °
n workpla ce . We mu st con sta n tly improve tra in in g a n d retra in in g servicesto he p me rica n s g e t better jobs a n d to help Ameri ca pro sper in a globa l econ omy .
28
down , but we don’t even—we’re losing money we have already fromwhat we have . But let me talk about the general
,overall
,the block
grant proposal , and ask you a question about it.T here are some proposals here that we want to bIO ck grant eve hing—food stamps , whatever, and job tra in in And there’s abi ] that’s introduced by one of our colleagues t at would blockgrant the employment training programs . An d I heard today
,and
I jokin ly call it some of our throw-down Governors that come inthat ta k about they want to block grant training programs to Wi sconsin or Michigan . Could you respond to some of the -questionsabout block granting, particularly training programs? I think if wehave a duplication now in the Federal level
,I worry that if we have
50 States doing it, no telling what we may come up with ; plus withthe verificati on and what they actually are doing.
Mr. R E ICH . Congressman , when we give State official s Federalmoney and rely on State bureaucrats to do with Federal moneywhat Federal bureaucrats had been doing with Federal money
,we
may sometimes get good results . But in the job training area,we
have tried before and we have not seen great results . T h e JobT raining Partnership Act was envi sioned largely as a State blockant roposa l . And over the past 1 5 years , 1 4 years , we have
cam e that it doesn ’t work that way . Congress has had to amendit to provide more and more Federal ida n ce and guidelines .We’ve been up and down the la der of federalism in the '
obtraining area. As I said before, with CE TA and the Manpower e
ve lopmen t and T raining Act, we have seen that Federal bureauet ats , State bureaucrats , local bureaucrats , job training works ; itmakes a difference . But if we want to make a real difference inpeople’s lives , our suggestion is to
'
ve people skill grants . Adultswe’re talking about adults now
,w 0 can make u their own deci
s ions about the kind of training they need , arme with good in formation about what j obs are out there
,what skil l s are in demand
,
and what in stitutions are doing the best job preparing people forthose jobs and getting people those j obs .T hat information can be computeri zed . We can use those one
sto
pcareer centers
,l ike in Houston
,that are working te rrifi ca ll
we ] around the country right now,and give people those ski ]
grants . T hey can make the market work ; they can create a marketin j ob skill s and in training
,in job training
,that’s better than any
set of bureaucratic guidance or g uidelines .
Mr . GR E E N . I ess the concern I have about block granting, and
I know that dup ica tion of the programs,but in some of our tates
and our local communities,we are actually combining these pro
grams . T hey ma come from Washington in separate grants,but
they’re actually e in g combined in the local community to serve ,ou know, unified instead of— they may be 1 0 0 and I don’t knowow many different—1 50 Federal employment grants or job training employment grants
,some of them are so small—but they are
also being combined in some of our one-step centers so we ca n a c
cess them .
Mr . R E ICH . At the street level . In fact, I’ve said , and what we aretrying to create with our one-stop centers
,as in Houston , i s what
might be called street level consolidation . And individual doesn’tcare whether that particular funding source comes from one cat
29
e g orica ] program or another ; whether it comes through one committee jurisdiction or another ; whether it comes from one de a rtme n t
or another. If a person walks in off the street, needs some elp getting a job, there s a counselor there , there’s good information there .
T hat person can get what that person needs . And that is streetlevel consol idation . I think those one-stop centers already take usa fa r way in that direction .
Mr . GR E E N . T hank you ,Mr. Secretary . T hank you, Mr. Cha ir
man .
[T h e prepared statement of Hon . Ge ne Green follows zlPR E PAR E D S T AT E ME N T O F H O N . GE N E GR E E N , A R E PR E S E NT AT IVE IN CO N GR E S S
FR O M T H E S T AT E .O F T E X A S
T ha n k you , M r . Cha irma n . T h e n ext two hea rin gs this committee wil l hold coverissu es tha t a re very importa n t to me : la bor a n d edu ca tio n . T h e A dmin istra tion iscon tin u in g with its rein ven tion efforts , to con so lida te programs a n d ta rget the mostn eedy for a ssista n ce . I do n ot thin k the importa n ce of this mission shou ld bedown pla yed or u n derestima ted.
From re ct a n in job tra in in g rog rams to en cou ra gin g the developmen t ofschool-to-wor a ppre n ticeships, the a bor Depa rtmen t h a s bee n in the fore fro n t ofthe movemen t to get govern men t to re s n d to cu rre n t n eeds . An d let u s n ot dou btthere is a n eed to be fi lled. I do n ot be 'eve the federa l ove rn me n t is a ll-powerfu la n d a l l-kn owin g. I do, however , believe th a t the federa govern men t ca n serve a s
a pa rtn er with the S ta tes a n d the priva te sector to e n cou ra e the kin ds of programstha t will help workers ge t job tra in in g a n d in crea se their l i e time ea rn in gs .I a ppla u d the S ecreta ry’s goa l ofmakin g the the Depa rtmen t’s programs more a c
cou n ta ble , en cou ra gin g competition amon g service providers , a n d givin g sta tes fle x ibili to ta ilor the prog rams to loca l n eeds . We n eed to ma ke this goa l a re a l ity a n dI wi gla dly work with the S ecreta ry on this ma tter .
Mr . CHR YS LE R [presiding]. T hank you . I have a couple of quickquestion s . T h e budget—you mentioned about the 7 0 j ob trainingprog r ams that you’re consolidating. What is the budget for those 7 0prog rams , and how many employees to administer those 7 0 programs .
Mr. R E ICH . T h e total budget for those 7 0 job training programs ,I wi ll give you in half a second . Congressman
,the—we have a p
proximately $ 1 0 billion in these programs , in terms of the Department of Labor’s portion of these programs . An d that’s a budget ofabout $ 1 35 mill ion for over si ht. And I think that’s a very importa nt point because the actua admini strative oversight costs nowbeing undertaken are actually a very
,very tiny proportion of those
costs . T his gets to the point I was making beforeMr . CH R YS LE R . How many employees? I’m real close on my time ,
because I’m going to have to go vote .
Mr . R E ICH . O K T h e total number of employees we have for allof these programs is , l et’s see , and I ’ll give it to you in one half second , let me just—O K, we will have to submit that for the record .
I have an estimate,but I will have to get it back to you.
Mr . CHR YS LE R . If you could send it to my offi ce,I’
d appreciateit, alon with how many jobs we’re going to create out of thatg roup . e con d, do you a cc or di sagree with the President’s endrun yeste rday on the stri er replacement bill of the Cong res s?Mr . R E ICH . Congres sman , I disagree with the characterization as
an end run . Under the procurementMr. CH RYS LE R . We weren’t allowed to vote on it.Mr . R E ICH [continuing]. Authority of the United States
,and this
has gone back right the Franklin D . Roosevelt,all the way throug h
30
every President. President Bush also used the executive authoritywith regard to ensuring that government contractors maintainedcertain standards . T his is not new ; this i s something that everyPresident, to my knowledge , has done , in te rms of ri sing Executiveorders to ensure that that Federal procurement and those Federalcontractors maintained minimal standards .Mr. CHR YS LE R . Have you heard of an orga nization called the Na
tion a l Council of Senior Citizens?Mr. R E ICH . I have heard of the organization , yes .Mr CHRYS LE R . Do you view its $68 million in Federal grant
money as an essential service of government?Mr . R E ICH . I am sure that if they received $68 million , Congress
ma n ,that we had—if you’re referring to the amount that they re
ceivedfrom the Department of Labor
,i s that what you’re referring
to .
T here’s a highly competitive system for awarding grants,based
upon whether the particular application gets people jobs ; i s a training program that is a pilot roje ct or a demonstration grant ; thati s unique
,original , has not een replicated before ; that there’s a n
evaluation component built into those . An d I’
m happy to share withyou an of the details about that one .
Mr . H R Y S LE R . Even though they only raise about fromtheir own membership?Mr . R E ICH . Well , a ain , i t has to do with the quality of the par
ticu la r application . ey must get the grant, by the way , underT itle 5 of the O lder Americans Act
,with regard to that particular
grant recipient.Mr . CH R YS LE R . Do you agree that the National Labor Relati on s
Boar?ought to spend $20 million on the T eamsters’ election next
year .
Mr . R E ICH . Under the National Labor RelationsM r . CH RYS LE R . Board— spend $20 million on the T eamsters ’ election for next year? Fu nd it.Mr. R E ICH. Well , if you’re referring to ensuring that labor elec
tions are fair and that they are undertaken according to law , thisi s an appropriation that— this is a responsibility that governmenthas maintained for decades , and it i s a responsibility that Cong resshas asked the Department of Labor to u n dertake .
Mr . CHR YS LE R . In 1 99 1 , they decided to do that. I guess I’d a p
pre cia te if you could provide to my offi ce a full accounting of anyand all the grants that the Labor Department provides to laborunion s
,public interest groups
,a National Endowment In Bemoe
racy . And also,I understand
,being on the Banking Committee ,
that the Labor Department also oversees pension funds .Mr . R E ICH . Let me make sure I understand the request. Did yousay National Endowment for Democracy, Congres sman?Mr. CHR YS LE R . Grants that the Labor Department provides to
labor u nions,public interest g roups , National Endowment for De
mocra cy and your oversight on the pension fu nds .Mr. R E ICH . An d with regard to oversight on pen sion funds , you
would like general information on the oversight of pension fun ds ,or how we administe r the oversight of pension funds?Mr . CHRYS LE R . Yes .Mr. R E ICH . Sure , we can get that to you .
31
Mr. CHRYS LE R . T hank you. I’
ve got to run to vote .
[T h e information referred to follows zlT r a n smitte d herewith is the in forma tion tha t wa s re qu ested con cern i n g gr a n ts tola bor u n ion s a n d pu blic in tere st grou ps in FY 1 994 from the Depa rtmen t of La bo r .
Plea se n ote tha t in FY 1 994 we did n ot provide a n y gra n ts to the N a tion a l En dowmen t for Democr a cy.
DISCRETIO NARY GRANTS
Ag ency. Ass is ta nt Secretary forPol icy—FY: 1 994
Gra ntee Amount Purpose
Esta bl ishment of No 80
Substa nce Abuse
In stitute
Georg e Mea nyCenter for Labor Studles, Inc.
US . DE PAR TM E N T O F LABO R—E M PLO YM E N T AN D T R A IN IN G ADM IN IST R AT IO N LIS T O F
CUR R E N T N O N -GO VE RN M E N T AL D ISCR ET IO N AR Y GRAN T S CO O PE R AT IVE AGR E EME N T S WIT H PUBLIC IN TE R E ST S GR O UPS AN D LABO R UN IO N S
S IN CE O CT O BE R 1 , 1 993
EconomicDislocation WorkerAdjustmentAct (EDWAAl—TechnicalAssista nce Tra in ing
Projects Funded Underthe Authority of Job Tra Ining Partners h ipAct (JTPA) Tulle IIIRECIPIENT NAME/PURPO SE
Huma n Resources Deve lopment Institute 0 1 -JUL-92 30-JUN-95
To soIIdIfy a worklng pa rtnersh lp among busmess, labor a nd government insupport of JIPA prog rams. Some speclflc actIvIties Include encourag inglabor involvement in the state and loca l counculs established under JTPAa nd framing of labor movement individua ls to be knowledgeable a nd ac
twomembers of the JTPA system.
U.S . Stee lworkers ofAmericaPla n n ing g ra nt (Pha se I) to conduct a survey to identify d islocated stee lworkers In four States who have , heretofore , not been served by ITPA a ndto deve lop a project pla n a nd programcoordlnatlon agreements to provideservices to these workers in Pha se II. Pha se II, if implemented will provideservices toworkers IdentIfied in Phase I.
lO—MAR-95 1 0-JUN-95
TECHNICALASSISTANCE ANDTRAINING (TAT)
Propels Funded Under the Authority of Job Tra in ing Partnersh lp Act (JTPA) Tit le IV Part 0RECIPIENT NAME/PURPO SE
Nationa l Association ofCountiesNationa l Con ference ofBlack MayorsNationa l Con ference of State Leg islaturesNatIona l Covemor’s Associatlon
US . Con ference of MayorsFunding for these gra nts to provIde contlnued support by these Publ ic Interest Groups (PIGs) to States. counties a nd cit Ies in carrying out the requirements ofJTPA. Th e ba sis of these g ra nts is in formation excha nge.
‘ Addniona l funds to be provided fromFY 1 994 dol la rs .
Also pa rtia l ly funded wit h EDWAA funds
1 5-MAY-93
l S-MAY-93
1 5-MAY! 93
1 5-MAY-93
1 5-MAY-93
30-APR-95
30-APR-95
30—APR-9530-APR-95
30 -APR-95
32
Pilot a nd Demonstration (P&D)Proiects Funded Under the Authority ofJob Tra ining Partners h ip Act (JIPA) Title IV Pa rt D
RECIPIENT NAMEJPURPO SE
South Ce ntra l Iowa Federation of LaborAFL—CIO l S-MAR-QS lB—MAR-QGProgramis desrg ned to l ink students with workers who ca n demon strate a rea listic viewof a cha l leng ing , satisfying , occupationa l ly diverse workplace .
Ce ntra l Iowa Bui ld ing a nd Construction Trades Council II-MAR-QS l I-SEP-97
To establ ish a Center for Adva nce Journeyma n Education to identify contempora ry ski l l sta nda rds for the mature journeyma n worker in the con struc
tion industry.
O CCUPAT IO N AL SAFE TY A N D HE ALT H ADM IN I S TR AT IO NT ARGE TE D T RA IN IN G PR O GR AM GRAN T S DE SC R IPT IO N FY 1 99 4
LUM BE RJACK R E S O UR CE CO N S E R V A T IO N AN D DE V E LO PM E N T CO UN CIL
Lumberj a ck spo n sors loggi n g safety tra in in g con du cted by the Forest In du stryS a fety a n d T ra in in g A llia n ce (PIS T A ). T his is a con tin u a tion of a n ea rlier gra n t progr am. T h e program provides ba s ic in -woo ds sa fety tra in in g, fol low-u p sa fety tra in in ga n d a dva n ced sa fety tra i n in g for loggers in Wiscon sin a n d other midwest sta te s .Cla ssroom session s on the importa n ce of sa fety a n d hea lth pro ams a re con du ctedfor loggin g employers . T wo tra in in g videos a re bein g developed u rin g the gra n t.CH ICAGO LAN D CO N S T R UCT I O N S AFE T Y CO UN CIL
T h i s gra n t program is developin g a n d will deliver tr a in ingon fa ll prote ction to
the con stru ction in du stry . T ra in in g ta rgets workers wh o n ee ba sic ha z a rd a wa ren ess tra in in g a n d su pervi sors a n d competen t person s . A tra in er's ma n u a l for bothsegmen ts is bein g developed a s well a s two videos a n d stu den t books . Awa ren esscou rses will be con du cte d in the Chic a rea a n d tr a in er cou rses wil l be con du cte din Chica go a n d throu ghou t the Un i ted ta tes .PAIN T E R S AN D ALLIE D T RADE S LABO R MAN AGE M E N T CO O PE RAT IO N
T h e Pa in ters a re deve lopin a l Z -hou r sa fety a n d hea lth cou rse for its members .In stru ctors will be tra in ed to e liver the cou rse , in clu din g S pa n i sh-spea kin g in stru ctors . T hese in stru ctors will provide tra in in g a t loca tion s a cross th e cou n try . In a ddition , modu les from the cou rse wil l be a da pted a s too lbox trai n i n g kits a n d distribu te d to sma ll pa in tin g con tra ctors for u se in tra in in g their employees .N AT I O N AL S AFE T Y CO UN CIL
T h e N a tion a l S a fety Cou n cil i s developin g a n d implemen tin g a two-da y comre h e n s ive sa fety a n d hea lth tra i n i n g cou rs e for employers a n d worker s in sma llbu s in esse s in the Chica go a rea . T ra in in g con ten t focu ses o n gen era l sa fety topics a swell a s specific O S H A sta n da rds tha t a ddres s the high ri sk expo su res of ta rgetedsma l l bu sin ess grou ps . Emph a s is is on employee “ in volvemen t in the sa fety a n d
hea lth program a n d u se of tra i n -the-tra in er a pproa ches. T h e Chica go Urba n Lea gu eis cc-spon so r in g the tra in in g.
ALICE H AM ILT O N O CCUPA T I O N AL H E ALT H CE N T E R
Alice Hami lton Occu p a tion a l Hea lth Cen ter wa s a wa rded a gra n t to a ssist sma l lbu sin ess in a n u mber of in du stries to develop sa fety a n d hea lth pro ms . A pro
g ram gu ide for esta blishin g a sa fety a n d hea lth program i s bein g pro u ce d for e a chi n du stry a n d will be sh a red with other bu sin esses . In a ddi tion , employers , la boru n ion loca l s, a n d others a re receivin g tra in in g a n d tech n ica l a ssista n ce .
AM E R ICAN FE DE RAT I O N O F S TA T E , CO UN T Y AN D M UN ICIPAL E M PLO YE E S (AFS CM E )
AFS CM E received a gra n t to develop a n d deliver tra in i n g on the lookou t/ta gou tsta n da rd to member s in vo lved with the repa ir a n d mai n ten a n ce of ma chin ery, pa rticu la rly those workin g with mech a n ica l , electrica l a n d flu id ha z a rdou s en ergysou rces . It is con du ctin g tra i n -the-tr a in er session a n d worker a wa ren ess session s . Apilot project will be con du cte d in Iowa u sin g a sta tewide fibe ro ptic commu n ica tio n ssystem to provide the worker a wa ren ess tr a i n in g to S ta te ma in ten a n ce workers .
33
O IL, CH E M ICAL AN D A T O M IC WO R IQ ZR S IN T E RN AT IO N AL UN IO NT h e gra n tee will con du ct, tra in i n g to improve u n dersta n din g a n d a pplica tion of there ce ss sa fety ma n eme n t sta n da rd by members a n d their employers . It is develop
i n g cu rr icu lum, a n wi ll tra in e x istin worker-tra in ers to tra in in process sa fetyma x
imr
ii e n t, con du ct tra in i n g, a n d pu li sh a process safety ma n a gemen t tra in in g
wor
UN IT E D BR O T H E RH O O D O F CARPE N T E RS H EALT H AN D S AFE T Y FUN D O FN O R T H AM E R ICA
T h e gra n tee is expa n din g the delivery of a n ex istin g e r on omic program for a ppren tices by tra in in g Un ited Brotherhood of Ca rpen ters (IIBC) a ppren ticeship instru ctors a n d bu sin ess a g en ts to deliver the program. T hese in dividu a ls will con du cttra in in g for a
ppren tices a n d jou rn eymen . T h e rogram will develo toolbox ta lks on
ergon omics a n
(pro
videthese to su pervi sors . he toolbox ta lks W i ll be a va il a ble in
both En glish a n S pa n ish . T h e program wil l be in corpora ted in to UBC’
s regu la r a ppren ticeship tra in in g.
LABO R E R S—AGO E DUCA T IO N AN D T RAIN IN G FUN D
T h e La borers -ACC, with techn ical a ssista n ce from the N a tion a l Con stru ctors’ A ssocia tion a n d the La borers ’ Hea lth a n d S a fety Fu n d of N orth America ,
is deve lo in ga core process sa fety ma n a gemen t cou rs e specifica lly for con tra ct em loye e s . AITrlra te d tra in in g fu n d in stru ctor sta ff will be tra in ed a s tra in ers a n d wil rovide process sa fet ma n a gemen t tra in in g to workers en ga ged in con stru ction a t a cilitie s ccvered by the process sa fety ma n a gemen t sta n da rd.
M AS SACH US E TT S CO ALIT IO N FO R O CCUPAT IO N AL S AFE T Y AN D H EALT H
(M a s sCO S I-I)M a s sCO S I-I, in con ju n ction with other CO S H grou s in N ew En gla n d, is providi n g
tra in in g in ergo n omics to clerical , con stru ction , h e a th ca re a n d in du stria l workers .Ergon omics specia l ists a re a ssistin g in developin g tra in in g cu rricu lums a n d ma te
r'i 8 . T here a re three types of tra in in g: tra in in g worker tra in ers , site -spe cifi c tra inin g , a n d gen era l tra i n in g. T h e la tter two a re offered in both En glish a n d S pa n ish .
Un ion loca ls recru it tra in ees a n d provide tra in in g sites .
O CCUPATIO NALSAFETY AND HEALTH ADMINISTRATIO N TARGETEDTRAINING PROGRAM GRANTS
FY 1 994
Gra ntees Start Date
Logg ing :
Lumberjack ResourcesConstruction :
Chica gola nd Con struction
Sma l l Business:Nationa l Sa fetyCouncil
Lockout:
Process Sa fety.
Un ited BrotherhoodErgonomics
0
Authority. Section ZIICI d the OSHA Act 1 970 (29 US C. 670]
Mr . SHAYS [presiding]. You have about how many minutes left?Mr. CHRYS LER . T wo and a h a lf.Mr. SHAYS . T wo and a half, and then they keep it open for two .
Now , that’s a compliment to you, Mr. Secreta ry, that this gen
34
tlema n would be willing to risk missing his vote to ask you questions . We’ve been doing a lot of running today .
T h egentlema n from Wisconsin , Mr. Barrett, you have the floor .
Mr AR R E T T . T hank you very much . As I was here the last time ,you were touching briefly on the recisions package . An d if youcould he] me a little bit, more specifically, I think you mentioneddi slocate workers , summer jobs . Obvious ly, this i s a time whenwe’re going to have to prioritize ; obviously , this is a time whenthere are going to be cuts . Which , to you, are the ones that youwould least like to see happen , and why?Mr. R E ICH . We ll, as I mentioned before, I think it a te rrible mis
take to make cuts in areas where people otherwise could be comemore productive . Now, the billion which were cut out of summer j obs , to me , i s a false economy , Congressma n , because theseyoun people—young teenagers in disadvantaged areas , disa dva ntage teenagers— ofte n they face a n implicit choice during the summer. T h ey are either going to be heading down a road toward workand jobs and education , or they’re going to be heading down a n
other road ; some of them are going to get into mischief.And why in the world would we wa nt to take money away fromopportunities for them to get jobs when they are willing and ableand eager to get a j ob . As I think I said before , last summer therewere two youn disadvantaged people seeking a job in the summerfor every '
oh 8 ct we had avai lable . An d now suddenly,we have
eliminate those jobs altogether. I frankly don’t understand it . Ithink that in this area of j ob training and work, generally , we aremaking the most im orta n t investment society can make in our future, in the ability o people to be productive .
Mr . BAR R E T T . I wasn’t in the hearings—what was the criticismof the program? Why was it chosen?Mr. R E ICH . Well , I apparently wasn’t in the hearings
,either
,be
cause the Appropriations Sub committee hearings that I attended,the i ssue never came up . T his i s one thing that surpri sed me somuch . If an Appropriati ons Committee or Subcommittee i s going toexercise the kind of jurisdiction that an authorization committeenormally exercises in effective] el iminating a program
,I would ex
pect at the very least, that e Secretary who is responsible forthat program would have be en given an opportunity to ta lk aboutthe benefits of that program . And there was not even that. T hi shappened
,I am told
,at 1 a .m.
,in the dead of night, without so
much as a question being asked of me as to the effectiveness of
that program .
Mr. BAR R E T T . What kind of j obs are these? I’m tryin to figureout where the criticism comes up . Are they make work jo 5?
Mr. R E ICH . T h e Inspector Ge neral , the GA O ,a separate con sult
ant firm called We sta ts , have all in recent ears—in the past 3years— looked at the summer jobs program . T hey have foun d thosej obs to be mea ningful work experiences for these youn people . In
fact, they have been very complimenta ry of the Labor epa rtme n tfor how we’re organizing that and how we tried to move those jobsinto a work and learning exper ience
,so that they were combined
with some education,in many instances
,for oung people who oth
e rwise lose the learning by September that they gained by June or
36
We combined those two into one committee of Congress . You -havej ob programs in the Department of Education ; you have job programs in the Department of La bor. It seems to me that what we’retalking about is that skill s matte r more than anything. el se for employment. An d you’ve made a very clear statement that income isrelated to education . An d so it ties in so neatly, to me , about thevalue of having these two departments closely coordinated
,if not
becoming one .
I know on can’t put things in little boxes,but I just wonder if
you can efabora te a little more on why it wouldn ’t be a good idea .
I mean,I could see a sin
gle department with you running it
,and
I would be ve comforta b e
Mr. R E ICH . ell,in that case
,Mr. Chairman—[L a u hten ] No , let
me—I don’t want to state once again the points I’ve a ready stated ,but let me add one additional point . T h e Education Department, asyou know, used to be part of HHS—it was the Department of
Health , Education , Welfare ; before that, the Education Departmentwas part of another department. T h e Labor Department startedout as part of the Commerce Department , or I should say , the Commerce Department started out as part of the Labor Department .T hese departments have moved from place to place . T here is alogi cal connection between Labor and Commerce . T here’s a logicalconnection between Education and Health and Human . Services .T here is , indeed , a logical connection between both of them and alot of what HUD does , with regard to communities and communitydevelopment in central cities .
Mr . SH AYS . You didn’t brin u pM r . R E ICH . M point
,if— Im sorry
,if I could just end the point
,
and that is on y that, conceptual] the—every department hassomething to do with most other dispa rtme n ts ; even the DefenseDepartment has a lot of training and education programs . We’vebeen workin very
,very closely with them . T h e question is , what
i s the centra mission of each of these departments?Mr. SHAYS . Right.Mr. R E ICH . And I would stipulate that there is something dif
fere n t about a central miss ion of a department of the Americanwork force— the Labor Department— in terms of adults , adult training, adult
°obs,adult work force development, adult j ob protection ;
and somet ing quite distinct between that and other departmentsand other mi ssion s . Although we work very closely with other dep a rtme n ts .
Mr . SH AYS . Let me just say,I think you make a very concrete
and strong case that while there are connections with a lot of differe n t departments
,your presenta tion could be given by the Edu
cation Department or by the Department of Labor. T hey are verymarried together.When I read the JT PA T itle 2C program for disa dva n ta ed
youth , it talks about the whole is sue of citizenship and skill s . atI’
m thinking is that we’re learning that education happens nowwhen you’re an adult
,whereas before
,you went to college and you
were done . An d we know the Department of Labor is getting involved in youth programs . So I just want to tell you that I am concepfi
u a lly very comfortable with the departments being put toget er .
37
What I’d love to suggest i s that maybe some members of the committe e could come and vi sit with you , on an informal basis . Wecould meet in your offi ce or wherever and have a dialog about howwe can do a better job of helping you with what you sa i s yourmost diff i cult challenge— this new world environment ; an how weca n make the Department of Labor really attuned to this new need .
Mr . R E ICH . I’
d be deli h ted,Mr Chairman . And let me add , if
I may,'ust one a ddition a point.
Mr . SHAYS . Sure .
Mr . R E ICH . One of the largest '
ob training pro ams in the Federal Government i s now the JO S program , a ministered out ofthe Department of HHS , not the Department of Education , not theDepartment of Labor. So there are cross-references
,there are
points of integration and collaboration that need to be undertakenetwe e n many departments .Also , when you said that wages are declin in for people at the
bottom,I want to make sure that for the re corg, I underscore the
equally troubl ing fact, and that is that wages are decl ining for theaverage worker . Median wages , in particular , continue to be undergreat stres s . And the early indication s are that between 1 993 and1 994 ,
median weekly earnings dropped once again . We are in a r e
cove ry ; the economy is showing every sign of continued buoyantg rowth . And yet median weekly earnings declined . T hi s should bea cause for alarm across this Nation .
We have to be passionate about j ob training and skill s .
Mr . SH AYS . Well , I think you have a— you’re in charge of a veryfascinating department with tremendous respon sibil ities . An d thiscommittee looks forward
,in particular
,to working with the people
who work with you . You’ve honored us with your presence today,
and we will be , I ’m sure , interacting with your top captain s andlieutenants during the next 2 years
,and we look forward to that.
Mr . R E ICH . Great. Well,thank you
,and I compliment you for
holding these hearings .[T h e prepared statement of Mr. Reich follows zl
PR E PAR E D S T AT E M E N T or R O BE RT R E ICH, S EC R E TARY or LABO RM r . Cha irma n a n d Distin gu ished Members of the S u bcommitte e :T ha n k you for this opportu n it to di scu ss the opera tion s a n d programs of the De
pa rtme n t of La bor . I welcome t e cha n ce to en ga ge in bi a rtisa n dia logu e on thecri tica l choices fa cin g u s in en su ri n g the best u ses of limite pu blic re sou rces .You r review cou ld n ot be more timely . T h e De a rtme n t h a s a lrea dy emba rked on
a n exten sive examin a tion a n d reorga n iz a tion 0 ou r programs a n d o ra tion s . Weha ve ma de sign ifica n t cha n ges to en su re grea ter a ccou n ta bility a n effi cien cy inwha t we do a n d h ow we do it.An d we ha ve ma de a commitmen t : to fu n d wha t works, to fix or elimin a te wha tdoes n ot, to improve workers’ prospects a n d, with them, the prospects for ou r cou n
try’s fu tu re .
Ba ckg rou n d
However , we ca n n ot examin e the Depa rtmen t’s prog rams a n d opera tion s in a va c
u um—they mu st be examin ed in the con text of the la rger forces tha t a re re sha pin gou r econ omy. Five yea rs from the tu rn of the cen tu ry, Amer ica is fa cin g en ormou schal len ges. We won the Co ld Wa r, bu t n ow stru ggle to fi n d a common pu rpose du rin g pea cetime . We hu rtled in to the a g e of i n forma tion , bu t n ow won der whether th ecommu n ica tion s revolu tion will bri n g u s together or on ly deepe n ou r division s . Wes aw ou r fu n damen ta l pri n ciples—democra cy a n d free ma rkets—a f firmed throu ghou tthe wor ld, yet we a re a n x iou s a bou t the resilien cy of America n va lu es here a t home .
T h e ba ckdrop—a n d in deed the root ca u se—of these cha l len ges a n d a n xieties ca nbe loca ted, I be lieve , in the fu n damen ta l shifts n ow takin g pla ce in the globa l econ
38
omy . We ha ve en tered a n e ra in which, in crea sin gly, skilled a n d well-e du ca tedworkers a re the on es wh o ca n expect to ca ptu re a growin g portion of the eco n omicga in s . N ew techn ologies a n d globa l competition ha ve rewritte n the ru les tha t governou r econ omic fu tu res. N ow more tha n ever , wha t on ea rn wil l depen d on wha t youlea rn . For those with the ri ght edu ca tion a n d ski 8
, thi s n ew econ omymea n s ri sin gwa ges a n d widen in g re spects . Bu t the wa ges of the rest of the workforce a re sta gn a tin g or sinkin g, a n their opportu n ities a re sh ri n kinT h e opera tion s a n d prog rams of the Depa rtmen t of
gLa bor mu st be scru tin iz ed in
th e light of the cen tra l cha llen ge ou r cou n try n ow fa ces : to re sto re America ’s middl ecla ss . If we a re to re store ou r heri ta ge of sh a red prosperity, Ame rica n workers n eedprotection in the workpla ce a n d every bit of a s sista n ce we ca n give them in a da ptin gto the n ew econ omy. A n d let me a s su re you tha t I a gree with those of you wh o al sos ay tha t America n s a re ri ghtly dema n din g tha t we provide for these n eeds a s e f ficie n tly a n d crea tively a s possible.Bu t on ly some Ameri ca n s sta n d rea dy to prosper in thi s n ew econ omy. T hese division s a ren ’t simply a threa t to the in comes of workin g Ameri ca n s; they a l so u n dermi n e ou r n a tion ’s eco n omic competitiven ess . Compa n ies a re discoveri n g tha t theirgloba l competitors ca n re plica te n ea r ly every elemen t of their opera tion , in clu din gma chin ery, techn ology , a n d sta te of the a rt roce s s e s . T h e on ly thin g tha t ca n ’t bedu lica te d a re America n workers—their ski ls , a bilities , a n d ca pa city to work tog efhe r . For corpora tion s a n d for n a tion s, a skilled workforce is the on ly en du rin gcompetitive a dva n ta ge .R ea p in g th e divid e n ds
O u r in vestmen t in Ameri ca ’s workforce over the pa st two yea rs is al rea dy pa yin gdividen ds . We a re experi en cin g a n u n preceden te d econ omic re covery which h a s cre
a ted million n ew jobs, the va st ma jority in the pri va te sector . At th e same time ,the deficit h a s been redu ced from $290 billion in 1 992 to $20 3 bil lion in 1 994 , to
a projected $ 1 93 bil lion this yea r . It i s expected tha t by 1 999, th e deficit wil l fal lto its lowest level a s a rce n ta g e of GDP sin ce 1 97 9 . T hese in dica tors demon stra te ,I believe, the con tin u e wisdom of redu cin g the deficit withou t ha pha z a rdly cu ttin
grog rams which ha ve proven to be effective in helpin g a ll America n s fi n d n ew a n
getter jobs— in clu din g disa dva n ta ged you th, disloca ted workers, a n d other grou ps inn eed ofjob tra in i n g a ssista n ce .
T hese in vestmen ts ha ve tra dition a lly been bipa rtisa n . Recogn iz in g the n eed to invest resou rces to promote lifelon g lea rn in g the l 0 3rd Con gress en a cted, with bipa rtis a n su pport , systems to en h a n ce
'
oh 0 portu n itie s for tho se en terin g the workforcea n d those seekin g n ew jobs . T h e h oolito -Work Opportu n ities Act promote s n a tio nwide in n ova tion s in you th a pren ticeships , which a re especia lly importa n t to lowin come kids wh o frequ en tly Ra ve little con ta ct with the job ma rket a n d often dropou t of schoo l . T h e crea tion of O n e -S to p Ca reer Cen ters is tr a n sformi n g the u n emloyme n t system in to a cu stomer-dr iven re employmen t system where sta te a n d loca l
r
fis titu tio
gs a re cu stomiz in g the design a n d opera tion of these opera tion s to meet
t e ir n e e s .T ra n sformin g Job T ra in in gT h e n ext ste p a lon g the pa th to re form the existin g a rra of job tra in in g programs— with their con fu sin requ iremen ts a n d bu rea u cra tic a rrie rs—is con ta in edin the A dmin istra tion ’s Mi dle Cla ss B ill of Rights proposa l . T his proposa l offersevery America n a cha n ce to lea rn the skill s n eeded to bu i ld a bette r fu tu re by u t
tin resou rces direct] in to workers’ ha n ds so they ca n ga in skill s a t the time, p a cea n in the ma n n er w ich ma kes sen se to them—a pla n very simila r to the O pera tionof the ori a ] C .I . B ill . T h e proposed n ew system focu ses on workers, job seekers,l a bor ma r e t in forma tion , sta te a n d loca l flexibility, pri va te sector pa rtn erships a n da ccou n ta bility. T h e G .I . B ill for Amer ica ’s Workers wil l repla ce the ou tmoded a n d
con fu s in ma z e of feder a l job tra in in g programs by con so lida tin g 7 0 job tra in in g programs . a n y of these existin g programs were design ed to a ddress a specific con cerna t a specific time bu t were n ever a lign ed with other programs.For a du lts, skill g ra n ts of u p to will be offered to low-in come a n d disloca ted workers. S ervices will be provided throu gh O n e -S top Ca reer Cen te rs offerin ge a sy a ccess to relia ble , u p-to -da te in forma tion o n where jobs exist, wha t skills a rein dema n d
,a n d the rforma n ce records of trai n in g in stitu tion s . For you th, re forms
sta rted u n der the hoo l-to Work 0 ortu n itie s Act will in te n sify. Work-ba sedlea rn in g will be in tegra ted with sch ooI a sed lea rn in g for high-ri sk you th. S econ dCha n ce
gra n ts will empower loca l in stitu tion s to ma n a ge resou rces to a ssist you th
likely to a ve the most di f ficu lties in ma kin g a su ccessfu l tra n sition in to sta ble employmen t a n d a ca reer pa th . Disa dva n ta ged you th n eed pra ctica l , effective opportu
39
n itie s throu gh a ccess to a lea rn in g framework offerin g the pro spects of so lid retu rn sin the form of jobs a n d higher ea rn in gs .Fa lse econ omies
However , I believe the recen t re sci ssio n of bil lion by the Hou se S u bcommitte eon Appropr ia tion s exhibits a disre ga rd for the n eed to ma i n ta in this su ccessfu l investmen t stra te T h e severe cu ts bein g pro po sed in progr ams tha t serve dis a dva nta g ed ou th a n a ddition a l re du ction s in tra i n in g pro grams for a du lts a n d disloca te workers will e limi n a te or seriou s
lyu n dermi n e ou r a bilit to provide for
America n s most in n eed of job tra in in g a n job sea rch a ssista n ce . Th e pro pose d re
scission s wil l a lso dama ge ou r a bility to en force the la ws tha t en su re worker pro teotion in the a re a s of sa fety a n d hea lth a n d la bor sta n da rds .We mu st re cogn i z e re a lity—be g in n in with the fa ct tha t a ll Ameri ca n s a re n ot
equ a lly well-po i sed to take a dva n ta ge 0 the opportu n ities in toda y’s econ omy. T h eu n employmen t r a te amon g this n a tion ’s you n g people, pa rticu la rly min ori ties , loomshigh a bove the overa ll u n emplo e n t r a te . T h e pro po sed re scission of su mmer jobfu n din g wil l ha ve deva sta tin g e ects on the mil lio n disa dva n taged you n g people,wh o will be den ied su mmer employmen t work experien ces a n d despera tely n eededin come . At a time when we a re extol lin g the ben efits of work over welfa re ,
theseri ori tie s mu st seem in com re h e n s ible to you n g people a n d their commu n ities .ta te s a n d mu n icipa l ities will
)
n ot on ly lose over $80 0 mil lion in direct fu n din g; theywi ll a l so su ffer a commen su ra te loss in co n sumer pu rcha sin g power .
S u ch decision s a re n ot on ly fa l se econ omies, they ru n directly con tra ry to ma instream America n con cern s, which evin ce a stron g n a tion a l commitmen t to a ssu rin ga ccess for Ameri ca n s to the skill s a n d job protection th a t a re in crea sin gly requ iredfor a pla ce in the middle-cla ss .S ome su ggest tha t edu ca tion a n d job tra in in g a re n ot federa l respo n sibilities, a n dthe so lu tion is to provide block gr a n ts to sta te s so the ma y determi n e h ow to in vestin worker tra in in g pro ams . Bu t the Ameri ca n pe0 p e a re n ot clamori n g for pu blicre sou rces to be diverte from on e bu rea u cra tic stru ctu re to a n other . T hey a re a skin gfor less bu rea u cra cy a n d more a ccou n ta bility.
R e in ve n tin g H ea lth a n d S a fetyJu st a s Ameri ca n s wh o a re rea dy to take respo n sibility to impro ve their own pro s
pects ca n expect the govern men t to su pport their efforts , so too ca n workers le ' tima te ly expect u s to en su re tha t their work la ces a re hea lthy
,sa fe
,a n d free rom
discr imi n a tion . Ma n y cri tics ha ve ta rgeted tIIe programs a n d regu la tion s of the O ccu p a tion al S a fety a n d Hea lth Admin istra tion a s a n example of a program gon ea wry— too ma n y complica ted, n on sen sica l, a n d overly in tru sive regu la tion s , a s wella s in compete n t a n d con fro n ta tion a l in spectors wh o focu s on fi n es ra ther tha n jobsa fety a n d complia n ce a ssista n ce . M a n horror stories a re be in g cite d to su pportthis position . Bu t they do n ot a ccord wit the fa cts .S in ce its crea tion in 1 97 0 , O sH A
’
s sta n da rds a n d en forcemen t pro grams ha vehelped to redu ce the workpla ce fa ta lity ra te by over 50% percen t a n d ma de s ig n ifica n t in ro a ds in redu cin workpla ce in ju ri es, pa rticu la rly in high-ri sk in du str ies likecon stru ction a n d ma n u a ctu ri n g . T h e record is clea r : sen sible sta n da rds ha ve ma dea differe n ce between life a n d dea th for ma n y Ameri ca n workers . For example :
1 » S tren gthen ed tren chin g ro te ction s ha ve redu ced fa ta lities byo Gra ig: ha n dlin g sta n da rd; ha ve helped cu t fa ta l ities by 58% a n d in ju ri es by
a n
0 Cotton du st sta n da rds in the textile in du stry ha ve drama tica lly redu ced“brown lu n ca ses from ca ses to a few hu n dred .
In a ddi tion , S H A in spection s ha ve helped make over workpla ces sa fer forn ea r ly two mi llion workin g Ameri ca n s .Every yea r , work-rela ted a cciden ts a n d il ln esses ta ke a n estima ted lives
a n d cost ou r e con om over $ 1 0 0 billion . We ha ve ma de sign ifica n t pro gress inrein ven tin g the wa y t a t O S H A doe s bu sin ess a n d we a re committed to con tin uto ma ke the n ecessa ry cha n ges to ma ximi z e the impa ct on worker sa fety. T heseforts in clu de :
o mea su rin g performa n ce by re a l im roveme n t in worker sa fety a n d hea lth,n ot th e n umbe r of in spection s con du cted
)
;0 simplifyin g or el imin a tin g ou tda ted, va gu e , con fl ictin g or du plica tive regu lation s ;
0 helpin g bu sin esses iden tify a n d a ba te ha z a rds,thro u gh te chn ica l a ssista n ce
free of cita tion s or fi n es ;o ta rgetin g the most da n gerou s workpl a ces a n d h a z a rds ; a n d0 recogn iz in g employers wh o ha ve excellen t sa fety a n d hea lth records, exemptin g them from gen era l in spection s .
4 0
O u r a chievemen ts in protectin g Ameri ca n workers ca n n ot be compromised bysla shin g resou rces a t ra n dom or impo sin g u n worka ble , ri gid ru le-ma kin g requ iremen ts withou t rega rd to sa vin g the lives of tho se tha t en tru st u s with protectin gtheir hea lth a n d welfa re .R e in ve n tin g DO L
T h e Depa rtmen t’s bu dget a n d pro gr am pri ori ties , su ch a s those I di scu ssed a bove,refl ect ou r commitmen t to rein ven tion . It s import a n t to reco e tha t the Depar tmen t’s em loyme n t levels ha ve fa l len from n ea rly in isca l Yea r 1 980 to a ppro xima te y ia Fisca l Yea r 1 993, a dro p of At the same time , U .S . employmen t h a s gro wn from 90 million to a p ro x ima te ly 1 25 mil lion . Bu t we’ve ma degrea t strides, n ot on ly in down siz in g the epa rtme n t—with n ea rly fewer em
p loyee s over two ea rs—bu t in ch a n gin g the wa y we do bu sin ess. When we sta rtedto ta ke a good, a rd look a t wha t we cou ld impro ve, we ma de some drama ticcha n ges . For example :
0 the Pen sion Ben efit Gu a r a n ty Corpora tion developed a n ew ro gram tha ten a bled them to fin d missin g n s ion be n e ficra ri es- pe op e en titled topen sion s they wou ld n ot ha ve tte n ot e rwis e .
0 O u t in the sta te of Wa s'
n g ton , the Depa rtmen t of La bor join ed forcesa cro ss a gen cy a n d sector lin es to make su re l a id-o ff Boein g A ircra ft employeesg ot the help they n eeded to fi n d n ew jobs . T h e on e -stop ca reer shop the pa rtn ersset u p on -site a t Boein g w a s u p a n d ru n n in g even before the compa n y la id off
people .
0 Beca u se people a n d commu n i ties fa cin g ba se closin gs a n d loss of employmen t ha ve en ou gh to con ten d with a s it is , they don ’t n eed lon g wa its, bu rea ucra tic re d ta pe , a n d u n certa in ty a bou t where to get help . S o we sen t in “swa tte ams” of job a ssista n ce cou n selors to commu n ities where mi lita ry ba ses wereschedu led to be closed, givin g people ra pid , on -the-spot respon se to their reemploymen t n eeds . La st yea r a lon e
,DOL helped a n estima ted workers
th rou h defen se co n version a n d diversifica tion efforts .0 e re a t DO L, we sa ved million n e t by reviewin g the rolls of federa lemployees on lon g-te rm workers’ compen sa tion . T hrou
gh su ch “periodic ro ll
r
z
n
ogba g eme n t,
" we expect to sa ve a n a ddition a l $230 mil ion from n ow thro u gh
We a ctively in itia ted rein ven tion efforts in ea ch of ou r program a rea s by focu sin gon h ow we cou ld improve existin g work processes so a s to more effectively serve th eAmerica n workforce . By focu sin g on improvin g cu stomer service , em weri n g em
ploye e s , cu ttin g re d ta pe , a n d ettin g ba ck to ba sics, the Depa rtmen t a s bee n a bleto u s e resou rces more fu lly wfiile a t the same time elimi n a tin g u n n ecessa ry processes a n d bu rden s .We ha ve levera ged limited federa l a n d sta te resou rces b formin federa l-sta te
pa rtn erships a n d ta rg
letin g in vestiga tion s . For example , the ta te of a in e h a d in ci
en ce ra tes of workp a ce in ju ri es a n d il ln ess th a t were 7 1 % grea ter tha n the n a
tion a l a vera ge . T hro u gh the u se of workers’ compen sa tion da ta , the 20 0 most da nge rou s workpla ces were iden tified a n d ea ch wa s a sked to coopera te with O S H A to
improve the ir workpla ce sa fety a n d hea lth pro ms . T h e va st ma jori ty of workpla ces pa rticipa ted in this ro g ram a n d ide n tifie over i n sta n ces of ha z a rds ,
with of these a lre a y elimin a ted. T his n u mber is more tha n twice the n umbe r of ha z a rds O S H A h a s cited du ri n g in spection s performed du ri n g the previcu s e i t yea rs .T h e epa rtme n t is a lre a dy a hea d of schedu le in rea chin g the N a tion al Perform
a n ce Review ta rgets of redu cin g the overa l l n u mber of employees a n d redirectin g resou rces from overhea d to fron t-lin e , cu stomer service po sition s . A cu mu l a tive redu etion of FT E h a s been a chieved throu gh FY 1 996 .
T h e Depa rtmen t is a ctively emba rkin g on the secon d pha se of the N a tion a l Pe rforma n ce Review . We a re closely reviewi n g ou r 0 ra tion s a n d se ekin to improvethe wa ys we ca ou t ou r va ri ed missio n s— a s wit ou r n ew a n d va ri e a ppro a chesto en su re the sgg ty a n d hea lth of America n s in the workpla ce . S imil a r ly, the S kil lGra n ts con ta i n ed in the propo sed G .I. B ill for Ameri ca ’s Workers wou ld tu rn overdecision s on job tra in in g to the cu stomers thems elves— Ameri ca n workers .T o complemen t ou r rein ven tion efforts, we a re reviewin g the ma n n er in which wepro mu lga te regu la tion s with a n eye to redu cin g or elimin a tin g u n n ecessa ry re lation s, a n d a doptin g differen t models for a chievi n g ou r regu la tory objectives wit a n
empha sis on min irn i z in federa l govern me n ta l i n tru sion . I ha ve a sked ea ch a gen ehe a d to review a n d e va u a te a ll existin g re g u la tion s to a ssess their impa ct on botemployers a n d employee s , a n d ta ke the n ecessa ry a ction s to improve the regu la torypro cess . O u r a n swer to a llega tion s of “
re gu l a tory-z ea l” by en forcemen t a gen cies isto weed ou t overly sp e cific a n d obso lete re gu la tion s, n ot to preven t those cha rged
with su ch workpla ce respo n sibilities a s sa fety a n d hea lth , from i ssu in g n ecessa ry,common sen se re gu la tion s .Is there stil l ro om for improveme n t? O f cou rse . T ha t’s why the Depa rtmen t ofLa bor is con tin u in g to en ga ge in a ri goro u s , methodica l review of its mi ss io n a n dopera tion s.T h is con clu des my prepa red rema rks . I wou ld be ha ppy to a n swer a n y qu estion s.
1 950 to 1 978
Rea l Family Income Growth By Q uintileBottom20% Secondm Middle 2075 Fourt hm Top 201
o o o o o o o o o oo o o o o
SOURCE Bureau of th e Census Depa rtment of Commerce . All da ta convened to 1 993 dolla rs .
1 979 to 1 993—Growing ApartRea l Family Income Growth By Quintile
Bottom20% Second 20% Mid d le 20% Fourth 20 1 .
e e e e e e e e e e e e e e e
SOURCE Burea u of th e Census, Department d Commerce All data converted to 1 993 dol lars .
4 8
U.S . DE PAR T M E N T O F LABO R R E IN VE N T IO N AN D S’I‘
R E AM LIN IN G
S tre amlin in —Progress on N a tion a l Performa n ce Review Go a l s of Redu cin g S ta ffLevels a n d Re ctin Resou rces to Fron t-Lin e a n d Cu stomer S ervice Position s
0 Em loyme n t own sin ce Ja n 1 993o ETEre du ction s exceed ta rgets in 1 993 a n d 1 9940 S en ior-level position s redu ced by 1 1 6 sin ce 1 9930 Hea dqu a rte rs position s redu ced 24 2 sin ce 1 9930 Con tro l po sition s re du ced by 9 1 sin ce 1 993
Rein ven tion H ig h li hts—Impro vemen ts in Cu stomer S ervice , EmployeeEmpowermen t, Cu ttin g ed T a pe Gettin g Ba ck to Ba sics0 Bu re a u of La bor S ta tistics Impro ves T imelin ess of CPI In forma tion0 Oce n a tion a l S a fet a n d Hea lth Admin istra tion ’s Ma in e 20 0 Pro gram0 Emp oyme n t a n d ra in i n g A dmin istra tion ’s Boein g R e -employmen t Pro ject0 Pen sion a n d Welfa re Ben efits A dmi n istra tion Ca se Pro cessin g Ba cklog R en ca d0 Of fice of Workers’ Compen sa tion Progr ams S treaml in es Its Cla ims Re viewPro cesse s
0 Pen sion Ben efit Gu a r a n ty Corpora tion ’s Missin g Pa rticipa n t Ou tre a ch Proamg r. S e ven “Hammer Awa rds from Vice-Pre siden t Gorch th e most to a n y a gen cy
Mr . SH AYS . Well,thank you for coming. And this hearing i s a d
jou rn ed.
[Whereupon , at p m ,the subcommittee was adj ourned
,sub
ject to the call of the Chain ][Additional information submitted for the hearing i s as follows .
Due to high pri nting costs this information can be found in subcommi ttee files ]1 . US . DOL FY 1 996 Bu dget Bri efi n g, Ma jor In itia tives .2. US . DOL FY '
1 996 Bu dget .3. CR S Report for Con g re ss, Job T ra in in g: Propo sed Rescission s .
O V ERS IGH T H EARIN G O N T H E DEPARTM EN T
O F LAB O R
TUE SDAY , APR IL 4 , 1 995
HO US E O F R E PR E S E N T AT IV E S ,
SUBCO M M I'I' T E E O N HUM AN R E S O UR CE S AN DIN T E R G O V E R N M E N T A L R E LAT IO N S ,
C O M M I T TE E O N GO V E R N M E N T R E FO R M AN D OV E R S IGHT,
Wa sh in g ton , DC.
T h e subcommitte e met,pursuant to notice
,at a .m.
,in room
224 7 , Rayburn House Office Building, Hon . Christopher Shays( chairman of the subcommitte e) presiding.
Present: Representa tives Shays,Souder
,Chrysler
,Scarborough
,
T owns , Barrett, and Green .
Staff present: La wrence J . Halloran,staff director and counsel ;
Chri stopher Allred,profess ional staff ; T homas M . Costa , cl erk ; Liz
Campbell,minority staff assis tant ; and Cheryl Phelps , minority
profes sional staff.
Mr. SHAYS . I would l ike to call this heari ng to order, to welcomeour witnesses , to welcome our ranking member, and to welcomeour guests as well .T h e purpose of today’s oversight hearing i s to examine 0 portties for cost savin 8 within the Department of Labor wit an emphasis on waste
,aud
,abuse
,and also mismanagement . We also
will discuss pos sible cost reductions through consolidation or elimination of a multitude of employment training programs .
T hi s is the second hearing we have had regarding the Department of Labor. T h e first heari ng was on March 9 ,
and our only witness then was Secretary of Labor Robert Reich . H i s te stimony included a di scussi on of DO L
’
s missi on s and his plans for stre amlinin
gthe Department.consider this a hearing on oversight that wi ll help this commit
tee begin to focus its time and attention on the Department of
Labor . We are going to try to get into specifics obviously, but weare goin to try to get a taste today of where we should focus ourtime a n energy . It i s very likely that we will call our first two witnesses back again when we then highlight one particular part thatwe want to focus in on .
We are anticipating hearing testimony about the Job T rainingPartnership Act. Accordin to the Offi ce of Inspector General
,the
JT PA program is vu ln e ra lfie to fraud and lacks accou ntability. Wealso anticipate focusing discussion on the T argeted Jobs T a x Credit, which offers tax incentives to corporations for hiring the di sadvantaged . I
’
m fascinate d by the nationwide audit of the progr am ,
( 4 9)
50
in which the IG found that 92 percent of those hired would havebeen employed regardles s of the prog ram .
So I °ust welcome our witnesses , and I know we will get intosome ot er areas as well and now would just ask for un animousconsent that all witnes ses’ statements be included in the record
,so
that you don’t have to read your testimony,that you can highlight
parts ; that Members’ statements can be included in the record aswell ; that we have -3 days to include all our information into therecord ; and I also—without ob
'
ection ,that wil l happen
,and I’ll just
call on our distinguished Mem er, Mr. T owns , the ranking memberof the committee .
[T h e prepared statement of Hon . Christopher Shays follows z]PR E PAR E D S T AT E M E N T O F H O N . CHR IST O PHE R S HAYS , A R E PR E S E N T AT IVE IN
CO N GR E S S FR O M T H E S T AT E O F CO N N E CT ICUTWelcome to a ll ou r witn esses . T h e u rpo s e of toda y’s oversight he a ri n g is to exam
in e opportu n i ties for cost sa vin gs witgin the De a rtme n t of La bor , with a n empha sison wa ste , fra u d, a bu se a n d misma n a gemen t .We will a lso discu ss po ssible cost redu ction thro u gh the con so lida tio n or elimi n a tion of a mu ltitu de of employmen ttra in in g pro g rams.T hi s is the secon d oversight hea rin g on DoL. I n the fi rst hea ri n g held M a rch 9 ,
ou r witn ess wa s the S ecreta ry of La bor , Robert Reich . H is testimon y in clu ded di scu s s ion of DoL
’
s mission a n d his pla n s for streaml in in g the de a rtme n t.T o he] the S u bcommittee a chieve the pu rpo se of toda y’s Ire a ri n
lg, ex rts from
both pu b ic a n d riva te or
ga n i z a tion s will testify. T hey in clu de : Do ’
s 0 Ice of th eIn spector Ge n era Ge n era Accou n tin g Of fice ; Urba n In stitu te ; a n d the In stitu te forPol icy S tu dies a t John s Hopkin s Un iversity . We a pprecia te the time, in terest a n drecommen da tion s of ea ch witn ess .We a n ticipa te hea rin te stimon abou t the Job T ra in in Pa rtn ership Act (JTPA ).
Accordin to DoL’
s O I the JT A pro gr am is vu ln e ra b e to fra u d a n d la cks a ccou n ta b
‘ ity . T h e IG a u ditors con tin u e to fi n d over-bill in g, fa lsifica tion of examscores a n d other a bu ses in the pro am.
As for a ccou n ta bilit a 1 993 IO a u dit of the JT PA T itle II—A ro am fou n d tha tof the pa rticipa n ts w 0 left the pro am
,on ] 53% obta in ed jogs (eff which a lmost
ha lf were a rd $5 a n hou r or less 1 4 % a c ieve d some “employa bility en ha n cemen ts ,” a n 33% received n o “employa bility e nh a n ceme n ts” or obta in ed a CDAn other issu e to be discu ssed is the T a r eted Jobs T a x Credit (T JT programwhich offers ta x in cen tives to co ra tion s or hiri n g the disa dva n ta ged. A n a tionwide a u dit of the pro gram by th e
r
FG fou n d tha t 92% of those hired wou ld ha ve beenemployed rega rdless of the ta x cre dit a n d in most ca ses emplo e rs sou ght to determi n e el igibility a fter they h a d decided to hire the employee . The ta x credit, the IGrepo rt sta tes , is a win dfa ll for employers a n d does n ot i n du ce hiri n g of the dis a dva nta ed.
Is a ws regu la tin g th e workpla ce a lso n eed to be examin ed. T h e GA O sta tes tha tthere a re 4 0 di ffere n t la ws a n d a mu ltitu de of DO L of fices esta blishin g regu la tion sfor the workpla ce . T h e GA O in terviewed bu si n esses a n d employees a n d fou n d tha tthe system is in ef ficien t , complica ted a n d difficu lt to u n dersta n d.
We will a lso di scu ss the a wa rdin g of n on compe titive, discretion a ry g ra n ts. A 1 994
GAO report sta tes tha t DO L a wa rded 1 34 su ch a n ts of or more to org a n iz a tion s other tha n sta te or loca l govern men ts u rin g the FY 9O —92 period . Ma n y of
those orga n i z a tion s ha ve been re ceivin g the same a wa rds for more tha n 25 yea rs.GAO n ote s tha t the n on competitive gra n ts ofte n ha ve high a dmin istra tive co sts a n dthere is limited oversight on h ow the mon ey is spe n t .T hese a re a few of the issu es the S u bcommittee will discu ss toda y . We look forwa rd to the testimon y of ou r pa n el ists .Mr . TO WN S . T hank you very much ,
Mr . Chairman . Let me thankyou for calling this hearing and al so say that I really appreciatethe fact that you have paid a lot of attention to these matters .It should be a g iven though that the purpose of the agency is to
foster, promote , and develop the welfare of the wage earner of theUnited States
, to improve their working condition s , and to advancetheir opportunity for profitable employment. T hat is not my lan
52
For exam le , we a ll kn ow tha t the o
pportu n ities a va i la ble to low-skilled workers
a re in ra pid)
declin e . Ma n u fa ctu ri n g a n pro du ction jobs which were on ce a wa g eea rn er’s leg u p in to the mi ddle-cla ss , a re movin g off-shore to low-wa ge econ omies .Ca n we a g re e tha t if we a re to stabil iz e a n d in crea se ou r middle-cla ss, this n a tion
mu st produ ce jobs a n d a workforce to fi ll them? Ca n we a gree tha t we ca n n ot getpeople off welfa re a n d in to jobs withou t effective job tra in in g prog rams? Ca n we a lsoa gree tha t if we a re to ma in ta in ou r competitive a dva n ta ge globa lly, we mu st retra in tha t workforce to meet the hi h e r skilled, high-wa ge job op rtu n it ie s?
T hen clea r ly, in itia tives tha t a itra rily cu t employmen t a ndx
ira in in g programsa re ill-a dvis ed a n d cou n te rprodu ctive , a n d shou ld be di sca rded.
M r. Cha irma n , I am con vin ced tha t the solu tion is ou t there somewhere , a n d I
am equ a l ly con vin ced tha t we mu st work together—Repu blica n s a n d Democr a ts, theCon gress a n d the a dmin i stra tion— to fi n d it . A fi rst step, however , mu st be to fi n dsome common gro u n d.
T owa rd tha t e n d, I look forwa rd to the testimon y of ou r witn esses a n d welcomea n y recommen da tion s they may ha ve .
PR E PAR E D S T AT E ME N T O F H O N . GE N E GR E E N , A R E PR E S E N T AT IVE IN CO N GR E S SFR O M T H E S T AT E O F T E X A S
T ha n k you , M r . Cha irma n . I a pprecia te the o portu n ity to dig deeper in to ea chfederal a gen cy a n d fi n d ou t h ow effective ou r edera ] programs tru ly a re . In thehea ri n gs we ha ve held thu s fa r, we h a ve n oted the overla p of severa l program within a gen cies a n d between them. N ot a ll the pro grams a re ru n effectively, a n d ma n yof them a re su bject to a bu se .
T h e key is to decide which programs mu st g o a n d which on es shou ld stay. S omepro gr ams ma y be effective beyon d the price ta g th a t they brin g a n d serve goa ls tha tshou ld be served. T wo programs in a rticu la r , the summer jobs program a n d theDa vis-Ba co n Act ma y be two of those liin ds of progr ams .
I believe we shou ld con sider which goa ls we wa n t to promote a n d wha t ma y bebest for society a s a who le a n d n ot ju st look a t n a rrow cri teri a su ch a s co st withou trecogn iz in g the con text in which these programs a re ta kin g pla ce .
ClI look forwa rd to explori n g these idea s with toda y’s pa n elists . T ha n k you , M r.
a i rma n .
Mr . SHAYS . I thank the gentleman .
Mr. Chrysler. Do you have a statement?Mr . CH RYS LE R . Yes
,Mr . Chairman , I appreciate this opportunity
to ask question s of this distin ish ed board .
You know,it is my belief t at the solutions that we are looking
for,certainly that my distingui shed colleagues ask for , should real
ly come from you , because you are the ones that are on the frontl ines of this is sue , you are the ones out there talking to these people and listening to their issues
,and they really do need to come
from you . However we need our Federal Departments of Govemment to come to these committe es and certainly come to Congresswith those solutions . T hey can say to everyone in Congress thatthis i s the way we need to conduct business
,these are the things
that we need to do to give the best service pos sible to our con stituents , our customers , and certainly this is the way we can do it inthe most cost-effective way.
So I believe that each and every hearin like this or each andevery year that you would come through wit more and better solutions and more cost-effective ways so that the Ameri can taxpayerscan get a better bang for their buck ,
we can get better solution sfor the people that truly need it
,and they really need to come from
you.
T hank you .
Mr . SHAYS . I thank the gentleman .
‘
53
T h e practice of th is committee is to swear in all of our witnesses ,and if all three of you would stand— I’m going to encourage you tostand as well . T hank you.
[Witnesses sworn .]Mr. SHAYS . Great. Nice to have you here .
Mr. Souder, do you have a statement you would like to make?Mr. S O UDE R . No , thank you ,
Mr . Chairman .
Mr . SH AYS . O K. It i s nice to have you here in the committee a n dhere today for the heari nWe are °
oin ed by Char es Masten , who is the Inspector Generalfor the US . De a rtme n t of Labor— it i s nice to have ou here—alsoClarence Cra ord who is the As sociate Director of du ca tion andEmployment with the GA O ’
s offi ce— and I find it interesting thatou combine education a n d labor— and we are also j oined by JoeFi sch , Assistant Inspector General . Nice to have you here as well .Gentlemen , it would probably be helpful for you to summarize
your testimony , but I do want to make sure though that we get thewhole gi st of your comments , so just feel free to give your testimony as you would like .
Mr . Masten , we wil l s tart with you.
S TATE M E N T O F CHAR LE S C . M AS'
I‘
E N , IN S PE CTO R GE N E R AL,US . DE PAR TM E N T O F LABO R , ACCO M PAN IE D BY JO E FIS CH,
AS S I S TAN T IN S PE CTO R GE N E R AL FO R AUDIT; AN D CLARE N CE C . CR AWFO RD , AS S O CIA TE DIR E CTO R , E DUCATI O NAN D E M PLO YM E N T I S S UE S , HE ALTH, E DUCATI O N , AN D
HUM A N S E R V ICE S DIV I S I O N , U.S . GE N E R AL A CCO UN TIN GO FFICE
Mr . MAS T E N . Good morn in T hank you,Mr . Chairman and
members of the subcommitte e .
gTh a n k you for inviting me to appear
before you in my capacity as Inspector Ge neral of the US . Department of Labor. I am accompanied by Mr. Fisch ,
as you stated,Mr.
Chairman . He is our As si stant Inspector Ge neral in charge of ourOffi ce ofAudit.Before I get into summarizing my statement
,I would l ike to
s tate for the record that my comments here will be in my ca pacityas the Inspector Ge neral and may not be the of ficial position of theDepartment of Labor.Mr . SH AYS . Is that intended as a joke?Mr. MA S T E N . No , no , that is not a joke . If you notice in my testi
mony, that is a comment I put on the record .
Mr . Chairma n,there is much di scussion at all levels on the need
to reform the employment a n d training system of which Job T raining Partnership Act
, JT PA ,i s the centerpiece . One of our main con
cerns with respect to JT PA i s that the Department still has not instituted outcomes-based performance measures to Show the returnon investment for the JT PA pro am . Although the current performa n ce measures have come a IOn g way since the earl days of
JT PA , they still do not get to the fundamental i ssues of ong-termeconomic self-sufficiency
,increased employment and earnings
,re
duction in welfare dependency,and increased educational attain
ment and occupational skill s as required b statute . Without suchmeasures , the effectivenes s of JT PA, whio received a fiscal year1 995 appropriation of over $5 bill ion , cannot be properly evaluated .
54
Another area of concern relates to the current discussion of' block
grants as a fu nding mechanism for a one-stop delivery system .
JT PA was amended in 1 992 to improve JT PA procurement as wellas program and cost accountability . T h e amendments were partia lly in response to problems and abuses identified by C IG audits .I am concerned that these reforms might be dimini shed or discontinn ed with a decentralized framework . T hus , we would recomme n d that in considering a block grant approach to j ob training,Congress ensure that the standards of accountability established bythe 1 992 amendments are preserved .
Another area where we have some concern is the consiste nt, rela tive ly low performance of a number of Job Corps Centers . We areof the opinion that this needs to be addressed before the programi s expanded . We are encouraged by the Job Corps management’srecent commitment to conduct, in conjunction with the O IG , a comprehensive review of the best and worst centers to identify factorscontributing to poor performance and to take corrective action . JobCorps has also significantly revi sed its performance standards fori ts cente rs in order to improve overall program performance .
Mr . Chairman ,as you may recall
,in my previous testimony be
fore thi s subcommittee last September, as a result of our findingsin a nationwide audit of the T argeted Job T a x Credit, t h e T JT Cprogram
,for the first time in the hi story of the O IG ,
my officecalled for the el imination of a program . Even though the ta x creditwas create d to encourage employers to hire members of hard to employ ta rget groups
,our audit determined that 92 percent of the in
dividu a ls in our sample would have been hired even without T JT C .
We also found that hiring decisions were typically made before anindividual’s T JT C elig ibility was determined . T h e Joint Committeeon T axation estimates that T JT C resulted in expenditures and lostFederal tax revenue of nearly $30 0 million in 1 994 alone .
While the program expired last December,we remain concerned
because,in the past
,the program has been allowed to expire
,but
then it has been reauthorized . We are of the opinion that the highcost and ineffectivenes s of thi s program place it squarely on the li stof programs that should be eliminated .
Mr . Chairman , as you may be aware, the Federal Employee Comp e n sa tion Act, FE CA ,
is the basic workers’ compensation programfor Federal and other covered employees . During fiscal year 1 994Federal agencies spent bill ion on compensation and $4 85 mill ion on medical benefits . Over the years our investigations have u ncovered many schemes by medical providers and claimants to defraud this program . T h e O IG i s of the opinion that real savingsmay be achieved by the Federal Government if both Federal agencies and DOL effectively monitor FE CA cases to detect and preventfraud both from claimants and providers .Mr. Chairman , in my full statement I also discuss our rec
omme n da tion s that E T A implement full cost recovery user chargesto make the Foreign Labor Certification Program self-susta iningand some concerns and recommendations related to discretionaryand noncompetitive grants
,and indirect costs charged to the Gov
e rnme n t by contractors and grantees .
55
Mr. Chairman,thi s concludes the summary of my oral statement
,
and Mr. Fi sch and I will answer any questions you or any memberof the subcommittee may have .
[T h e prepared sta tement of Mr. Masten follows z]PR E PAR E D S T AT E ME N T O F CHA R LE S C . M A S T E N , IN S PEC TO R GE N E R AL, US .
DE PAR TM E N T O F LABO R
Good morn in g, M r . Cha irma n a n d M embers of the S u bcommitte e . T ha n k you forin vitin g me to a p
ga r before you in my ca pa city a s In spector Gen era l of the US .
Depa rtmen t of La r (DO L). I am plea s ed to be here todayto a ddress the importa n t
topic of fi n din g wa ys to ma ximi z e ve rnme n t services w ile con ta i n i n g co sts . I ama ccompa n ied by M r . Jos eph Fisch, t e A ssista n t In spector Gen era l for Au dit .From the ou tset, I wish to empha s iz e tha t the views expre ssed toda y a re mi n e
a s the In spector Gen era l a n d ma y n ot be the officia l po sition of the Depa rtmen t .BACKGR O UN D
T h e Of fice of In spector Ge n era l ( O IG) wa s esta bli shed a t the US . Depa rtmen t ofLa bor by the In spe ctor Gen er a l Act ( IG Act) of 1 97 8 . O u r mi ssion is to provide in depen den t a n d objective oversight of the Depa rtmen t. We do this by con du ctin g a u ditsa n d in vesti a tion a of DOL ro g rams a n d opera tion s . We a l so con du ct crimin a l in ve sti a tion a re a ted to the in ffu e n ce of orga n iz ed crime a n d l a bor ra ckete eri n g in em
p oyee ben efi t pla n s , la bor-ma n a gemen t re la tion s a n d in tern a l u n ion a ffa irs .My of fice is in a u n i e po sition to offer views on wa ys to ma ximi z e services while
con ta in in g costs in DOT for two pr in ci 1 re a so n s . First, while I , a s I n spector Ge nera l , am u n der the broa d su pervisio n o the S ecre ta ry of La bor , the IO Act pre servesO lG
’
s in depen den ce from the Depa rtmen t. T his orga n iz a tion a l in depen den ce a llowsu s to pre se n t fa ir a n d impa rtia l con clu sion s a n d recommen da tion s on the e con omef ficien cy a n d effectiven ess of DOL pro grams a n d opera tion s . S econ d, the DOL O G“l ives” in the Depa rtmen t of La bor , a lon gs ide other de a rtme n ta l compon en ts ; thisgives u s a n in sider’s kn owledge of the Depa rtmen t’s wor in gs .It is from thi s du a l pers pective tha t I su ggest the fo l lowin g DOL pro grams a rea s
a n d a g en cies for ree xami n a tion . In doin g so, fu n ds po ten tia lly ca n be freed u p or
better u til iz ed to ca rry ou t the Depa rtme n t’s fu n damen ta l mission of servin g a n dpro te ctin g Ameri ca ’s workin g me n a n d wome n .
E MPLO YME N T AN D T RA IN IN G PR O G R AMSJob T ra in in g Pa rtn e rsh ip Act
T here is mu ch discu ssion a t a ll levels on the n eed to reform the employmen t a n dtra in in g system. Programs opera ted u n der the Job T ra in in g Pa rtn ership Act (JTPA),the cen te rpiece of the cu rre n t sys tem, serve a s a referen ce po in t for th e deba te .
M r . Cha irma n , on e of ou r ma in con cern s with re spect to JTPA , a n d which weha ve been reportin g sin ce 1 988 ,
is tha t E TA h a s still n ot in stitu ted ou tcomes-ba sede rforma n ce mea su re s to show the retu rn on in vestmen t for the JT PA pro m. T h e
T PA law itself pro vides tha t “it is esse n tia l tha t cri teria for mea su rin g t e re tu rnon in vestmen t be developed to be mea su red by lon g-te rm econ omic selfsu f ficien cy, in cre a sed em loyme n t a n d ea rn in gs, re du ctio n s in welfa re depen den cy,a n d in cre a sed edu ca tio n a l
)
a tta in men t a n d occu pa tio n a l skills ." A lth ou h the cu rren t
performa n ce mea su re s ha ve come a lon g wa y sin ce the ea rly days of J PA , they sti ll0 n ot get to the fu n da men ta l issu es of lon g-term econ omic self-su f ficie n cy , in
crea sed employmen t a n d ea rn in gs , redu ct io n s in welfa re depen den cy, a n d in crea sededu ca tion a l a tta inmen t a n d ocen a tion a l skill s, a s requ ired b la w . Withou t su chmea su res, the effectiven ess of J A , which re ceived a Fisca l e a r 1 995 a ppro pr iation of over $5 bill ion ,
ca n n ot be properly eva lu a ted .
An other a re a of con cern re la tes to the cu rre n t discu ssion of block gr a n ts a s a
fu n di n g mecha n i sm for a o n e -stop delivery system. T h e origin a l JTPA pro gram, althou gh n ot en a cted a s a block gra n t, wa s implemen ted with some block a n t principle s u n der the “
N ew Fede ra lism”of the ea rly 1 980 9 . T h e O IG is of t e opin ion
tha t ma n of the a ccou n ting
, procu re men t, complia n ce a n d performa n ce mea su remen t we n esses we ha ve i e n tifie d ma y , in pa rt, be a ttri bu ta ble to the wa y JT PAwa s implemen ted. Le t me cite ju st a few examples from ou r a u di t fin din gs over the
pa s t severa l yea rs perta in in g to the JT PA pro gram pri or to its bein g amen ded in992:
0 O u r Ma rch 1 993 a u dit re port on JT PA T itle I I—A Pro am O u tcomes forProgram Yea r 1 990 fou n d tha t, of the a rticipa n ts wh o left e program, 53 pe r
cen t obta in ed jobs (of which a lmost Ra lf were pa id hou rly wa ges of or
56
less); a n other 1 4 percen t a chieved some em 1 0 ability en ha n cemen ts (tha t is,tra in in g which provided a t lea st the pote n tiaqfdr fu tu re employmen t); a n d th erema in i n g 33 percen t did n ot obta in a job or a chieve a n em oy ability en h a n cemen t . We a lso fou n d tha t in dividu a ls with edu ca tion a l a n person a l ba rri ers ,su ch a s schoo l dropou ts , rson a with di sa bilities , a n d su bsta n ce a bu sers , wereu su a lly n ot a ssisted to t e same exte n t a s rs on s wh o la cked job skil ls , jobsea rch skill s a n d la bor ma rket in forma tion . e a u dit ra ised qu estion s a bou twhether JT PA wa s su fficien t] fu n ded to ca rry ou t its legisla tive ma n da te a n dwhether the program’s focu s ou ld be n a rro wed.
0 O u r Ma rch 1 992 report on Ken tu ck In du stria l In cen tives qu estion edmil lion of JTPA fu n ds expen ded b the ta te ofKen tu cky to su bsidiz e its in du stri a l developmen t rog
lram . T h e ta te reimbu rsed a portion of n orma l sta rt-u p
co sts in cu rred by the o ota Motor Co ra tion a n d the Bu dd Com a n to re
cru it a n d tra in in dividu 8 wh o were h ig ly qu a lified for the jobs a nswh’
o weren ot in n eed of JTPA a s sista n ce .
0 In a report i ssu ed in Ma rch 1 994 , we u e stion e d mi llion in Pro amYea rs 1 989 a n d 1 990 expen ditu res by the Klamo Con sort ium S DA . We i en tifi ed si ifi ca n t amou n ts spe n t on a ctivities tha t pro vided ma rgin a l, if a n y ,
ben efit to A pa rtici a n ts a s well a s u n n ecessa ry or u n documen ted costs for tra inin g a n d services . e con clu ded tha t the Con sortiu m’s ro blems were of su chma
gn itu de tha t we recommen ded tha t the Depa rtmen t t e steps to cla ssify the
S D a s a h igh-risk su bg ra n te e .
0 O u r M a rch 1 992 report on Compu ter Edu ca tion a l Equ ipmen t Usa ge in Florida qu estion ed over mi ll ion for compu ter equ ipmen t pu rcha sed with JT PAfu n ds by s ix Flori da S DA s . We determi n ed tha t 82 percen t of the u sers weren ot e
Alig
'
Ible for JT PA a n d JTPA wa s n ever compen sa ted for the costs of the n onu sers .
0 An other a u dit report i ssu ed in M a rch 1 992 qu estion ed a lmost in
u n wa rra n ted profits gen era ted throu gh the S ta te of Florida ’s la yeri n g of fixedu n it pri ce , performa n ce-ba sed con tra cts. We e s tion e d a n a ddition a lin u n su pported a dmin istra tive costs ch a rg edfiy a pri va te n on -
pro fit orga n iz ation .
Pa rtia l ly in re spon se to O IG fi n din gs , a s well a s su ggestion s by the sta te s themselves, a fte r 4 ea rs of pu blic a n d le
'
s la tive deba te , the Job T ra in in g Pa rtn ershipAct wa s amen ed in 1 992. T h e JTP Amen dmen ts in corpora ted stron g provision sto improve JT PA pro cu remen t a s well a s pro am a n d cost a ccou n ta bilit T h e fi n a lru le impleme n tin th e amen dmen ts wa s pu b ish ed S eptember 2, 1 994 ,
u t will n otbe effective u n til u n e 30 of this yea r . We be lieve th e amen dmen ts will sign ifica n tlyredu ce in ciden ts su ch a s those cited a bove . T hu s, I am con cern ed tha t these reforms,which took so lon g to be a chieved, might be dimin ished or discon tin u ed u n der a decen tra li z ed framework. Con sequ en tly, we wou ld recommen d tha t in con sideri n g a
block a n t a pproa ch to job tra in in g, Con gress en su res tha t the sta n da rds of a o
cou n ts il it esta blished by the 1 992 amen dmen ts a re preserved.
Essen tia y, M r. Cha irma n ,
the O IG believes services will n ot be ma ximiz ed, n or
co sts mi n imi z ed, withou t a va lid mea su remen t of retu rn on in vestmen t a n d a levelof a ccou n ta bility a dequ a te to en su re tha t the in vestmen t of pu blic mo n ies is sa fegu a rded a n d ju stified .
In a ddition to ou r a u dit work , over the yea rs my of fice h a s devoted sign ifica n t inve stig a tive re sou rces to detect a n d deter JT PA pro am fra u d . O u r in vesti a tion acon tin u e to di sclose seri ou s en demic pro blems , a s we 1 a s ou tright crimin a l sc emes,su ch a s bill in g for ghost a rticipa n ts , overbillin g or embez z lemen t by con su lta n tsa n d con tra ctors , fa lsifica tion of pa rticipa n t score s , a n d/or a bu ses by bro kers a n dother middlemen . For example :
0 We con du cted a cr imin a l in vesti a tion of Q u a l ity Plu s , a n A tla n ta secreta ria l school , in which we determin ed t a t opera tors a n d in stru ctors were pro vidinfl a n swers or fa bri ca tin g test scores for JT PA pa rticipa n ts a n d fra u du len tly
co cetin g JTPA fu n ds . Ka thleen Ba con Miller pled gu ilty to cha r 3 of theft a n dembez z lemen t cha rges. B a ra k Miller pled gu ilty to two cou n ts 0 embe z z lemen t .T hey a re awa itin g sen ten cin g, while a third defen da n t is awa itin g tria l . T h ecrimin a l in vestiga tion a lso iden tified a re a s of rogram mi sma n a gemen t . A S e ptember 1 993 a u dit of this co n tra ctor resu lte in a lmost bein g qu estion ed, prima rily du e to progr am mi sma n a gemen t a n d other irre
gpla ritie s .
0 We a lso con du cted a n in vestiga tion of N ew York’s Project R e cu n d a n d seve ra ] of its su bcon tra cto rs . Opera ted by the N a tion a l A ssocia tio n for the Adva n cemen t of Co lored People
,Project Rebou n d served a s a ma jor JTPA on -the
job tra in in broker for ma n y yea rs a n d received mu lti-million do lla r JT PA con
tra cts to i en tify a n d pla ce in dividu a ls in O JT position s in the N ew York Citya re a . O u r in vestiga tion fou n d tha t Pro ject Rebou n d execu tives a n d pla cemen t
57
cou n selors fa ls ifi ed pa rtici a n t pla cemen t a n d re te n tion reco rds to fra u du len tlyobta in some in T PA program fu n ds . T h e seven defe n da n ts in thisca se , in clu din g thre e su bco n tra cto rs , in dividu a l ly pled gu ilty to n u merou s Federa l cha rges .
0 A n other in vestiga tion , con du cted jo i n t] with the In tern a l R even u e S ervice,fou n d tha t the former JT PA Director of t e S ou th Ca ro lin a Govern or's Of fice
,
I shma el M . Ho lley, con spired with James E . Den n i s, a mu lti-mi ll ion dol la rJT PA co n tra cto r a n d Robert E . S cott, Jr ., Den n is’ Com tro ller, to a cce t pa ymen ts to in flu en ce bu sin es s tra n s action s a ffectin g JT PA
)
con tra cts . Hol ey a n d
Den n is led gu ilty to these cha rges. S cott pled ilty to mi sa pplica tion of JT PAfu n ds . They were sen ten ced to va r iou s te rms 0 in ca rc era tion ,
home deten tion ,
a n d pro ba tron . In a ddition , Ho lley wa s ordered to pa y in restitu tion a n da fin e . T h e in vestiga tio n iden tified a proxima tely in misa ppliedJT PA mon ies. In a dditio n , ou r Of fice of u dit qu estion ed over $3 millron incosts .
N eedless to s a y , M r . Cha irma n , the O IG is of the opin ion th a t, in this era of di
mi n i sh i n re sou rc es,it is vita l ly import a n t tha t a ll Federa l , S ta te , a n d Lo ca l a gen
cies in vo ved in the a dmi n istra tion of the JT PA pro gram exert lea dersh ip, in a con
ge tt
eid(effortto en su re tha t JT PA resou rces a re n ot misma n a ged, squ a n dered, or de
ra u eT h e Job Corp s Prog ra mAn other a rea where we ha ve h a d some con cern s is the Job Corps Pro gram. T h e
Job Corps Pro gram wa s crea ted 30 yea rs a o a s a residen tia l edu ca tion a n d tra i n in gro gram to a ssist disa dva n ta d you th to i e more employa ble , ro du ctive citiz en s .t is a u thori z ed u n der T itle of the JT PA a n d fu n ded a t over 1 billion pe r yea r .
T h e Job Corps ca n be a n importa n t too l in helpin g disa dva n ta ged you n g me n a n dwomen to tu rn their lives a ro u n d a n d in cre a s e their eco n omic ea rn in g power . T his'
m rta n t mi ssion,cou pled with its cost
, makes en su ri n g the pro gram’s su ccess vi1
ta
Tyui‘mporta n t.u g h con ss ion a l te s timon y a n d O IG a u dit reports, In of fice h a s ca lled a t
ten tion to c ets of in effectiven ess” within the Job Co 3 gra m th a t n eed tobe a ddre s se by DOL before it con tin u es to seek to e x pa n the rogram with a ddition a l cen te rs . O n e of th e mo st importa n t a rea s tha t we h a ve i e n tifi ed in ou r a u
dits a s u irin g a tten tion h a s been the con siste n t , rela tively low performa n ce of an umbe r
r
gfce n te rs . Usin g Job Corps’ own da ta ,the O IG h a s reviewed the in dividu a l
performa n ce of Job Co 8 Cen ters n a tion wide sin ce 1 98 7 . B a sed on severa l performa n ce in dica tors , the 0 ] h a s ra n ked the cen ters a ccordin g to their overa l l rforma n ce . While a sign ifica n t n u mber of ce n te rs ha ve su sta in ed performa n ce a ove then a tion a l a vera ge in a ll or most of the pe rforma n ce in dica to rs , there a re a n umberof cen te rs th a t con sisten tly perform below th e n a tion a l a vera ges . T h e O IG h a s fou n dth a t, for the most pa rt , th e bottom-ra n ked ce n ters pl a ce a sma ller ro portion oftheir stu den ts u po n termin a tion , a ssist fewer stu den ts in obta in in t e ir GED or
in a chievi n g lea rn in g ga in s, ha ve fewer stu den ts wh o complete t e ir voca tion a ltra in in g, a n d ha ve h igher ra tes of stu den ts wh o ha ve termin a ted the pro gr am bu twhose sta tu s is u n kn own .
Beca u se of this wide va ria bil ity in cen ter performa n ce a n in dividu a l stu den t’scha n ce to su cceed ma y come down to “the lu ck of the dra w . We n eed to en su re th a tevery stu den t wh o en ters the Job Corps Pro gram h a s a n equ a l opportu n ity to su c
ce e d, rega rdless of which cen ter he or she a tten ds .I believe th a t these pro blems mu st be re solved before a n y fu n ds a re spe n t on
open i n g n ew Job Corps cen ters . We a re en cou ra ged by Job Corps ma n a geme n t’s recen t commitmen t to con du ct
, in co n ju n ction with the O IG, a comprehen sive reviewof the best a n d worst cen ters to ide n tify fa ctors co n tri bu tin g to or performa n ceto ta ke correct ive a ction s . Job Corps h a s a l so sign ifica n tly revis ed
x
its performa n cesta n da rds for its cen ters in order to impro ve overa ll prog ra m performa n ce . T h e O IGwill con tin u e to mon itor these developmen ts a n d report on Job Corps’ pro gress , pa rticu la rly a s expa n sion of the pro gram i s co n sidered.
T a rg eted Jobs T a x Credit Prog r a mM r . Cha irma n , a s you ma y reca ll from my pre viou s testimon y before this S u b
committee la st S eptember, a s a resu lt of ou r fi n di n gs in a n a tion wide a u dit of theT a r eted Jobs T a x Credit (T JT C) Progr am, for the fi rst time in the history of theDO IG my office ca l led for the el imin a tion of a program.
T h e T JT C program wa s en a cted in 1 97 8 to en cou ra ge bu sin esses to hire membersof ha rd-to o emplo ta rget g rou ps—predomin a n t] the econ omica l ly disa dva n ta gedin excha n ge for e de ral ta x cre di ts . We a u dite T JT C to dete rmin e if the pro ami s a n effective a n d eco n omica l mea n s of helpi n g the ta rget grou p members 0 ta in
58
jobs. T h e O IG fou n d tha t the grea t mafority of em loyers ma de their hiri n g deci
sion s even before dete rmin in g a n in divi u a l’
s e ligibi ity for T JT C . We pro jected tha t92 percen t of th e in dividu a l s for whom employers cou ld ha ve cla imed a credit wou ldha ve been hired even withou t T JT C . In other words
,a lth ou h T JT C wa s in ten ded
a s a hirin g in cen tive, the ta x credit ca u sed the employmen t 0 ta r
get grou p members
in on
ly8 perc en t of the ca ses . I n a ddition , we estima ted tha t t e program’s co sts
e x ce e ed its ben efi ts by over $234 million over a 1 -yea r period, resumin g eco n omicben efits of ju st 37 cen ts for ea ch dol la r of spe n di n g a n d foregon e ta x re ven u es .O u r a u di t fou n d T JT C °
obs were la rgely en try-level , pa rt -time, low-pa yin g,low
skilled po sition s . We fou n d1tha t :
0 T JT C employmen t in clu ded jobs su ch a s fry cooks , order takers, wa iters/wa itresses , ca shiers reta il clerks a n d ma ids/
‘
a n ito rs—the same types of jobs individu a ls held both before a n d a fter their T J C emplo men t °
o T JT C pa rt icipa n ts’ sta rtin g hou rly wa ges a vera ge o n ly
1
o 1 of 3 employees wa s pa id n o more tha n the min imum wa ge requ ired byaw ;o 2 of 3 employees worked pa rt-time ; a n d0 2 of 3 employees were n ot offered a n y fri n ge benefits .
T h e da ta in dica te s tha t T JT C employmen t wa s u su a lly in jobs for which n o specia l qu a lifi ca tion s were n eeded or for which a pplica n ts a lrea dy possessed requ isiteskills . We a lso fou n d tha t T JT C-covered employmen t wa s the fi rst job for on ly 1 3percen t of the in dividu a ls we sampled .
T h e Join t Committee on T a x a tion estima ted tha t T JT C resu lte d in expen ditu resa n d lost federa l ta x re ven u es of n ea rly $30 0 million in 1 994 a lon e . Despite this su bs ta n tia l cost
,ou r resu lts led u s to con clu de tha t T JT C is n othin g more tha n a win d
fa l l to employers . Accordin gly, we recommen ded the S ecreta ry en cou ra ge Con gressn ot to ren ew T JT C a fter its ex ira tion on December 31 , 1 994 .
In a ddition to ou r a u dit wor we ha ve a lso con du cted severa l crimi n a l in vestigation s in which we ha ve ide n tified fra u d in the pro am, pa rticu la rly fa lsifica tion ofeligibility documen ts by con tra ctors . We ha ve fou n tha t a t times con tra ctors wou ldimperson a te pa rticipa n ts in te lephon e in terviews with sta te employmen t secu ri tya gen cies, a n d fa lsify a n d su bmit docu men ts to the Govern men t withou t the pa rticipa n ts ’ kn owledge .
While the pro g ram expired December 31 , 1 994 ,we rema in con cern ed beca u se , in
th e pa st, the ro gram h a s been a l lowed to ex ire,bu t h a s then bee n re a u thori z ed
re troa ctively . e a re of the opin ion tha t the ig h cost a n d in effectiven ess of thi spro gram pl a ce it squ a rely o n the li st of programs tha t shou ld be el imin a ted .
ALIE N C E RT IFICAT IO N US E R FE E S
T h e Office of In spector Gen era l a l so h a s a lon g-sta n din g con cern tha t the Employmen t a n d T ra in in g Admi n istra tion i s n ot imposin g su fficie n t u ser fees for processin ga n d issu in g la bor certifica tion s for foreign workers . In a Ja n u a ry 1 99 1 O IG a u ditreport, we recommen ded tha t E T A i n stitu te fu ll cost-recove u ser cha rge s for al lforeign la bor cert ifica tion programs . Federa l a gen cies ca n imp eme n t fu l l cost racove ry u ser cha rges b a dmin istra tive a ction . We estima ted a t the time tha t costs of$ 1 0 0 mi ll ion cou ld e re covered over a 3-yea r period throu gh collection of fees fromem loyers requ estin g la bor certifica tion s from E TA . A lthou gh E TA a greed in pri ncip e with ou r recommen da tion , n o a ction h a s been taken to da te . More over , sin ceou r a u dit, E T A h a s a ssu med respo n sibility for a dmin isteri n g severa l a ddition a lla bor certifica tion programs .
We con tin u e to believe E T A shou ld implemen t cost-re cove u ser cha rges to ma kethe foreign la bor certifica tion pro gr am self-su sta in in g a n d s ift the co st to its prima ry be n e ficia ry—the employer .
T h e O IG h a s recen tly i n itia ted a n a u dit to determi n e the effectiven ess of E T A ’
s
a dmin istra tion of its foreign la bor certifica tion a n d a ttesta tio n progr ams . We expectto re port ou r resu lts la ter this yea r .
N AT IO N A L D IS CR ET IO N ARY AN D N O N CO MPET IT IVE GRAN T SA s you kn ow, M r . Cha irma n
,DOL a gen cies fu n d n umero u s discretion a ry g ra n ts,
con tr a cts a n d stu dies in the cou r se of ca rryin g ou t their pro gram respon sibil ities .In some ca ses
,the a wa rd pro gram itself ma y be a t the discretion of the S ecreta ry.
I n other ca ses, there ma y be some discretion in h ow the program i s ca rri ed ou t . For
example , the JT PA le‘
s la tio n permits— bu t does n ot requ ire—the S ecreta ry to
ma ke gra n ts to n a tion s orga n iz a tion s a n d pu blic in te rest grou ps tha t h a ve specia le x pe rtrs e in a dmi n i steri n g employmen t a n d tra in in g programs . Pa rt of this mon eyis u sed for E T A ’
s Pa rtn e rsh i g ra n ts . . A la rge portion of these gra n ts a re a wa rdedon a sole sou rce ba sis, with t e ba la n ce a wa rded competitively to commu n ity-ba sed
60
cen ta e cou ld be in dexed to the type a n d siz e of the a wa rdee . S u ch a n a pproa chwou l simplify a n d redu ce th e a dmin istra tive bu rden a ssocia ted with determi n in gin direct co sts , a t the same time a l lowin g recipien ts to recover n on -direct costs a pplied to a Federa l project .
FE DE R AL EMPLO YE E S ’ CO M PE N SAT IO N ACT PR O GRAMM r . Cha irma n , a s you may be a wa re , the Federa l Employees’ Compen sa tion Act
(FE CA) is th e ba sic workers’ compe n sa tion pro gram tha t a
ys ben efits to Federa l
employees a n d certa in other covered workers wh o in cu r disa i ity or disea se th rou ghou -the-job in ju ry or exposu re . Du rin g FY 1 994 , Federa l a n cie s spen t over bill ion on compen sa tion a n d $4 8 5 million on medica l ben e Its . O u r in vest iga tive focu sin the FE CA pro m ca n be divided in to two a re a s of con cen tra tion : medica l provider fra u d a n d c a ima n t fra u d . Over the yea rs , ou r in vesti a tion s ha ve u n covere dma n y schemes where doctors , cli n ics, pha rma cists , physica l t e ra pists , medica l techn icia n s , a n d pro viders ofmedical e ipme n t ha ve billed the govern men t for servicestha t were n ot ren dere d, fi led mu ltiple bills for the same procedu re , billed for n on
exi sten t illn esses or in ju ri es, or overcha rged for services . For example:0 A recen t in vesti a tion resu lted rn a T exa s physicia n , Dr . Ea r l M . S te n ger ,plea din g gu ilty to su mi ttin g fa lse billin
gs for services n ever ren dered. O u r n u
de rcove r a gen t, sin g a s a pa tien t, to] the doctor she n eeded time off fromwork for person a re a son s . T h e doctor h a d ou r a gen t retu rn to his office peri odica l ly over a peri od of a few mon ths . At e a ch vis rt, he billed the FE CA programfor services su ch a s physica l thera py, biofeedba ck or family cou n se llin eventhou gh n on e of these services were a ctu a lly provided. He i s schedu led to s e n
te n ce d this mon th .
0 In a n other ca se, a registered physica l thera pist a n d his wife, Le on a r d a n dKa thleen V ig lia tore , pled gu ilt to con spira cy a n d ma i l fra u d, re spectively, ina scheme where they defra u de the Depa rtmen t b su bmittin g frau du len t billsfor trea tmen t tha t wa s n ever re n dered to FE CA cIEima n ts . T h e defen da n ts rece ived a pproxima tely million a s resu lt of the scheme . Ka thleen V ig lia to rewa s sen ten ced to 24 mon ths of proba tion . Leon a rd V ig lia tore wa s sen ten ced to27 mon ths in prison a n d 36 mon ths of proba tion , a n d ordered to make restitution ofWith re spect to cla ima n ts , we gen era lly fin d two t pes of FE CA fra u d—e itherwhere th e a ctu a l in ju ry bein g cla imed is fa l sified or w e re the cla ima n t is in ju red,recovers , a n d then co n cea l s or fa ls ifie s n on -in ju ry in forma tio n , pa rticu la r ly u n re
ported in come , tha t cou ld redu ce or term in a te ben efi t pa ymen ts . For example :0 Followin a join t in vestiga tion with the FBI, a former T rea su ry employee,B illy Clem a e , wa s con victed in a scheme to defra u d the FE CA pro am. Hetried to fu rther the scheme by a tte m tin g to hire a n in dividu a l to mu er a keywitn ess, wh o h a d in forma tion tha t s e wa s n ot tota l] di sa bled a n d wa s , infa ct , own er of fou r differen t corpora tion s while fra u u le n tly receivin g over
in FE CA ben efits . He wa s sen ten ced to over 1 2 yea rs in pri so n a n d
3 yea rs of pro ba tion , a n d fi n ed0 A former N a vy em loyee, Robert V . S u ttle , wh o su sta in ed a ba ck in ju ry in
1 97 1 , pled gu ilt a fter Ee in g cha rged with su bmittin g fa l se sta temen ts to fra u du le n tly obta i n E CA ben efits . O u r in vestiga tion fou n d tha t, from 1 980 throu gh1 994 , S u ttle worked a s a re a l esta te a e n t withou t reportin g his employmen t .Followin g his
gu ilty plea to ma il fra u d, e wa s sen te n ced to 1 4 mon ths in pri son
a n d 3 yea rs 0 proba tion . He a g reed to pa y restitu tion of a n d pa y a
fi n e ofIn a ddition to ou r in vestiga tive effort s , my office h a s coordin a ted with members
of the IG commu n ity by providin g tra in in g a n d techn ica l a dvice on con du ctin gFE CA fra u d in vestiga tion s . Moreover , du rin g the l 0 3rd Legi sla tive S ession , weworked clo sely with the Con gress a n d the Depa rtme n t to su ccessfu l] secu re p a ssa ge of legisla tion tha t deters fra u d a n d a bu se of th e FE CA rog ram. e le '
a la tionra rsed the viola tion of the FE CA fra u d sta tu te from a mis eme a n or to a e lon y . Ita l so a u thori z ed th e Depa rtmen t to perma n en tly termin a te the ben efits of a n yon econ victed of de fra u di n
fih e program.
T h e O IG h a s a l so e n le a din g a review by the IG commu n ity to determin ewhether Feder a l employin g a g e n cre s a re efficien tly a n d effectively ma n a gin g theirworkers’ compen sa tion re spon sibilities u n der FE CA . A s a resu lt of ou r fin din gs a t
the Depa rtmen t of La bor , we ha ve stimu l a ted in terest in the IG commu n ity to a u dittheir a gen cies’ FE CA pro grams which, a s I men tion ed ea rl ier , co l lectively a ccou n t
for bil lion s of do lla rs in a ppro ri a te d fu n ds .T h e O IG is of the O pin ion a t rea l sa vin gs may be a chieved by the Federa l Gov
e rnme n t if both the a gen cies a n d DOL effectively mon ito r FE CA ca ses to dete ct a n d
6 1
pre ven t fra u d, both from cla ima n ts a n d providers . We a lso believe a gen cies n eed toen su re th a t a ble employees a re re sumed to work a s soon a s po ssible , I n clu din g mak
ingia
rra n g eme n ts for pa rt-time or l ight du ty employmen t.Cha irma n , this co n clu des my pre
tppre d sta temen t . M r . Fisch a n d I wou ld be
plea sed to a n swer a n y qu estion s you or e other S u bcommittee members ma y ha ve .
Mr . SHAYS . I thank the gentleman . We will wait for questionsand hear from Mr. Crawford .
Mr . CR AWFO R D . Good morning, Mr. Chairman and members ofthe subcommittee . We are pleased to be here today to discuss waysto make labor a less costly , more effective agency.
Over the years the Labor Department has contributed much tothe qualit of life of American workers . However , the ever in crea sing rate 0 change in the e con om has presented new demands andchallenges in the way the Federa Government carries out its worker protecti on a n d work force deve lo ment res on s ib ilitie s , leadingmany to ask three questions about t e Federa role
,and I think it
also addresses some of the concerns that ou and Mr. T owns hadmentioned
,and these three questions are : at should the Federal
role be in e n su rin worker protection and work force deve lo ment?How can the role e carried out in a less costly manner an at thesame time enhance U.S . competitivenes s? And , No . 3: What shouldbe the Labor Department’s role in this process?Thrrn in your attention to our big board
,the workplace regula
tion boar there are 26 statutes and Executive orders that coverworkplace re lation . T h e ones that labor has re spon sibilit are inblack
,and E O C has the next hi hest number , four, whio are in
the blue color. T h e interesting t ing to note here— and we wil lcome back to itM r . SHAYS . Could the gentleman just tel l me—I’m not color
blind on said blue?Mr . R AWFO R D . Blue or violet or whatever.Mr. SH AYS . O K.
Mr . CR AWFO R D . I’
m not very good a t— I know that it i s differentthan black .
Mr. SH AYS . O K. Well , we will struggle with this .Mr. CR AWFO R D . O KJust as in the multiple employment training area where we iden
tifi ed a number of different players involved in the issue , when youl ook at the average employer in this country , the are covered byabout nine statute s and there are eight agencies t at they have todeal with in the workplace regulation issue. If you look at an organ iz a tion l ike OSHA
,i t has about enforcement employees and
in
bt
l'
ie neighborhood of 1 0 0 field locations to carry out thi s re spons i i ity .
Based on our study in 1 994 ,employers and workers told us that
they e n era lly supported workplace regulation and they thoughtthat t ere were benefits to having these regulations but they hadconcerns about the way the regulation s were carried out . T hey bel ieve that the agencies employed a “Gotcha” me n ta lit that e n
forcement was un fair and inconsistent, they didn ’t fe e that theyreceived su ffi cient credit for good faith efforts , and communicationswere poor. T hey suggest some new approaches that the Labor Dep a rtme n t may want to consider, and with these approaches theytend to be les s labor inten sive
,which “could translate into less cost.
T h e adoption of greater service ori entation and greater reliance on
62
alternative regulatory strategies,more employer a n d worker t e
sponsibility in ensuri ng workplace protections . And the next areawould be greater technical assi stance
,toll-free telephone numbers ,
bettler education programs for employers and educate— a n d for the
wor ers .Shifting gears to the employment training board
,you will see as
you begin to look at what to do with Labor and the programs,you
will see that Labor has about a quarter of the programs and abouta third of the dollars in the multiple employment program area .
When we looked at those 1 63 programs,the consistent message we
found was the programs confuse workers,em loyers
,and a dmin is
tra tors ; they provrde overlapping services ; t ey waste resources ;and little i s known about whether or not the programs actuallyhelp people .
T ak ing a look at three pro ams—and I’ll just cover them veryqu i ckly since the IG a ddre sse much of this in hi s statement—theytell a very in te re stin story , and I ’ll just use some phrases . Whenyou look at the you tfiprograms , disl ocated worker programs , anddi sadvantaged programs
,these phrases come to mind : Ineffective
,
l ow program performance,inconsi stent
,l ittle is known about re
su lts , modest gains at best.We bel ieve that there are also opportunities here to improve theu a lity and also save money . T hrough the consolidation of many oft ese em loyme n t training progr ams , we think that savings arel ikely to e derived . We would argue though that, as you workthrough this is sue
,Labor’s role in this new process needs to be
clearly defined .
In conclusion there are opportunities to improve service and r e
duce cost in both the worker protection and work force deve lo mentfunctions b rethinking Labor’s role—rather
,the Federa role ,
which in clu es defining Labor’s part in the new system .
When you talk to private sector experts about redesign andchange
,one of the things that they say is that accompanying deci
sions to reduce costs i s also a requirement that you begin torethink what it is that you are doing and what your busines s a otivitie s are .
Mr . Chairman thi s concludes my oral statement, and I will behappy to answer any question s that you or other members of thesubcommittee may have .
T hank you.
[T h e prepared statement of Mr. Crawford follows zlPR E PAR E D S T AT E M E N T O F CLAR E N C E C . CR AWFO R D , A S S O C IAT E D IR E C TO R , E DU
CAT IO N AN D E MPLO YME N T IS SUE S , H EALT H,E DUCAT IO N , A N D H UM A N S ER VICE S DIVIS IO N , U .S . GE N E RAL ACC O UN T IN G O FFICE
M r . Cha irma n a n d Members of the S u bcomm ittee :We a re plea sed to be here toda to a s sist the S u bcommi ttee a s it looks for wa ys
to impro ve the a ctivities a t the U . Depa rtme n t of La bor , while ma kin g the Depa rtmen t a sma ller , more effective a gen cy.
Over the yea rs , the federa l ove rnme n t a n d the De a rtme n t of La bor ha ve con
tri bu te d sig n ifica n tly to work i fe qu a l ity in America y im ro vi n g workin con dition s a n d worker-ma n a gemen t rela tion s a n d impro vin g wo force skills . owe ve r,the ever in cre a sin g pa ce of cha n ge in the eco n omy, the globa li z a tion ofma rkets , theworkforc e’s in crea si n g skill requ iremen ts, a n d cha n gi n g employer-employee relation s ha ve prese n te d n ew dema n ds a n d cha llen ges to the feder a l g ovemme n t’s tra dition a l ro les a n d a ppro a ches. T his ra i ses the e s tion s : Wha t shou ld the federa l ro lebe today in en su ri n g worker pro tectio n s a n workforce developmen t, a n d h ow ca n
63
th a t ro le be ca rried ou t in a less co stly ma n n er a n d a t the same time en ha n ce U.S .
competitiven ess?T o help you a ddre ss these qu estion s, you a sked tha t we discu ss ou r work on fed
era l pro grams a n d a ctivities, in clu di n g the La bor Depa rtmen t’s role, in the a rea s of( 1 ) worker pro te ction a n d (2) workforc e developmen t.lIn su mma ry, ou r work su ggests tha t a lthou gh La bor h a s a ccompli shed mu ch overits history ,
its cu rren t a ppro a ches to worker pro te ction a re da ted a n d fru stra te bothworkers a n d employers . Wha t is n eeded, a ccordin g to the employers a n d employeeswe spoke with is a gre a ter service ori en ta tion : improved commu n ica tion , in cre a sedemployers’ a n d workers’ a ccessibility to complia n ce in forma tion
,a n d expa n ded
mea n in gfu l in pu t in to the sta n da rd-settin g a n d en forcemen t processes . By developin g a ltern a tive re gu la tory stra te gies tha t su pplemen t a n d in some in st a n ces mightre pla ce its cu rre n t la bo r-in ten sive complia n ce a n d en forcemen t a ppro a ch , La bor ca n
ca rry ou t its sta tu to ry respo n sibilities in a less costly, more effective ma n n er .
S imil a r ly, in the workforce developmen t a re a , the n a tion ’s job tra in i n g programsha ve become in crea sin gly fra gmen ted a n d u n clea r. Ra ther tha n a cohere n tworkforce developmen t system, wha t exists toda y, sprea d a cross ma n y federa l a gencie s , is a pa tchwork of federa l pro grams with simila r goa ls , con fl ictin g requ ire men ts,overla ppin g popu la tion s , a n d qu estion a ble ou tcomes . T h e rou ghly $20 billion a ppropri a te d in fisca l yea r 1 995 for job tra in in g a ssista n ce to a du lts a n d ou t-o f-schoo]you th is disbu rsed to 1 5 a gen cies
,in clu din g La bor
,which su pports 1 63 sepa ra te pro
gr ams . T h e cu rren t situ a tion su ggests tha t a ma jor overha u l a n d con so l ida tion of
pro grams is n eeded to crea te a more efficien t, effective workforce developmen t system.
BACKGR O UN DT h e pu rpose of the La bor Depa rtmen t, which wa s esta blished a s a sepa ra te e x e cutive depa rtmen t in 1 9 1 3, i s to foster , promote
,a n d develop the welfa re of
wa ge e a r n er s of the Un ited S ta tes, to improve their workin g con dition s , a n d to a d
va n ce their opport u n ities for pro fi ta ble employmen t .” T his pu rpose h a s evo lved in totwo ma in La bor Depa rtmen t fu n ction s: e n su ri n g worker pro tection ,
essen tia llythrou gh regu la tion i ssu a n ce a n d en forcemen t a n d en ha n cin g workers’ skill s thro u ghjob tra in in g.
T h e bu lk of La bor’s bu dget billio n of La bor’s bil lion fi sca l yea r 1 995bu dge t) is ma n da tory S pen din g o n in come ma in te n a n ce pro grams su ch a s the u n employmen t in su ra n ce program. (S e e ta ble Abou t billio n of La bor’s 1 995 bu dgetis for en forcemen t of worker protection s a n d workforce developmen t billion isfor en forc in g workpla ce sta n da rds for su ch a rea s a s min imu m wa ges , pe n sion s, a n doccu pa tion a l sa fety a n d hea lth ; a n d bill ion i s a l loca ted to employmen t tra in in ga ctivities. However , most— a bou t fu ll-time equ iva le n t (FT E ) sta ff-yea rs—o fLa bor’ s FT E s a re dedica ted to its la bor-i n te n sive worker protection efforts ,wh ile abou t FT E s a re u sed to oversee its workforce developmen t re spon s ibilities .2T h e Depa rtmen t h a s six u n its respo n sible for worker pro tection s: the Employmen t
S ta n da rds A dmi n i stra tion ,the Pen sion a n d Welfa re Be n efits Admin istr a tion , theOf fice of the America n Workpl a ce , the Pen sion Ben efi ts Gu a ra n ty Corpora tion , theOccu pa tion a l S a fety a n d Hea lth Admin istra tion , a n d the M i n e S a fety a n d Hea lth
Admi n istra tion . T ogether,they ha ve FT E s a n d a bu dget of $ 1 billion .
T h e Depa rtmen t’s workforce developmen t respo n sibilities a re hou sed in th e E mploymen t a n d T ra in in g Admi n i stra tion a n d the Vetera n s’ Employmen t T ra i n in gS ervice . T ogether , they ha ve a bu dget of a bou t bill io n a n d FT E s . La borDepa rtme n t employmen t tra in i n g programs in clu de 20 programs a u thori z ed by theJob T ra in in g Pa rtn ership Act (JT PA ) for econ omica lly disa dva n ta ged a du lts a n d
you th , workers wh o lose their jobs du e to pla n t closin gs or down si z in g, a n d a n in ts usive residen tia l pro gr am for severely di sa dva n ta ged you th . Other a ctivities in clu desu pport for th e Employme n t S ervice , Appren ticeship T ra in in g, a n d the Vete ra n sEmploymen t Program.
1 S ee a ppen dix II for a list of GA O ’
s wor k re la te d to Depa rtme n t of La bor fu n ction s ,wor k pla ce
pro te cti on a ctivities,a n d employmen t tra in in g prog rams .
z La bor h a s experien ced a lon g -te rm d ecli n e in s ta ffi n g , from over E T E s in fi sca l yea r1 980 to in fisca l yea r 1 995.
64
Table I: Department of LaborAppropriations and Staff-Year SpendingFisca l Yea r 1 995
Category
Unemployment Insura nce and Other Income Ma intena nce ExpensesEmployment a nd Tra iningEnforcement
Employment Sta ndards Admin istrationPension andWe lfare Benefits AdministrationO ffice of the America n WorkplacePension Benefits GuarantyCorporationOccupationa l Sa fety a nd Hea lth AdministrationMine Sa fety a nd Hea lth Admin istration
Bureau ofLabor Statistics
Depa rtmenta l Ma nagement
Note Tota ls may not add due to round ingSource: Depa rtment a La bor.D IS SAT IS FAC T IO N W IT H LABO R ’
S CUR R E N T APPR O ACH T O WO RKE R PR O T E C T IO NDespite La bor’s ma n y con tri bu tion s over its history to pro tectin g workers, the De
pa rtme n t’
s a pproa ches do n ot a ppe a r well su ited to the dema n ds a n d cha llen ges oftoda y’s work wor ld. Moreover , workpla ce la ws a n d regu la tion s ha ve ri sen in n umbera n d complex ity in the la st 60 ea r s . T his , combin ed with La bor’s a ppro a ch to e n forcin g these worker prote ct ion s t rou gh la bor-in ten sive , ou -site in spection s a n d the imos ition of fi n es a n d pen a lties viewed a s
“gotcha "-ori en ted, ha ve crea ted di f ficu ltiesor employers . Con cern s ha ve a ri se n tha t this a pproa ch does n ot recog n i z e “goodfai th” efforts of bu sin esses a n d qu estion s ha ve been a sked a s to whether this is themost effective mea n s for improvin g workin g con dition s today. For example , La borcon tin u es to u se cm-site in spection s to en force O S H A regu la tion s despite the a ddition of mil lion s of n ew work la ces a n d employees in recen t yea rs . Abou t fede ra ] a n d sta te complia n ce 0 Icers a re respon sible for well over 6 mil lion workpla ces ;this equ a ls a ra tio of 1 in spector for eve workpla ces .La st yea r , we re lea sed a report tha t i e n tified the ma n y federa l sta tu tes corn ri s
in g the framework of federa l workpla ce regu la tion a n d col lected in forma tion a ou t
a ctu a l employer a n d emplo ee experien ces with worker protection re gu la tion s .3 T oobta in the experien ces of t ose opera tin g u n der federa l workpla ce protection sta tu tes , we u sed a ca se stu dy a pproa ch a n d in terviewed a bro a d ra n e of 36 employersa n d employee represen ta tives of orga n iz a tion s of la r a n d sma l bu sin esses in 24differe n t in du stries in differen t sta tes . S ix of the emp oyers h a d less tha n 7 5 worke rs ; 1 2 h a d more tha n 50 0 workers. N in e of the bu sin esses h a d mu ltista te opera tion s
,a n d n in e h a d some workers represen ted by a u n ion .
In ou r stu dy we fou n d tha t, a lthou gh fi rms of a ll si z es su pported the n eed forworkpla ce regu la tion s , employers a n d workers were more co n cern ed with h ow regula tion s a re ca rried ou t r a ther tha n with the a ims of the regu la tio n s . For example,employers believed th a t
0 re gu la tory a gen cies u s e a“gotcha ” r a ther th a n a more col la bora tive a p
pro a ch ;0 en forcemen t is u n fa ir a n d in con sisten t, in pa rt du e to la ck of sta ff kn owledge of regu la tion s a n d bu sin ess opera tion s ;
0 reg u la tors fa il to a ckn owledge good-fa ith complia n ce efforts ; a n d0 commu n ica tion between a ge n cies a n d firms a n d u n ion s is poor .
On ly 8 of the 26 key sta tu te s a n d o n e execu tive order tha t we iden tified a s thecore framework of federa l workpla ce regu la tion rima ri l cover in g a re a s su ch a s
la bor-ma n a gemen t rela tio n s , min imu m w a ges, a n u n em oyme n t i n su ra n ce—werein pla ce b 1 960 . T h e n umber of sta tu tes a lmo st dou ble by 1 97 0 a n d rea ched 1 9by 1 980 . oda y, La bor oversees 21 of these sta tu tes , a n d the Equ a l Employmen t O pportu n ities Commission (E E O C) oversees 4 . (S e e fig . 1 a n d a pp .
-I .)
3Workpla ce Re g u la tio n : In forma tio n o n S electe d Employer a n d Un ion E xperien ces (GAO /HEHS—94—1 38,Ju n e 30
,
65
FIGUR E 1 : LEG IS LAT IVE CH R O N O ID GY O F KEY WO RKPLACE PR O T EC T IO N S TAT UT E S
ADE A : Ag e Discrimi n a tion in Employmen t ActADA : Ameri ca n s With Disa bilities ActCO BR A: Con solida te d Omn ibu s Bu e t Recon ci lia tion Act of 1 985CWH S S A : Con tract Work Hou rs a n S a fety S ta n da rds ActDBA : Da vis-Ba co n ActDFWA : Dru -Free Workpla ce ActE PPA : Emp oyee Po lygra ph Pro tection ActE R ISA : Emplo ee Retire men t In come S ecu ri ty ActE Q PA : Equ a l a y Act ( amen dmen ts to the Fa ir La bor S ta n da rds Act)E O 1 1 24 6 : Execu tive Order 1 1 24 6FIS A : Fa ir La bor S ta n da rds ActFM LA: Family a n d Medica l Le a ve ActIRCA : Immigr a tion Reform a n d Con tro l Act ( amen dme n ts to the Immigra tion a n d
N a tion a l ity Act)LM R DA : La bor-Ma n a eme n t Re rtin a n d Disclo su re ActM S H A : Federa l Min e a fe ty a n Hea lt Act
M S PA : Migra n t a n d S ea son a l Agri cu ltu ra l Worker Protectio n ActN LBA : N a tion a l La bor Rela tion s ActO S H A : Occu pa tion a l S a fety a n d Hea lth ActR LA : Ra ilwa y Labor ActR A : Reha bilita tion Act—S ection 50 3S CA : S ervice Con tra ct ActS TAA : S u rfa ce T ra n sporta tion Assista n ce Act (A n ti-reta lia tory provi sion )T itle V II : T itle V II of the Civil Rights ActUC : Un employmen t compe n sa tion pro vi sion s of the S ocia l S ecu ri ty ActV R R : Vetera n s’ re employmen t ri ghts provisio n s of the S elective T ra in in g a n d
S ervice ActWH A : Wa lsh-H e a le ActWAR N : Workers A ju stmen t a n d Retra in i n g N otifica tion Act
68
sta ffi n g, ba sed on La bor’s cu rren t en forcemen t a pproa ch , cou ld impro ve the'
re guls to ry process .
PAT CHWO RK O F FE DE RAL PR O GRAM S SUPPO RT WO RKE R DEVELO PME N TIn a ddition to its worker protection re s n s ibilitie s , the La bor Depa rtmen t h is to ri
ca lly h a s been the foca l po in t for federa workforce developmen t a ctivities. T oda y,however, La bor is respo n sible for less tha n a qu a rter of the n a tion ’s '
ob tra i n in g ro
g rams (37 of the 1 63 programs), with a third of the billion of e de ra l spe ndin gon workforce developmen t, a s i llu stra ted in ta ble 2.
Table 2: Number of Employment Train ing Programs, Agencies, a nd Fisca l Year 1 995 Appropriations by TargetGroup
Fisca l year 1 995 apO l lier proprra tion ( Ill mil
Ta rget g roup age lion s)
Dis located workersNa tive America n s
O u r work h a s demon stra ted th a t the federa l vemme n t’
s pa tchwork of prog ra msis ch a ra cte ri z ed by overl a p, du plica tion ,
wa ste resou rces , a n d poor service qu a l itya n d crea tes co n fu sion for clien ts, employers, a n d a dmin istra tors .
6 Addition a lly,ma n y a gen cies do n ot k n ow if the their prog rams a ctu a lly help people get jobs .T hu s
,the effectiven ess of these programs is a lso in qu estio n .
A S N APS HO T O F LABO R ’
S WO RKFO R CE DE VE LO PME N T PR O GR AMSWe iden tified th a t ma n y of the problems tha t pla gu e the ma jori ty of workforcedevelopmen t progr ams a lso a re prese n t in La bor’s rog rams . T o illu str a te , we willhighlight a few prog rams from you th , disloca ted wor e r
,a n d econ omica lly dis a dva n
ta g e d grou s . In dorn g so , we a re a l so s u g estin g tha t these pro gra ms ma wa rr a n ta ddition a l bu dget review . T h e prog rams a l come u n der JT l A , which is u n de d on
a program yea r ba sis . T ha t is , fisca l e a r 1 995 a ppro pria tion s will n ot be a va il a bleto sta te s u n til Ju ly 1 , 1 995. Most ofythe ro g rams experien ced a bu dget in crea sedu rin g fi sca l yea r 1 995 , despite the ove ra li re du ction in the De a rtme n t
’
s bu dgetfrom 1 994 to 1 995 . It is importa n t to n ote tha t workforce deve opme n t progr amso n ly pro vide a ssista n ce to a sma ll mi n or ity of the eligible popu la tio n — from a bou t6 percen t for the JTPA T itle IIA rogram for di sa dva n ta ged workers to a bou t 30e rce n t for disloca ted workers . Bu get redu ction s in some o f these a re a s wou ld likey resu lt in a redu ction in services pro vided to these popu la tio n s .
YO UT H T ARGET GR O UP0 T h e JT PA T itle IIC you th tra in in program rovide s tra in in to in -schoolyou th a ged 1 4 a n d 1 5 a n d ou t-o f-schoo econ omica ly disa dva n ta ge you th ,
a ged1 6 to 2 1 . T itle IIC goa ls i n clu de hel in g you th i n cre a se lon g-te rm employa bil ity ;e n h a n ci n g occu pa tion a l , edu ca tion a l, a n d citi z e n ship skill s ; a n d i n crea si n g emloyme n t a n d ea rn in gs . T h e pro gr am’s fisca l yea r 1 995 bu dget tota led $54 9 milion
, $ 1 0 million lower th a n fi sca l yea r 1 994 level s . A re ce n t eva lu a tio n of thee a rn in gs ga in s o f ou t-of-school pa rticipa n ts fou n d th e pro gra m to be in effective .
7
o T h e Job Co 9 rog ram is prima ril a residen tia l progra m for se vere ] disa dva n ta ged you t ft ta rgets you th a g e 1 6 to 2 1 with severe econ omic a n e du
°M u l tiple Employme n t T ra in in g Pro g r a ms : M ajor O ve rh a u l N e e de d to Crea te a N ore E lli
cie n t,Cu s tomer -Dri ve n S y s te m, (GA O / F—HEHS—95
7 T h e N a tion a l JT PA S tu dy : Ti tle ”A Impa cts o n E a rn in g s a n dv
Employmcn t a t 1 3 M on th s ,Abt As s ocia te s
, In c. (Ja n .
69
os tion a l deficien cies ( su ch a s bein g a school dro u t or la ckin g re a din g or ma thski ll s) a n d other employmen t ba rriers . T h e Jo Corps fu n di n g for fi sca l yea r1 995 is billion , a n in crea s e of $59 million over 1 994 . T h e in cre a sed fu n di n gis ea rma rked prima ril for pro gram expa n sion—thro u gh in cre a s in the n u mberof Job Corps cen te rs . owever , the Depa rtmen t’s In specto r Gen era h a s po in tedou t in re cen t te stimo n y rela tively low program performa n ce a t some cen te rs a n dthe n eed for overa l l pro m improvemen ts.8
o T h e JT PA T itle II S ummer You th progr am ta rgets di sa dva n ta ged you tha ged 1 4 to 2 1 to expose them to th e world of work , en ha n ce ba sic edu ca tionski ll s a n d citiz en sh ip skil ls , a n d en cou rs schoo l completion . T h e pro m wa s
a ppro pria ted a bou t bill ion in fi sc yea r 1 995—a n in crea se of 1 68 million— a n d, a ccordin g to Depa rtmen t e stima tes, wil l serve over pa rticipa n ts . T wo re cen t stu dies con clu ded th a t the pro gram su cceeded in providin gpa rticipa n ts with work experien ce bu t tha t the re media l edu ca tion compo n e n twa s n ot bein g con siste n tly a pplied thro u ghou t the n a tion .
”
D IS LO CAT E D WO RKE R GR O UP0 At bil lion , La bor’s la rgest tr a in in g pro am provides employmen t tra in
in g a ssista n ce to di sloca ted workers . It receive in cre a ses of $5 1 6 mil lion in fi sca l yea r 1 994 a n d $ 1 7 8 million in fi sca l yea r 1 995. We determi n ed tha t this pro
am h a s h a d di fficu lty spen din g its a l loca tion s, ca rryin g over fu n ds of $54 milion from fisca l yea r 1 993 to 1 994 . However , little in forma tion is a va ila ble on
whether this pro m is makin g a differe n ce—tha t is , we do n ot kn ow if pa rticipa n ts a re more I ' ely to fi n d jobs tha n n on pa rticip a n ts .
E CO N O M ICALLY D ISADVAN T AGE D ADULT S GR O UP0 T h e JTPA T itle IIA program pro vides employmen t tra in in g services to e co
n omica lly disa dva n ta ged a du lts to en a ble them to en ter a n d a dva n ce in thela bor force . T h e pro gram wa s fu n ded a t bill ion in fi sca l yea r 1 995
,a $57
mil lion in cre a se over 1 994 . A lthou gh a recen t stu dy in dica ted tha t the progr amh a d gen er a lly positive , a lthou gh modest, effects on the ea rn in g a n d employme n tof pa rticipa n ts , 1 0 its growth a lon e ma y wa rra n t revisitin g the program.
O PPO R TUN IT IE S T O S AVE M O N EY AN D IMPR O VE S E RVICE Q UALIT YWe a re co n vin ced tha t a ma jor overha u l a n d con sol ida tion of the 1 63 prog ramsis n eeded to cre a te a more effective workforce developmen t system a n d tha t La bor’sro le in this n ew system mu st be clea r ly defi n ed. Al thou gh the amou n t of mon eyspen t on a dmin istra tin these programs ca n n ot be rea dily qu a n tified a n d is g e ne ra lly n ot even tra ckediy program, a dmin istra tive costs a re su bsta n tia l . T here fore ,comprehen sive con solida tion a n d streamlin in g of these prog rams cou ld likely resu ltin su bsta n tia l bu dget sa vi n gs in fu tu re yea rs a n d improve the a ssista n ce providedto pa rticip a n ts .
CO N CLUS IO NT h e Depa rtmen t of La bor’s worker pro tection fu n ction s tou ch the lives of n ea rlyeve Ameri ca n . Its a pproa ches to ca rryin g ou t these fu n ction s may ha ve me t then e e of a n ea r lier time
,bu t toda y’s work wor ld presen ts n ew dema n ds a n d cha l
le n g e s to th e federa l governmen t’s tra dition a l ro le a n d a pproa ches . Cle a rly the old
wa ys of do in g bu sin ess a re in a dequ a te , a n d n ew, less costly, more effective mea n sof en su rin g worker protection s a re n eeded.
In If ht of the fra gmen te d, du plica tive workforce developmen t prog rams th a t ha veevo lve over time, we be lieve a co n certe d effort is n eeded to overh a u l a n d con so lida te pro g rams to crea te a n effective a n d effi cien t workforce developme n t system.
M ore over , a s the Co 38 is con siderin g pro posa l s to con vert ma n y programs toblock g ra n ts to stre h e a n d a chieve cost sa vi n gs , we believe a n opportu n ity ex
ists)to r
ie th i nk a n d better defi n e the federal workforce developmen t stra tegy a n d La
0 s ro e in it .
8 S ta temen t by C h a rles C . M a s te n,I n s Ge n era l
,US . Depa rtme n t of La bor , be fore th e
S en a te Committe e on La bor a n d H uma n u rces ( O ct. 4 ,°A u dit of th e 1 992 S ummer You th Employmen t a n d T ra in in g Pro g ra m,
US . Depa rtmen t ofLa bor , O ffice of In spector Gen era l , (Wa s h in g to n ,
DC Feb . 24,
a n d S tu dy of th e JT PA
T itle IIB Program Du rin g th e S ummer of 1 993,We s ta t
, In c. (Apr .
1 °T h e N a ti on a l JT PA S tudy : Ti tle IIA Impa cts on E a r n in g s a n d Employme n t a t 1 8 M on th s,
Abt Ass ocia te s,In c. (Ja n .
7 0
M r . Cha irma n , tha t con clu des my pre pa red sta temen t. At this time, I -will beha ppy to a n swer a n y qu estion s you or other members of the S u bcommittee mayha ve .
Appendix I—DESCRIPTIO N OFMAJO R STATUTES ANDEXECUTTV E O RDERS GO V ERNINGWO RKPLACEREGULATIO N
Statute Descriptionl
La bor Sta nda rds
Davis-Bacon Act
Service Contract Act
Wa lsh-Hea leyAct
kmmsEstablishes uniform sta ndards for employe e pension a nd we l fa rebenefit pla ns, includ ing min imum pa rticipation. accrua l andvesting requirements, fiduciary responsibilities. and reporting
a nd d isclosure requirements.Provides for continued hea lth ca re coverage under group hea lthpla ns for qua l ified sepa rated workers for up to 1 8 months.
Unemployment Compen sation Authoriz es fund ing for state unemployment compe n sation administratrons and provides the genera l framework for the O perationof state unemployment insura nce prog rams.
Entit les employees to ta ke up to 1 2 weeks of unpa id , job-protected leave for specrfied famlly a nd med ica l rea sons such a sthe birth or adoption of a child or an il lness I"the family.
Civil Rig hts
Equa l PayAct£0 1 1 24 6
EEO C7
Establishes min imumwage, overtime pay a nd ch i ld labor sta ndards.
Provides for payment of preva iling loca l wages a nd fringe benefitsto laborers a nd mecha n ics employed by contractors a nd sub
contractors ou federa l contracts for con struction , a lteration , repa ir, pa inting or decorating of publ ic bui ld ing s or publicworks.
Provides for payment of preva i ling loca l wages a nd fringe benefitsa nd sa fety a nd hea lth sta ndards for employees of contractorsa nd subcontractors providing services under federa l contracts.
Provides for labor sta nda rds, includ ing wag e , hour, sa fety, a ndhea lth for employees working on federa l contracts for the ma nufacturing or furnishing of materia ls, supplies, a rticles. or
equipment.Establishes sta ndards for hours. overtime compen sation , a nd
sa fety for employees working on federa l a nd federa l ly fina ncedcontracts and subcontracts.
Protects mig ra nt a nd sea sona l ag ricu ltura l workers in their dea ling s with fa rmla bor contractors. a gricu ltura l employers, a gocu ltura l a ssociations. a nd providers ofmig ra nt housing .
Proh ibits employment ormembersh ip discrimination by employers.employment a gencies, a nd unions on the ba sis of race , color,re l ig ion , sex , or nationa l orig in ; proh ibits discrimination in employment against women a ffected by preg na ncy, childbirth , orre lated medica l condition .
Prohibits d iscrimination on the ba sis of sex in the payment ofwa ges.
Proh ibits discrimination aga inst an employee or applica nt for employment on the ba sis of race , color, re l ig ion , sex , or nationa lorig in by federa l contractors and subcontractors, a nd requiresfedera l contractors a nd subcontractors to ta ke a ffirmative ao
tion to ensure that employees a nd appl ica nts for employmenta re treated without rega rd to race, color, re lig ion. sex. or nationa l orig in .
Prohibits employment d iscrimination on the ba sis of age ag a in stperson s 4 0 years a nd older.
Prohibits employment discrimination aga in st individua ls with disabil ities, requires employers to make reasonable accommodatio ns
"
for d isabil ities un less dorng so wou ld ca use undue ha rdsh ip to the employer.
7 1
Appendix l—DESCRIPTIO N O FMAJO R STATUTES ANDEXECUTIV E O RDERS GO V ERNINGWO RKPLACEREGULATTO N—Continued
Statute Dascnption
Section 503of the Reha bilitation Proh ibits federa l contractors a nd subcontractors fromdiscriminatAct. ing in employment on the ba srs of d isabil ity a nd requires them
to take a ffirmative action to employ, a nd a dva nce in employment. indiwdua ls with d isa bil it ies.
Anti-reta l iatory provision STAA Proh ibits the discha rge or other d iscriminatory action a ga in st a n
employee for fi ling a compla int re lating to a violation of a
commercia lmotor ve hicle sa fety rule or reg u lation or for refusing to operate a vehicle that is in violation of such a ru le orregu lation . or beca use of a fea r of serious injury due to a n uhsa fe condition .
Occupa tiona l Hea lth a nd Sa fety:Requ ires employers to furn ish each employee with work a nd a
workplace free from recog n iz ed ha z a rds that ca n ca use deathor serious physica l harm.
Requires mine operators to comply with hea lth a nd sa fety sta ndards a nd requirements established to protectminers.
Drug Free Workplace Act Requires recipients of federa l g ra nts a nd contracts to ta ke certa insteps toma inta in a drug free workplace.
La bor Re lation s:NLRB
Ra ilway LaborAct
Employment Decision s: H iring a nd Sepa rations
Polygraph Protection ActVetera n s
'
Reemployment Rig htsLaw.
Employment provisio ns of IRCA
None I s
5.
l Ma ny statutes are complex and conta in a multit ude of requirements, rig hts, a nd remed ies The information presented has been simplifiedfor il lustrative purposes .
2Wa ge and flour Dnrs ion’ Pension Welfare Benefit Administration‘ Pens ion Benef it Gua ra ntee Corporation5 Interna l Revenue SewiceEmployment and Tra ining Admin istration
’ Equa l Employment O pportun ity Commission‘ Off ice of Federa l Centred Compliance Programs’ 0ccupationa l Safety and Hea lth Admin istrationl°Mine Safety and Hea lth Admin istratio n1 1 Nationa l Labor Re lation s Board1 2 O ff ice of the America n Workplace1 ’ Nationa l Med iation Board1 ‘ Vetera n
'
s Employment a nd Tra ining ServicelsAlthoug h ETA wid e WARN
'
s implementin g reg u lations. there is no principa l enforcement ag ency because the law is enforced private lyth roug h the courts
Protects certa in rig hts of workers. including the rig ht to org a niz ea nd ba rg a in col lective ly throug h representation of their ownchoice .
Requires the reporting and disclosure of certa in fina ncia l and admin istrative practices of labor orga n iz ation s and employers; establishes certa in rig hts formembers of labor org a n iza tions; imposes other requirements on labor org a niz ations.
Sets out the rig hts and respon sibil ities ofma nag ement a nd workers in the ra il and a irline industries a nd provrdes for negotiatio n a ndmed iation procedures to settle labor-ma na gement disputes.
Prohibits the use of lie detectors for pie-employment scree n ing orduring the course of employment.
Provides reemployment rig hts for people return ing fromactive dutyor reserve tra ining in the armed forces or Na tiona l Gua rd.
Proh ibits the hiring of il lega l a liens a nd imposes certa in duties onemployers in hiring ; proh ibits employment discriminationa ga inst lega l a liens; authorize s but l imits the use of importedtemporary agricultura l workers.
Requires employers to provide advance written notice of pla nt
closing s a nd ma ss layoffs to individua l a ffected employees,loca l governments and other pa rties.
7 2
Ma nyAgencies Engaged in lob Training
O therAg end rim
Tota l Labor fl“
Dislocated workersNative AmericansEconomica l ly disa dva nta ged
Mr . SHAYS . I thank the gentleman .
Mr . Maste n , I would like you to just touch on briefly the last partof your sta tement dealing with— actually
,it i s not the last. I would
like you to talk about the NAB and the National Alliance for Business as an example of— in your testimony of where they are r ece iving funds without having to compete for them .
Mr. M AS T EN . Mr. Chairman , we audited the NAB g rant for program years 1 988 and 1 989 and issued our report in 1 99 1 . T h e
major concern at that time was that the audit of the N AB g ranthad been awarded on a noncompetitive basis . We feel that this i snot the best way to award these types of grants .Mr. SHAYS . Are they allowed to do that by law?Mr. FIS CH . Some of the appropriation language that comes off
the H ill , Mr. Cha irman , indicate s to the program that some of
these grants should be competed noncompetitively.
Mr. CR AWFORD . What you have al so—we took at a look at someof those as well .Mr. SHAYS . I just want to make sure—M r . Crawford , I’m happy
to have you respond . I just want to be clear . I’
m not sure if the a nswer is yes or no .
Mr. FIS CH. It i s yes and 'no . I don ’t think that they have to benoncompetitive , but the agency and prog ram managementMr. SHAYS . Can you not speak in a negative but speak in a posi
tive . T hey don ’t have to be—say that again .
Mr. FIS CH . T hey don’t have to be awarded on a sole source basis.Mr. SHAYS . Answer it this wayM r . FIS CH . Do they have to be competed? N o .
Mr. SHAYS . O K, and that is at the discretion of the Department.
Mr . FIS CH . Yes .Mr . SHAYS . And in most cases are these grants competitive?Mr. FIS CH . T hey could be competitive without any problem .
Mr . SHAYS . T hey aren’t though .
Mr. FIS CH . T hey aren’t. T hey have had a long history of notbeing competitive .
Mr. SHAYS . O K. Since you made your findings in 1 99 1 , how hasthe Department responded?
7 3
M r . FIS CH . T hey have competed part of the grant to N AB . Someof it is awarded on a sol e source basis
, a n d other portion s of it arecompeted , but it is not totally.
Mr . SHAYS . I guess I don’t understand why they wouldn’t be come titive . It just seems to me so logical . Wh y would they have aock? We are ta lking gigantic dollars .Mr. FIS CH . Yes , sir, we are.Mr. SHAYS . What do they do for those dollars?Mr. FIS CH . Well , NAB ,
itself,sir? NAB has run training pro
grams around the country for JT PAMr. SHAYS . So these are JT PA training programs
,O K
Mr. FIS CH . Yes , sir.Mr . SHAYS . I
’
m sorry,Mr. Crawford . You wanted to respond . I
just wa nte d toM r . CRAWFORD . Yes , I understand.
We looked at some of the noncompetitive discretionary grants aswell , and we found that what you have in some cases i s languagein the appropriations conference reports that suggests that the Dep a rtme n t award—continue to award these contracts . You will findthat some of these groups have been receiving grants for up to 25years .
Mr. SHAYS . T his i s the result not of language in the bill s but ofthe conference report lan age encouraging the De a rtme n t to continn e—in other words
,t e money is appropriate but it doesn’t
specifi cally say it will go to the N AB,it says in report lang uage
that it is expected that it would? Is that what you are saying?Mr . FIS CH . I think the langua e reads something to the effect
that these grants should be awar ed to such agencies or such businesses as
,and they name specific situations in the lang uage .
Mr . SHAYS . Mr . Crawford , in your report about j ob training,which really is a devastating report
,I remember when we went
over this last year and— was it last year or the year before last?Mr . CRAWFORD . Last year, Mr . Chairman .
Mr . SHAYS . Yes . I mean it was absolutely devastating. I read thisparagraph :
“Our work has demonstrated that the Federal Govemment s patchwork of programs is characterized by overlapping
,du
pl ication , wasted resources , and poor service quality , and createsconfusion for clients , employers , and administrators . Additionally ”— as if there could be anything additional— “Additionally
,
many agencies do not know if their programs actually help peopleget j obs . T hus the effectiveness of these programs is al so in question .
”
What is left to say that is good about it? I mean thi s,to me
,i s
a real statement that cries out to us . I know other committees arealso getting into this , but it seems to me to be crying out for ourattention . What is being run well , or is the indictment pretty muchuniversal as it relates to this?Mr . CRAWFORD . I think from the prog rams we have looked at, I
think the indictment is pretty much universal .Mr . SHAYS . It i s what, sir?Mr . CRAWFORD . Universal .Mr . SHAYS . Yes .Mr . CRAWFORD . I think what on will find though are pockets of
prog rams that are run well , a nd'
we are now in the proces s of con
7 4
ducting a stud that tries to get a better handle on some of thosecor
flpon e n ts , what are those components that make programs work
weMr. SHAYS . You point out that 37 of the programs a re ru n by theDepartment of Labor. You are basically saying there are 1 9 youthage employment programs
, of which the Department has 7 .
Mr . CR AWFORD . Yes .Mr. SHAYS . Is your sense that we should be con solida tin these
programs,j oining them together
,block granting them? at do
you see as the general solution?Mr . CRAWFORD . We think that one of the fix es that needs to be
made is a structural fix . We think that there are too many programs
,they are run by too many different organizations . What we
would suggest that the Cong ress do and what we have said in thepast i s
,in deciding whether to consolidate one program with a n
other,we should be looking first a t what is the principal focus of
that program . If the prin cipal focus i s job training, then maybe weshould look at it.Within the youth area
,we have job training programs . T hey fall
essentially,as I recall
,into three categories . One sort of deal s more
with in -school youth,another one deals with out-of-school youth
,
and a third one deal s with youth that are preparing to go to college . Maybe as you look at the youth programs we should look atit in those three categories that we reported to the Congr es s .I
ll
lr
?SHAYS . As opposed to 1 9 programs , end up with three poten
tia y .
Mr. CRAWFORD . You could move toward maybe three programsthat seem to be—when you look at common goal s
,common objec
tive s , common clients , they are ve similar.My time has e n dedrhu t we are going to go one more
cycle through .
Mr. T own s .Mr. T OWN S . T hank
you ve much
,Mr. Chairman .
Let me begin by ta king a out block grants,and I g uess to sort
of both of you , beginning with GAO ’
s recent report entitled “Blockgr ants : Characteri stics , experience , and le s sons learned ,” ci ted anumber of specific limitations in previous block grant programs . Inl ight of this report , how would GAO recommend we overcome thesel imitation s in current block granting proposals before the Con
gress .
Mr . CRAWFORD . While I haven’t had an opportunity to study thevarious block g rant proposals that are before the Congr ess , I couldoffer some advice from our report
,what we have learn ed .
One of the things that we would suggest—the first thing I guesswe want to mention is that from our experience it looks as thoughmost of the States were able to get up to speed and administerblock grants .T h e second thing there that we would mention as advice wouldbe in the area of accountability and data . Many of the bl ock grantsm the early eighties did not have good data or good accountability
,
and what you found over time was a re ca te g ori z a tion of programsi n part. because we didn
’t have data . Without data,you are not in
a positi on to know who is being served , and you become very susceptible then to putting set-asides in .
7 6
expended on increasing the number of centers , we think the mosteffective and effi cient way to proceed is to address the problemsthat we have already identified .
Mr . T OWN S . Yes , and I understand that and respect that, and Ithink that is wise
,but I was just wondering, in all the areas , has
there been this kind of communication between each other, becausewhat we are ta lking about here is— I mean it i s major . I mean thisi s not minor kinds of recommendati on s , you know ,
we are notpatching something
,we are just going to tear it down and put it
back together,and I was just wondering, i s everybody sort of talk
ing to each other? T hat is what I am really concerned about. GAOm ight be able to g ive me a betterMr . CRAWFORD . I think within our organization the division
which I am in is the divi si on that also has respon sibil ity for welfare and some of the health care kinds of i ssues , and we do talkabout these . We have supported each other . We have looked a t
supported them in lookin at the JOBS prog ram and other programs
,and we work very c ose ly together.
You raise legitimate concern s that—with block grants , our position has been that we just see block grants as a del ivery strategy .
You could use any number of different ways to deliver money topeople
,block grants probably 'ust as good as any
,they all have cer
tain kinds of l imitation s , an ti, as the IG was saying, you have totake into account, whichever strategy you use , what are thestrengths and weaknesses of that strate and then put in placethe kinds of safe ards that assure that
gthe money i s being spent
in the way that t e Congress intends .Mr. T OWN S . My time has expired .
Mr . SHAYS . T hank you.
Mr . Souder , and I would just point out that we are joined byGene Green from T exas . I probably didn’t have to tell you he isfrom T exas . You can always tell a T exan .
Mr . SOUDER . First,I wanted to make a comment on the work
place regulation statute s . T hat is what happen s when you have aCongress full of attorneys and n ot pe op le who run a business . Assomebody who has had a business
,part of the reason you are e t
ting the negative reaction that you hear is,you just g ive up u n ess
you have enough money that you can hire a bunch of attorneys tomanage you through everything. You look at something like that,and you just wait until somebody hits the door and hope on canscramble and hope you have been “close enough to the law
, eca u se
to follow the letter of every one of those laws or even to know whatwas in it would break your company
,it i s impossible to function
,
and if the Government really wants to bring the workplace moreinto line they need to streamline and manage this better becauseit i s not workable for small or midsized busines ses .You need so many corporate attorneys
,and even big companies
are split into little units who have very little time to figure outwhether they are foll owing the letter of the law on that many statutes as opposed to trying to make a profit for their company, andi t i s just outrageous when you see it in chart form .
I wanted to get into the question a little bit of the block grantsbut more directly relate d to the JT PA
,where you said that there
should be or where you would need performance standards because
7 7
we don’t really know whether they are working. Both of you kindof address that in your testimony . What type of performance standards would you have?For example
,if it i s employment it obviously has to just be more
than somebody got a job,because in your targeted jobs credi t ques
tion you said most of those people would have been employed anyway . S o what kind of standards could we put in that would actuallyenable us to see whether or not the programs are working?Mr . MA S T EN . I think the standards should be really geared to
ward the return on investment, and we just don’t have those inplace now. What are the ta xpayers gettin for their money? I thinkthis is the ultimate question that we nee to answer with all of ourmeasurements .
Mr . SOUDER . So specifi ca ll b getting the return on the investment
,would you measure w ether they got placed in a job? How
would you measure whether they would have gotten that j ob anyway? T h e amount of time of training? What type of data would youhave to have
,and where would we start to go with that?
Mr . MAS T E N . I’
ll defer to Mr. Fi sch .
Mr. FIS CH . Cong ressman ,when the JT PA law came off the H ill
,
there was a requirement in there for program managers in the Dep a rtme n t of Labor to measure the return on investment
,which in
cluded the cost of training as compared to reduction in welfare benefi ts , increased wages , e t cetera . And the law was very specific andvery clear as to what should be measured
,to see whether the train
ing was effective and whether the jobs that the people got weresustained over a period of time . I think it i s something the Department has notMr . SOUDER . So you are saying there is not even a basic estimate
of how much it costs for each person?Mr . FIS CH . No . T hey know how much . T hey can pretty well tell
you the cost now . T hey measure people . In 1 3 weeks they go outand look at a statistical sample of people 1 3 weeks out of the program to see what their earnings are . However, there i s no longterm measurement as to the success of this progr am in place .
Mr . SOUDER . But back to the first part , you said that they needto have a cost of training versus the cost of the benefits that thosepeople would have received had they not had it. Do they have that?Mr . FIS CH . T hey have it, but they haven ’t used it. T hey haven’t
put it out there in terms of measuring what the return on the investment was on the training.
Mr . SOUDER . So the primary thing they are missing is the longterm data because they have the short-term data .
Mr . FIS CH . T hey have a short-term look , they do not have a longterm look at these folks .Mr . SOUDER . Is your feeling that there has been some , quote,
creaming like there has been in the tar eted j obs credit?Mr . FIS CH . No . My gues s is , from w at we have seen and what
we have looked at,we would not say that there i s any creaming
in the program .
I think to operate a training program today is one thing but tostart dealing with the training prog ram and then deal with education’s failures is another thin I mean you are getting people inthe program today that have e u ca tion a l barriers , they have drug
abuse problems,and the training folks are not really up to speed
with dealing with this type of person today . I mean to train someone to do something i s one thing, but to deal with all the other baggage that a lot of these people come with is an entirely differentproblem .
Mr . CRAWFORD . One thing I would add on the accountabilitypiece
,the outcomes
,I th ink in addition to having good performance
standards,if you look at JT PA ’
s performance standards today theyare pretty good . T hey place— about 7 0 percent of their peopl e comp lete and get jobs .What the problem is and what is needed is more of what wewould call an effectiveness revi ew ; in other words , look at whathappens to a person that goes to JT PA and compare that to theperson that looks similar to that JT PA person but doesn’t gothrough the prog ram , and that is when you find the modest gainsin terms of income and employability . T here is not much there , andI agree
,many of these people do need the basic education
,and that
i s a starting point.Mr . SHAYS . I thank the gentleman .
I neglected to point out we are also joined by T om Barrett fromWisconsin . I apologize to the gentl eman .
Do either of you have statements you want to make,or shall we
just go with the questions .Mr . BARRET T . Just the questions , Mr. Chairman .
Mr . SHAYS . All right. We will go with your question s .Mr . Barrett.Mr . BARRET T . Perhaps you can help me—and I ’m sorry I came
a l ittle late— with the graph on the left there .
Mr . SHAYS . It i s a thermometer .
Mr . BAR RET T . What was the purpose for having that here?Mr . CRAWFORD . Wh at we were showing was— it was in the con
text of understanding the Labor Department’s role . It has twocentral roles . One i s in workplace development—worker protection ,and that includes the workplace regulation there
,and the other
one is in the job training worker development.Mr . BARR ET T . Are some of these going to collapse together? Is
that what you are suggesting, or is this just to give you sort ofM r . CRAWFORD . We are suggesting the same kind of l ook that we
have given to j ob training is probably mer ited in the area of workplace protections
,and if I can just add
,Congres sman
,when we
went out and spoke wi th busines ses,small and large
,one of the
messages that we came back with was,we don’t know right now
whether we are in compliance with all the rules that we are supposed to , and we are not even quite sure what all the rules are .
Mr . BARRET T . I’
m going to ask you sort of an odd question . Couldyou quickly just run through what they all stand for?Mr . CRAWFORD . Sure , and in fact what we also have in the testi
mony there for you— let me find the page—ou page 5 , we havethe—of our testimony
,I would be happy to run down that list.
Mr . BARRET T . T hat is O K.
Mr . CRAWFORD . O K Page 5 of the testimony , and also at thevery end of the testimony beginning on page 1 2
,we have a l ittle
on what each of these reg u lations i s supposed to accompli sh ,and
7 9
in that final column the agency responsible for enforcing those regu la tion s .
Mr . BAR RET T . O K T hat is good .
You ta lked a l ittle bit about the National Alliance of Busines sesthat is referred to in your testimony. I don ’t know what that is .Can you help me out as to what that is? What is the Nati onal All iance of Businesses? I simply don’t know what it i s .
Mr. FIS CH. It i s an advocacy group that was put together to workwith businesses throughout the United States and provide themwith ,
I guess , some support here on the H ill . In that capacity theyalso sell their services to different providers in the States for train
M r . BAR RET T . Is i t a lobbying group?Mr . CRAWFORD . T hat is one of their functions .
Mr . FIS CH . Yes , it has got a portion of it to do lobbying.
Mr . BARRET T . T hey get $96 million from the Federal Govern
Mr . FIS CH . Yes , sir .
Mr . BAR RET T . T o lobby?Mr . CRAWFORD . I don ’t believe they can useMr . FIS CH . T hey don ’t use a n y
.
of their Federal funding for l obbyi n g . T hey make that very clear di stinction .
Mr . BAR RETT . And where are they located?Mr . FIS CH . T hey are located here in Washington ,
DC .
Mr . BARRET T . Do they have branch offi ces throughout the country?Mr . FIS CH . I
’
m not sure of that, sir, but their primary headquarters i s here in Washington
,DC .
Mr. BARRET T . An d it‘
s a y s NAB has competed for part of the partn e rsh ip money it receives from E T A and receives a balance on anoncompetitive basis . How much—can ou break that down?Mr . FIS CH . I
.
don’t have a figure what is competed and notcompeted at thi s pomt, but at one pomt it was all sole source . Afterour audit they did compete a portion of the g rant.Mr . BARRET T . If you could g et—if I could ask , Mr. Chairman , for
a breakdown as to what percentage they received,I would a ppr e
ciate that.[T h e information referred to follows zlAgin cy : Employmen t a n d T ra in in g Admin istra tion (E TA ), Of fice of Policy a n d R e
se a reReci ie n t N ame /Addre s s : N a tion a l A ll ia n ce of Bu sin ess, 1 20 1 N ew York Aven u e,
N .W .,a shin gto n , D C . 20 0 0 5 .
Gra n t .Amou n t :Au thority: D IM S 2 —c n e respo n sible sou rce .
Pu rpo se of Project : T his project will en ha n ce a n d promote a rticipa tion of thebu sin ess sector in the pa rtn ership progr am of the federa lly fu n ed employmen t a n dtr a in in system. It will provide gen era l su pport services to Pr iva te In du stry Cou ncils a n sta te job tra in i n g coordin a tin g cou n cils to stren gthen their roles a s employmen t a n d tr a in in g coordin a tors towa rd ma ximiz i n g the resou rces a n d expertise of
the bu sin ess sector .
Expla n a tion of Recipien t Cho ice : S ervices a re a va ila ble from on ly on e respo n siblesou rce , a n d n o su bstitu te will su f fice . T h e re cipie n t h a s u n iqu e qu a l ifica tion s to pe rform the type of a ctivities to be fu n ded .
Perce n ta ge S pen t on Admi n istra tive Costs: N ot a va ila ble .
Agen cy: Employmen t a n d T ra in i n g Admin istra tion (E TA ), Of fice of Policy a n d R e
sea rch .
80
Reci ie n t N ame /Addre s s : N a tio n a l A ll ia n ce of Bu sin ess, 1 20 1 N ew York Aven u e,W. , a shin gton , D .C . 20 0 0 5 .
Type : Gra n t .Amou n t :Au thor ity: DLM S 2 —o n e respon sible sou rce .
Pu rpo se of Project: T o provide a N a tion a l Workforce Assista n ce Colla bora tivepro
’
e ct to develop cou rsewa re a n d design cu rricu la for in cu mbe n t worker tra in i ng
.
x pla n a tion of Recipien t Cho ice : S ervices a re a va ila ble from on ly on e re spon s ib esou rce, a n d n o su bstitu te will su f fice . T h e re cipien t h a s u n iqu e qu a l ifica tion s to pe rform the type of a ctivities to be fu n ded .
Perce n ta ge S pen t on Admi n i stra tive Costs: 2396 .
Agin cy : Employmen t a n d T r a i n i n g A dmi n istra tion (E TA ), Of fice of Pol icy a n d R e
sea reReci ie n t N ame/Addre s s : N a tion a l A ll ia n ce of Bu si n ess, 1 20 1 N ew York Aven u e,
N .W .,a shin gto n , D .C . 20 0 0 5 .
Gra n t .Amou n t:Au thor ity: DLM S 2 —c n e re s n s ible sou rce .
Pu rpo se of Project: T hese gra n ts wi provide techn ica l a ssista n ce a n d tra in in gservices for e a ch orga n i z a tion ’s respective a ffi l ia te n etwork , in the a rea s of progr amdevelopmen t, program a n d fi sca l ma n a gemen t, a n d sta ff tra in in g.
Expla n a tion of Recipien t Cho ice : S ervices a re a va i la ble from on ly on e respo n siblesou rce, a n d n o su bstitu te will su f fice . T h e re cipien t h a s u n iqu e qu a l ifica tion s to pe rform the type of a ctivities to be fu n ded .
Percen ta ge S pen t on A dmi n istra tive Costs:A gin cy : Employmen t a n d T ra i n i n g Admin istra tion ( E T A ), Of fice of Pol icy a n d R e
se a rc
Reci ie n t N ame/Addre s s : N a tion a l A ll ia n ce of Bu sin ess, 1 20 1 N ew York Aven u e,N .W .,
a shin gton , D .C . 20 0 0 5 .
Type : Gra n t .Amou n t :Au thority: DLM S 2 —o n e respo n sible sou rce .
Pu rpo se of Project : T his project wil l en ha n ce a n d promote pa rtici pa tion of th ebu sin ess sector in the a rtn e rsh ip program of the feder a l ly fu n ded employmen t a n dtra in in system. It will
)
provide gen era l su pport services to Pri va te In du stry Cou ncils a n sta te job tra in in g coordin a tin g cou n cils to stren gthen their roles a s employmen t a n d tra in in g coordi n a tors towa rd ma ximiz in g the resou rces a n d experti se of
the bu sin ess sector .
Expla n a tion of Recipien t Cho ice : S ervices a re a va i la ble from on ly on e respo n siblesou rce , a n d n o su bstitu te will su f fice . T h e re cipien t h a s u n iqu e qu a l ifica tion s to pe rform the type of a ctivities to be fu n ded .
Percen ta ge S pen t on Admi n i stra tive Costs : N ot a va i la bleAgin cy : Employmen t a n d T ra in i n g A dmin istra tion ( E T A ), Of fice of Pol icy a n d R e
sea reReci ie n t N ame /Addre s s : N a tion a l All ia n ce of Bu sin ess, 1 20 1 N ew York Aven u e,
N .W ., a shin gton , D .C . 20 0 0 5 .
Type : Gra n t .Amou n t:Au thority: DLM S 2 —o n e respo n sible sou rce .
Pu rpo se of Project : T o provide a N a tion a l Workforce A ssista n ce Co lla bora tivep ig
e ct to deve lo cou rsewa re a n d design cu rr icu la for in cu mbe n t worker tra in i ng
.
x pla n a tio n 0 Recipien t Cho ice : S ervices a re a va i la ble from on ly on e re spo n s ib esou rce , a n d n o su bstitu te will su f fice . T h e re cipien t h a s u n iqu e qu a lifica tion s to pe rform the type of a ctivities to be fu n ded .
Perce n ta ge S pen t on Admi n istr a tive Costs:Agin cy : Employmen t a n d T ra in in g A dmin istra tion (E T A), Of fice of Policy a n d R e
sea reReci ie n t N ame /Addre s s : N a tion a l A ll ia n ce of Bu sin ess, 1 20 1 N ew York Aven u e,
N .W ., a shin gto n ,D .C . 20 0 0 5 .
T ype : Gra n t .Amou n t:Au thori ty: DLM S 2 —o n e re s n s ible sou rce .
Purpo se of Project : T hese a n ts willm
provide te ch n ica l a ssista n ce a n d tra in in gservi ces for e a ch orga n i z a tion 8 respective a ffi l ia te n etwork , in the a rea s of programdevelopmen t, program a n d fi sca l ma n a gemen t, a n d sta ff tra in i n g.
‘
8 1
Expla n a tio n of Recipien t Cho ice : S ervices a re a va ila ble from on ly on e respo n siblesou rce, a n d n o su bstitu te will su ffi ce . T h e re cipien t h a s u n iqu e qu a l ifica tion s to pe rform the type of a ctivities to be fu n ded .
Percen ta ge S pen t on Admin istra tive Costs:Agen cy : Employmen t a n d T ra i n in g Admin istra tion (E TA), Offi ce of Pol icy a n d R esea rch .
Reci ie n t N ame/Addre s s : N a tion a l A ll ia n ce of Bu sin ess, 1 20 1 N ew York Ave n u e,N .W .,
ashin gto n , D .C . 20 0 0 5 .
ra n t .Amou n t:Au thority: DLM S 2 —o n e respo n sible sou rce .
Pu rpo se of Project : T hese gra n ts wil l su pport pa rticipa tion a n d in volvemen t of thepu blic sector in s cific n ew in iti a tives in volvin g n a tion a l employme n t a n d tr a in in g
Emg rams—S choo -to-work , S kil l S ta n da rds , a n d the stra tegy u n der lyin g theemploymen t Act of 1 994 .
Expla n a tion of Recipien t Cho ice : S ervices a re a va i la ble from on ly on e respon siblesou rce, a n d n o su bstitu te will su ffi ce . T h e recipien t h a s u n iqu e qu a l ifica tion s to pe rform the type of a ctivities to be fu n ded .
Percen ta ge S pen t on Admi n istra tive Costs:
Mr . CRAWFORD . Another example, Congressman Barrett, i s theOlder Workers Program in the Department of Labor. T hey also arenoncompetitive discretionary ants
,and the funding there
,I b e
l ieve,i s—approaches $4 0 0 mil ion .
Mr . SHAYS . $4 0 0 million nationwide— I ’m sorry .
Mr . BAR RET T . Go ahead .
Mr . CRAWFORD . Yes , sir.Mr . SHAYS . $4 0 0 million per year?Mr . CR AWFORD . Yes , in the CSEP Program ,
the Senior Citizen sEmployment Program .
,
M r . BARRET T . Is that a decision that i s made at the Departmentlevel? You talked about some of these suggestion s being made atthe appropriation s level . Are either of those two suggestions thatwere made at the appropr iations level
,or are those strictly within
the Department?Mr . CRAWFORD . I would have to‘ research the CSEP Program to
answer that. I would be happy to do that and let you know .
Mr . BAR RET T . If ou could do that , I would appreciate it.Mr . CRAWFORD . ure .
Mr . BARRET T . I have no further question s .Mr . SHAYS . I thank the gentleman .
I would just like to follow up quickly on this . I am trying to e s
ta blish a principle in my own mind. Mr . Crawford , let me just respon d first to your comment . On page 4 of your statement
,you say
that when businesses work with the De a rtme n t of Labor the mentality of the Department seems to be tcha” rather than a morecooperative approach . Do you find that with OSHA primarily
,or do
you find it with other of fices as well? I have had people tell methey will invite OSHA in to ask it to tel l them where they havemade mistakes
,and where they need to correct
,and then they end
up getting a fine . You know ,a business invited OSHA in
,and the
get a fine of or or because they haven tdone something properly
,and yet they are trying to identify what
they haven’t done properly to correct it. T his seems to relate .
Mr. CR AWFORD . Y e s , sir, it does .
When we spoke,again
,what I wanted to mention is that we
looked at 30—we met with 36 emp lo ers and employee groups . I
want to put this in context . We also ha d an advi sory group made
u p of representatives of business and unions to work with us tohelp us construct this study
,and what we generally found was that
workplace regulation was important but it wasn’t always the mostimportant to a business .Generally
,what the business ’s principal function was , if it i s a
small diner,their most important concern was local licen sing
,
health licensing,for their businesses . With that said , what you
found , what we heard most was— concerns about OSHA and EEOCwere the two that consis te ntly were cited by employers .
Mr . SHAYS . I’
m try in to look at it from the Department’s standpoint. Do they think t at “businesses will use as an excuse
,that
they didn’t know,and
,if they think OSHA i s on their trail
,invi te
them in to come look and then say , “T ell us what we need to cor
rect”?Do you think the mentality - cf business i s that they will just
muddle through , and when it comes close to being reviewed , thenthey will ask for a review? I ’m just trying to understand why theDepartment would approach it this way. Give me the best argument the Department has .Mr . CRAWFORD . Well , I’ll give you an argument. I’m sure the De
p a rtme n t will have even a better one .
I think what you have is,over time the Department has done a
good job,and its approach has evolved over time into one that has
been primarily enforcement and regulation,and it has done a good
j ob . What we are arguing about now is that the times havechanged
,it i s time for the Department to change . T hey are t '
n gto do things differently . T hey are trying to is sue standards in c eare r lang uage . T hey are trying to improve the way they inspect . Ourconcern is that they may not be going quite fa r enough .
T h e employers would like a way— and union groups too—wouldlike a way to have OSHA come in
,or other parts of the Depart
ment, or EEOC ,and advise them
,as you say . Now the Department
does have volu ntary programs . It has the V oluntary Protection Program
,which is generally a pro am that is—has large p etroch emi
cal companies in it. T here are a ou t,I th ink
,20 0 sites , em
ploye e s , where OSHA comes in , helps them work on their standards , helps them beef up their standards , and in return O sH A ’
s
role there is more technical advice and ass istance as opposed to inspection and citation .
Mr . SHAYS . A theme that is kind of coming through,i s that some
of these laws were created in an industrial society . T hen a wholenew set of laws were created from the 1 960 ’s on . I mean a wholeplethora of them . We are really into “a new age of information , i ti s a whole different competitive environment out there
,and it
strikes me that one of the messages I’m hearing i s that the Department has to get with it and adjust to this new environment.I would like to ask you
,Mr . Masten : A statement you made be
fore the Appropriations Committee that you didn’t focus in on interms of your testimony here dealt with unemployment insurancefraud . I
’
m just curious . T his was on January 1 1 , Mr . Masten , whenyou were before the Subcommittee on Labor
,H H S ,
and E ducation .
Y ou stated that over the past 5 years O IG investigations have u ncovered more than a dozen separate fraudulent unemployment in
84
there is no doubt about it , some of them have been . Others needto be strengthened , I think there is no doubt, I think we al l agreewith that
,but I think we have to be concerned .
I come from New York City, a n d I just can envi si on that all of
a sudden,based on what we are doing, that we will have a lot of
people coming into the city t ing to survive . And I think we on htto be very concerned about t at because we have been down t isroad before
,and when we talk about block g rants , and if we do not
have some kind of overs ight and some kind of way to determine interms of whether or not you are actually addressing the needs , wecould have some big problems at the other end
,and I know you
have looked at that a little bit.Mr . CRAWFORD . We have offered some suggestions to Congress asearly as last year as it l ooks at reforming job training, and therewere four pieces that we have said it would be easier to access .Many of these prog rams are hard to find and hard to access . Moreeffi cient use of resources in the area , and the area I think you aretalkin about concerns the variety of services .
We ave suggested that whatever g roups the Congress choosesto serve in its j ob training programs
,that the services be tailored
to the needs of individuals . We found in some cases where a personwould end up going to a service provider and there wouldn’t be anindependent as sessment.For example
,a person goes— sees an advertisement on T V . at 2
a .m. ,for a truck driving school
,goes to the . truck driving school
,i s
assessed,and guess what he is asses sed to be? A truck driver . And
he is trained as a truck driver. An d what we would argue is thatyou need to have independent assessment so that whatever g roupsthe Con ess chooses to serve
,people are served well .
And t e last of the four points i s one of accountability , makingsure we know not only the dollars but also the outcomes .Mr . FIS CH . Cong ressman T own s , I think if a lot of the programs
had,as we stated earl ier here
,some long-term measures as to the
success rather than the numbers of people served and the numberof people that went through the program
,maybe we wouldn’t be in
a situation today where we are cutting thi s and cutting that andcu ttin this and cutting that. If the long-te rm measurements hadbeen t ere
,some of these programs would have been able to prove
themselves out.Mr . CR AWFORD . You find also
,Congres sman T owns
,in one case
we even had a— I had a conversation with a service provider whowas telling me how well his program was functioning
,and his
measure of success was the number of people trained,not nec
e s sa r ily the number of people employed as a. result of the training.
Mr . T OWN S . Let me ask ,what happen s if a State decides that,
“I’
m not going to get involved in any kind of employment and training, I’m not even going to get involved in the program?” What happens in a case like that?Mr . CRAWFORD . I don ’t think we have had one .
Mr . FIS CH. I don’t think we have ever had anybody not take themoney
, s i r .
Mr . CRAWFORD . No .
Mr . T OWN S . But you have had some people take the money andnot do what they were supposed to do .
85
Mr . FIS CH . Yes .Mr . CRAWFORD . Yes .Mr . T OWN S . And that bothers me too . Let me be right up front .
I don ’t see the kind of regulatory constraints that would make mefeel comfortable in terms of this whole block grant situation as towhat happens at the oth erl end when the Sta te gets hold of themoney. I just — I just don’t feel comfortable in terms of
what I have seen and what I have heard up to this point.Mr. FIS CH . When JT PA was enacted , it came off the H ill as a
block gra nt. Within 2 or 3 years , our investigative case load waseating up about 4 5 percent of our resources because of the fact thatts
here was no accountabil ity with the money that went down to thetates .Mr. T OWN S . We make mistakes 1 1 here, no question about it.Mr. SHAYS . If the gentleman wou (I yield .
Mr. T OWN S . Yes , I yield .
We are going to have a roll call vote,and I would like
Mr. Souder to get his 5 minutes .Mr . T OWN S . I would be delighted to yield to him .
Mr . SOUDER . I would point out that the critici sms you have hadof the Federal programs are so devastating, while it is hard toimag ine the States being much worse , but we need some kind of
accountability at the State level , but overlap , duplication , wastedresources
,poor service quality, confusion by clients , employers , a d
min istra tor s , and all that is a pretty devastating indictment of theFederal as well .I merely would like to ask that—M r . Crawford , you have a chart
that then further elaborates on thi s one . Do you have and couldyou put together so we would have it for our information , you havethe number of these programs that are in the Labor Department,where you could print out like“ you did on the supplementary material with the descriptions of what other departments have youthprograms and what those are? Do you have that type ofMr. CRAWFORD . Yes , we have that type of information .
r . SHAYS . If the gentleman would yield , you have a report onthis whole program that does exactly that?Mr . CRAWFORD . Yes .Mr . SHAYS . And it bogg les the mind .
Mr . SOUDER . Yes , because we are trying to deal with the samething over in the Education and Economic Opportu nities Subcommittee cmwork force , a n d it is a nightmare trying to get a handle on this stuff.
Mr . SHAYS . We will get it for you.
Mr . CRAWFORD . We will give you a copy—make sure you get acopy.
Mr . SOUDER . T hank ou for your testimony.
Mr . SHAYS . I would ike to thank all three gentlemen for testifying. You have given us a tremendous amount to focus in on . T h e
tax credit alone we could take a ood look at, but every one of theareas would justify an in depe n ent hearing. T hank you for thework that you do for our country .
We will call our next witnesses after we have had an opportunityto vote , and we will be back shortly . So we are recessed .
[Reces s ]
86
Mr . SHAYS . I would like to reconvene this hearing and call on ourwitnesses .Do we have witnes ses? If we do
,I would like to cal l them . Please
come up . While you are still standing, I’ll save you the opportunityof sitting down . It is nice to have all three of your here .
Our witnes ses are Burt Bamow,Nancy Pindus and Demetra
Smith Nightingale . If you would raise your right hand .
[Witnesses sworn .]Mr . SHAYS . Ms . Pindus
,we will start with you . As has already
been agreed to by un animous consent, your full testimony will beincluded in the record
, a n d you can summarize it, you can refer toparts of it , or you can do what you choose . We will start with you
,
Ms . Pindus .
S T A T E M E N T O F N A N CY PIN DUS , URBAN I N S T ITUT E , ACC O M
PAN I E D BY DE M E T RA S M I T H N I GH T IN GALE , URBAN IN S T I
T UT E ; AN D BURT S . BAR N O W, PRIN CIPAL RE S E ARCH S CI
E N T IS T , IN S T IT UT E FO R PO LICY S T UDIE S , J O H N S H O PKIN S
UN I V E RS IT Y
Ms . PIN DUS . T hank you to the subcommittee for the opportunityto speak today. I
’
m accompa nied by Ms . Demetra Nightingale , acoprincipal investigator on the study that we are discussing today.
Mr . SHAYS . Let me ask a favor. Would you turn the mike down .
Just bend it down more,and is it on?
Ms . PIN DUS . Yes .
Mr . SHAYS . Sorry to interrupt you .
Ms . PIN DUS . T h e recent focus on redesigning Government programs to be more responsive to the needs of their customers hasencouraged initiatives to improve program effi ci ency . A related concern is whether, and b how much , consolidation of Federal funding streams would re su t in cost savings .T h e Urban Institute has complete d a preliminary study for the
US . Department of Labor to identify potential administrative savings that might be expected from various program consol idationmodels . T h e conclusions presented h ere '
a re considered prel iminaryand tentative mainly because of data limita tions and differences indefinitions across programs . For example , while most programsmaintain data on administrative costs
,the definitions of what a c
tivitie s are included in the administrative versus direct cost categ ory vary . By sharing our findings with you today we hope to provi de an understanding of the conceptual framework and operatingassumptions that can be used to further examine this complexi ssue .
T h e policy decision about whether to consolidate or not should,
ideally, begin with an asses sment of the overall value of each pro
gam . Does it make sense to consolidate various existing programs?oes each program have a clear purpose and mandate? Are the ex
istin g mandates and objectives of individual programs compatiblewith , duplicative of, or inconsistent with other programs?Administrative savings that result from consol idation ca n eitheroffset costs of the overall program
,thus resulting in real program
cost reductions , or be redistributed from administrative activities todirect service activi ties . T h e benefits
,then
,can either be measured
87
in terms of cost reduction or in improved customer service and efficre n c
T he,
majority of State integration initiatives identified in ourstudy were motivated by the objective of improving efficiency, notreducing program costs . Federal decision make rs should be clearabout the relative priority of the two obj ectives , reducing costs orimproving program effi ciency .
We an alyzed the following examples of consolidation : Consolidation of JT PA I IA and JOBS program for disadvantaged adults andwelfare recipients ; consolidation of JT PA IIA
,JOBS
,and the em
ployment service ; consolidation of JT PA IIA,vocational education
,
and adult basic education ; and consolidation of s ix prog rams fordislocated workers under JT PA T itle III . T h e bottom line implication is that potential administrative savings of Federal consolidation would depend on how much and what type of integration therealready is acros s the Nation at base line . Savings result fromstreamlining paperwork , reducing administrative staff , and integrating computer systems personnel and fiscal procedures .If most State s currently operate programs separately , then the
considerable up ! front costs associated with implementing consol idation would exceed any savings . An y potential savings would onlyappear in the long run . If most Sta tes currently integrate servicedelivery but not administration , there could be some small savingsin the short run .
Even under scenarios where there could be some admini strativecost savings , though , the amount of savings is not l ikely to begreat . T otal Federal expenditures on administrative costs incurredat the State level represent a very small percentage of total prog ram costs to begin with ,
generally only 1 or 2 percent of all Federal costs . Under the best case scenario there might also be somesmall Federal savings at the local level .If JT PA T i tle IIA and the JOBS program were totally consolidate d and if total administrative costs could be reduced by onethird
,that would represent about $ 1 27 million in Federal budget
savings .
T here are some examples from the States in my written testimony that back up the fact that motivation for consolidation ismostly not for reducing budgets but for improving customer service .
Savings at the Federal level resulting from consol idation will bemainly related to personnel and agency operation s
,not program
costs . T h e amount of savings will depend on the number and typesof programs combined
,but since expenditures at the Federal level
are generally less than 1 percent of program costs the potentialsavings are also low.
In conclusion,our analysi s suggests that the potential for admin
istra tive savings is likely to be small relative to total direct program service costs . T hi s does not mean that consolidation of programs should not be seriously considered . In fact, most State program administrators feel that some amou nt of consolidation andoperational simplification i s critical to improve program effectiveness and effi ciency . Savings are expected in per customer costs
, ef
fi cie n cie s that allow more individual s to be served with the existinglevel of resources .
T hat concludes my oral statement. We will be happy to answerany question s .T hank you .
1[T lie prepared statement of Ms . Pindus and Ms . N ightingale fol
ows :PR E PAR E D ST AT E M E N T O F N A N CY PIN DUS A N D DE M E ’
I‘
RA S M IT H N IGH T IN GALE , UR BA NIN S T IT UT E
IN T R O DUC TIO N 1
T h e recen t focu s on redesign in g govern men t programs to be more respo n sive tothe n eeds of their cu stomers h a s e n cou r
?e d in i tia tives to improve program e ffi
cie n cy . A rela ted co n cern is whether, a n by h ow mu ch, con solida tion of federa lfu n din stre ams wou ld resu lt in cost sa vin gs . T his is a complica ted issu e, requ irin gca re fu exami n a tion of cu rren t a n d fu tu re va r ia tion s a cro ss programs in terms of ope ra tion s , ma n a gemen t, in ter-pro gram coordin a tion ,
a n d fi sca l reportin g a n d bu dget
fi'h e Urba n In stitu te h a s completed a pre l imin a ry stu dy for the US . Depa rtmen tof La bor to iden tify pote n tia l a dmin istra tive sa vin gs th a t might be expe cted fromva riou s pro gram con so li da tion models . T h e con clu sion s presen ted a re con sidered
gre limin a ry a n d ten ta tive, ma in ly beca u se of da ta limi ta tion s a n d differen ces ine fi n ition s a cross pro ams . For example , while most programs ma in ta in da ta on
a dmin istra tive costs, e defi n i tion s of wha t a ctivities a re in clu ded in the a dmin istr a tive versu s direct cost ca te go ry va ry . By sha r in g ou r fi n din gs with you toda y, wehope to provide a n u n de rs ta n di n of the con ce tu a l framework a n d oper a tin g a s
sumption s tha t ca n be u sed to fu e r examin e t is com lex issu e .
At a ll levels of govern men t, in crea sed a tte n tion h a s e n pa id to the be n efits ofprogram coordin a ti on a n d/or con so lida tion . T here h a s been a pro li fera tion of serviceI n tegr a tion models for employmen t a n d tra in in g begin n in g in the 1 98 0 8 , cou pledwith a belief tha t, a t lea st from a se rvice delivery pers tive, in tegra te d progr amsa re desira ble . T o da te , mu ch of th e in itia tive for con so ida tin g pu blic prog rams h a sbeen taken a t the sta te a n d local level. When sta te a n d loca l a dmin istra tors a n dsta ff a re a sked a bou t coordin a tion , on e of the ma in messa ges they se n d forth is tha tfedera l fu n din g provision s a n d regu la tion s a re a ba rrier to effective coordin a tion a n din tegr a tion of services. S evera l n ew federa l in itia tives by the Depa rtmen t of La bora n d the Depa rtmen t of Edu ca tion a re design ed to remove some of those ba rriers a n den cou ra ge more in tegr a tion . O n e -S top Ca reer Cen te rs for employmen t, tra in in g, a n dedu ca tion services ha ve a lrea dy be en in i tia ted, a n d more sta te a n d loca l effort s a reex eted in th e n ext few yea rs . Oth er agen cies a re simila rly in terested in re movin gfe era l ba rriers to in tegra tion , a s eviden ced throu gh in i tia tives su ch a s the S ervicesI n te a tion Demon stra tion s a t the Depa rtmen t of Hea lth a n d Huma n S ervices(H I-I the Welfa re S impl ifica tion efforts a t H H S a n d the De a rtme n t of A gricu ltu re , a n d the welfa re reform wa iver process a u thor iz ed u n der ction 1 1 1 5 of theS ocia l S ecu rity Act .
A logica l n ext ste then , to im ro ve service e f ficie n c might be to forma lly con
so lida te federa l fu ndin g streams on g with federa l regula tion s rela ted to a rea s su cha s program reportin g cycles , defi n ition s, pla n n in requ iremen ts , a n d fi sca l mon itor
in g . T e block a n t con cept is on e wa y to con so ida te fu n din g streams b “devolv
ing
"
a u thor ity mm th e n a tion a l governmen t to th e sta tes or loca l ities . ther con
s o ida tion models might in clu de a more directive ro le for the n a tion a l govern men tto a ssu re con sisten t a tte n tion to specific objectives .
CO N CE PT UAL IS SUE S
T here a re a n u mber of con ce tu a l issu es tha t come to min d in con s ide rin the pote n tia l sa vin tha t might re su t fro m con solida tin pro grams . First, the poficy decision a bou t w ether to con soli da te or n ot shou ld, ige a lly , begin with a n a ssessmen tof the overa ll val u e of ea ch pro gram: Does it make sen se to con so lida te va riou s existin g pro grams? Does e a ch program ha ve a clea r pu rpo se a n d ma n da te? A re theexistin g ma n da tes a n d ob
'
e ctive s of in dividu a l ro g rams compa tible with , du plicative of, or in con si ste n t wit other prog rams? S u c issu es shou ld be a ddressed beforedeci sion s a re ma de a bou t co n so l ida tion .
S econ d, there a re u n dou bte dly some econ omies of sca le a ssocia ted with con so l idation . If two or more programs sha re spa ce
,equ ipmen t, compu ters, a n d the like , costs
1 T h e followi n g views a re t hos e of the a u thors a n d a re n ot to be a ttribu ted to th e De pa rtme n tof La bor or to th e Urba n In stitu te
,its o ffi cers
,tr u s tem
,or spo n s ors .
89
will be lower tha n if ea ch pro gr am h a s its own sepa ra te opera tion . However , therema a l so be a poin t beyon d wh ich n o eco n omies of sca le re su lt .Th ird, pu blic ma n a gemen t a n d effi cien cy expe rts con ten d, to rea lly ma x imiz e e ffi
cie n cy over the lon g ru n ,pu blic a gen cies shou ld empha siz e im rovin g overa l l pro
gram services by focu sin g on cu stomer service a n d optima l u s e of)
techn ology . S implyco n solida tin g existin g pro grams if they a re n ot a lrea dy opera tin g a t ma ximum e ffi
cie n cy a n d produ ctivity is n ot likely to produ ce ma x rmum effi cien cy in the n ewlycrea ted system.
Fi n a l ly, a dmin i stra tive sa vi n tha t resu lt from con solida tion ca n either ( 1 ) offsetco sts of the overa l l prog ram,
u s re su ltin g in re a l program cost redu ction s ; or (2)be redire cted from a drmn istra tive a ctivities to direct service a ctivities . T h e be n efi ts,then , ca n either be mea su re d in te rms of cost re du ction or in improved cu stomerserv ice a n d effi cien cy. T h e ma
'
ori ty of sta te in tegra tion in itia tives iden tifi ed in ou r
stu dy were motiva ted by the o je ctive of improvin g effi cien cy, n ot redu cin g rogramcosts . Federa l decision ma kers shou ld be clea r a bou t the rela tive pr iority 0 the twoobjectives—redu cin g co sts or impro vin g pro gr am effi cien cy.
CA N D IDAT E S FO R PR O GRAM CO N SO LIDAT IO N
Con gress a n d the Ge n era l Accou n tin g Of fice ha ve focu sed a tte n tion on the n u mbe r of employmen t-rela ted pro g rams a cross differen t a gen cies, r a isin g n ew qu estion sa bou t the ss ible overla p of program services a n d ro g ram cu stomers a n d a bou tthe fe a s ib ' ity of con solida tin g pro grams . T h e GAO fia s beg u n a u sefu l process ofiden tifyin g poten tia l a rea s of over la p a n d opportu n ities for pro gr am con sol ida tion bylookin g a t ta rget po u la tion s
,goa ls
,a n d a dmin istra tive a n d se rvice delivery stru e
tu res of programs . Bu t,the exa ct n umber of programs va ries depen din g u pon the
specific criteria a pplied to cha ra cteriz e a“pro gr am”
a s well a s the defi n ition u sedfor
“employmen t a n d tra in in g.
”A n a ccu ra te opera tion a l defi n ition of a n employmen t
a n d tra in in g program is “a program tha t provides employmen t-rela ted tr a in in g or
other direct a ssista n ce to in dividu a ls .” Usin g this defi n ition , the Depa rtmen t of
La bor cu rre n tly in fi sca l yea r 1 994 a dmin i sters 20 prog rams tha t provide job tra i nin g a n d/or employmen t a ssista n ce to in dividu a ls :
0 Job T ra in in g Pa rtn ers hip Act (JT PA ) T itle TIA -T r a in in g for Eco n omica l lyDis a dva n ta ed Adu lts0 JT PA T it e IIB-S u mmer You th Employmen t Program0 JTPA T itle IIC-Yea r Rou n d T ra in in g for Econ omica lly Dis a dva n ta ged You th0 JT PA T itle III -Econ omic Disloca tion a n d Worker Adju stmen t A ssista n ce(E DWAA )0 JTPA T itle III -Defen se Con version Adju stmen t Progr am (DCAP)0 JT PA T itle III-Defen se Diversifica tion Pro gram (DDP)0 JT PA T itle II I-Clea n A ir Employmen t T r a n sition A ssista n ce Prog ram(GAET A )0 T ra de Ad'
u stme n t Assista n ce0 N AFTA rid e” Pro gram0 S choo l-to-Wor Opportu n ities Prog ram0 Commu n ity S e rvice Employmen t for Older America n s0 JTPA T itle IV A-Migr a n t a n d S e a son a l Fa rmworke rs Pro gram0 JT PA T itle IV A -N a tive America n Employmen t Prog ram0 JTPA T itle IV B-Job Co 3
0 Vetera n s Employmen t g ram0 Homeless Vetera n s In tegra tion Project (M cKin n ey Act)0 Job T ra in in g for the Homeless Demon stra tion Program (M cKin n ey Act)0 Employmen t S ervice0 Disa bled Vetera n s Ou trea ch Pro gr am0 Local Vetera n s Em loyme n t Represen ta tive Pm am
In a ddition to the DO E programs ,importa n t emplgigrme n t a n d tra in in g-re la ted
pro g rams a lso a re a dmin istered throu gh other federa l a gen cies , in clu din g :o Voca tion a l Edu ca tion (US . Depa rtmen t of Edu ca tion )0 Adu lt Ba sic Edu ca tion (US . De a rtme n t of Edu ca tion )0 Job Op rtu n itie s a n d Ba sic Skills (JOBS ) Program (US . Depa rtmen t of
He a lth a n Huma n S ervices)o
lFoo
dS tamp Employmen t a n d T ra in in g Progr am (US . Depa rtmen t of Ag r i
cu tu reFIN DIN GS AN D CO N CLUS IO N S
We a n a lyz ed the followin g examples of con sol ida tion , con sider in g the pote n tia l forsa vi n g federa l a dmin i stra tive costs in cu rred a t the sta te a n d loca l level , a n d in a
sepa ra te a n a lysis, a t the federa l level :
o 1 . Con sol ida tion of JT PA IIA a n d JOBS for di sa dva n ta ged a du lts a n d welfa rereci ie n ts ;o Con so l ida tion of JT PA IIA JOBS a n d the E S ;0 3. Con so lida tion of JT PA IlA , voca tion a l edu ca tion , a n d a du lt ba sic edu
ca tion ; a n d0 4 . Con so lida tion of six pro grams for disloca ted workers u n der JT PA T itle III .
Federa l costs a n d sa vin gs of fu tu re con sol ida tion licie s will va ry de pe n din on
the amou n t of in tegra tion tha t cu rre n tly exists for thz pro gr ams in qu estion . Sgin ce
there is n o good sou rce of in forma tion on the exten t of In te a tion a t the sta te a n dloca l level , we a ssumed there a re thre e differen t h ypoth etica ba selin e scen a rios:
0 Ba selin e S cen a r io 1 : T here is a lrea dy tota l in te a tion of a dmin istra tion a n dservice delivery for the in clu ded pro gr ams, a t bot the sta te a n d loca l levels .0 Ba selin e Scen a r io 2: T here is a lrea dy in teg ra tion of service del ivery a t theloca l level , bu t a t the loca l a n d sta te levels a dmin istra tion is ha n dled sepa ra telyfor the in clu ded prog ram s.0 B a selin e S cen a rio 3: T here is cu rre n tly n o in tegra ted service delivery or a d
mi n istra tion for the in clu ded ro g rams .
T h e bottom-lin e implica tion is t a t te n tia l a dmin istr a tive sa vi n gs of federa l conso lida tion wou ld depen d on h ow mu cgi
)
a n d wha t ty of in tegra tion there a lrea dyis a cross the n a tion a t ba selin e before the imp eme n ta tion of a n y feder a l conso lida tion ). If most sta te s cu rren tly opera te programs sepa ra tely, then the con sidera ble u p
-fron t costs a ssocia ted with impleme n ti n con sol ida tion wou ld exceed a n ysa vin gs . An y sa vi n 3 wou ld on ly a pe a r in the on g ru n . If most sta tes cu rren tlyin te a te service de ivery bu t n ot admin istra tion , there cou ld be some sma ll sa vin gsin t e short ru n . It is n ot clea r wha t time period shou ld be u sed to determin e thelon g ru n ,
bu t Iowa a dmin istra tors estima te th a t even a fte r severa l yea rs,the pro
je cted sa vin gs a re n ot expected to offset the co sts of the in itia l u p-fron t in vestmen tsre ired to Implemen t the con solida tion tha t they a re cu rre n tly a ttemptin g.
n e po in t is pa rticu la r ly importa n t to n ote . Accordin g to offi cia l s in severa l sta tes,
it is po ssible tha t both the u p-fro n t costs a n d the lon g-ru n sa vin gs of re con figu rin gcompu ter systems ma y be sign ifica n t ( a lthou gh sta te s a re n ot yet a ble to providein forma tion on the ra n ge of pote n tia l costs or sa vin gs). However, °
ve n the ra pidte ch n olo
°
ca l cha n ges a n d the riority given to developin g high pe rfdrma n ce workpla ces , t e tota l costs of u pg ra
'
n g compu ter techn ology a n d ma n a gemen t in forma
tion systems, even if in itia ted by a progr am con so li da ti o n , shou ld n ot a ll be a ttri bu ted to the con so lida tion . Pu blic a g e n cre s , like priva te compa n ies , a re in cre a sin glyex cte d to mai n ta in on go in g review ,
re de s i a n d u pgra din g of tech n o logy .
ve n u n der scen a rios where there cou l be some a dmi n i stra tive cost sa vin gsthou gh
,the amou n t of sa vin gs is n ot likely to be a t. M u ch of the expected feder a
sa vi n gs wou ld occu r a t the sta te level,bu t tota l ede ra l ex n ditu re s on a dmi n istra
tive costs in cu rre d a t the sta te level re presen t a very sma 1 percen ta ge of tota l progr am costs to beg in with (gen era lly on e to two rce n t of a ll federa l costs). Evenif ha lf of a ll a dmin i stra tive costs a t the sta te leve were sa ved a s a re su lt of federa lcon sol ida tion
,tha t wou ld sti ll repre sen t on ly a bou t on e rce n t of tota l feder a l pro
aam expen ditu res for a ll pro ms con so lida ted. Un e r the best-ca se scen a rio ,t e re might a lso be some sma l federa l sa vin gs a t the loca l level . If 20 perce n t ofthe loca l a dmi n istra tive costs cou ld be sa ved, this might tra n sla te in to a sa vin gs of2—4 percen t of tota l federa l pro am ex e n ditu re s for a ll programs con sol ida ted . For
example , if JTPA T itle IIA a nflh e JO 8 rog ram were tota l ly con so lida te d a n d if
tota l a dmi n istr a tive costs cou ld be redu ced y on e -third , tha t wou ld represen t a bou t$ 1 27 mill ion in federa l bu dget sa vin gs, re cog n iz in th a t some of this te n tia l s a v
in gs wou ld be offset by in vestmen ts n eeded to impqeme n t su ch a con so ida tioncompu ters, perso n n el po licies, pro gram reportin g pro cedu res). T his con clu sion of limite d sa vi n gs resu ltin g from con sol ida tion i s con sisten t with the experien ces descr ibed by sta te a dmin istra tors. T hey gen era lly in dica te tha t the motiva tion for con
solida tion is n ot redu cin g bu dgets bu t impro vin g cu stomer service a n d overa l l opera tion a l effi cien cy. For example :
0 West Virgi n i a , by in te g ra tin a n d sha rin sta ff in loca l employmen t servicea n d u n employme n t in su ra n ce 0 recs
,redu ce the tota l n u mber of sta ff po sition s
a n d the tota l dol la rs ex n ded from the Un employmen t In su ra n ce T ru st Fu n d.
0 Iowa is in te g ra tin t e services delivered by six sta te a gen cies tha t a dmi ni ster employmen t a n tra in in g pro grams . T his in itia tive h a s reportedly rea liz edsa vi n gs in terms of ren t a s a resu lt of cc-loca tion in o n e loca l commu n ity,ren t wa s redu ced b pe r yea r) ; a n d sa vin gs of a re expectedby con solida tin a n fu lly a u toma trn te n sepa ra te in ta ke pro cedu re s a n d rela ted forms . Up ro n t costs in clu de a ou t for a pro fession a l con tra ctcal led Bu sin ess T ra n sition Pla n n in g, a n d other co sts a ssoci a ted with redesignin g da ta a n d ma n a gemen t in forma tion systems . Iowa expects tha t the costs pe r
92
but it i s important to recognize that what they are counting thereare really fundin streams , some of them are not really programsat all . For e x amp e , the T itle IIA program for JT PA as they countit includes four programs . T h e youth T itle IIC ,
which was split offfrom IIA in the 1 992 amendments , adds three additional titles . Sothat is a total of seven just for those two ma ' or programs . T heirl ist includes demonstrations such as the Yout Fair Chance thatare only temporary and were specifically added so that we mighttest out new prom i sing events . In addition , there are some that arequ i te tangential to the employment a n d training area that wouldinclude the eight Small Bus iness Admini stration prog rams in mopinion . So there may well be too many programs , but to just lookat
,focus on
,that 1 63 number I think can be a bit misl eading.
T h e Department of Labor staff has indicated that about threequarters of the money is concentrated in 1 2 prog rams . In a studyI did several years ago I identified about 1 4 major programs . T hati s where the money is , and that is where of course you have themost potential for savings . In addition ,
some of these programsthat have been establi sh ed are for specific target groups such asthe elderly
,migrants
,refugees
,Native Americans
,and people with
di sabilities . T h e Congress n eeds to think clearly whether they wishto consolidate these programs or whether there still remains a needfor separate programs for such individual s . In the meantime , interms of major opportunities for cost savings and for consol idation ,focus on the big programs like JT PA
,JOBS , vocational education ,
and food stamps .Finding No .
-2: Most a gencies do not know if their programs areworking effectively and gains have been modest at best. T his i s asta tement by Mr . Crawford that he made today as well as in previcus testimony .
Most agencies may not col lect data on participants and outcomes,
but the JT PA T itle II programs gather . a great deal of informationabout their participants
,and a major evaluation has recently been
conducted . Mr . Crawford cites fi n din from the JT PA evaluation ,
but he on] cites the impacts for yout for whom the program doesappear to be qui te ineffective . He omits the findings for adult menand women
,for whom JT PA has a statistically significant positive
impact of about per year in 1 993 dollars , so if we convertedthat to 1 995 dollars it would be even larger. My concern is thatCongress may misinterp ret Mr . Crawford’s remarks to apply moregeneral] than is warranted .
T h e t ird finding that I took issue with in my paper had to dov
pyit
hithe administrative cost savings
,and that was covered by Ms .
m us .I would like to turn now to impediments to programs identified
by General Accounting Offi ce and the Inspector General , and herewe agr ee for the most part. Barriers that keep programs fromworking well together are one form that we have ; and , second, wehave barriers that keep eligible individuals from actively participating. In some instances these barriers ari se because of deci sionsmade by Cabinet departments .
Agp
cd example here is that the Departments of Labor andHealt and H uman Services have establi shed different definitionsof low reading levels for the JOBS and JT PA programs . In other
93
cases States or local governments are to blame . An example herewould be the different geographic boundaries for programs such asJT PA ,
vocational education , K—1 2, et cetera .
In ma ny cases , however, the Congres s is the culprit often because the programs are established by different committees , and Iwould urge you to look into thi s . One example here is the differencein the program ear concept used by JT PA which sta rts on July 1each year and t e fiscal ear which starts October 1 and is usedfor the JOBS program a nd
,
the voc-cd program .
In addition,as GAO points out in their studies and as we have
pointed out in our previous work , the programs have different defin ition s for age for both cuth programs and older worker programs ,different concepts of '
0 los s for dislocated worker programs , anddifferent definitions f
)r income . T hese are all ser ious barriers for
the programs to work together.T urning now to the individual level , I think that it i s importa nt— it has long been recognized as important for us to provide asseamless as possible a system for participants . A survey of the 50States conducted in 1 993 by the Urban Institute found that all butthree States have implemente d at least some form of one-stop shopping
, a n d as part of its new middle class bill of' rights initiative the
Department of Labor has proposed establishing one-stop careercenters . I have not seen the details of this initiative, but if it offerss ignificant State and l ocal flexibility a n d if the demonstrationswork out I think it could be a step in the right direction .
In an important sense the 1 992 amendments to JT PA may haveused the wrong strategy to deal with p roblems un covered by GAOand the O IGT . T h e amendments are very prescriptive about howlocal rog rams are to serve participants . Instead , Congr ess mightcon s i er giving State and local programs more flexibility but holding them more accounta ble for the outcomes
,and I think this reit
e r a te s a point made by Mr . Crawford . T h e di scussion of on -the-j obtraining that I will turn to next provides an exampl e of how thecurrent system may be too focused on proces s rather than outcome .
I would like to conclude my testimony by briefly discussing theuse of on -the-j ob training as an activity in JT PA O JT has been oneof the success stories in the employment and training field . T h e r e
cent evaluation of JT PA found that for adults the impact on earnings for those as signed to JT PA was always statistically sign ificantand of greater magnitude than the impact of any of the other s etivitie s
,in clu din classroom training. However
,field studies by
GAO and the ffice of the Inspector General identified someabuses of O JT . In particular
,in some insta nces O JT was used as
a wage subsidy for low-skilled jobs where little,if an tra in in cc
curred , people being trained , for example , for 3 mont s to be ishwashers . My daughter mi ht qualify for that.Acting on the GAO a n GIG reports , Congress added a number
of additional requ i rements for O JT contracts which have resultedin the curtailment of O JT— I’m sorry— in the curtailment of O JTfor adults and the virtual elimination of this activity for youth .
Since the JT PA evaluation clearly indicates that O JT i s one of themost promising strate '
e s for adults,Congress and the Department
of Labor should cou si er steps to encourage increased use of O JTwhile still avoiding the abuse that sometimes occurs .
94
T hank you.
[T h e prepared statement of Mr. Ba rn ow follows zlPR E PAR E D S T AT E M E N T or BURT S . BAR N ow,
PR IN CI PAL RE S E AR CH S C IE N T IST ,
IN ST I TUT E FO R PO LICY S T UDIE S , J O H N S HO PKIN S UN IV E R S IT YI wou ld like to tha n k the S u bcommittee on Hu ma n Reso u rc es a n d I n te rg ove
men ta l Rela tion s for pro vidin g me the opportu n ity to te stify toda y on employmen ta n d tra in i n g programs. T here a re ma n y issu es before the Con gress this yea r rega rdin g hu ma n re sou rce pro grams, a n d the Con gress wil l be makin
iimpo rta n t deci sion s
shortly on h ow the n a tion ’s hu ma n re sou rce pro ams shou ld e or a n iz ed a s wella s the level of su pport tha t shou ld be provided. wou ld like to u s e t is opportu n ityto provide my observa tion s ba sed on resea rch I ha ve con du cted a s well a s re viewsof the re orts of the In spector Ge n era l, the Ge n era l Accou n tin g Of fice
,a n d other s.
I wil l I ret n ote a few a re a s where my in te re ta tion s differ from those of the Ge ner a l Accou n tin g Offi ce a n d the Offi ce of the n spector Ge n era l . I will then tu rn to
the bo a rder a rea s of a gre emen t with their fi n din gs a n d discu ss the implica tion s ofthese fi n din gs . Fin a lly, I will discu ss h ow GA O a n d O IG re rts of a bu se of a pa rticu la r type of a ctivity, on -the-job tra in in g ( O JT ) ha ve re su ted in too little u se ofa stra tegy th a t is ofte n effective.
INT E RPR E T IN G T H E GE N E RA L ACCO UN T IN G O FFICE AN D O FFICE O F T H E IN S PE CT O RGE N E RAL FIN DIN GS
Both the Ge n er a l Accou n tin g Offi ce a n d the Depa rtmen t of La bor’s Offi ce of theIn spector Ge n era l ha ve don e a n excellen t job of br in gin g to light issu es of con cernrega rdi n g the n a tio n ’s employmen t a n d tra in in g system. Before a ddressin g thea rea s of a greemen t, I wou ld like fi rst to n ote some fi n din gs tha t I believe a re su bjectto po ssible misin terpreta tion .
Fin din g #1 : T h ere a re 1 63 emp loymen t a n d tra in in g prog ra ms with s u bs ta n tia l ove rla p a mo n g th em.
While it wou ld certa in ly be n oteworthy if there were actu a lly over 1 60 federa l employmen t a n d tra in in g prog rams ,
GA O’
s cou n t is more a ccu r a tely of fu n din g stre amsra t e r tha n of a ctu a l programs . T h e De a rtme n t of La bor’s ma in tra in in g programfor econ omica lly dis a dva n ta ed a du lts
,itle II- A ,
is con sidered to be fou r sepa ra tepro g rams by GA O beca u se t e fu n din g stream reserved for rewa rdin g good performa n ce is con sidered a s a sepa r a te pro gram,
a n d s o is the set-a side for o lder in dividu a ls , which is u su a l] a dmin istered a s pa rt of the re la r T itle II—A program. WhenCon gress established
,
T itle II—C a s a sepa ra te title or you th , three a ddition a l ro
ams” were cre a ted. T h e l ist a l so in clu des pilot pro g rams, su ch a s You th a ir
ha n ce, which is in ten ded to test in n ova tive or promisin g stra tegies , a s well a s proams with on ly limited con n ection to employmen t a n d tra in in g, su ch a s the Sma l lu sin e ss Admin i stra tion ’s eight programs for own ers of sma ll bu sin esses .T here ma y well be too ma n y programs ,
a n d I am n ot a r in tha t we n eed to re
ta in a ll the programs a s they a re cu rre n t] con stitu ted . Ngu
on y poin t here is tha tCon gress does n ot n eed to worry a bou t a 1 63
“programs” iden tified b GA O . In
a 1 989 stu dy for th e Commission on Workforce Q u a l ity a n d La bor Mhrke t E fficie n cy , my col lea e La u da n Aron a n d I iden tified 1 4 major employmen t a n d tra inin g programs . 1 epa rtme n t of La bor sta ff ha ve estima ted tha t 1 2 of the 1 63 pro
ams a ccou n t for a bou t 7 5 rce n t of the expen ditu re s . A l so , Con gress ma y ha vea d good rea son s for e s ta blis in g specia l pro grams for ta rget grou s su ch a s the e lde rly , migra n ts, re fu gees, N a tive America n s, a n d people with disabil ities . T h e mostsign ifica n t pro grams toda y in clu de JT PA ro g rams for di sa dva n ta ged you th , a du lts,a n d disloca ted workers ; the voca tion a l e u ca tion system; the foo d stamp employmen t a n d tra in in
%program; a n d the Job Opportu n ities a n d Ba sic S kills tra i n i n g
program for AFD recipien ts . I re commen d tha t Con gress focu s its oversight on
these major programs ra ther tha n worryin g a bou t the myria d of sma ller prog ramsin existen ce toda y.
Fin d in g #2: M os t a g en cie s do n ot kn ow if th e ir p rog ra ms a re workin g effective ly , a n d
g a in s h a ve bee n mode s t a t be s t.T hese sta temen ts were ma de by M r. Cla ren ce Crawford, A ssocia te Director forEdu ca tion a n d Employmen t Issu es for the Ge n era l Accou n tin g Offi ce in his testil Bu rt S . Ba rn ow a n d La uda n Y. Aron .
“S u rvey of Govern men t-Provi de d T r a in in g Prog r ams ,
in Commiss ion on Wor k force Q u a lity a n d La bor M a r ket E ffi cien cy . I n ves ti n g in Pe ople : A S tra te g y to A d dres s Ame rica ’
s Wor k force Crisis Ba ckg rou n d Pa pers ,V ol . I . Wa s h in gton ,
DC US .
Depa rtme n t of La bor , 1 989 .
96
T h e Depa rtmen t of La bor’s ropos a l to combin e its di sloca ted worker programs isa fi rst step in redu cin g su ch ba rriers .
At the pa rticipa n t level, it h a s lon g been re cogn i z ed tha t it is im rta n t to provideservices a s se amlessly a s possible to a rticipa n ts . A su rvey of t e . 50 sta tes con
du cted in 1 993 by the Urba n In stitu te ou n d tha t a ll bu t 3 sta tes have implemen teda t lea st some form of
“on e -stop shop” for huma n service pro gr ams .
6 A s pa rt of itsn ew Middl e Cla ss B ill of Rights in itia tive, the Depa rtmen t of La bor h a s proposedesta bli shin g on e -stop ca reer cen te rs . I ha ve n ot seen the deta il s of this in itia tive ,bu t if th e in itia tive provides sta te a n d loca l flexibil ity a n d the cu rren t demon stration s pro ve effective , on e -stop cen ters ma y ma ke en try a n d pa rticipa tion in the employmen t a n d tra in in g system mu ch ea sier for Ameri ca n workers a n d la bo r ma rketen tra n ts .In a n importa n t sen se , the 1 992 amen dmen ts to JTPA ma y ha ve u sed th e wron gstra tegy to dea l with pro blems en cou n tered by GA O a n d the O IG . T h e amen dmen tsa re very prescri ptive a bou t h ow loca l pro grams a re to serve pa rticipa n ts . In stea d,Con gress might con sider 'vin g sta te s a n d loca l pro ams more flex ibil ity bu t ho ldin g them more a ccou n ta b e for the ou tcomes . T h e “
scu s s ion of on -the job tra in in gtha t follows pro vides a n example of h ow the cu rre n t system ma y be too focu sed on
pro cess ra ther tha n ou tcomes .E N CO URAGIN G O N -T H E -JO B T R AIN IN G
I wou ld like to con clu de my te stimon y by br iefly discu ssin g the u se of on -the-jobtra in in g ( O JT ) a s a n a ctivity in JT PA . O JT h a s been on e of the su ccess stor ies inthe employmen t a n d tra in in g field . T h e re cen t eva lu a tion of JTPA fou n d tha t fora du lts, the im a ct on ea rn in gs for tho se a ssign ed to O JT wa s a lwa ys sta tistica l lysign ifica n t a nd
)
of gre a te r ma gn itu de tha n the impa ct of other a ctivities ( su ch a s
cl a ssroom tra in in g); a recen tly completed stu dy h a s shown tha t O JT is the most effective a ctivity for welfa re recipien ts .
7 However, field stu dies by GAO a n d O IG identifi ed some a bu ses of O JT . In pa rticu la r, in some in sta n ces O JT wa s u sed a s a wa gesu bsidy for low-skill jobs where little if a n y tra in in g occu rred. A few service deliverya rea s I visited recen tly told of h ow pa rticipa n ts were “tra in ed” for three mon ths tobecome di shwa shers . Actin g on the GAO a n d O IG re rts , Con gress a dded a n umbe r of a ddition a l re qu ire men ts for O JT con tra cts wh ic ha ve resu lted in the cu rta ilmen t of O JT for a du lts a n d the virtu a l el imin a tion of this a ctivity for you th . S in cethe JTPA eva lu a tion clea r] in dica tes tha t O JT is the most promisin g stra tegy fora du lts, Con gress a n d the ge pa rtme n t of La bor shou ld con sider steps to en cou r a gein cre a sed u se of O JT while stil l a voidi n g the a bu se tha t sometimes occu rred.
Mr . SHAYS . You all were here when the Inspector General andthe GAO testified . T hey talked about specific kinds of prog rams ,some of which cost a l ot . You made reference to j ob training programs in particular
,and both Ms . Pindus and Ms . Nightingale
,you
focused in on the whole is sue of consolidation and can there be costsavings . You are talking about cost savings as it relates to all diffe re n t kinds of programs
,or as it relates primarily with the JOBS
program? I’m trying to get a handle on your general point.Ms . Nightingale .
Ms . NIGHT IN GA LE . We really focused on the potential for administra tive cost savings .Mr . SH AYS . With what?Ms . NIGHT IN GA LE . At the Federal level in whatever combinations
of programs might be considered,so that—we were asked by the
Labor Department to try to come up with a framework that couldbe used to analyze the potential cost savings that might result from
6 Pa mela A . H olcomb,Kri s ti n S . S ee fe l dt
,Jo h n T ru tk o
,a n d Bu rt S . Be rn ow
,O n e -S top S h op
pin g S ervice l n te g ra tio n : M ajor Dimen sio n s, Key C h a ra cte ris tics ,a n d Impe d ime n ts to Imple
me n ta tion ,T h e Urba n In stitu te
,S eptember 1 993.
7 H owa rd S . Bloom, La rry L. O rr
,Ge org e Cave, S te p hen H . Be ll
,a n d Fre d Doo little . T h e N a
tio n a l JT PA S tu dy: T itle II—A Impa cts on E a rn in g s a n d Employmen t a t 1 8 M o n th s,U.S . De pa rt
men t of La bor , 1 993; a n d Jod i N u de lma n ,T h e Impa cts of Job T ra in in g for Wome n on AFDC :
A n A n a lysis of T itle II -A of th e Job T ra in in g Pa rtn ers h ip Act, Un pu blis h e d M a s ter’s T h e s is ,Jo h n s H opk in s Un ivers ity I n s titu te for Policy S tu d ies , A pri l 1 995 .
97
program consol idation without having a particular consolidationpr am in mindLI
T
. SHAYS . Le t’s just take a case—I get the sense . So we are taking the j ob training.
Ms . NIGHT IN GA LE . Right, JT PAMr . SHAYS . Mr. Ba rn ow,
you are mak ing a point,there aren’t 1 63
programs so in some ways— so maybe there are 1 20 . I mean giveme a senseM r . BAR N O W . It depends how you count them , right. T here areabout 1 2 to 1 4 major programs , a n d, as I indicated , i t has been e s
timated by the Department of Labor sta ff— I did h ot check— thatabout 1 2 programs account for three-quarters of all the money.
Mr . SHAYS . T hat is a very valid point. What I ’m trying to get ahan dle on is , i s it fair to say all 1 63 are separate budgeted itemswith their own bureaucracy?Mr. BAR N O W . I think they have funding streams for most of
them .
Ms . NIGHT IN GA LE . No .
Mr . SHAYS . I’
m just trying to un derstand what your fu ndingstreams—yes
,Ms . Nightingale.
Ms . NIGHT IN GA LE . T hey don ’t all have separate bureaucracies .
Some of the funding streams are administered together.
Mr. BAR N O W . T h at is correct.Mr . SHAYS . Did GAO use a little poetic license? I s this basically
your point?Ms . NIGHT IN GA LE . T h e Ge neral Accounting Offi ce i s used to look
ing at budget accou nts,a n d that rs what they did .
Mr . SHAYS . O K So they looked at budget accounts . I ’m trying tounderstan d the significa nce of what you are trying to tell me .
Ms . NIGHT IN GA LE We are looking at programs .
t ?SHAYS . O K,
and, of programs , how many programs , do you
t inMs . NIGHT IN GA LE . We have identified 20 within the Labor De
p a rtme n t that provide either j ob trainingM r . SHAYS . Instead of 37 .
Ms . NIGHT IN GA LE . Right. Either job training or employment ass ista n ce to individual s .Mr . SHAYS . If GAO were here now and if I were to ask them ,
would they argue back a n d say yes , on have 20 general areas ofactivity but you really have di e re n t people— 37 differentde cision make r s in the roce s s? Would they still contend it i s verydi sjointed? Why do we have it? Let me back up . Why don ’t we justhave 20 programs with 20 fundin g sources then?Ms . NIGHT IN GA LE . I th ink that the point i s that, whether it i s 20or 37 , there are still a lot of programs there and there is still roomfor improvement and probably for consolidation .
Mr . SHAYS . Fa ir enough .
Now your general theme thon h 1 8 , you are not going to receivethe kinds of savings financially Trut you are going to end up witha better program
,more effi cient
,and so on . So if you are looking
to find ways to bala nce the budget, don’t look here i n consolidationto balance the budget
,but you will end up providing a better serv
ice . I s that your general thrust?Ms . NIGHT IN GA LE . Yes .
98
Mr . SHAYS . O K . Let me just quickly go through , s ince you werehere when the Inspector General and GAO spoke , JT PA you havebasically touched on . Let me just ask you to focus on the JobsCorps program in general . I would like to know what you thoughtabout the tax credit program . I would like to know what you thinkabout the whole is sue of— if you have encountered this in yourwork— and maybe, Mr . Ba rn ow , maybe you are the only one thathas— the NAB getting fu nds without competition . Maybe you couldjust kind of respond to the testimony you have heard earlier.Mr . Ba rn ow , do you want to start.Mr. BAR N O W . O K T here have been a number of evaluations of
the T argeted Jobs T a x Credit. I’m not familiar with the work thathas been done by I believe it was the Inspector General’s Offi ce
,
or was it GAO , but most of them find small , if any , benefits , so thattheir findings were not inconsistent with other studies that I haveseen .
Mr . SHAYS . So the general thrust of their testimony you wouldconcur with .
Mr . BA R N O W . Yes . T here is some— there have been some studiesthat have found positive impacts but not as large as one would expeet. My revi ew of the literature a few years ago found that
,on bal
ance,it was not one of our best programs .
Mr . SHAYS . Was there anything they said you would have takeni ssue with either to say they understated it or they overstated itwhen you were li stening?
BAR N O W . Well , I would have to l ook at the study . I was alittle surprised that they found as many as 92 percent of the peoplewould have been hired anyway. T hat sounded a little high .
Mr . SHAYS . And I wish I had pursued how they determined that.Mr . BAR N O W . I haven ’t seen the study
,but
,again
,most of the
studies are not very positive on T JT C .
Mr . SHAYS . An yet we keep fu nding it.Mr . BAR N O W . Well , i t keeps dying and coming back sort of l ike
a vampire .
Ms . NIGH T IN GALE . If I could add one thing?Mr . SHAYS . Yes , definite]Ms . NIGHT IN GA LE . I thin when you talk to employers out in the
real world,there are some employers that feel that it i s an effective
tool for them for hiring, and when you talk to some job developersin programs
,they feel that it i s one more tool in their little black
bag of tool s that they can use to help get people hired , but overallthe net impacts are notMr. SHAYS . My recollection is that we had a hearing on this . And
I recall the Marriott Corp . or some others said that they had founda way to have it be effective for them .
My time has come to a cl ose .
Mr. T own s .Mr . T OWN S . T hank you very much
,Mr. Chairman .
Let me begin by first thanking both of ou for your testimonyall th r e eL —well
,actually no te stimony yet ffom Ms . Nightingale .
Mr . SHAYS . But she is teamed up withMr . T OWN S . But she sure has 'ven us a lot of thought around
the questions , no question about t at.
1 0 0
Contract Compliance in the Department of Labor . T hey have somewhat different mandates and somewhat different tools for enforcement, so I’m not sure whether they should be combined or not.Mr. T OWN S . T han k you.
Are there advan tages of a federally administered employmentand training program? Are there advantages to have that kind of
arrangement?Mr . BAR N O W . I would a e e with what Mr . Crawford was saying
,
that it is ve important that we have accoun ta bility in the system ,
and I wou ldr
be concerned about if we moved to either a block grantor a voucher system
,that if we aba ndon the Federal Government
collecting the data a n d t '
n g to see how effective the programsare , we will just—we won t know how well we are doing and wewon’t know if the taxpayers’ money is well spent and we won’tknow which programs are working better than others . T hat wouldworry me a lot .So I would stress the importance of the Federal role in overs ight
,
monitoring,and accountability.
M S . NIGHT IN GA LE . If I could add to that also , I think that theFederal role in employment and training has historically been tohelp the di sadvantaged and the role of the Federal Government intargeting on those who are least likely to have informal networksfor education . Identifying education 0 portu n itie s ,
°
ob training, andlabor market information has been the mission of
! the Federal jobtraining prog rams in general , and a lth ou h there is some need forincreasing flexibility at the State and loca level we need to balancethat with some accountability for ta rg e tin on the most disa dva nta g ed, and I would think that continues to be the Federal role .
Mr. T OWN S . May I ask one more question?SHAYS . Certainly.
Mr . T OWN S . I know my light is on .
Let’s just switch rol es for a moment, switch seats . How mightCongr ess ensure that Federal standards of accountabil ity are preserved in a block grant approach? How can we do that?Mr. BAR N O W . I guess I could take a crack at that. If we had a
block grant typ e program ,we could still requ ire the States to re
port data back to the Federal Government on who is served , onwhat the outcomes a re , s imilar to what we have now . I mean Ithink these things are a matter of de e e in terms of how muchflexibility we would give and who wou ( 1 do the oversight, but wewould still require that uniform sta ndard data be reporte d to theFederal Government so that we could compare the programs andsee what the return on the investment is .Ms . NIGHT IN GA LE . I think also that we may be at a point where
we are rethinking what the rol e of the Federal agencies should be,and we may be in need of a stronger Federal agency role in providing technical as si stance to the Sta te s and helping to develop thekind of data systems that Dr. Ba rn ow was talking about.T here is a need for local capacity building, and the Federal Gov
e rn me n t—the Federal agencies can play a rol e there as well , andone of the things that we have learned through previous blockgrants i s that we haven’t done very well in making sure that a ccounta bil ity is assured and that particularly disadvantaged individu a ls are receiving an equita ble amount of the services and that
1 0 1
with a— a change in sort of the miss ion and the statements thatcome out of the Federal Government are just as important as theperformance sta ndards
,and that with leadership and direction
about what the intent of the programs are , that plus technical ass ista n ce a n d ca a city development could shift sort of what the ob
je ctive s of the b ock grants are .
Mr . T OWN S . Fine .
T hank you,Mr. Chairman . I know my time has expired .
Mr . SHAYS . I thank the gentleman .
Mr . Scarborough has joined us for your te stimony and has questions .Mr . SCAR BOROUGH . T han k you, Mr. Cha irman .
I certainly appreciate you all having this important hear ing,and
I appreciate your testimony today. Let me ask you a questionthough . I was intrig ued by comments sayin that
,in effect
,these
j ob training programs are so important, we ave to have the Federal Government involved and , in fact, in some areas even gettinmore involved
,and that it can ’t be trusted to the States or handle
by the States,and I’m intrigued by that when GAO states our work
has demonstrated that the Federal Government’s patchwork of prog rams is characterized by overlap , duplication , wasted resources ,and poor service quality
, a n d creates confusion for clients , employers
,and administrators . Additional] man y agencies do not know
if their prog rams actually help pe0 p e get jobs . T hus , the effectiveness of these programs is also in question .
And you balance that wi th the successes that the State of Iowahas had in succes sfully integrating employment and training programs together , and it certainly begs the question to be asked , ifthe Federal Government is the only one that can be trusted withthis , then aren ’t we in pretty bad shape?Ms . NIGH T IN GALE . I would think that we have to trust everybody
at the Federal level,State level
,and the local level
,and Iowa is
to be commended for the work that the are doing,but even Iowa
and I think in our statement we say t is— acknowledges that theyare— they are investing a lot of money to improve their program ,
and it is that commitment,that politi cal and public commitment to
prog ram improvement, that is needed at the State and at the Federal level , but it i s not one that is costl es s , and Iowa is an examplewhere they are investing substantial amounts of money on techmical improvements
,on data systems , on retra ining staff, and on
streamlining the entire servi ce delivery system,which is exactly
what we are talking about that is needed . Whether it is a Federalprog ram , or State program ,
we still need that same kind of techn ica l improvements .Mr . BAR N O W . I wou l d add that if the Federal Government is pay
ing for some of the tra in in programs,then it has a responsibility
to the taxpayers to try a ndsee how well they are doing, and thefact that they may not be doing it in all the programs now doesn’tmean we ca n ’t do a better j ob .
I think in my te stimony I pointed out that in some progr ams , inthe Job T ra in mg Partnership Act , they are tracking the clients ,they are doing the evalu ations
, a n d so we do have a feeling of howwell the program is performing
,and I believe Mr. Crawford’s com
ments apply to other programs than the main line JT PA program .
1 0 2
Mr. SCARBOROUGH . Do on have any comments as fa r as yourconfidence in the Federal ve rnmen t
’
s record in the past?Ms . PIN DUS . I don’t think the tenor of any of the discuss ion s I
heard was that the Federal Government should do everything andnot allow the States to have any responsibility here . In fact, mostof our study was based on looking at what the States are alreadydoing and what their exper iences have been to date in integratingprograms . I just think it i s again the concern ,
based on the blockgrant experience, that there needs to be accountabil ity when someof those responsibilities are turned over to the States .Mr . SCARBOROUGH . Let’s talk about when responsibilities are
turned over to the States,and I would like to ask each of your
opinions regarding something that Alice Rivlin wrote a few earsback before she came to the administration , and the basic t rustO f her work at the Brookings Institute in 1 992 had to do with abook where she stated that job tr a in in and education and employment type work would be better hand ed at the State governmentand that the Federal Government should rapidly go into retreat inthese areas .Would you agree or disagr ee with Ms . Rivlin’s assessment? Andlet’s take it beyond what is poss ible in 1 995 , because obvi ously wecan’t turn the switch off in 6 months and get the Federal Government to retreat the way Ms . Rivlin stated she would like them toretreat. But would you all agree that that is a desirable goal
,to
move I n the direction that Ms . Rivl in wrote about , and that istrusting the States with the important function of j ob training?Ms . NIGHT IN GA LE . I have not read what you are talking about,
but I think there is a difference in terms of whether Federal moneyi s involved or removing the Federal investment in that area anddepending on States to do it, and I think those are two differentI ssues .Mr. SCAR BOROUGH . O K Why don’t we focus then on the Federal
Government etting out of fi nding and freeing up the ta x revenueto allow the tates to raise money for j ob training, and let’s takeit from that perspective . I S that a desired goal as fa r as you all areconcerned?Ms . NIGHT IN GA LE . It raises a lot of concerns in my head , because
I’
m not sure that every State would in fact pick up and fil l the a pwhere the Federal Government withdraws
,and the burden of t at
will fall on those who are least able to gain acces s to the economicand education system . So I would be concerned about the equitabletreatment across the country .
Mr . BAR N O W . I would echo that concern . I have not read Dr.Rivlin’s book so I would have to read that before I could fully u n
de r sta n d it, but I think toda we do have a number of programsthat are run by States as we] as some that are run by the FederalGovernment, and it i s hard to say whether the State training programs are necessar ily more effective or not. I certainly wouldn ’trule it out, but at this point I just don’t have enough informationto say whether it makes sense to proceed to scrap the Federal system that she has apparently recommended .
Mr. SCARBOROUGH . O K . All right. T hank you. I appreciate it.Mr . SHAYS . I just have one other question to ask ,
and then Iwould open it up for my colleag ues to just go one round . I
’
m not
1 0 4
was a group of people both from programs a n d Government whosaid they would like to see more emphasis on the accountabilityand the outcomes a n d less on just monitoring the process . So ifthat were done , I think there could be more of a role for the Statesand a little les s for the Federal Government and it would work O KI think, again , you do need the Federal Government. As long as
it i s a Federal program with Federal funding,the Federal Govern
ment should be looking at how the States are doing, and if theyare not doing a good job then it would be time for a change .
Ms . NIGHT IN GALE . I’m not exactly sure what he meant by that
comment, and one dimension of it could be that because there hasbeen a lot of cha nge , and whenever there is a lot of change whatthat causes i s sort of ripples down through the system , and it takesthe system a while to adjust to previous reforms , and then beforeyou know it there is another set of reforms that are coming along.
So those are sort of shocks to the system that don’t have time tosettle down and to re a ch
‘
a steady state of maturity from the lastround of revi sions and there were some changes . T hi s has happened in employment and training for 30 years , that problems areidentified , Congress and the Labor Department take steps to try toimprove those changes , and before those new changes have hadtime to— for anybody to know if they have worked or not worked
,
t
fie n there is another round of changes that are imposed on top of
t at.So I wasn ’t sure exactly what he meant in terms of undermining
the changes in improvements that were introduced butM r . T OWN S . Let me just sort of raise something el se .
I think it was you,Ms . Pindus , said that we would not reach the
kind of savings that we were looking to reach if we would do thisand do it right. And before you answer, l et me say I ag ree withyou . But let me ask you , would I be in a position later on to saythat as a result of what we have done that we are going to improvethe quality of l ife for people and that more people now will be ableto benefit as a result of what we are doing?Ms . PIN DUS . I think , based on some of the State experiences
,in
the l ong run that appears to be the case . T h e one thing to keep inmind is
,there is a considerable amount of up front investment, in
planning what programs ought to be consolidated and what is thebest way to consolidate . Investments must be made in integratedcomputer systems
,s taff training
,and many other things that are
needed to really provide that seamless and effi cient model . But tojust g ive you a couple of examples of State progr ams— and I knowIowa was mentioned before . We got some information from Iowa ,where they are integrating servi ces from six State agencies . T heyhave realized some savings already in terms of rent, because theyhave been able to colocate off i ces
,and they are e x p e ctin savings
by fu lly automating and consolidating their separate inta e procedures for six different programs . So , there are definitely savings aswell as investments that they have to make to do this .But almost all the State s we spoke to said that what they were
doing was not cutting their budget based on those savings , but theywere taking it and usin it to serve more participants . T hey werefinding it easier to re a c participants
,easier to provide access to
1 0 5
participants,and they were able to basically make their money go
further to serve more people .
Mr . T OWN S . All right, and I agree wi th you wholeheartedly ,but
let me just ask you another question . How does a person like thisMember get this across to his colleagues that this is the way— Imean
,could you help me with that
,because I agree with you
wholeheartedly and I think you are so ri ht,but it i s just so dif
fi cu lt to convey that message. And I thin you were here when Imade the point earlier that what we will do 1 s cut bill ion fromover here and then all of a sudden the Bureau of Pri son s will comein a n d deman d billion and we wi l l have to give it, and therei s no doubt about it, and I just say to you that is not a solutionto the problem .
Mr. SHAYS . You don ’t have to answer that. [Laughter.]Mr . T OWN S . Can you sort of help me with that a little bit?Ms . NIGHT IN GA LE . One way you could do it— I mean one of the
ways we were able to do this study is,because we know what hap
pens out in the field, we have done a lot of work around the country in different commu nities , and if you had local program a dmin istra tor s come here a n d speak and you asked them how they wouldimprove their system
, a n d every one of them will say we need somestreamlining a n d consolidation to make -our jobs easier . I th ink thati s where on can convince your coll eagu es of the value , because outin the field in terms of the service de l 1 very and the—where individu als a n d employers are workin g, that is where the difference willbe made .
Mr. T OWN S . Right . I’m embarras sed to ask thi s question ,but I
want to make certain because it i s on my mind and I can’t leavethis room without asking. Are you the same Nightingale in termsof welfare reform
,in terms of the article
Ms . NIGHT IN GA LE . Yes .Mr . T OWN S . O K T ha nk you . I think that is something that ev
erybody should read.T hank you very much . I have no further questi ons .Mr . SHAYS . You tri gg ered a question . When I tried to summarize
what I thought your messa ge was , that there would not be any realcost savings but we wou ld see enhanced prog rams , better programs , better del ivery , and so on , I didn’t really delve into thequestion why because it conceptually made sense to me
,but what
I’
m hearing come through is that you would have more participants .
M s NIGHT IN GA LE . Well , you cou l d either have more participants
Mr . SHAYS . Because it i s a better program .
Ms . NIGHT IN GA LE . Or a broader range of services,some of what
the previous panel ta lked about in terms of a variety of services ,better targeted services .Mr . SHAYS . Well
,you have made an incredible argu ment then for
consol idation . I mean it °ust shouts from the rooftops . It i s not anargument not to consoli ate
,it i s an argument to consolidate but
don’t expect a l ot of savings but—correct?Ms . NIGHT IN GA LE . An d that there may be up front investments
as well , so that it is not costles s to consolidate .
Mr . SHAYS . Right, and so payback i s long term .
BO S T O N PUBLIC LIBRAR Y
Ms . NIGHT IN GA LE . Right.Mr. SHAYS . So you are actually saying there might be increased
costs .
Ms . NIGHT IN GA LE . In the short ru n .
Mr . SHAYS . T hat is almost a kil ler,unfortu nately
,1 n thi s env1
ron me n t.Ms . NIGHT IN GA LE . I think Iowa has some estimates of their pro
jection s on how long it will ta ke them to recoup their u p -front investments . What was it? Seven years?Ms . PIN DUS . Yes , 7 years is what their projection s are , and theystill don’t have that much back in the way of cost data .
Ms . NIGHT IN GA LE . Before they would break even .
Mr . SHAYS . We kind of covered the waterfront wi th our two previon s witnesses
,so it may more apply to Mr. Ba rn ow ,
my questi on,
I feel like a kid in a candy store in one sense . I mean whereveryou go , you have got something you can consume here .
If you were in our shoes,where would you put the primary focus
in terms of the reduction of waste ,fra ud , abuse? What area seems
to cry out for attention more than others? Because I think a l ot ofareas cry out for attention .
Mr . BAR N O W . I have to say I’m not an expert on waste,fraud
,
and abuse,I’
m sorry .
Mr . SHAYS . You worked for the Department?Mr . BAR N O W . Pardon?Mr. SHAYS . You worked for the Department? T hat i s not comfort
1 n g .
Mr . BAR N O W . Well , that was a lon time ago .
Mr . SHAYS . Well , use your emera intel ligence and tell me whatprograms do you think
,just w en ou were there . I mean I can just
tell you,candidly
,I have a frie n who ended up buying a house
from someone who worked for the Department of Labor,and he
had renovated the downstairs and the basement and put in a kitchen and put in an apartment. He did it o n Government time . Hewent to work at 1 0 , read the newspaper for 2 hours , and at 1 2 hewent and worked—came back . Now this was just one example , andmaybe it was a total vignette—I mean a totally i solated example .
But I got the sense that he was—the administration simply didn’tbel ieve in his task so they didn’t give him any respons ibility .
Mr. BAR N O W . T hat is a broader Govemme n t-wide question . Atone point when I got a new job I had four secretaries and I evendid my own typin so I mean I didn’t know what to do
,so I didn’t
promote them , an one by one they left. But those days I think arepretty much gone . T hey have been reinventing like crazy overthere
,if that is the right term
,and a lot of— I think they are actu
ally ahead of schedule on the staff reductions . So in that particulararea there may still be some people who are not carrying theirload
,and there i s no question there were people l ike that then and
it was very diffi cult. I mean you could do it, but it was very diffi cu lt to discipline people who were what we used to call retired onthe job . So that was a problem . Now I go over there and there hasbeen such drastic cuts in a number of areas that a lot of the peopleare working ve long days .Mr. SHAYS . That is why we do some cutting, sir, to try to get at
those who are retired on the job.
1 0 8
terms of actually addressing the problem , and so thank you very,very much for your testimony .
Ms . PIN DUS . T hank you.
Mr . SHAYS . Can I ask you,i s it one isolated individua l? I mean
you think thatM r . T OWN S . You only gave one example .
Ms . NIGHT IN GA LE . Did you say—what?Mr. SHAYS . I mean the terminology you used blew my mind , “
re
tired on the job .
”I didn’t make that up , that i s a phrase that is
used . It i s a mentality , and it isn’t an isolated individual . T hat isthe problem , it is simply not isolated , a n d the terminology used
,“retired on the jo i s something you said was a problem and isno longer a problem . An d,
you know,I consider that a very candid
but honest remark .
We adjourn this hearing,and thank you all for coming.
[Whereupon , at p .m. , the subcommittee was adj ourned ][Additional information submitted for the hearing record i s as
follows . Due to high printing costs this information can be foundin subcommittee fi le s .]
CO ST S A V IN GS AT T H E DE PART M E N T O F LABO R
AT T ACHM E N T IN DEXAtta chmen t 1 Office of In spector Gen era l , S emia n n u a l Report to the Con gress .
A pri l 1 , 1 994 S eptember 30 , 1 994
Atta chmen t 2 Offi ce of In spector Ge n era l , S emia n n u a l Report to the Con g ress, O ctober 1 , 1 993 Ma rch 31 , 1 994Atta chmen t 3 Office of In spector Ge n era l , S emia n n u a l Report to the Con gress ,
Apri l -1 , 1 993 S e tember 30 , 1 993Atta chmen t 4 ffi ce O f In spector Ge n era l , S emia n n u a l Report to the Con gress, O ctober 1 , 1 992 Ma rch 31 , 1 993Atta chmen t 5 GAO te stimon before the S u bcommittee on Postsecon da ry E du
ca tion , T ra in i n g a n d Li felon g a rn in g, Febru a ry 6 , 1 994 ,
“M u ltiple E m loyme n t
T ra in in Pro grams, M ajor Overha u l N eeded to Crea te a More Effi cien t, u stome r
Dri ven ystem”
Atta chmen t 6 GAO report, Febru a ry 1 994 , “Depa rtmen t of La bor , N on competitive,Discretion a ry Gra n ts”Atta chmen t 7 Urba n In stitu te Report, coa u thored by N a n cy Pin du s a n d Demetra
Smith N ightin ga le for the De a rtme n t of Labor , N ovember 1 994 ,
“
Admi n istra tiveCost S a vin gs Resu ltin g From ede ra l Pro gram Con so lida tion ”
0
[ S E N 0 - 1 6 -0 525 4 4 -6
9 7 8 0 1 60 525 4 4 5